S-1

As filed with the Securities and Exchange Commission on May 24, 2011.

Registration No. 333-            

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Latrobe Specialty Metals, Inc.

(Exact name of registrant as specified in its charter)

Delaware	3310	20-5927926
(State or other jurisdiction of Incorporation or organization)	(Primary standard industrial classification code number)	(I.R.S. Employer Identification No.)

2626 Ligonier Street

Latrobe, Pennsylvania 15650

(724) 537-7711

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

B. Christopher DiSantis

President and Chief Executive Officer

Latrobe Specialty Metals, Inc.

2626 Ligonier Street

Latrobe, Pennsylvania 15650

(724) 537-7711

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Todd R. Chandler, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10013 Telephone: 212-310-8000 Facsimile: 212-310-8007 Marc D. Jaffe, Esq. Latham & Watkins LLP 885 Third Avenue New York, NY 10022 Telephone: 212-906-1200 Facsimile: 212-751-4864

Approximate date of commencement of proposed sale to public:

As soon as practicable after the Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer  x     (Do not check if a smaller reporting company)	Smaller reporting company  ¨

CALCULATION OF REGISTRATION FEE

Title of each class of Securities to be registered	Proposed maximum aggregate offering price(1)(2)	Amount of registration fee
Common Stock, $0.01 par value	$175,000,000	$20,318

(1) Estimated solely for the purpose of computing the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.

(2) Includes amounts attributable to shares of common stock that may be purchased by the underwriters to cover over-allotments, if any.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We and the selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED MAY 24, 2011

             Shares

Latrobe Specialty Metals, Inc.

Common Stock

This is the initial public offering of our common stock. We are selling              shares of common stock. Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock is expected to be between $             and $             per share. We intend to apply to list our common stock on the New York Stock Exchange under the symbol “LAT.”

The underwriters have a 30-day option to purchase on a pro rata basis up to an aggregate of              additional shares from the selling stockholders to cover over-allotments of shares. We will not receive any proceeds from the sale of shares of common stock by the selling stockholders.

Investing in our common stock involves risks. See “Risk Factors” beginning on page 16.

	Price to Public	Underwriting Discounts and Commissions	Proceeds to Latrobe Specialty Metals, Inc. (Before expenses)	Proceeds to Selling Stockholders (assuming full exercise of the over-allotment option) (Before expenses)
Per Share	$	$	$	$
Total	$	$	$	$

Delivery of the shares of our common stock will be made on or about                     , 2011.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Credit Suisse
	FBR Capital Markets
		Jefferies
			KeyBanc Capital Markets

Cowen and Company

The date of this prospectus is                     , 2011

TABLE OF CONTENTS

	Page
SUMMARY		1
RISK FACTORS		16
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		33
CORPORATE RECAPITALIZATION		35
USE OF PROCEEDS		36
DIVIDEND POLICY		37
MARKET PRICE OF COMMON STOCK		37
CAPITALIZATION		38
DILUTION		39
SELECTED CONSOLIDATED FINANCIAL DATA		40
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		42
INDUSTRY AND MARKET DATA		63
BUSINESS		64
MANAGEMENT		86

	Page
EXECUTIVE AND DIRECTOR COMPENSATION		91
PRINCIPAL AND SELLING STOCKHOLDERS		103
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		105
DESCRIPTION OF INDEBTEDNESS		109
DESCRIPTION OF CAPITAL STOCK		111
SHARES ELIGIBLE FOR FUTURE SALE		114
U.S. FEDERAL INCOME TAX CONSIDERATIONS TO NON-U.S. HOLDERS		115
UNDERWRITING		118
NOTICE TO CANADIAN RESIDENTS		122
LEGAL MATTERS		124
EXPERTS		124
WHERE YOU CAN FIND INFORMATION		124
INDEX TO FINANCIAL STATEMENTS		F-1

You should rely only on information contained in this prospectus, any free writing prospectus prepared by us or information to which we have referred you. We have not, and the underwriters have not, authorized anyone to provide you with different information. This prospectus may only be used where it is legal to sell these securities, and this prospectus is not an offer to sell or a solicitation of an offer to buy shares in any jurisdiction where an offer or sale of shares would be unlawful. The information in this prospectus and any free writing prospectus prepared by us may be accurate only as of their respective dates.

“Latrobe Steel,” “Specialty Steel Supply” and their respective logos are our trademarks. Other service marks, trademarks and trade names referred to in this prospectus are the property of their respective owners. Solely for convenience, we refer to our trademarks, service marks and trade names in this prospectus without the ™ and ^® symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to our trademarks, service marks and trade names.

Dealer Prospectus Delivery Obligation

Until                     , 2011 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to each dealer’s obligation to deliver a prospectus when acting as underwriter and with respect to unsold allotments or subscriptions.

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SUMMARY

This summary highlights information contained elsewhere in this prospectus, but it does not contain all of the information that you may consider important in making your investment decision. Therefore, you should read the entire prospectus carefully, including, in particular, “Risk Factors” beginning on page 16 of this prospectus, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 42 of this prospectus and the financial statements and related notes included elsewhere in this prospectus. In this prospectus, the “Company,” “Latrobe,” “ we,” “us” and “our” refer to Latrobe Specialty Metals, Inc., a Delaware corporation and the issuer of the common stock offered hereby, and its consolidated subsidiaries, including Latrobe Specialty Metals Company.

Our Company

We are one of the largest manufacturers and a global distributor of high-performance specialty metals and alloys. We serve a diversified group of end markets, including the commercial aerospace, defense, oil and gas exploration and production, power generation and industrial markets. We develop, produce and market over 350 grades of specialty metals and alloys that are used in demanding applications such as the manufacture of: (i) landing gear, helicopter shafts, jet engine fasteners and jet engine bearings for the commercial aerospace and defense markets; (ii) downhole logging tools, completion tubes and valves for the oil and gas exploration and production market; (iii) turbine bolts, shafts, pins and blades for the power generation market; and (iv) metal cutting, punching, sawing and stamping dies for the industrial market. To meet the exacting requirements of our customers, we produce materials that possess specific metallurgical properties, including high-strength, corrosion resistance, hardness, fatigue resistance, fracture toughness and temperature resistance. We are able to produce these advanced materials as a result of the highly specialized equipment we have installed at our facilities, the talented team of metallurgists and engineers that we employ and the knowledge we have gained from decades of manufacturing specialty metals.

We have been in continuous operation since 1913 and have manufactured specialty metals for the commercial aerospace and defense industries for over 50 years. We were acquired by our current stockholders in December 2006 from The Timken Company (“Timken”), which had owned our Company since 1975. Since our acquisition from Timken, we have implemented a strategy to increase our production of higher value-added specialty metals and to target underserved end markets and customers that require difficult-to-produce grades of metals. As part of this strategy, we have invested approximately $60 million in state-of-the-art equipment and facilities to, among other things, increase our vacuum induction melting (“VIM”) furnace capacity by approximately 200% and to increase the number of our vacuum arc remelting (“VAR”) furnaces by approximately 30%. This new equipment was placed into service in September 2008 on schedule and on budget, and received subsequent certifications in 2009. This increased capacity provides the basis for our aggressive expansion into new products, such as nickel-based super alloys, and new end markets, such as oil and gas exploration and production and power generation. We have received a wide assortment of critical end-user qualifications and certifications on this new equipment that are required to generate commercial sales.

We operate through two segments: Manufacturing and Distribution. We conduct our manufacturing activities at facilities in Latrobe, Pennsylvania; Franklin, Pennsylvania; and Wauseon, Ohio. We also operate warehouse facilities in Germany and the United Kingdom to fulfill the needs of our Manufacturing customers. The centerpiece of our Manufacturing facilities are two of the largest operating VIM furnaces in the world and 17 VAR furnaces, including four of the largest in the world. Our Manufacturing facilities also include equipment and other assets used for primary melting, forging, rolling, finishing and metallurgical testing, all of which allow us to meet the specific needs of our customers. For the fiscal year ended September 30, 2010, our Manufacturing segment accounted for approximately 64% of our net sales and 79% of our operating income.

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Our Distribution segment globally sources and distributes corrosion resistant steels, tool steels and powder metals for a wide range of industries. We are a leading distributor of tool steels in North America, and we operate eight service centers that are strategically located in the United States and Canada to fulfill the needs of our Distribution customers. We believe our Distribution segment is differentiated from its competitors by the breadth and depth of our value-added machining services. Over 70% of the products we distribute undergo a value-added process such as cutting, milling, grinding, precision straightening, center-less grinding to exact tolerances or computer numerical control (“CNC”) machining to meet our customers’ specific requirements. Like our Manufacturing segment, our Distribution segment continually targets opportunities to distribute and process higher value-added metals to new end markets and new customers. An example of our implementation of this strategy was our 2010 agreement with Crucible Industries to become its exclusive North American distributor for the majority of its Crucible Particle Metallurgy or Powder Metal (“CPM”) branded products. These products are used by a large base of industrial, medical and aerospace companies in attractive, growing applications, and CPM is one of the most well-respected brands in the powder metal market. In addition, in September 2008, we acquired Specialty Steel Supply, Inc. (“Specialty Steel Supply”), a Houston, Texas-based distributor of nickel-based super alloys and high-end corrosion resistant alloys, to gain entry into the oil and gas exploration and production market. For the fiscal year ended September 30, 2010, our Distribution segment accounted for 36% of our net sales and 21% of our operating income.

Our direct customers, which typically include forgers, machine shops and distributors, further process the specialty metals and alloys that we manufacture for ultimate use by a variety of original equipment manufacturers (“OEMs”) and end users. Direct Manufacturing customers include Canton Drop Forge, Firth Rixson Limited, SIFCO Industries, Inc., Specialty Ring Products, Inc. and Wyman-Gordon Company. The end users of the specialty metals and alloys that we manufacture include the U.S. Army Aviation and Missile Command (“AMCOM”), Airbus S.A.S. (“Airbus”), Augusta Engine Parts Inc., Bell Helicopter Textron Inc., The Boeing Company (“Boeing”), Caterpillar Inc., Central Wire, FAG Kugelfischer Georg Schaefer AG, General Electric Company, Halliburton Company (“Halliburton”), Kennametal Inc., Lockheed Martin Corporation, National Oilwell Varco, Inc. (“National Oilwell Varco”), Newell Rubbermaid Inc., Rolls-Royce Plc, Schlumberger Ltd., SKF Group, Snecma S.A. and United Technologies Corporation. The end users of the specialty metals and alloys sold through our Distribution segment include Alcoa Inc., Cummins Inc., Eaton Corporation, General Dynamics Corporation, GKN plc, Halliburton, Timken and Weatherford International Ltd.

The specialty metals industry is undergoing a period of significant growth since its downturn in 2008 and 2009, driven by an improved outlook for manufacturing globally and higher growth forecasts in various end markets in which specialty metals are used, most notably commercial aerospace, oil and gas exploration and production and power generation. For the fiscal year ended September 30, 2010, we generated net sales of $309.2 million, a 6.9% increase over net sales of $289.2 million for the fiscal year ended September 30, 2009. For the fiscal year ended September 30, 2010, we generated net income of $7.3 million versus a net loss of $14.8 million for the fiscal year ended September 30, 2009. For the fiscal year ended September 30, 2010, we generated Adjusted EBITDA of $32.9 million versus Adjusted EBITDA of $15.2 million for the fiscal year ended September 30, 2009. See footnote 4 of “Summary Historical Consolidated Financial and Other Data” for the definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income.

For the six month period ended March 31, 2011, net sales, net income and Adjusted EBITDA were $202.7 million, $10.4 million and $27.4 million, respectively, compared to net sales, net loss and Adjusted EBITDA of $132.9 million, $(3.6) million and $5.6 million, respectively, for the six month period ended March 31, 2010. As of March 31, 2011, our order backlog was approximately $181.8 million, a 98% increase compared to our backlog of $91.7 million as of March 31, 2010. See “Business—Backlog” for a description of how we calculate backlog.

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Our Markets

We expect to continue to increase revenue and earnings by targeting high-margin end markets with attractive growth characteristics, including the commercial aerospace, defense, oil and gas exploration and production, power generation and industrial markets.

For the fiscal year ended September 30, 2010, 52% of net sales for our Manufacturing segment was derived from the commercial aerospace industry, which encompasses both the construction of new aircraft and the manufacture of replacement parts that are utilized in routine maintenance. Currently, the global commercial aerospace market is expanding due to increased passenger travel worldwide (as measured by revenue passenger kilometers (“RPKs”)) and a surge in aircraft orders from carriers in high-growth regions such as Brazil, Russia, India and China as well as in the Middle East. Furthermore, recent high oil prices, and consequently high jet fuel prices, have created incentives for airlines, primarily in the United States and Western Europe, to replace their aging fleets with new, more fuel-efficient aircraft. These conditions have resulted in a significant order backlog stretching to 2017 for aircraft manufacturers such as Airbus and Boeing and have prompted both airplane manufacturers to announce several production rate increases that are planned for 2011, 2012 and 2013. Each aircraft that is placed into service adds to a steady order stream for replacement parts due to regular wear and tear, creating a recurring revenue stream for us.

We believe that demand for our products from the defense industry will remain steady with ongoing military operations in harsh physical environments throughout the world accelerating the maintenance and replacement of military stock. The specialty metals that we produce are used, among other things, in the manufacture of military helicopters, armored vehicles, missile casings and gun barrels. We believe that the specialty metals that we manufacture are critical to the readiness of the U.S. military and the safety of our nation and that we are a key member of the supply chain to the U.S. Department of Defense (“DoD”). In September 2008, we signed a Strategic Buffer Contract with the DoD to ensure that specific grades and quantities of metal are available to meet the military’s surge and sustainment requirements, and in December 2008 and August 2010, we executed agreements with the DoD that provided for us to receive up to $25.7 million to invest in our facilities to increase production capacity. While some defense industry experts are projecting decreases in the annual U.S. defense budget in 2012 and beyond, we believe the segment of the defense industry that we serve will be less affected due to the U.S. military’s need to restock after a decade of fighting in harsh physical environments. For the fiscal year ended September 30, 2010, 15% of net sales for our Manufacturing segment were derived from the defense industry.

Oil and gas exploration and production is a high-margin end market with strong demand characteristics that we have recently targeted as part of our growth strategy. The recent increase in oil prices combined with important technological advances in horizontal drilling and hydraulic fracturing have led to a sharp increase in North American drilling activity as measured by rig counts. According to data from Baker Hughes Incorporated (“Baker Hughes”), North American rig counts have increased from 916 rigs as of July 27, 2009 to 1,830 rigs as of April 29, 2011, an increase of 99% in less than two years, with horizontal drilling rigs accounting for nearly 60% of the rig count, up from just 7% as recently as 2003. Other trends affecting the oil and gas exploration and production market are: (i) increased drilling activity in harsher and more remote environments; (ii) a steady increase in well depths; (iii) more prevalent use of hydraulic fracturing techniques; and (iv) an increase in lateral drilling per well. We expect these trends to result in higher demand for, and increased consumption of, specialty metals such as those that we manufacture and distribute. To support our entry into this end market, (i) we have hired experienced metallurgists to enable us to manufacture new grades of materials such as nickel-based super alloys, an example of which is a grade known as 718 that is used in downhole drilling tools and blow out preventors; (ii) we have hired sales professionals to cultivate or deepen relationships with oil field services companies, particularly in Houston, Texas; and (iii) we acquired a Houston, Texas-based distributor, Specialty Steel Supply, in September 2008 to fulfill and process customer orders. To date, we believe this strategy has been

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successful. For the fiscal year ended September 30, 2010, 7% of net sales for our Manufacturing segment were derived from the oil and gas industry versus 3% of net sales for our Manufacturing segment for the fiscal year ended September 30, 2007.

Beginning in late 2007, we also expanded into the power generation market by developing relationships with key power generation parts makers, forgers and OEMs, including GE Energy and Grupo Frisa, S.A. de C.V. (“Grupo Frisa”) of Mexico. We believe our entry into this market has been well-received by customers due to our status as a U.S. domestic producer of specialty metals, our ample VIM and VAR production capacity and our proven quality systems. We believe our power generation customers value the rigor of our commercial aerospace processes and choose to do business with us because they would like that same rigor applied to the specialty metals that we manufacture for them. Over the last three years, we have been awarded many end-user and customer qualifications for power generation products, such as turbine blade materials, pins, shaft, veins and critical high-temperature, high-strength bolting materials. We believe we have two competitive advantages versus our peers in serving the power generation end market. First, we believe that having our own, captive distribution network enables us to more effectively service these customers. Second, we believe our wide product portfolio, which encompasses several specialty metals, differentiates us from our peers. Our portfolio of specialty metals includes iron-based remelted alloys for pins, specialty niche stainless remelt materials for bolts and blades and nickel-based super alloys for the high-temperature sections of steam and gas turbines. By comparison, most of our peers only focus on a subset of these materials.

Business Strengths

We believe that we have the following competitive strengths:

• Extensive Product Portfolio Serving Attractive End Markets. We are one of the largest manufacturers of specialty metals and alloys, producing over 350 grades of metals that are used in healthy, growing end markets such as commercial aerospace and defense, oil and gas exploration and production and power generation. We have been a supplier to the commercial aerospace industry over the last 50 years and have a leading market position supplying mission critical specialty metals for the defense industry. We have recently expanded our market position in other attractive, high-margin end markets such as oil and gas exploration and production and power generation.

• Strong Competitive Position and High Barriers to Entry. Many of our customers, OEMs and other end users in the markets we serve require us to complete rigorous qualification processes. These qualification processes are expensive both for the end user and the company seeking qualification. They often require two to three years to complete, and they require a high degree of metallurgical and technical expertise. We believe these qualifications cannot be achieved easily by new market entrants, leading to high barriers to entry. For example, we are one of only three globally qualified producers of specialty metal for the Airbus A380 landing gear. We are also the only qualified supplier of specialty metals for the solid rocket boosters used by NASA. Additionally, we have undergone numerous certification processes to be eligible to supply metals for mission critical parts to the commercial aerospace and defense markets, including ISO 9001:2000, AS9100 and the National Aerospace and Defense Contractors Accreditation Program (“NADCAP”). We also benefit from the fact that the United States military, an important end user of our specialty metals, is required by statute to maintain a preferential supplier policy for domestic manufacturers, which enhances our position with the U.S. military relative to foreign competitors.

• Value-Added Production Process. We own and operate state-of-the-art manufacturing assets that enable us to produce high value-added specialty metals and alloys. From June 2007 to March 2010, we invested approximately $60 million into our Latrobe and Franklin, Pennsylvania facilities to increase the production capacity for our highest margin products, to expand our market share, to shorten our lead times to customers and to enable us to manufacture new, difficult-to-produce materials such as nickel-based super alloys that earn attractive profit margins. Our new VIM furnace was placed into service in

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September 2008 on schedule and on budget and received the rigorous, critical end-user qualifications in 2009 that are necessary for manufacturing commercial aerospace, oil and gas exploration and production and power generation specialty metal grades. This additional capacity provides the basis for our future growth.

• Critical Technical Expertise. Our manufacturing assets are complemented by a staff of well-trained, talented and experienced engineers and metallurgists. Our engineering and metallurgical expertise enables us to design and manufacture specialty metals and alloys that meet or exceed our customers’ needs for quality, consistency and process control. Since our materials are often used in applications with no tolerance for failure, a key requirement of our customers and the end markets they serve is our ability to document each detail of our manufacturing process to demonstrate conformity to standards. These process controls are not replicated easily by new market entrants. As a result, we believe we are recognized among our customers for our ability to consistently meet or exceed their technical specifications and those of the end users in the markets we serve.

• Diversified Customer Base with Long-Standing Relationships. We believe that the high quality of our products, our high level of customer service and our ability to serve as a one-stop supplier for a wide range of products and value-added services enables us to achieve a high rate of customer retention and to win new business. We have long-standing relationships with many of our customers and have supplied our top ten Manufacturing customers (based on net sales for the last twelve months ended March 31, 2011) for over 25 years on average. We have a diversified customer base and no significant revenue concentration with any one customer. In the aggregate, our top ten customers accounted for approximately 18% of our net sales for the last twelve months ended March 31, 2011, and none of our customers accounted for more than 3.5% of our net sales during that period.

• Strong Distribution and Value-Added Services Capabilities. Through our Distribution segment, we distribute corrosion resistant steels, tool steels and powder metals and we provide rapid, on-time delivery, excellent customer service and a wide product selection. We also provide value-added processing services including cutting, grinding and CNC machining to meet our customers’ specific requirements. We believe we derive competitive benefits from our participation in both the manufacturing and distribution of specialty metals and alloys. Our manufacturing capability gives us the flexibility to source specialty metals and alloys either internally or from our broad range of global suppliers, depending on availability, and thus to adjust our mix of distribution products. In addition, the ability to source products from our Manufacturing segment allows our Distribution segment to offer our customers shorter lead times and to ensure adequate inventory levels. Similar to our efforts in our Manufacturing segment, we constantly strive to improve our product mix by distributing and processing higher value-added products.

• Seasoned Management Team and Experienced Workforce. We are led by an experienced management team whose members have an average tenure of over 15 years in the specialty metals manufacturing industry. Our senior management team has extensive experience in managing capital expenditure projects on time and on budget and was responsible for Latrobe winning the 2010 American Metal Market Steel Excellence Award for Best Operational Improvement related to the capacity expansion of our Manufacturing operations. Our current management team is largely responsible for leading our strategic transformation since 2007. Furthermore, their efforts during the economic downturn positioned us to increase market share, to profit from the current favorable market conditions and to increase operating efficiency through the implementation of continuous process improvement programs. Our workforce numbered approximately 800 employees as of March 31, 2011. We are able to attract and retain qualified employees due to our reputation in the marketplace, our good standing within the communities in which we operate, our ability to continue to operate through economic cycles and the emphasis we place upon operating safety.

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Business Strategy

We intend to expand our business and to increase stockholder value by pursuing the following strategies:

• Strengthen Our Existing Position in Commercial Aerospace and Defense. To strengthen our leading position within the commercial aerospace and defense industries, we intend to meet the needs of our customers by reducing lead times and supplying metals for innovative applications. We are leveraging the installation of the largest VIM capacity in North America by introducing high technology alloys that support the commercial aerospace and defense industries. These nickel-based super alloys are difficult to produce and are characterized by their high-temperature and high-strength attributes resulting from the manufacturing process path they follow. Our ability to produce these metals in large, 30-ton batch sizes allows greater responsiveness to customer needs by producing larger quantities of material with more reliable lead times. Comparatively, our competitors typically melt in batch sizes of 20 tons or less.

• Expand to New, High-Margin Markets Through New Product Development. We plan to continue Latrobe’s long history of manufacturing innovation and to enhance our product mix by manufacturing new, complex and higher value-added specialty metals that fulfill our customers’ needs. The key aspects of this strategy include identifying new customers that are underserved, addressing end markets with attractive long-term growth dynamics and developing the required metallurgical expertise. Target markets for our product development portfolio are global oil and gas exploration and production, power generation and precision cutting applications. Since 2007, we have formed new relationships with Grupo Frisa, National Oilwell Varco, Halliburton and GE Energy, enabling us to increase significantly our exposure to these target markets. We believe the rapid industry acceptance of our recent entry into the nickel-based super alloy business demonstrates our ability to introduce new products successfully. These new metals address the most demanding applications, such as for downhole production tools in oil and gas, land-based gas turbine blades and shaft materials for power generation and commercial aerospace components. These new materials are designed to meet the needs of the largest OEMs such as GE Energy, Siemens, Airbus, Boeing, Commercial Aircraft Corporation of China, Ltd. (“COMAC”), Firth Rixson Limited and Timken Aerospace, and they demonstrate Latrobe’s commitment and ability to continue to expand its product offerings.

• Extend Participation in Global Markets. From 1995 to 2004, commercial aircraft orders from emerging markets rarely exceeded 50 planes and generally (with a few exceptions) accounted for 5% or less of Boeing’s total annual orders. However, beginning in 2005, demand from emerging market economies increased significantly, representing aircraft orders of roughly 200 planes or more and between 15% to 25% share of total global aircraft orders from Airbus and Boeing, before falling in 2008 and 2009. In 2010, emerging market demand returned to roughly 150 planes and 25% of total global aircraft orders from Airbus and Boeing. As a result of this increased demand, commercial aerospace production has begun to expand to developing nations. In anticipation of this shift, we made an initial investment in China and have begun to develop deeper customer relationships in Asia. For example, we have recently expanded our China and Asia platforms by winning key approvals for China’s COMAC C919 single aisle aircraft that enable us to supply its specialty metals. Additionally, we have extended our global reach by competing in the South Korean helicopter and fighter jet markets. During the current fiscal year, we are scheduled to open a Chinese service center that will enable us to supply existing and new aerospace customers more effectively. We are also evaluating additional global investments in Asia that would increase our service capabilities.

• Continue to Expand Critical Technical Expertise and Technology. We are expanding capacity and improving operating efficiencies through ongoing staff development and capital investments in our manufacturing facilities and equipment. To augment our metallurgical and operating expertise, we have increased the number of our metallurgists by 15% and our engineers by 14% since the prior calendar year.

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Since March 2007, we have increased the number of our metallurgists by 43% in conjunction with our expansion of manufacturing capacity and our business development initiatives. This has enabled us to broaden our product offerings, such as nickel-based super alloys, and to selectively forward integrate with products such as edgewire, a highly technical product used in the manufacture of industrial bandsaws. Although a substantial portion of our new production capacity will be utilized to meet the needs of current customers for our existing products, a meaningful amount of this new capacity will be available to develop and manufacture new products for new customers. As demonstrated by our recent installation of new VIM and VAR capacity, we intend to anticipate the needs of our customers by implementing new technology and capacity enhancement projects ahead of our peers.

• Maintain Financial Strength. Upon completion of this offering and the resulting reduction of our debt, we will have $             million of debt and a financial leverage ratio of less than             x, as measured by debt divided by $             million of EBITDA for the trailing twelve month period ended March 31, 2011. Additionally, upon completion of this offering, we will have $             million of excess availability under our senior secured revolving credit facility. We believe that having a strong balance sheet will give us a favorable position versus our competition, enable us to remain strong financially throughout business cycles and permit us to pursue acquisitions and fund capital expenditures that may enhance our strategic position within the industry.

Risk Factors

Our financial performance and ability to execute our strategy are subject to numerous risks as discussed more fully under “Risk Factors” in this prospectus. You should read and consider carefully the information set forth under “Risk Factors” and all other information set forth in this prospectus before deciding whether to invest in our common stock.

Our Principal Stockholders

Prior to this offering, Toolrock Investment, LLC (“Toolrock”) controlled approximately 90.5% of our common equity on a fully diluted basis, with substantially all the balance owned by management and certain other key employees. HHEP-Latrobe, L.P. (“Hicks”), affiliates of The Watermill Group (consisting of Watermill-Toolrock Partners, L.P., Watermill-Toolrock Partners II, L.P. and Watermill- Toolrock Enterprises, LLC (collectively, “Watermill”)) and funds managed or advised by Sankaty Advisors, LLC (consisting of Sankaty Credit Opportunities II, L.P., Prospect Harbor Credit Partners, L.P. and Sankaty High Yield Partners III, L.P. (collectively, “Sankaty”)) have a membership interest of 51.5%, 32.5% and 15.9%, respectively, in Toolrock.

After the corporate recapitalization described below and upon completion of this offering, Toolrock will hold approximately     % of our common stock. Immediately following the completion of this offering, Toolrock will be dissolved under a plan of dissolution pursuant to which the cash and shares of our common stock received by Toolrock in the recapitalization will be distributed to the members of Toolrock. See “Corporate Recapitalization.” As a result, Hicks, Watermill and Sankaty will control              shares of our common stock (representing approximately     % of all common stock outstanding) or              shares (representing approximately     % of all common stock outstanding) if the underwriters exercise their over-allotment option in full. If the underwriters exercise their over-allotment option in full, the selling stockholders will receive net proceeds of approximately $             million.

Hicks is a limited partnership whose limited partners include Thomas O. Hicks and his family and several other third-party investors and whose general partner is an entity controlled by Mr. Hicks. Mr. Hicks controls a number of entities that hold the private equity and real estate investments of Mr. Hicks and his family. In

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addition to Latrobe, these other private equity investments include: Ocular LCD, Inc., a designer, manufacturer and marketer of high-performance liquid crystal displays, modules and systems; Grupo Pilar, an animal feed and pet food company in Argentina; and Anvita Health, a provider of clinical decision support systems for healthcare professionals. In September 2007, Mr. Hicks founded and served as Chairman of Hicks Acquisition Company I, Inc., a $552 million Special Purpose Acquisition Company (“SPAC”) which completed a successful merger with Resolute Natural Resources on September 25, 2009, to form Resolute Energy Corporation, which is listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “REN.” Based on the success of this transaction, in October 2010, an entity controlled by Mr. Hicks founded Hicks Acquisition Company II, Inc., a $150 million SPAC that has 21 months from the date of its initial public offering to consummate a merger or acquisition, a search that is still underway as of the date of this filing.

Watermill-Toolrock Partners, L.P. and Watermill-Toolrock Partners II, L.P. are limited partnerships whose partners include Steven E. Karol and several other third-party investors and whose general partner is an entity controlled by Mr. Karol. Mr. Karol is the founder, chairman and CEO of The Watermill Group, a Boston, Massachusetts-based private investment group with over 30 years of experience acquiring and operating middle-market companies where there is an opportunity to enhance performance through a combination of strategic change, operating improvements and balance sheet realignments. Mr. Karol’s other unaffiliated investment limited partnerships own several other operating companies including MultiLayer Coating Technologies, LLC, a leader in high precision roll to roll coating of flexible substrates; FutureMark Paper Company, an environmental paper manufacturer that produces high-quality paper with an unmatched level of recycled content; and C&M Corporation, a leading worldwide designer and manufacturer of high-performance cable, coil cords and custom cable assemblies.

Sankaty Advisors, LLC, the credit affiliate of Bain Capital, LLC, is one of the nation’s leading private managers of fixed income and credit instruments. With approximately $18 billion assets under management, Sankaty Advisors, LLC invests in a wide variety of securities and investments, including leveraged loans, high-yield bonds, distressed/stressed debt, mezzanine debt, structured products and equities.

Corporate Recapitalization

Prior to the completion of this offering, our principal stockholder was Toolrock. Immediately prior to the completion of this offering, we will enter into a corporate recapitalization, whereby all of our Series A Preferred Stock, Series B Preferred Stock and outstanding warrants will be converted into common stock. In addition, we will effect a one-for-                          reverse stock split. See “Corporate Recapitalization.” Immediately following the completion of this offering, Toolrock will be dissolved under a plan of dissolution pursuant to which the cash and shares of our common stock received by Toolrock in the recapitalization will be distributed to the members of Toolrock. As a result, Hicks, Watermill and Sankaty will become our direct stockholders. See “—Our Principal Stockholders.”

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Corporate Structure

The following chart illustrates our ownership structure after giving effect to the corporate recapitalization and immediately following the completion of this offering:

Corporate Information

Latrobe Specialty Metals, Inc. was incorporated in Delaware on November 13, 2006. Latrobe’s primary asset is 100% of the capital stock of Latrobe Specialty Metals Company and its subsidiaries, through which we operate our business. Our company was founded in 1913. Our principal offices are located at 2626 Ligonier Street, Latrobe, Pennsylvania 15650. The telephone number at our principal office is (724) 537-7711. Our website address is www.latrobemetals.com. Information on our website is not part of this prospectus.

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The Offering

Common stock offered by us              shares

Common stock to be outstanding after this offering              shares

Over-allotment option The underwriters have an option to purchase a maximum of              additional shares of common stock from the selling stockholders to cover over-allotments. The underwriters can exercise this option at any time within 30 days from the date of this prospectus.

Ownership after this offering Upon completion of this offering and the dissolution of Toolrock, Hicks, Watermill and Sankaty, our principal stockholders, will collectively control              shares of our common stock (representing approximately     % of all common stock outstanding) or              shares (representing approximately     % of all common stock outstanding) if the underwriters exercise their over-allotment option in full, and our directors and named executive officers will control              shares of our common stock (representing approximately     % of all common stock outstanding) or              shares (representing approximately     % of all common stock outstanding) if the underwriters exercise their over-allotment option in full.

Use of proceeds We estimate that our net proceeds from the sale of              shares of our common stock in this offering will be approximately $             million, based on an assumed initial public offering price of $             per share, the mid-point of the price range set forth on the cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any proceeds from the sale of the shares being sold by the selling stockholders.

With the net proceeds received by us, we intend to use:

• approximately $             million to reduce the outstanding balance of our senior secured revolving credit facility;

• $             million to pay off in entirety our senior secured term loan and an associated pre-payment penalty;

• $             million to pay the dividends on our Series A Preferred Stock;

• $             million to pay the dividends on our Series B Preferred Stock;

• $             million to terminate our monitoring and oversight agreements with Hicks and Watermill;

• $             for fees and expenses associated with this offering; and

• the balance for general corporate purposes.

See “Use of Proceeds.”

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Dividend policy We do not anticipate paying any dividends on our common stock in the foreseeable future. See “Dividend Policy.”

Proposed NYSE symbol “LAT”

Risk factors Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 16 of this prospectus for a discussion of factors you should carefully consider before investing in our common stock.

The number of shares of common stock outstanding after this offering is based on              shares of common stock outstanding as of March 31, 2011. Unless otherwise indicated, this number:

• excludes 1,884,927 shares of our common stock issuable upon exercise of stock options that will be outstanding upon completion of this offering, at a weighted average exercise price of $2.82 per share; and

• excludes                  shares of our common stock reserved for future grants under our existing compensation plans.

Unless otherwise indicated, all information in this prospectus:

• assumes the filing of our amended and restated articles of incorporation and the amended and restated by-laws upon completion of this offering;

• assumes no exercise of stock options that will be outstanding upon completion of this offering;

• gives effect to the conversion of our outstanding Series A Preferred Stock (assuming the exercise of all outstanding Series A Preferred Stock warrants) into 32,014,832 shares of common stock prior to the completion of this offering;

• gives effect to the conversion of our outstanding Series B Preferred Stock into 12,114,815 shares of common stock prior to the completion of this offering;

• gives effect to a one-to-             reverse stock split of our common stock, which will be effected immediately prior to the completion of this offering; and

• does not give effect to the exercise of the underwriters’ over-allotment option to purchase up to              additional shares of common stock from the selling stockholders.

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SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA

The following table sets forth our summary historical consolidated financial and other data as of the dates and for the periods indicated.

We derived the summary consolidated financial data for the fiscal years ended September 30, 2010, 2009 and 2008 and as of September 30, 2010 and 2009 from our audited consolidated financial statements included elsewhere in this prospectus. We derived the consolidated financial data for the six months ended and as of March 31, 2011 and 2010 from our unaudited consolidated financial statements included elsewhere in this prospectus. We have prepared our unaudited consolidated financial statements on the same basis as our audited consolidated financial statements and have included all adjustments, consisting of only normal recurring adjustments, that we consider necessary for a fair presentation of our financial position and operating results. The results for any interim period are not necessarily indicative of the results that may be expected for a full year.

The data presented below should be read in conjunction with, and are qualified in their entirety by reference to, “Capitalization,” “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the notes thereto included elsewhere in this prospectus.

	Fiscal Year Ended September 30,								Six Months Ended March 31,
(dollars in thousands, except per share data and other data)	2010		2009			2008			2011		2010
	(Audited)								(Unaudited)
Statement of Operations Data:
Net sales	$	309,229	$	289,181		$	433,104		$	202,742	$	132,919
Cost of sales		254,431		267,832			328,411			161,578		118,331
Selling, general and administrative expenses		26,219		28,549			37,115			16,412		13,285
Income (loss) from operations		28,579		(7,200	)		67,578			24,752		1,303
Other expense (income)		1,161		665			(1,465	)		663		490
Interest expense		11,655		14,205			15,773			7,278		5,469
Loss on extinguishment of debt		4,076		—			3,264			—		1,105
Income (loss) before income taxes		11,687		(22,070	)		50,006			16,811		(5,761	)
Income tax expense (benefit)		4,417		(7,259	)		17,859			6,391		(2,189	)
Net income (loss)	$	7,270	$	(14,811	)	$	32,147		$	10,420	$	(3,572	)
Income (loss) per share:
Income (loss) per share—basic	$	0.16	$	(20.88	)	$	0.98		$	0.21	$	(3.44	)
Income (loss) per share—diluted	$	0.16	$	(20.88	)	$	0.98		$	0.21	$	(3.44	)
Number of common shares used in the per share calculations:
Basic		1,107		710			7,875			1,160		1,053
Diluted		34,122		710			31,515			33,274		1,053
Balance Sheet Data (at period end):
Cash and cash equivalents(1)		—		—			—			—		—
Working capital(2)	$	154,206	$	155,368		$	221,297		$	213,784	$	135,204
Property, plant & equipment, net		69,321		66,588			63,196			70,780		66,409
Intangible assets, net and goodwill		5,705		7,467			8,409			5,044		6,740
Total assets		338,147		299,789			370,220			409,219		292,342
Revolving line of credit		71,140		102,971			163,076			119,709		59,397
Long-term debt, less current portion		47,500		32,449			30,612			45,000		43,853
Stockholders’ equity		48,240		39,457			75,863			59,007		47,520

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	Fiscal Year Ended September 30,									Six Months Ended March 31,
(dollars in thousands, except per share data and other data)	2010			2009			2008			2011			2010
	(Audited)									(Unaudited)
Statement of Cash Flows Data:
Net cash provided by (used in) operating activities		18,796			67,102			32,293			(44,236	)		24,943
Net cash used in investing activities		(7,586	)		(6,997	)		(53,496	)		(3,170	)		(2,091	)
Net cash provided by (used in) financing activities		(11,210	)		(60,105	)		21,203			47,406			(22,852	)
Other Financial Data:
EBITDA(3)		34,657			(1,734	)		73,420			27,613			4,276
Adjusted EBITDA(4)		32,915			15,225			94,052			27,356			4,525
Capital expenditures(5)		7,611			6,951			44,710			3,170			(2,116	)
Cash interest expense		13,986			10,578			14,513			6,105			3,935
Other Data:
Total pounds sold		95,605			83,158			113,890			56,913			44,165

(1) Cash and cash equivalents are zero because under our senior secured revolving credit facility, we are subject to a daily cash sweep to pay down amounts outstanding under our senior secured revolving credit facility.

(2) Working capital is calculated as current assets (excluding cash) less current liabilities (excluding the current portion of long-term debt of $73.6 million, $104.0 million, and $163.1 million for the fiscal years ended September 30, 2010, 2009 and 2008, respectively, and $123.5 million and $60.4 million for the six months ended March 31, 2011 and 2010, respectively).

(3) EBITDA as used in this prospectus is defined as net income (loss) plus depreciation and amortization, interest expense and income tax expense (benefit). EBITDA is not a financial measure calculated in accordance with generally accepted accounting principles in the United States (“GAAP”). We present EBITDA as our management uses it:

• as a measurement of operating performance because it assists us in comparing our operating performance on a consistent basis;

• for planning purposes, including the preparation of our internal annual operating budget;

• in monitoring compliance with our senior secured revolving credit facility and our senior secured term loan (which uses EBITDA with further adjustments as a measure in calculating certain financial ratios);

• to allocate resources to enhance the financial performance of our business;

• to evaluate the effectiveness of our operational strategies; and

• to measure performance under certain compensation arrangements with our executives, which are derived from EBITDA.

In addition, EBITDA is a commonly used measure of financial performance for companies comparable to us and we believe it assists investors and analysts in evaluating comparable companies on a consistent basis. Other companies may calculate EBITDA differently than we do. In evaluating EBITDA, investors should be aware that EBITDA:

• does not represent net income or cash flows from operating activities as defined by GAAP;

• is not necessarily indicative of cash available to fund our cash flow needs; and

• should not be considered as an alternative to net income, income from operations, cash provided by operating activities or other financial measures as determined under GAAP.

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The following table sets forth a reconciliation of EBITDA to net income (loss), the most comparable GAAP financial measure, for the periods presented:

	Fiscal Year Ended September 30,							Six Months Ended March 31,
(dollars in thousands)	2010		2009			2008		2011		2010
	(Audited)							(Unaudited)
EBITDA Reconciliation:
Net income (loss)	$	7,270	$	(14,811	)	$	32,147	$	10,420	$	(3,572	)
Depreciation and amortization		7,239		6,131			4,377		3,524		3,463
Loss on extinguishment of debt		4,076		—			3,264		—		1,105
Interest expense		11,655		14,205			15,773		7,278		5,469
Income tax expense (benefit)		4,417		(7,259	)		17,859		6,391		(2,189	)
EBITDA	$	34,657	$	(1,734	)	$	73,420	$	27,613	$	4,276

(4) Adjusted EBITDA as used in this prospectus is defined as EBITDA as adjusted for inventory purchase adjustments, stock option and grant expense, amortization of capitalized variances, refinance-bank and consulting costs and adjustments to inventory reserves. Adjusted EBITDA is not a financial measure calculated in accordance with GAAP. We present Adjusted EBITDA as our management uses it:

• as a measurement of operating performance because it assists us in comparing our operating performance on a consistent basis;

• for planning purposes, including the preparation of our internal annual operating budget;

• in monitoring compliance with our senior secured revolving credit facility (which uses EBITDA with further adjustments as a measure in calculating certain financial ratios);

• to allocate resources to enhance the financial performance of our business;

• to evaluate the effectiveness of our operational strategies; and

• to measure performance under certain compensation arrangements with our executives, which are derived from Adjusted EBITDA.

Other companies may calculate Adjusted EBITDA differently than we do. In evaluating Adjusted EBITDA, investors should be aware that Adjusted EBITDA:

• does not represent net income or cash flows from operating activities as defined by GAAP;

• is not necessarily indicative of cash available to fund our cash flow needs; and

• should not be considered as an alternative to net income, income from operations, cash provided by operating activities or other financial measures as determined under GAAP.

The following table sets forth a reconciliation of EBITDA to Adjusted EBITDA for the periods presented, which should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this prospectus:

	Fiscal Year Ended September 30,								Six Months Ended March 31,
(dollars in thousands)	2010			2009			2008		2011			2010
	(Audited)								(Unaudited)
Adjusted EBITDA Reconciliation:
EBITDA	$	34,657		$	(1,734	)	$	73,420	$	27,613		$	4,276
Stock options and grant expense(a)		400			—			—		675			100
Restricted stock(b)		(797	)		1,525			5,636		501			(797	)
Inventory adjustments related to purchase accounting(c)		—			1,253			—		—			—
Legal fees(d)		—			813			—		—			—
Strike costs(e)		427			2,091			14,996		—			241
Refinance-bank and consulting costs(f)		705			1,152			—		—			705
Adjustments to inventory reserves(g)		(2,477	)		10,125			—		(1,433	)		—
Adjusted EBITDA	$	32,915		$	15,225		$	94,052	$	27,356		$	4,525

(a) We have issued stock options under the 2006 Employee, Director and Consultant Stock Plan (the “2006 Equity Plan”) to certain key employees. The amount of stock compensation expense recognized is based upon the grant date fair value. The fair value of the option grant is estimated on the date of grant using the Black-Scholes option pricing model with assumptions on dividend yield, risk-free interest rate, expected volatilities, expected forfeiture rates and expected lives of options.

The stock compensation expense related to options granted was approximately $0.4 million, $0.7 million and $0.1 million for the fiscal year ended September 30, 2010, the six months ended March 31, 2011 and 2010, respectively.

Due to the non-cash nature of the stock compensation expense, these amounts were included in the reconciliation of EBITDA to Adjusted EBITDA.

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(b) Shares of restricted Non-Voting Common Stock totaling 1,558,000 were granted to certain members of management in December 2007 and vested 50% at December 31, 2008 and 2009, respectively. Included in stock compensation expense is approximately $(0.8) million, $1.5 million and $5.6 million, which includes $3.3 million in cash to satisfy the related income tax, for the fiscal years ended September 30, 2010, 2009 and 2008, respectively, and $0.5 million and $(0.8) million for the six months ended March 31, 2011 and 2010, respectively. Stock compensation expense in 2010 includes compensation expense of approximately $0.2 million and income of $1.0 million, related to the forfeiture of shares by a former officer upon his resignation.

Due to the non-cash nature and non-recurring nature of the stock compensation expense, and non-recurring and non-cash income pertaining to the forfeiture shares, these amounts were included in the reconciliation of EBITDA to Adjusted EBITDA.

(c) On September 11, 2008, we acquired Specialty Steel Supply, a distributor in Houston, Texas. The aggregate purchase price, including transaction costs, was approximately $13.9 million. Following an election under Section 338(h)(10) of the Internal Revenue Code, the transaction was treated as a purchase/sale of assets and accounted for under purchase accounting. The impact resulted in a write-up of inventory of approximately $1.3 million. As this inventory was sold in the fiscal year ended September 30, 2009, EBITDA was negatively impacted by this amount.

Due to the non-cash nature of the step-up in basis of inventories, this amount was included in the reconciliation of EBITDA to Adjusted EBITDA.

(d) In the fiscal years ended September 30, 2007 and 2008, we evaluated an initial public offering (“IPO”) that was not executed due to market conditions. In the fiscal year ended September 30, 2009, we paid for legal costs of $0.8 million associated with the terminated IPO. Due to the non-recurring nature of this event, we included this amount in the reconciliation of EBITDA to Adjusted EBITDA.

(e) During the fiscal year 2008, we encountered a work stoppage at our Latrobe, Pennsylvania facility. During the strike, we incurred incremental costs of approximately $17.5 million due to added security, replacement workers, overtime for salaried workforce and other costs. Those costs were recognized over the fiscal years ended September 30, 2008, 2009 and 2010, as a portion of the costs were included in capitalized inventory costs and recognized as inventories were sold.

Due to the non-recurring nature of this event, we included this amount in the reconciliation of EBITDA to Adjusted EBITDA.

(f) During the fiscal year ended September 30, 2009, inventory appraisal levels and corresponding advance rates fell, causing us to fail to meet the minimum excess availability requirement in our senior secured revolving credit facility. We engaged consultants to execute an acceptable amendment with the lenders under our loan agreements to waive the event of default.

We incurred approximately $1.2 million and $0.7 million for the fiscal years ended September 30, 2009 and 2010, respectively, and approximately $0.7 million during the six months ended March 31, 2010, pertaining to refinancing consulting banking costs.

Due to the non-recurring nature of these costs, we included them in the reconciliation of EBITDA to Adjusted EBITDA.

(g) For the fiscal year ended September 30, 2009, we recorded unusual charges totaling approximately $10.1 million due to the deepening recession and economic uncertainty.

Included in the unusual charge was:

• $5.9 million in excess fixed overhead costs absorbed in inventory attributable to reductions of operating levels (i.e., idle capacity); and

• $4.2 million in write-down of inventory to reflect a lower of cost or market adjustment.

As the inventory was sold in subsequent periods, we realized the benefit of this lower priced inventory. These benefits were approximately $2.5 million and $1.4 million in the fiscal year ended September 30, 2010 and the six months ended March 31, 2011, respectively.

Due to the unusual and non-recurring nature of these items, we included them in the reconciliation of EBITDA to Adjusted EBITDA.

(5) Capital expenditures is net of funding received from the DoD.

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RISK FACTORS

You should carefully consider each of the following risk factors and all of the other information set forth in this prospectus, including the financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in our common stock. The risks and uncertainties described below are not the only ones we face. If any of the following risks actually occur, our business, financial condition and results of operations could be harmed and we may not be able to achieve our goals. In such an event, the value of our common stock could decline and you could lose some or all of your investment.

Risk Factors Relating to Our Business

Global and domestic economic conditions can materially adversely affect demand for our products.

The level of demand from our customers can be adversely affected by global economic conditions impacting the markets and economies in which they operate. As has been widely reported, the financial markets and overall economies in the United States and abroad are currently undergoing a period of significant uncertainty and volatility. Economic slowdowns in certain markets, particularly in the United States, and the availability of financing and other credit may adversely impact overall demand for our products, which could have a negative effect on our results of operations and financial condition. Further, there can be no assurance that any governmental responses to disruptions in the markets or to economic slowdowns ultimately will stabilize the markets or result in improved economies. As a result, there can be no assurance that global economic and market conditions will not adversely impact our business, results of operations and financial condition in the future. In addition, protracted declines in the demand for our products caused by poor economic conditions or by the deterioration of the financial condition of our key customers could adversely affect our business, results of operations and financial condition.

While the U.S. economy generally follows the trends of the global economy, the U.S. economy could decline without a coinciding decline of the global economy. This could be the result of a number of different scenarios, including shifts in exchange rates which reduce the competitiveness of the U.S. manufacturing industry. The U.S. economy could also be adversely affected by changes in legal and regulatory requirements, such as environmental laws or tax laws, which ultimately impact our customers and could reduce their demand for our products. As a result, there can be no assurances that domestic economic and market conditions will not adversely impact our results of operations or financial position in the future. In addition, protracted declines in the demand for our products caused by poor domestic economic conditions or by the deterioration of the financial condition of our key customers could adversely affect our business, results of operations and financial condition.

Fluctuations in demand for specialty metals and alloys can result in fluctuations in our level of production, our net sales and our earnings.

Demand for specialty metals and alloys is cyclical and may fluctuate significantly due to many factors beyond our control. This fluctuation directly affects the levels of our production and our net sales and earnings. Demand for our high-strength alloy steel, corrosion-resistant steel, high-temperature resistant alloys, high-performance bearing steel, nickel-based super alloys, high-speed steel, powder metal and tool steel is affected by conditions in the commercial aerospace, defense, oil and gas exploration and production, power generation and industrial markets. Demand for our high-speed steel and tool steel is also affected by conditions in the overall domestic manufacturing economy. A downturn in any of these markets or in the domestic manufacturing economy can result in weakened demand for our products, which may lead to both pricing weakness and decreased production and sales volumes. For example, as a result of the economic slowdown in 2009, many of our customers implemented inventory destocking measures, resulting in reduced demand for our products. In the event of future economic slowdowns, our customers could implement similar destocking measures. These factors can adversely affect our business, results of operations and financial condition.

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The industry in which we participate is highly competitive, and our failure to compete successfully could adversely affect our results of operations and financial condition.

The specialty metals and alloys industry is a highly competitive global market, and we compete with domestic and foreign suppliers of specialty metals and alloy products. In addition to the domestic competition that we face, there has been increased competition in the industry from Europe, China, Taiwan and Brazil. Some of the steel producers with which we compete have the advantage of low-cost labor, inexpensive capital and newer, more efficient manufacturing processes. Additionally, consolidation among participants in the specialty steel manufacturing industry has resulted in fewer competitors but several which are significantly larger. Further consolidation could result in increased competition against companies with greater resources and more diverse businesses than we have. There can be no assurance that we will be able to compete successfully in the future, and our failure to do so could adversely affect our business, results of operations and financial condition.

Competition resulting in decreased demand for our customers’ products could adversely affect demand for our products.

A significant portion of the specialty metals and alloys that we produce is sold to OEMs and others who use it to produce the products they sell (e.g., engines, landing gear, downhole logging tools, gear boxes for helicopters and military vehicles). Many of the finished products sold by these OEMs and others are in direct competition with finished products manufactured by other sources, both domestic and foreign, which may affect the demand for the products of our customers’ customers. Any competitive factors that adversely affect the market for finished products manufactured by OEMs or others who use our products could indirectly adversely affect the demand for our products.

In addition, OEMs or others in the supply chain could choose to source their products or components from manufacturers located in other countries. The reasons for the change in sourcing could be due to overall cost reductions or agreements reached to source some of their necessary components in foreign countries in order to sell their final products in those countries. These purchases could be individual components or complete final assemblies. These manufacturers may choose to not buy their raw materials from us, which has happened in the past. As a result, there can be no assurance that our customers or other parts of the supply chains we operate in will continue to buy from us. Reduced demand for our products could adversely affect our business, results of operations and financial condition.

A substantial portion of our net sales is derived from the commercial aerospace and defense markets, and our net sales and earnings may be adversely affected by the cyclical nature of those markets.

Approximately 52% and 55% of net sales for our Manufacturing net sales in the fiscal year ended September 30, 2010 and the six months ended March 31, 2011, respectively, were ultimately derived from the commercial aerospace industry. The commercial aerospace industry is historically cyclical due to both external and internal market factors. These factors include general economic conditions, airline profitability, demand for air travel, age of fleets, the availability of aircraft financing, varying fuel and labor costs, price competition, aircraft production cycles and international and domestic political conditions such as military conflicts and the threat of terrorism. The length and degree of cyclical fluctuations can be influenced by any one or a combination of these factors and are difficult to predict with certainty. A downturn in the commercial aerospace market would adversely affect the demand for our products and/or the prices at which we are able to sell our products, which could adversely affect our business, results of operations and financial condition.

Additionally, approximately 15% and 12% of net sales for our Manufacturing segment in the fiscal year ended September 30, 2010 and the six months ended March 31, 2011, respectively, were ultimately derived from the defense industry, including by manufacturers of military aircraft such as helicopters and armored fighting vehicles. Defense market demand is impacted by a variety of factors, which include international and domestic

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political conditions, military conflicts, the threat of terrorism, accelerated wear of military equipment due to harsh physical environments and budget approval by the U.S. Congress. Reduced demand from the defense market would adversely affect the demand for our products and/or the prices at which we are able to sell our products, which could adversely affect our business, results of operations and financial condition.

A growing portion of our net sales are derived from the oil and gas exploration and production and power generation markets, and our net sales and earnings may be adversely affected by a reduction in demand from these markets.

Approximately 7% and 8% of net sales for our Manufacturing segment in the fiscal year ended September 30, 2010 and the six months ended March 31, 2011, respectively, were ultimately used in oil and gas exploration and production and power generation markets. In addition, a significant amount of our planned growth over the next four years is based upon expanding our net sales in these markets.

These markets can be highly cyclical. The activity in the oil and gas exploration and production market is directly correlated to the market price for oil and natural gas. Any reduction in oil and gas pricing will reduce drilling activity, which in turn will reduce the demand for specialty metals sold into the oil and gas exploration market. Any potential moratorium on offshore drilling could also adversely affect demand for specialty metals in the oil and gas exploration market. The power generation market is directly related to demand for electricity in the United States and abroad and is particularly influenced by the growing demand in emerging market economies such as China and India. In the event that such demand declines due to economic factors, the demand for specialty metals in this market will decrease. In addition, the growth of alternative energy sources could reduce demand for land-based gas turbines in which our materials are utilized. As such, our business, results of operations and financial condition could be adversely affected.

Any increase in the cost of raw materials could materially reduce our earnings and any delay in, or loss of, availability of raw materials could adversely affect our business.

We rely largely on third parties to supply raw materials that are critical to the manufacture of our products. Purchase prices and availability of these critical raw materials are subject to volatility, and we currently do not hedge any of the costs of our raw materials. We purchase raw materials from suppliers on a spot basis, with the actual monthly purchase price of the raw materials based, in most cases, upon a negotiated formula using published commodity market prices for each raw material. If there is an increase in the price of critical raw materials, we may not have alternative sources of supply. In addition, to the extent that we have quoted prices to customers and accepted customer orders for products prior to purchasing necessary raw materials, or have existing fixed price sales contracts, we may be unable to raise the price of products to cover some or all of the increased cost of raw materials. Typically, our customer agreements contain a raw material surcharge mechanism where we calculate a surcharge based on the average price of the raw materials for the three months prior to the month preceding shipment. However, to the extent that the prices of raw materials decline during the period from the date of our purchase of raw materials to the date we ship the finished product to our customers, our raw materials surcharge may not compensate us entirely for our actual cost.

We acquire certain key raw materials, including nickel, chromium and cobalt, from foreign suppliers. Some of these suppliers operate in countries that may be subject to unstable political and economic conditions. In addition, one of our suppliers could experience a reduction in output due to work stoppages, equipment failures or various other reasons. These conditions may disrupt supplies or affect the prices of these materials. We may experience delays or shortages in the supply of raw materials. If we are unable to obtain adequate, cost efficient or timely deliveries of required raw materials, we may be unable to manufacture sufficient quantities of products on a timely basis. This could cause us to lose sales, incur additional costs, delay new product introductions or harm our reputation within the specialty metals industry. As such, our business, results of operations and financial condition could be negatively affected.

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The demand for specialty metals and alloys may decrease further during economic downturns due to the destocking of the supply chain.

Generally, we are two to four levels away from the ultimate end user, and between us and the end user there may be multiple distributors, such as a forge shop, a machine shop and a component manufacturer. Each level of the supply chain aims to have sufficient inventory to meet customer demands and, in many cases, maintains a buffer inventory in excess of their customer demands. When one of our end markets declines, the reduced end-user demand impacts the entire supply chain. Each level of the supply chain will reduce the amount of material it needs for its customer demands and generally will also reduce its buffer inventory. For example, if each member of a four level supply chain was producing ten units per month and maintained a buffer inventory of two units, an economic downturn resulting in a decline in end-user demand of 50% would also likely reduce buffer inventory by 50% for each member of the supply chain. The raw material supplier to this supply chain, who was producing at ten units per month, would experience a two to three month period of zero demand before returning production to the new end-user demand level of five units per month. As this example shows, such a scenario may result in a greater impact on the demand for the raw material supplier’s products than to the demand for the end user’s products. Historically, we have observed this multiplying effect in economic downturns. As a result, potential future economic slowdowns would adversely affect the demand for our products further and/or the prices at which we are able to sell our products, which could adversely affect our business, results of operations and financial condition.

Political or social turmoil or other external factors that we cannot control could reduce or disrupt demand for our products and may significantly impact our net sales, costs and expenses and financial condition.

Political and social turmoil, including the ongoing conflict in Afghanistan and unrest in the Middle East and Africa, could put pressure on economic conditions in the United States and worldwide, potentially impacting demand for our products. For example, demand for our products in the commercial aerospace market could be negatively impacted by political and social turmoil in countries in Asia. These political, social and economic conditions could make it difficult for us, our suppliers and our customers to forecast demand accurately and plan future business activities. This could adversely affect the financial condition of our suppliers and customers and affect customer decisions as to the amount and timing of purchases from us.

In addition, other external factors such as terrorist attacks, military actions, civil conflict, natural disasters and public health issues, including domestic or international pandemic, have caused and could cause damage or disruption to domestic or international commerce by creating economic or political uncertainties. These events could result in a decrease in demand for our products, make it difficult or impossible to deliver orders to customers or receive materials from suppliers, affect the availability or pricing of energy sources or result in other adverse consequences that may not be predictable.

As a result, our business, net sales, costs and expenses and consequently, our results of operations and financial condition could be adversely affected.

We may not be able to successfully develop and market new products.

Without the timely introduction of new products or enhancements, our products could become obsolete over time, in which case our business, results of operations and financial condition could be adversely affected. In our efforts to develop and market new products and enhancements to our existing products, we may fail to identify new product opportunities successfully or develop and timely bring new products to market. We may also experience delays in completing development of enhancements to, or new versions of, our products. We may be unable to develop or acquire marketable products in a timely manner. In addition, product innovations may not achieve the market penetration or price stability necessary for profitability. As the market and technology related

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to specialty metals and alloys expands, we may modify our business model to take advantage of new business opportunities, including end-markets in which we do not have extensive experience. Failure to develop these or other businesses successfully could be harmful to our business, results of operations and financial condition.

The substitution of other materials for specialty metals and alloys, particularly for so-called “composite materials” in the aerospace market, could result in reduced demand for our products.

Products made from our specialty metals and alloys, which are used in the commercial aerospace end-user market, particularly many newer aircraft models, compete with products fashioned from alternative materials such as titanium and carbon fiber composites, which enjoy certain advantages over specialty metals and alloys. For example, composites offer the advantage of being lighter than most steel alloys and titanium has improved corrosion resistant properties compared to steel alloys. The use of titanium and composites results in lighter weight planes that require less fuel and are cheaper to operate, particularly for large-sized aircraft such as the Boeing 787 and the Airbus A380. A further extension of the use of alternative materials could reduce the demand for specialty metals and alloys in the future, including for our products, which could adversely affect our business, results of operations and financial condition.

We may experience a shortage in the supply of energy, an increase in energy costs or exposure to credit and market risks as a result of our attempts to protect the company from price fluctuations of certain energy costs.

The manufacturing of our products is an energy intensive process. We rely upon third parties for the supply of energy that we consume in the manufacturing of our products. The availability of, and prices for, electricity and natural gas are subject to volatile market conditions. These market conditions are often affected by political and economic factors beyond our control. Disruptions in the supply of energy could temporarily impair the ability to manufacture our products. Further, increases in energy costs, or changes in costs relative to energy costs paid by domestic and global competitors, have adversely affected and may continue to adversely affect our business, results of operations and financial condition.

We have, and may continue to have in the future, natural gas commitments to manage our exposure to natural gas price fluctuations. As of March 31, 2011, we were party to 20 contracts to purchase natural gas for the months of April 2011 through December 2011. The contracts range between 10,000 and 20,000 thousand cubic feet (“mcf”) per month each at fixed prices of $3.985 to $4.810 per mcf. We are obligated to purchase the agreed upon amount at the agreed upon prices plus a basis cost of $0.19 per mcf, a transportation cost of $0.36 per mcf and a pool fee of $0.08 per mcf. While we attempt to manage our exposure to energy costs through these natural gas commitments, we are unable to eliminate our exposure entirely. As such, an increase in energy costs could negatively impact our business, results of operations and financial condition.

We may be subject to work stoppages that could cause interruptions in the manufacturing of our products.

Approximately 40% of our employees are represented by labor unions. Labor organizing activities could result in additional employees becoming unionized and higher ongoing labor costs. We have collective bargaining agreements with the United Steelworkers Union of America (“USWA”) in Latrobe, Pennsylvania and the Teamsters Union (“Teamsters”) in Detroit, Michigan. Our collective bargaining agreements with the USWA and the Teamsters expire on August 1, 2013 and March 31, 2014, respectively. In addition, on August 1, 2011, our collective bargaining agreement with the USWA allows employees to renegotiate wages set by the collective bargaining agreement. If an agreement is not reached, the USWA workers have a limited right to engage in a strike as of this date. We expect that negotiations with the USWA will begin in July 2011. Although we do not currently anticipate workers engaging in a strike, there can be no assurance that we will be able to renegotiate wages in a manner acceptable to us and our unionized workers. Additionally, there can be no assurances that we will be able to negotiate the terms of any other expiring or expired agreement in a manner acceptable to us.

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On May 1, 2008, our unionized workers in Latrobe, Pennsylvania engaged in a strike for 81 days. This strike resulted in significant extra temporary costs and reduced our profitability. If our unionized workers were to engage in a strike, work stoppage or other slowdown again in the future, we could experience a significant disruption to our operations, which could have a material adverse effect on our business, results of operations and financial condition.

We are subject to various safety and health laws and regulations, and our failure to comply with them could result in costs, fines, sanctions and claims.

Various federal, state, local and international worker safety and health laws and regulations are applicable to our operations. We have used, and currently use and manufacture, substantial quantities of substances that are considered hazardous, extremely hazardous or toxic under worker safety and health laws and regulations. Ensuring the safety of our employees is of paramount importance to us. Although we implement controls and procedures designed to reduce the risk of health and safety issues, we could incur substantial costs, fines and civil or criminal sanctions, or personal injury and workers’ compensation claims as a result of violations or liabilities under these laws, which could adversely affect our business, results of operations and financial condition.

We are subject to environmental laws and regulations, and our failure to comply with them could result in costs, fines, sanctions and claims.

We are subject to numerous domestic and international environmental laws and regulations that govern, among other things, the generation, use, handling, treatment, storage and disposal of hazardous substances and wastes, the discharge of pollutants, including air emissions and wastewaters and the investigation and remediation of contaminated soil and groundwater. These laws are constantly evolving and many are becoming increasingly stringent. Under certain environmental laws, we could be required to investigate and remediate the effects of the release or disposal of materials both at sites associated with past and present operations and at third-party sites where wastes generated by our operations were disposed. Historically, we have been involved in the investigation and remediation of some of our sites and have previously been identified as a potentially responsible party (“PRP”). We cannot assure you that we will not be named as a PRP at third-party sites in the future or that the costs associated with such an investigation or remediation of current or future sites would not have a material adverse effect on our business, results of operations and financial condition.

Certain environmental laws and regulations require our facilities to operate under permits that are subject to renewal or modification. These laws, regulations and permits can require expensive pollution control equipment or operational changes to limit actual or potential impacts to the environment. Violations of these laws, regulations or permits can also result in the imposition of substantial penalties and permit revocations. In addition, we could incur substantial cleanup costs, fines and civil or criminal sanctions or third-party property damage or personal injury claims as a result of violations or liabilities under these laws or non-compliance with environmental permits required at our facilities. Although we strive to operate and maintain our facilities in compliance with applicable environmental laws and regulations, we may in the future fail to comply, which could have a material adverse effect on our business, results of operations and financial condition.

From time to time, we are a party to lawsuits and other proceedings involving alleged violations of, or liabilities arising from, environmental laws. When our liability is probable and we can reasonably estimate our costs, we record environmental liabilities in our financial statements. In many cases, we are not able to determine whether we are liable, or if liability is probable, to reasonably estimate the loss or range of loss. Estimates of our liability remain subject to additional uncertainties, including the nature and extent of site contamination, available remediation alternatives, the extent of corrective actions that may be required and the participation, number and financial condition of other PRPs, as well as the extent of their responsibility for the remediation. We intend to adjust our accruals to reflect new information as appropriate. Future adjustments could have a material adverse effect on our results of operations in a given period, but we cannot reliably predict the amounts of such future adjustments. At March 31, 2011, we had reserves of $0.2 million for environmental matters.

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Additionally, future developments, administrative actions or liabilities relating to environmental matters could have a material adverse effect on our business, results of operations and financial condition.

New and pending legislation or regulation of carbon dioxide and other greenhouse gas emissions may have a material adverse impact on our results of operations, financial condition and cash flows.

Our manufacturing processes, and the manufacturing processes of many of our suppliers and customers, are energy intensive and generate carbon dioxide and other greenhouse gases. Political and scientific debates related to the impacts of emissions of carbon dioxide and other greenhouse gases on the global climate are ongoing. On January 2, 2011, new United States Environmental Protection Agency rules regulating greenhouse gas emissions from certain large industrial plants came into effect. While the ultimate impact of the new greenhouse gas emissions rules is not yet known, it is possible that these new rules could have a material adverse effect on our results of operations and financial condition. Additional regulation or legislation aimed at reducing carbon dioxide and greenhouse gas emissions, such as a “cap-and-trade program,” is currently being considered in the United States and globally. Such regulation or legislation, if adopted or enacted in a more demanding form, could also have a material adverse effect on our business, results of operations and financial condition.

We have significant fixed costs and our profitability is highly sensitive to changes in sales volumes and production levels.

We have made substantial capital investments in our plants and equipment and have significant fixed costs. In addition, many of our other manufacturing costs, such as labor, maintenance and supplies, which are often thought of as variable, have a significant fixed cost element. Our profitability is dependent on our ability to produce sufficient volumes to recover our fixed costs and to spread those costs across the greatest possible volume of product sales and production levels. Therefore, profitability is very sensitive to changes in sales volumes and production levels, and relatively small changes in sales volumes and production levels can result in significant variations in earnings, both upward and downward. Consequently, small decreases in our sales volume and production levels may adversely affect our business, results of operations and financial condition.

We are reliant upon critical manufacturing equipment and sufficient capacity for certain testing procedures, the failure of which could disrupt our operations and adversely affect our results of operations and financial condition.

Our manufacturing processes are complex. These processes are dependent upon certain critical equipment and testing procedures that are used to manufacture specialty metals and alloys, for which there may be limited or no production alternatives. This risk is particularly relevant for our 30-ton VIM furnaces that are critical to the manufacture of products for commercial aerospace and defense applications. We have experienced in the past, and we may possibly experience in the future, prolonged periods of reduced production due to unplanned equipment failures and insufficient capacity for certain testing procedures. We could incur significant repair or replacement costs in the event of those failures. Any equipment failures or the cost to repair or replace our equipment could result in lost sales or increased costs and consequently could adversely affect our business, results of operations and financial conditions.

We are dependent on third-party services that are subject to price and availability fluctuations and variations in quality.

We often depend on third parties to provide outside material processing services that may be critical to the manufacture of our products, including certain testing procedures and additional melting, forging and other processes when we do not have sufficient capacity. Purchase prices and availability of these services are subject to volatility. At any given time, we may be unable to obtain these critical services on a timely basis, at acceptable prices, or on other acceptable terms, if at all. Further, if an outside processor is unable to produce to required specifications, our additional cost to cure such a deficiency may negatively impact our margins, which could

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negatively affect our business, results of operations and financial condition. Additionally, the quality of these third-party manufacturing processes may vary from the quality of our internal manufacturing processes, which could lead to product quality claims and could harm our reputation within the specialty metals industry. See “—Product liability and product quality claims could adversely affect our operating results.”

We may fail to implement our strategic capital projects successfully, which could adversely impact our results of operations and keep us from achieving our goals.

From time to time, we undertake strategic capital projects in order to expand and upgrade our facilities and operational capabilities. Our ability to achieve the anticipated increase in net sales and capacity or otherwise realize acceptable returns on these investments or other strategic capital projects that we may undertake is subject to a number of risks, many of which are beyond our control, including a variety of market, operational, permitting and labor related factors. In addition, the cost to implement any given strategic capital project ultimately may prove to be greater than originally anticipated. If we are not able to achieve the anticipated results from the implementation of any of our strategic capital projects, such as the expansion of our capacity to produce titanium wire and edgewire, or if we incur unanticipated implementation costs, our business, results of operations and financial condition may be adversely affected and we may not achieve our goals.

Our business requires substantial capital investments and our failure or inability to make such investments could adversely affect our business.

We must make regular, substantial capital investments and changes to our manufacturing processes to lower production costs, improve productivity, satisfy customer demand, manufacture new or improved products and remain competitive. Several of our manufacturing steps are currently operating near maximum capacity due to heightened market demand and may require capital investments for expansion. We may not be in a position to take advantage of business opportunities or respond to competitive pressures if we fail to update, replace or make additions to our equipment or our manufacturing processes in a timely manner. We cannot be certain that we will have sufficient internally generated cash or acceptable external financing to make necessary capital expenditures in the future. Our inability to make investments could adversely affect our ability to compete, which could adversely affect our business, results of operations and financial condition.

We have a concentration of manufacturing locations in Latrobe, Pennsylvania.

A significant portion of our manufacturing and production facilities are located in Latrobe, Pennsylvania. It is possible that we could experience prolonged periods of reduced production due to unforeseen catastrophic events, such as power outages, explosions, fires, floods, accidents and severe weather conditions, occurring in or around our manufacturing facilities in Latrobe, Pennsylvania. In the event of a business interruption at our Latrobe facilities, we may be unable to shift manufacturing capabilities to alternate locations, accept materials from suppliers or meet customer shipment needs, among other severe consequences. As a result, our business, results of operations and financial condition could be materially adversely affected.

Price volatility and availability of the products we globally source and distribute could affect the operating results of our Distribution segment.

In our Distribution segment, we purchase steels and other metals from our suppliers and apply value-added processing and finishing at our facilities prior to shipment to our customers. The prices for and availability of these products are subject to volatile market conditions. These market conditions often are affected by factors beyond our control, such as overall economic conditions. Significant disruptions in the supply of the necessary raw materials to other specialty metal manufacturers could impair their ability to manufacture the products we require in our Distribution segment. Additionally, while we are able to pass along any price increases by modifying the prices we charge our distribution customers, price increases could affect the amount of product that we sell. As a result, our business, results of operations and financial condition could be negatively affected.

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We may incur costs and liabilities as a result of current or future litigation and claims.

We are defending various claims and legal actions that have been or may be asserted against us relating to the conduct of our businesses, including those pertaining to labor violations. Due to the uncertainties of litigation, we can give no assurance that we will prevail on all claims made against us in the lawsuits that we currently face or that additional claims based on labor, health and safety and environmental regulation violations or other matters will not be made against us in the future. The outcome of litigation cannot be predicted, and some of these lawsuits, claims or proceedings may be determined adversely to us. The cost of litigation or the resolution in any reporting period of one or more of these matters could have a material adverse effect on our results of operations for that period. We can give no assurance that any other matters brought in the future will not have a material adverse effect on our business, results of operations and financial condition.

Product liability and product quality claims could adversely affect our operating results.

We produce high-performance, specialty metals and alloys that are frequently used in highly demanding applications within the commercial aerospace, industrial, defense, oil and gas exploration and production and power generation markets. Failure of the materials that are included in our customers’ applications could give rise to substantial product liability claims. There can be no assurance that our insurance coverage will be adequate or continue to be available on terms acceptable to us. We have a complex manufacturing process necessary to meet our customers’ product specifications. We are also required to adhere to various third-party quality certifications and qualifications and to perform sufficient internal quality reviews to ensure compliance with established standards. If we fail to meet a customer’s specifications for their products, we may be subject to product quality costs and claims. These costs are generally not insured. The impacts of product liability and quality claims could adversely affect our business, results of operations, financial condition and reputation within the specialty metals industry.

We may incur costs and liabilities due to liability retentions, exclusions or limitations in our insurance coverage.

We maintain various forms of insurance, including insurance covering claims related to our properties, risks associated with our operations and insurance for our directors and officers. Our existing property, pollution, legal liability and liability insurance coverages contain deductibles, self-insured retentions, exclusions and limitations on coverage. From time to time, in connection with renewals of insurance, we have experienced additional exclusions and limitations on coverage, larger self-insured retentions and deductibles and significantly higher premiums. As a result, in the future our insurance coverage may not cover claims to the extent that it has in the past and the costs that we incur to procure insurance may increase significantly, either of which could have an adverse effect on our business, results of operations and financial condition.

Our intellectual property rights may be inadequate to protect our business.

We attempt to protect our intellectual property rights through a combination of patent, trademark, and trade secret laws, as well as licensing agreements and third-party nondisclosure and assignment agreements. Because of the differences in foreign laws concerning proprietary rights, our intellectual property rights may not receive the same degree of protection in foreign countries as they would in the United States. Our failure to obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect on our business, results of operations and financial condition.

We own patents in the United States relating to certain existing and proposed products and processes. The patents we own could be challenged, invalidated or circumvented by others and may not be of sufficient scope or strength to provide us with any meaningful protection or commercial advantage. Further, we cannot assure you that competitors will not infringe our patents, or that we will have adequate resources to enforce our patents.

We also rely on unpatented proprietary technology. It is possible that others will independently develop the same or similar technology or otherwise obtain access to our unpatented technology. To protect our trade secrets

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and other proprietary information, we require certain employees, consultants, advisors and collaborators to enter into confidentiality agreements. We cannot assure you that these agreements will provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information. If we are unable to maintain the proprietary nature of our technologies, we could be materially adversely affected.

We rely on our trademarks, trade names, and brand names to distinguish our products from the products of our competitors, and have registered some of these trademarks. Third parties may challenge our use of our trademarks. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in loss of brand recognition, and could require us to devote resources to advertising and marketing new brands. Further, we cannot assure you that competitors will not infringe our trademarks, or that we will have adequate resources to enforce our trademarks.

If third parties claim that we infringe upon their intellectual property rights, our operating profits could be adversely affected.

We face the risk of claims that we have infringed third parties’ intellectual property rights.

Any claims of intellectual property infringement, even those without merit, could:

• be expensive and time consuming to defend;

• cause us to cease making or using products that incorporate the challenged intellectual property;

• require us to reengineer or rebrand our products, if feasible;

• divert management’s attention and resources; or

• require us to enter into royalty or licensing agreements in order to obtain the right to use a third-party’s intellectual property.

Any royalty or licensing agreements, if required, may not be available to us on acceptable terms or at all. A successful claim of infringement against us could result in our being required to pay significant damages, enter into costly license or royalty agreements, or stop the sale of certain products, any of which could have a negative impact on our operating profits and harm our future prospects.

We may fail to implement our acquisition and strategic alliance strategy successfully.

We consider acquisition and other business combination opportunities as part of our overall business strategy. From time to time, our management may hold discussions with management of other companies to explore such opportunities. As a result, the relative makeup of our businesses is subject to change. Acquisitions and other business combinations involve various inherent risks, such as difficulties in integrating the operations, technologies, products and personnel of the acquired companies, diversion of management’s attention from existing operations, difficulties in entering markets in which we have limited or no direct prior experience, dependence on unfamiliar supply chains, insufficient net sales to offset increased expenses associated with acquisitions, loss of key employees of the acquired companies, inaccurate assessment of undisclosed liabilities, including environmental liabilities, difficulties in realizing projected efficiencies, synergies and cost savings, and increases in our debt or limitation in our ability to access additional capital when needed.

Defined benefit pension plans to which we contribute may become underfunded.

Our United States qualified defined benefit pension plan was fully funded in accordance with the requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”), and the Internal Revenue Code, as of March 31, 2011. A significant decline in the value of plan investments in the future or unfavorable

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changes in laws or regulations, including the Pension Protection Act of 2006, that govern pension plan funding could materially change the timing and amount of required pension funding. Depending on the timing and amount, a requirement that we change the contemplated funding of our defined benefit pension plan could adversely affect our cash flow and our business, results of operations and financial condition. Moreover, we cannot assure you that we will have the financial resources to fund any additional required contributions to our pension plan.

Our cost of providing retiree medical and life insurance benefits is unfunded and could adversely affect our cash flow and financial condition, which may place us at a competitive disadvantage.

We provide medical and life insurance benefits to some of our retired union employees. Most of the cost of these benefits is paid by us and is not covered by insurance. The cost of these benefits has not been funded in advance. Depending on the timing and amount, our funding of these costs could adversely affect our cash flow and financial condition. In addition, some domestic and many international competitors do not provide such benefits or have better funded defined benefit retiree health care and life insurance coverage. Other international competitors operate in jurisdictions with government sponsored health care plans that may offer them a cost advantage. Consequently, we may have to expend more funds than some of our competitors with respect to retiree benefits. As a result, we may not be able to pursue or we may have less flexibility in pursuing opportunities, strategies or acquisitions that our competitors can undertake, which could adversely affect our business, results of operations and financial condition.

The recently enacted legislation on healthcare reform and proposed amendments thereto could increase the healthcare benefits required to be provided by us and cause our compensation costs to increase.

The recently enacted healthcare legislation and proposed amendments thereto contain provisions which could materially increase our future healthcare costs. While the legislation’s ultimate impact is not yet known, it is possible that these changes could significantly increase our compensation costs, which would reduce our net income and adversely affect our cash flows, business, results of operations and financial condition.

Changes in the spending policies or budget priorities of the U.S. government, and the Department of Defense in particular, or delays in the passage of the U.S. government budget, could cause us to lose sales.

Changes in U.S. government spending could affect our operating performance and lead to an unexpected loss of sales. The loss or significant reduction in funding by the DoD for any of the large programs in which we participate could also result in a material decrease to our future sales, earnings and cash flows. Congress usually appropriates funds to agencies, such as the DoD, who then allocate funds for a given program or contract on a September 30 fiscal year basis, even though contract periods of performance may extend over many years. Consequently, at the beginning of a program, the contract may be only partially funded, with additional funds committed to the contract by the agency only as appropriations are made by Congress for future fiscal years. The factors that could impact U.S. government spending and reduce our federal government contracting business include:

• policy and/or spending changes implemented by the current administration;

• a significant decline in, or reallocation of, spending by the U.S. government, in general, or by the DoD, in particular;

• changes, delays or cancellations of U.S. government programs, requirements or policies;

• the adoption of new laws or regulations that affect companies that provide products to the U.S. government;

• U.S. government shutdowns or other delays in the government appropriations process;

• changes in the political climate, including with regard to the funding or operation of the products we offer;

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• developments in Iraq or Afghanistan, including the sustained withdrawal of troops, or other geopolitical developments that affect demand for the products we offer; and

• general economic conditions, including a slowdown in the economy or unstable economic conditions in the United States or in the countries in which we operate.

These or other factors could cause U.S. government agencies to reduce their purchases under our contracts, to exercise their right to terminate our contracts in whole or in part, or decline to exercise options to renew our contracts.

A delay in the passage of the U.S. government’s budget could delay procurement of the products we provide and could have an adverse effect on our future sales. In years when the U.S. government does not complete its budget process before the end of its fiscal year on September 30, government operations are typically funded pursuant to a “continuing resolution” that authorizes agencies of the U.S. government to continue to operate but does not authorize new spending initiatives. When the U.S. government operates under a continuing resolution, government agencies may delay or cancel funding we expect to receive from customers on work we are already performing. Additionally, new initiatives and programs are likely to be delayed or cancelled, which could materially adversely affect our business, results of operations and financial condition.

The loss of any key members of our senior management team could disrupt our operations and harm our business.

Our success depends, in part, on the efforts of certain key individuals, including the members of our senior management team, who have significant industry experience. If, for any reason, our senior executives do not continue to be active in management, our business, results of operations or financial condition could be adversely affected. We may not be able to attract and retain additional qualified senior personnel with significant specialty metals and alloys industry experience as needed in the future. Failure to continue to attract these individuals at reasonable compensation levels could have a material adverse effect on our business. Although we do not anticipate that we will have to replace any of these individuals in the near future, the loss of the services of any of our key employees could disrupt our operations and have a material adverse effect on our business, results of operations and financial condition.

We depend on our information technology infrastructure to support the current and future information requirements of our operations.

We rely on our information technology infrastructure, including hardware, network, software, people and processes, to provide useful information to support assessments and conclusions about operating performance. Our inability to produce relevant and/or reliable measures of operating performance in an efficient, cost-effective and well-controlled fashion could adversely affect our business, results of operations and financial condition.

Risks associated with export sales could materially adversely affect our results.

A portion of our net sales are to customers in foreign jurisdictions. Risks associated with export sales include: political and economic instability, including weak conditions in the world’s economies; accounts receivable collection; export controls; changes in legal and regulatory requirements; policy changes affecting the markets for our products; changes in tax laws and tariffs; and exchange rate fluctuations (which may affect sales to international customers and the value of profits earned on export sales when converted into U.S. dollars). Any of these factors could materially adversely affect our business, results of operations and financial condition.

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We are subject to the Foreign Corrupt Practices Act and a determination that we violated this act may affect our business and operations adversely.

As a U.S. corporation, we are subject to the regulations imposed by the U.S. Foreign Corrupt Practices Act (the “FCPA”), which generally prohibits U.S. companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business. Any determination that we have violated the FCPA could have a material adverse effect on our business, results of operations and financial condition.

Risk Factors Relating to this Offering

Management may invest or spend our net proceeds from this offering in ways that may not yield an acceptable return to you.

We plan to use our net proceeds from this offering for debt reduction and general corporate purposes. We will have broad discretion as to how we will spend the proceeds, and you will have no advance opportunity to evaluate our decisions and may not agree with the manner in which we spend the proceeds. We may not be successful investing the proceeds from this offering in either our operations or external investments.

There has been no prior market for our common stock. The market price for our common stock could be volatile, which could cause the value of your investment to decline.

Prior to this offering, there has been no public market for our common stock, and we cannot assure you that an active trading market will develop or be sustained after this offering. The market price for our common stock will vary from the initial public offering price after trading commences, and you may not be able to resell your shares of common stock at or above the initial offering price. The stock market has experienced extreme volatility, and this volatility has often been unrelated to the operating performance of particular companies. The initial public offering price will be determined by negotiation between us and the underwriters based upon a number of factors and may not be indicative of future market prices for our common stock. This could result in substantial losses for investors. The market price of our common stock may fluctuate significantly in response to a number of factors, some of which are beyond our control. These factors include:

• increased competition in the specialty metals and alloys industry;

• the cyclical nature of the specialty metals and alloys industry and the end markets it serves;

• the availability and cost of raw materials and energy;

• environmental regulations;

• equipment failures;

• product failures;

• the loss of key personnel;

• labor stoppages or strikes;

• our operating and financial performance and prospects;

• our quarterly or annual earnings or those of other companies in our industry;

• the public’s reaction to our press releases, other public announcements and filings with the Securities and Exchange Commission (the “SEC”);

• changes in earnings estimates or recommendations by research analysts who track our common stock or the stock of other companies in our industry;

• strategic actions by us or our competitors, including the entrance to the market of new competition;

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• new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

• changes in accounting standards, policies, guidance, interpretations or principles;

• changes in general economic conditions in the United States and global economies or financial markets, including such changes resulting from war or incidents of terrorism; and

• sales of our common stock by us, our principal stockholders or members of our management team.

In addition, in recent years, the stock market has experienced significant price and volume fluctuations. This volatility has had a significant impact on the trading price of securities issued by many companies, including companies in our industry. The changes frequently occur irrespective of the operating performance of the affected companies. Hence, the trading price of our common stock could fluctuate based upon factors that have little or nothing to do with our business.

Future sales of our common stock may cause our stock price to decline.

If our stockholders sell substantial amounts of our common stock in the public market following this offering, the market price of our common stock could decline. These sales might also make it more difficult for us to sell additional equity securities at a time and price that we deem appropriate. Based on shares outstanding as of March 31, 2011, upon completion of this offering, we will have              shares of common stock outstanding. Of these outstanding shares, all of the shares of our common stock sold in this offering will be freely tradable in the public market. The remaining              shares of our common stock will be restricted securities as defined in Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”).

We, each of our officers and directors and certain existing stockholders have agreed that, subject to limited exceptions, for a period of 180 days from the date of this prospectus, we and they will not, without the prior written consent of Credit Suisse Securities (USA) LLC, FBR Capital Markets & Co., Jefferies & Company, Inc. and KeyBanc Capital Markets Inc., dispose of or hedge any shares of our common stock or any securities convertible into or exchangeable for our common stock. However, Credit Suisse Securities (USA) LLC, FBR Capital Markets & Co., Jefferies & Company, Inc. and KeyBanc Capital Markets Inc., in their sole discretion, at any time without notice, may waive these restrictions and release any of the securities subject to these lock-up agreements. The 180-day lock-up period is subject to a limited extension in certain circumstances described under “Underwriting.”

Subject to the lock-up agreements, these              restricted securities may be sold into the public market from time to time without registration in accordance with the Securities Act to the extent permitted under Rule 144 and subject to Rule 144, limitations on sales by affiliates.              shares will be available for sale              days after the date of this prospectus pursuant to Rule 144; of these shares, approximately     % would be available for sale under Rule 144, which imposes no volume or other limits. All of these restricted shares will be eligible for sale under Rule 144 following expiration of the lock-up agreements described above subject to limitations on sales by affiliates. In addition, commencing              days after the date of this prospectus, stockholders holding              outstanding shares of these restricted securities will have registration rights which could allow those holders to sell their shares freely through a future registration statement filed under the Securities Act. See “Shares Eligible for Future Sale.”

You will experience immediate and substantial dilution as a result of this offering and may experience additional dilution in the future.

The initial public offering price is substantially higher than the book value per share of our outstanding common stock. As a result, you will incur immediate and substantial dilution of $             per share, based on an assumed initial public offering price of $             per share, the mid-point of the price range set forth on the cover of this prospectus. For additional information, see the section of this prospectus entitled “Dilution.”

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As a public company, we will be required to meet periodic reporting requirements under SEC rules and regulations. Complying with federal securities laws as a public company is expensive, and we will incur significant time and expense enhancing, documenting, testing and certifying our internal control over financial reporting. Any deficiencies in our financial reporting or internal controls could adversely affect our business and the trading price of our common stock.

SEC rules require that, as a publicly-traded company following completion of this offering, we file periodic reports containing our financial statements within a specified time following the completion of quarterly and annual periods. Prior to this offering, we have not been required to comply with SEC requirements to have our financial statements completed and reviewed or audited within a specified time and, as such, we may experience difficulty in meeting the SEC’s reporting requirements. Any failure by us to file our periodic reports with the SEC in a timely manner could harm our reputation and reduce the trading price of our common stock.

As a public company we will incur significant legal, accounting, insurance and other expenses. The Sarbanes-Oxley Act of 2002, as well as compliance with other SEC and NYSE rules, will increase our legal and financial compliance costs and make some activities more time-consuming and costly. Furthermore, once we become a public company, SEC rules require that our chief executive officer and chief financial officer periodically certify the existence and effectiveness of our internal control over financial reporting. This process will involve considerable time and expense, may strain our internal resources and have an adverse impact on our operating costs.

During the course of our testing, we may identify deficiencies that would have to be remediated to satisfy the SEC rules for certification of our internal control over financial reporting. As a consequence, we may have to disclose in periodic reports we file with the SEC significant deficiencies or material weaknesses in our system of internal controls. The existence of a material weakness would preclude management from concluding that our internal control over financial reporting is effective, and would preclude our independent auditors from issuing an unqualified opinion that our internal control over financial reporting is effective. In addition, disclosures of this type in our SEC reports could cause investors to lose confidence in our financial reporting and may negatively affect the trading price of our common stock. Moreover, effective internal controls are necessary to produce reliable financial reports and to prevent fraud. If we have deficiencies in our disclosure controls and procedures or internal control over financial reporting, there may be a negative impact on our business, results of operations and reputation.

Anti-takeover provisions in our certificate of incorporation and by-laws and Delaware law could prohibit a change of control that our stockholders may favor and could negatively affect our stock price.

Provisions in our certificate of incorporation and by-laws may make it more difficult and expensive for a third-party to acquire control of us even if a change of control would be beneficial to the interests of our stockholders. These provisions could discourage potential takeover attempts and could adversely affect the market price of our common stock. These provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. For example, our certificate of incorporation and by-laws:

• permit our board of directors to issue preferred stock with such terms as they determine, without stockholder approval;

• prohibit cumulative voting for directors;

• prohibit stockholders from taking action by written consent;

• provide that only one third of the members of the board are elected at each stockholders meeting and prohibit removal without cause;

• require advance notice for stockholder proposals and director nominations; and

• contain limitations on convening stockholder meetings.

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We are also subject to the provisions of Section 203 of the Delaware General Corporation Law (the “DGCL”), which limits business combination transactions with stockholders of 15% or more of our outstanding voting stock that our board of directors has not approved. These provisions make it more difficult for stockholders or potential acquirers to acquire us without negotiation and could discourage potential takeover attempts and could adversely affect the market price of our common stock.

Risk Factors Relating to Our Capital Structure

Our indebtedness could adversely affect our financial health.

We have, and will continue to have, indebtedness. On March 31, 2011, after giving effect to this offering and the use of proceeds therefrom, we would have had total indebtedness of $             million.

Our indebtedness could have important consequences to you. For example, it could:

• increase our vulnerability to general adverse economic and industry conditions;

• require us to dedicate a portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, research and development efforts and other general corporate purposes;

• increase our vulnerability to and limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

• expose us to the risk of increased interest rates as borrowings under our senior secured revolving credit facility are subject to variable rates of interest;

• place us at a competitive disadvantage compared to our competitors that have less debt; and

• limit our ability to borrow additional funds.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future because the terms of the agreements governing our outstanding indebtedness do not fully prohibit us or our subsidiaries from doing so. If new indebtedness is added to our and our subsidiaries’ current debt levels, the related risks that we and they now face could increase.

Covenants and events of default in our debt instruments could limit our ability to undertake certain types of transactions and adversely affect our liquidity.

Our senior secured revolving credit facility and senior secured term loan contain negative and financial covenants that may limit our financial flexibility and ability to undertake certain types of transactions. For instance, we are subject to negative covenants that restrict our activities, including restrictions on creating liens; engaging in mergers, consolidations, reorganizations and acquisitions or sales of assets; incurring additional indebtedness; providing guaranties; changing the nature of the business; making loans and investments; paying certain dividends; making certain prepayments of indebtedness; and engaging in certain transactions with affiliates. If we fail to satisfy the covenants set forth in our senior secured revolving credit facility and our senior secured term loan or another event of default occurs under either the credit facility or the term loan, the maturity of the loans could be accelerated or we could be prohibited from borrowing from the senior secured revolving credit facility for our working capital needs. If the loans are accelerated and we do not have sufficient cash on hand to pay all amounts due, we could be required to sell assets, to refinance all or a portion of our indebtedness or to obtain additional financing. Refinancing may not be possible and additional financing may not be available on commercially acceptable terms, or at all. If we cannot borrow under the senior secured revolving credit facility to meet our working capital needs, we would need to seek additional financing, if available, or curtail our operations.

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Our existing indebtedness bears interest at a variable rate and as such, fluctuations in the interest rate affect our interest rate expense.

As of March 31, 2011, we had existing debt of approximately $168.5 million, consisting entirely of our senior secured revolving credit facility and senior secured term loan, each that bore interest at a variable rate. By its nature, a variable interest rate will move up or down based on changes in the economy and other factors, all of which are beyond our control. If interest rates increase, our interest expense could increase, affecting earnings and reducing cash flows available for working capital, capital expenditures and acquisitions.

We do not anticipate paying dividends on our capital stock in the foreseeable future.

We do not anticipate paying any dividends to stockholders in the foreseeable future. We intend to retain all future earnings for the operation and expansion of our business and the repayment of outstanding debt. In addition, the terms of our senior secured revolving credit facility limit our ability to pay dividends on our common stock. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

Conflicts of interest may arise because some of our directors are principals of our principal stockholders.

Upon the completion of this offering, representatives of Hicks and Watermill will occupy four of the seven seats on our board of directors. Those entities and their respective affiliates may invest in entities that directly or indirectly compete with us or companies in which they are currently invested may already compete with us. As a result of these relationships, when conflicts arise between the interests of those entities or their respective affiliates and the interests of our stockholders, these directors may not be disinterested. The representatives of Hicks and Watermill on our board of directors, by the terms of our certificate of incorporation, are not required to offer us any transaction opportunity of which they become aware and could take advantage of any such opportunity for themselves or offer it to other companies in which they have an investment, unless such opportunity is expressly offered to them solely in their capacity as our director.

After this offering, our principal stockholders will continue to have substantial control over us.

After the corporate recapitalization but prior to this offering, Toolrock controlled approximately 90.5% of our common equity on a fully diluted basis and, upon completion of the offering, will hold approximately             % of our common stock. Immediately following the completion of this offering, Toolrock will be dissolved under a plan of dissolution pursuant to which the cash and shares of our common stock received by Toolrock in the recapitalization will be distributed to the members of Toolrock. See “Corporate Recapitalization.” As a result, Hicks, Watermill and Sankaty will collectively hold approximately             % of all our common stock outstanding and will be able to exert a significant degree of influence or actual control over our management and affairs. Additionally, they will control matters requiring stockholder approval, including the election of directors, a merger, consolidation or sale of all or substantially all of our assets, and any other significant transaction. The interests of these stockholders may not always coincide with our interests or the interests of our other stockholders. For instance, this concentration of ownership may have the effect of delaying or preventing a change in control of us otherwise favored by our other stockholders and could depress our stock price.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements preceded by, followed by or that include, the words “may,” “could,” “would,” “should,” “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project,” “intend,” or similar expressions. These statements include, among others, statements regarding our expected business outlook, anticipated financial and operating results, our business strategy and means to implement the strategy, our objectives, the amount and timing of capital expenditures, the likelihood of our success in expanding our business, financing plans, budgets, working capital needs and sources of liquidity.

Forward-looking statements are only predictions and are not guarantees of performance. These statements are based on our management’s beliefs and assumptions, which in turn are based on currently available information. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our products, the expansion of product offerings geographically or through new applications, the pricing of the products that we manufacture and distribute, the timing and cost of planned capital expenditures, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Forward-looking statements also involve risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Many of these factors are beyond our ability to control or predict. Such factors include, but are not limited to, the following:

• current global and domestic economic conditions;

• fluctuations in demand for specialty metals and alloys;

• intense competition in the specialty metals and alloys industry;

• decreased demand for our customers’ or their customers’ products;

• unfavorable conditions in the commercial aerospace, defense, oil and gas exploration and production, power generation and industrial markets;

• adverse conditions in the availability and cost of raw materials;

• potential destocking measures implemented by our customers during periods of economic downturns;

• political or social turmoil, as well as other external factors that we may not be able to control;

• developing and marketing new products;

• substitution of other materials for specialty metals and alloys;

• shortage of supply of energy, an increased cost of energy or exposure to credit and market risks as a result of attempts to hedge price fluctuations of certain energy costs;

• work stoppages that cause interruptions in the manufacturing and distribution of our products;

• safety, health and environmental regulations, including new and pending legislation related to greenhouse gas emissions;

• significant fixed costs and sensitivity to changes in sales volume;

• failure of critical manufacturing equipment and testing procedures;

• our dependence on third-party services that are subject to price and availability fluctuations;

• our level of capital investment and implementation of our capital expenditure projects;

• our concentration of manufacturing locations in Latrobe, Pennsylvania;

• pricing volatility and availability of the products we distribute in our Distribution segment;

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• litigation or other claims;

• our exposure to product liability and product quality claims;

• incurrence of costs and liabilities due to liability retentions, exclusions or limitations in our insurance coverage;

• our inability to protect our intellectual property and the risk of claims that we have infringed on the intellectual property of others;

• failure to implement our acquisition and strategic alliance strategy successfully;

• underfunding of our defined benefit pension plans;

• the costs of funding the medical and life insurance benefits we provide our retired union employees;

• a potential impact on our future healthcare costs due to recently enacted legislation on healthcare reform and proposed amendments thereto;

• changes in the spending or budget priorities of the U.S. government and the U.S. military;

• loss of key personnel, including members of senior management;

• our dependence on our information technology infrastructure and services that are subject to price and availability fluctuations;

• risks related to our export sales, including potential violations of the FCPA; and

• other factors described in this prospectus. See “Risk Factors.”

We believe the forward-looking statements in this prospectus are reasonable; however, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and except as required by law, we undertake no obligation to update any of them in light of new information or future events.

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CORPORATE RECAPITALIZATION

Prior to this offering, our principal stockholder, Toolrock, held approximately 90.5% of our common equity on a fully diluted basis in the form of Series A Preferred Stock and Series B Preferred Stock. Substantially all of our remaining common equity is owned by management and other key employees. Immediately prior to the completion of this offering, we will effect a recapitalization, including a reverse stock split. In the recapitalization, we anticipate the following transactions will occur.

Series A Preferred Stock. (i) All outstanding warrants for our Series A Preferred Stock, which are exercisable for 524,832 shares at a price of $0.01 per share, will be exercised, (ii) we will pay a preferential dividend on the Series A Preferred Stock in an aggregate amount of $             ($0.90 per share) and a special dividend on the Series A Preferred Stock in an aggregate amount of $             ($0.022635 per share), in each case in connection with the Series A Preferred Stock conversion, and (iii) the Series A Preferred Stock will be converted into voting common stock on a one-for-one basis.

Series B Preferred Stock. (i) We will pay $             million to the holders of Series B Preferred Stock pursuant to its terms, $             million of which represents accrued and unpaid dividends on the Series B Preferred Stock, and (ii) the Series B Preferred Stock will be converted into voting common stock on a one-for-one basis. In addition, pursuant to the terms of the Series B Securities Purchase Agreement, dated March 17, 2010, stockholders associated with Sankaty will receive fees payable in cash equal to $119,989.

Common Stock. All 1,620,993 outstanding shares of non-voting common stock outstanding will be converted into voting common stock on a one-for-one basis. All warrants to purchase 20,332 shares of voting common stock will be exercised.

Options. All 1,884,927 outstanding options to purchase shares of non-voting common stock will become exercisable for an equivalent number of shares of voting common stock at exercise prices ranging from $2.78 to $2.82 before giving effect to the reverse stock split discussed below.

Reverse Stock Split. Immediately following the exercise of the warrants and conversion of stock described above and prior to the completion of this offering we will effect a one-to-             reverse stock split. In connection with the reverse stock split, each outstanding option to purchase shares of voting common stock will be adjusted appropriately to give effect to the reverse stock split.

Dissolution of Toolrock. Immediately following the completion of this offering, Toolrock will be dissolved under a plan of dissolution pursuant to which the cash and shares of our common stock received by Toolrock in the recapitalization will be distributed to the members of Toolrock.

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USE OF PROCEEDS

We estimate that our net proceeds from the sale of              shares of our common stock in this offering will be approximately $             million, based on an assumed initial public offering price of $             per share, the mid-point of the price range set forth on the cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any proceeds from the sale of the shares being sold by the selling stockholders.

The following table illustrates the estimated sources and uses of net proceeds received by us in connection with this offering. The actual amounts set forth in the table and in the accompanying footnotes may differ at the time of the completion of this offering.

Sources		Uses
(dollars in millions)
Net proceeds from this offering(1)	$	Repayment of senior secured revolving credit facility(2)	$
		Repayment of senior secured term loan(3)
		Payment upon conversion of Series A Preferred Stock(4)
		Payment upon conversion of Series B Preferred Stock(5)
		Termination of monitoring and oversight agreements(6)
		Estimated fees and expenses
Total sources	$	Total uses	$

(1) A $1.00 increase (decrease) in the assumed initial public offering price of $             per share would increase (decrease) the net proceeds to us from this offering by $             million, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us and assuming no other change to the number of common shares offered by us as set forth on the cover page of this prospectus.

(2) Represents the repayment of a portion of our senior secured revolving credit facility, which bears interest at our option of either the greater of (i) Prime Rate as used by Wells Fargo, National Association (“Wells Fargo”) or the federal funds open rate plus 0.5%, plus up to 3.25% per year, or (ii) the adjusted Eurodollar rate used by the lender, plus up to 4.50% per year. During the fiscal year ended September 30, 2010, our senior secured revolving credit facility bore interest at a weighted average interest rate of 4.13%. The amounts owed under our senior secured revolving credit facility mature on March 6, 2013. See “Description of Indebtedness—Senior Secured Revolving Credit Facility.”

(3) Represents the payment of $             million to repay all outstanding principal and interest on our senior secured term loan and $             million of prepayment penalties associated with such repayment. Our senior secured term loan bears interest at the applicable margin of 13.5% plus the adjusted Eurodollar rate in effect with a minimum floor of 1.5%. Our senior secured term loan is payable in quarterly installments of $625,000, which commenced on December 31, 2010, and increases to $1.25 million quarterly installments starting on December 31, 2011, with the remaining balance due on September 6, 2013. See “Description of Indebtedness—Senior Secured Term Loan.”

(4) Represents the payment of dividends on our Series A Preferred Stock (including Series A Preferred Stock purchased pursuant to the outstanding Series A Preferred Stock warrants) required to convert our Series A Preferred Stock into common stock, which consists of (i) $             (or $0.022635 per share) as a special dividend, (ii) $             (or $0.90 per share) as a preferential dividend and (iii) a fee of $                     paid to stockholders associated with Sankaty. See “Corporate Recapitalization.”

(5) Represents the payment of $             million plus $             million of accrued but unpaid dividends on our Series B Preferred Stock required to convert our Series B Preferred Stock into common stock. The holders of our Series B Preferred Stock are entitled to receive dividends, which accrues at a rate of 15.0% per year, whether or not declared. See “Corporate Recapitalization.”

(6) Represents $             million to terminate and prepay our monitoring and oversight agreement with Hicks Holdings Operating LLC (“Hicks Operating”) and $             million to terminate and prepay our monitoring and oversight agreement with Watermill Management Company, LLC (“Watermill Management”). See “Certain Relationships and Related Party Transactions—Related Party Transactions—Hicks Monitoring and Oversight Agreement” and “Certain Relationships and Related Party Transactions—Related Party Transactions—Watermill Monitoring and Oversight Agreement.”

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DIVIDEND POLICY

We have not declared cash dividends on our common stock since our formation in November 2006. Upon completion of this offering, we intend to retain all future earnings for the operation and expansion of our business and the repayment of outstanding debt. Consequently, we do not anticipate paying cash dividends or making any other distributions on our common stock. The payment of dividends in the future, if any, will be at the discretion of our board of directors and will depend on our results of operations, capital requirements, financial condition, prospects, contractual arrangements, any limitations on the payment of dividends present in any current and future credit agreements and other factors that our board of directors may deem relevant. We are subject to covenants under our current senior secured revolving credit facility that restrict us from paying cash dividends in certain situations.

MARKET PRICE OF COMMON STOCK

There is no established trading market for our common stock. In connection with this offering, we intend to apply to have our common stock listed on the NYSE and to reserve the symbol “LAT.”

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of March 31, 2011, on an actual and as adjusted basis.

The “As Adjusted” column gives effect to (i) the corporate recapitalization as discussed further in “Corporate Recapitalization,” and (ii) the sale of our common stock in this offering at an initial public offering price of $             per share, the mid-point of the price range set forth on the cover of this prospectus, and after deducting estimated underwriting discounts and commissions and offering expenses payable by us and the use of proceeds therefrom as if each had occurred on that date.

You should refer to “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the notes thereto included elsewhere in this prospectus in evaluating the material presented below.

	As of March 31, 2011
	Actual			As Adjusted
	(dollars in thousands)
Cash and cash equivalents(1)		—			—
Senior secured revolving credit facility(2)	$	119,709		$
Long-term debt, including current portions:
Senior secured term loan(3)		48,750			—
Total long-term debt, including current portions	$	168,459
Stockholders’ equity:
Series A Preferred Stock, $0.01 par value		315			—
Series B Preferred Stock, $0.01 par value		121			—
Common stock, $0.01 par value		16
Treasury stock		(38	)
Note receivable—officer		(1,300	)
Additional paid-in capital		49,400
Accumulated other comprehensive loss		(32,158	)
Retained earnings		42,651
Total stockholders’ equity		59,007
Total capitalization	$	227,466		$

(1) Cash and cash equivalents are zero because we are subject to a daily cash sweep to pay down amounts outstanding under our senior secured revolving credit facility.

(2) Reflects the repayment of a portion of the amounts outstanding under our senior secured revolving credit facility upon the completion of this offering. See “Use of Proceeds.”

(3) Reflects the repayment of the entirety of our senior secured term loan upon the completion of this offering. See “Use of Proceeds.”

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DILUTION

If you invest in our common stock in this offering, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share and the pro forma as adjusted net tangible book value per share of common stock upon the completion of this offering.

Our net tangible book value as of March 31, 2011 was $             million, or $             per share of common stock. Net tangible book value per share represents the amount of tangible assets less liabilities divided by the number of shares of common stock outstanding before giving effect to this offering.

Net tangible book value dilution per share to new investors represents the difference between the amount per share paid by purchasers of shares of common stock in this offering and the net tangible book value per share of common stock immediately after the completion of this offering. After giving effect to the sale by us of             shares of common stock in this offering at an assumed public offering price of $             per share (the midpoint of the range set forth on the cover page of this prospectus), and after deducting estimated underwriting discounts and commissions and estimated offering expenses, our net tangible book value as of March 31, 2011 would have been $             million, or $             per share. This represents an immediate increase in net tangible book value of $             per share to existing stockholders and an immediate dilution in net tangible book value of $             per share to investors purchasing common stock in this offering, as illustrated in the following table:

Assumed initial public offering price per share	$
Net tangible book value per share as of March 31, 2011
Increase per share attributable to the sale of shares in this offering
Pro forma net tangible book value per share after this offering
Dilution per share to new investors	$

A $1.00 increase (decrease) in the assumed initial public offering price of $             per share would increase (decrease) our pro forma net tangible book value after this offering by $             million and (decrease) increase the dilution to new investors by $             per share, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us and assuming no other change to the number of common shares offered by us as set forth on the cover page of this prospectus.

The following table presents the differences between the existing stockholders and purchasers of shares in this offering with respect to the number of shares purchased from us, the total consideration paid and the average price paid per share as of March 31, 2011 as adjusted to give effect to our sale of              shares in this offering:

	Shares purchased			Total consideration			Average price per share
	Number	Percent		Amount	Percent
Existing stockholders			%	$		%	$
New investors
Total			%	$		%	$

Sales by the selling stockholders in this offering will reduce the number of shares held by existing stockholders to            , or approximately     % of the total shares of common stock outstanding after this offering, and will increase the number of shares to be purchased by new investors to             , or approximately     % of the total shares of common stock outstanding after this offering.

A $1.00 increase (decrease) in the assumed initial public offering price of $             per share would increase (decrease) the total consideration paid by new investors by $             million and the total consideration paid by all stockholders by $             million.

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SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth our selected consolidated financial data for the periods and as of the dates indicated. We derived the selected consolidated financial data for the fiscal years ended September 30, 2010, 2009 and 2008 and as of September 30, 2010 and 2009 from our audited consolidated financial statements included elsewhere in this prospectus. We derived the consolidated financial data for the periods from January 1, 2007 to September 30, 2007, from December 1, 2006 to December 31, 2006 and from January 1, 2006 to November 30, 2006 and as of September 30, 2008 and 2007 and December 31, 2006 from our audited consolidated financial statements not included in this prospectus. We derived the consolidated financial data for the six months ended and as of March 31, 2011 and 2010 from our unaudited consolidated financial statements included elsewhere in this prospectus.

For purposes of identification and description in our selected consolidated financial data, we refer to the Company as the “Predecessor” for all periods prior to our acquisition from Timken, which was accounted for as being effective as of the close of business on November 30, 2006. For all periods subsequent to this acquisition, we refer to the Company as the “Successor.” The consolidated financial data for all Successor periods is presented on a different cost basis than that for the Predecessor period and, therefore, is not comparable. In addition, pursuant to Rule 3-06 of Regulation S-X, our consolidated financial data for the fiscal year 2007 is represented by our results for the nine months ended September 30, 2007 as a result of a change in our fiscal year from a December 31 fiscal year end to a September 30 fiscal year end.

We have prepared our unaudited consolidated financial statements on the same basis as our audited consolidated financial statements and have included all adjustments, consisting of only normal recurring adjustments, that we consider necessary for a fair presentation of our financial position and operating results. The results for any interim period are not necessarily indicative of the results that may be expected for a full year.

The data presented below should be read in conjunction with, and are qualified in their entirety by reference to, “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the notes thereto included elsewhere in this prospectus. Our historical results are not indicative of results to be expected in any future periods.

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	Successor															Predecessor			Successor
	Fiscal Year Ended September 30,									Nine Months Ended September 30, 2007(1)			One Month Ended December 31, 2006			Eleven Months Ended November 30, 2006			Six Months Ended March 31,
(dollars in thousands, except per share data)	2010			2009			2008												2011			2010
							(Audited)												(Unaudited)
Statement of Operations Data:
Net sales	$	309,229		$	289,181		$	433,104		$	318,743		$	28,405		$	347,011		$	202,742		$	132,919
Cost of sales		254,431			267,832			328,411			267,394			29,845			278,720			161,578			118,331
Selling, general and administrative expenses		26,219			28,549			37,115			18,390			3,230			15,106			16,412			13,285
Income (loss) from operations		28,579			(7,200	)		67,578			32,959			(4,670	)		53,185			24,752			1,303
Other expense (income)		1,161			665			(1,465	)		454			46			46			663			490
Loss on extinguishment of debt		4,076			—			3,264			—			—			—			—			1,105
Interest expense		11,655			14,205			15,773			13,363			1,339			4,302			7,278			5,469
Income (loss) before income taxes		11,687			(22,070	)		50,006			19,142			(6,055	)		48,837			16,811			(5,761	)
Income tax expense (benefit)		4,417			(7,259	)		17,859			6,198			(2,382	)		19,047			6,391			(2,189	)
Net income (loss)	$	7,270		$	(14,811	)	$	32,147		$	12,944		$	(3,673	)	$	29,790		$	10,420		$	(3,572	)
Income (loss) per share:
Income (loss) per share—basic	$	0.16		$	(20.88	)	$	0.98		$	0.41		$	(0.12	)				$	0.21		$	(3.44	)
Income (loss) per share—diluted	$	0.16		$	(20.88	)	$	0.98		$	0.41		$	(0.12	)				$	0.21		$	(3.44	)
Number of common shares used in the per share calculations:
Basic		1,107			710			7,875			31,500			31,500						1,160			1,053
Diluted		34,122			710			31,515			31,500			31,500						33,274			1,053
Balance Sheet Data (at period end):
Cash and cash equivalents(2)		—			—			—			—			—						—			—
Working capital(3)	$	154,206		$	155,368		$	221,297		$	205,582		$	211,221					$	213,784		$	135,204
Property, plant & equipment, net		69,321			66,588			63,196			18,212			14,235						70,780			66,409
Intangible assets, net and goodwill		5,705			7,467			8,409			5,138			6,779						5,044			6,740
Total assets		338,147			299,789			370,220			301,873			323,914						409,219			292,342
Revolving line of credit		71,140			102,971			163,076			106,140			101,593						119,709			59,397
Long-term debt, less current portion		47,500			32,449			30,612			60,227			74,912						45,000			43,853
Stockholders’ equity		48,240			39,457			75,863			42,491			29,712						59,007			47,520
Statement of Cash Flows Data:
Net cash provided (used in) by operating activities	$	18,796		$	67,102		$	32,293		$	26,327		$	8,576		$	65,527		$	(44,236	)	$	24,943
Net cash used in investing activities		(7,586	)		(6,997	)		(53,496	)		(8,689	)		(217,877	)		(6,036	)		(3,170	)		(2,091	)
Net cash provided by (used in) financing activities		(11,210	)		(60,105	)		21,203			(17,638	)		209,301			(59,491	)		47,406			(22,852	)
Other Financial Data:
Capital expenditures(4)	$	7,611		$	6,951		$	44,710		$	7,258		$	845		$	6,036		$	3,170		$	2,116

(1) We changed our fiscal year from a calendar year ending December 31 to fiscal year ended September 30. Consequently, our 2007 fiscal year consists of a transitional fiscal period of nine months from January 1, 2007 to September 30, 2007.

(2) Cash and cash equivalents are zero because we are subject to a daily cash sweep to pay down amounts outstanding under our senior secured revolving credit facility.

(3) Working capital is calculated as current assets (excluding cash) less current liabilities (excluding the current portion of long-term debt of $73.6 million, $104.0 million, and $163.1 million for the fiscal years ended September 30, 2010, 2009 and 2008, respectively, and $113.6 million and $107.2 million for the nine months ended September 30, 2007 and the one month ended December 31, 2006, respectively, and $123.5 million and $60.4 million for the six months ended March 31, 2011 and 2010, respectively).

(4) Capital expenditures net of funding received from the DoD.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Risk Factors,” “Selected Consolidated Financial Data” and our consolidated financial statements and related notes appearing elsewhere in this prospectus. This discussion contains forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of risks and uncertainties, including those described in this prospectus under “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.” We assume no obligation to update any of these forward-looking statements except as required by law.

Overview

We are one of the largest manufacturers and a global distributor of high-performance specialty metals and alloys. We serve a diversified group of end markets, including the commercial aerospace, defense, oil and gas exploration and production, power generation and industrial markets. We develop, produce and market over 350 grades of specialty metals and alloys that are used in demanding applications such as the manufacture of: (i) landing gear, helicopter shafts, jet engine fasteners and jet engine bearings for the commercial aerospace and defense markets; (ii) downhole logging tools, completion tubes and valves for the oil and gas exploration and production market; (iii) turbine bolts, shafts, pins and blades for the power generation market; and (iv) metal cutting, punching, sawing and stamping dies for the industrial market. To meet the exacting requirements of our customers, we produce materials that possess specific metallurgical properties, including high-strength, corrosion resistance, hardness, fatigue resistance, fracture toughness and temperature resistance.

We operate through two segments: Manufacturing and Distribution. Our Manufacturing segment produces specialty metals and alloys, such as corrosion resistant steel, high-speed steel, alloy steels, nickel-based super alloys and high-temperature steels, by melting together scrap metal and raw materials and molding them into various sizes and shapes. Our Manufacturing segment also conducts finishing processes such as cutting, milling and grinding at our facilities in Latrobe and Franklin, Pennsylvania, and Wauseon, Ohio. The centerpiece of our manufacturing facilities are two of the largest operating VIM furnaces in the world and 17 VAR furnaces, including four of the largest in the world. Our manufacturing facilities also include equipment and other assets used for primary melting, forging, rolling, finishing and metallurgical testing, all of which allow us to meet the specific needs of our customers. We also have warehousing operations in Germany and the United Kingdom.

Our Distribution segment globally sources and distributes corrosion resistant steels, tool steels and powder metals for a wide range of industries. Our Distribution segment purchases steels and other metals from our suppliers and applies value-added processing and finishing at our facilities prior to shipment to our customers. We are a leading distributor of tool steels in North America, and we operate eight service centers that are strategically located in the United States and Canada to fulfill the needs of our Distribution customers.

Our products are sold to our direct customers, which include forgers, machine shops and distributors. Generally, we are two to four levels away from the ultimate end user, and between us and the end user there may be multiple distributors, such as a forge shop, a machine shop or a component manufacturer.

Key Factors Affecting Our Results

Our business and financial performance are affected by general economic conditions, industry demand in the end markets we serve, various operational factors and our level of backlog.

General Economic Conditions

Changes in global economic conditions have impacted, and will continue to impact, demand for our products. Weakened global and U.S. economic conditions in 2008 and 2009 had a significant impact on our

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business during this period. Factors that impacted our business included increased competition as a result of industry-wide competition for less demand for specialty metals and alloys, as well as our customers’ suspending, delaying or reducing purchases and instead using their existing inventory, a process commonly known as “inventory destocking.” In addition, raw material prices declined due to the weak economic environment resulting in a decrease in the value of the inventory held on our balance sheet at the time, thus decreasing our borrowing capacity. The extreme volatility in the global financial, foreign exchange, equity and credit markets, the sustained economic downturn and the prolonged recessionary period exacerbated the impact of these factors on our business. As global economic conditions began to improve in 2010, we experienced increased net sales as our customers began to replenish their inventories following the inventory destocking period that began in 2009. In particular, we began experiencing increased sales in our Distribution segment followed by increases in our Manufacturing segment. Economic conditions have improved further during the first three fiscal quarters of 2011. We believe based on conversations with our customer base that inventory replenishment has come to an end and that the increase in order activity is based on high levels of fundamental demand.

Industry Demand in End Markets

Net sales in our Manufacturing segment are driven by demand in the commercial aerospace, defense, oil and gas exploration and production, power generation and industrial end markets. Net sales in our Distribution segment are primarily driven by demand in the industrial and oil and gas exploration and production end markets. The following is a summary of our net sales to each of the major end markets we serve:

(dollars in thousands)	Fiscal year ended September 30,						Six Months Ended March 31,
	2010		2009		2008		2011		2010
Manufacturing:
Commercial Aerospace	$	103,209	$	111,814	$	163,747		72,766		43,589
Defense		29,772		40,855		55,674		14,823		12,574
Oil and Gas Exploration and Production		4,585		4,301		4,912		3,557		1,936
Power Generation		9,309		4,301		1,637		7,223		3,931
Industrial		35,726		34,404		75,324		25,603		15,089
Other		15,878		19,352		26,200		10,780		6,706
Distribution:
Commercial Aerospace		—		—		—		533		—
Oil and Gas Exploration and Production		13,903		7,874		486		10,135		5,479
Power Generation		2,848		1,968		162		2,076		1,122
Industrial		93,999		64,312		104,962		55,246		42,493
Total Net Sales	$	309,229	$	289,181	$	433,104		202,742		132,919

The following is a discussion of certain trends in the major end markets we serve that we believe can affect demand for our products.

Commercial Aerospace

The commercial aerospace industry has demonstrated steady growth of 5% compound annual growth, as measured by RPKs, over the last 32 years driven by, among other factors, the emergence of an increasingly affluent middle class population who travel more frequently for business and pleasure and an increased level of demand for air travel in rapidly growing emerging regions such as Asia and the Middle East. Air traffic volume has grown steadily for most of the last two years after a period of decline during the global financial crisis of 2008 and 2009. Passenger air traffic, as measured by RPKs, has increased on a year over year basis in every month from September 2009 to March 2011 (except April 2010 due to the Icelandic volcano eruption). Freight air traffic has also increased on a year over year basis in every month from November 2009 to April 2011, with

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greater than 20% increases in each month from December 2009 to July 2010. In 2010, global passenger air travel, as measured by RPKs, increased by 6.3% over 2009, while cargo traffic increased by 6.7% versus 2009. The more aircraft fly, the greater the resulting wear and tear and the higher the demand for specialty metals and alloys used in replacement parts. We also expect that the aftermarket for replacement parts will improve in 2011 as airlines begin to carry out significant maintenance activity that was deferred during the severe economic downturn.

Within the industry, commercial aircraft orders are a closely watched indicator of future demand for, among other things, specialty metals, aerospace components, structures and, ultimately, replacement parts. In 2010, new aircraft orders from Airbus and Boeing rebounded substantially from 2009, a year which represented the lowest level of orders since 2002. Aggregate net commercial aircraft orders for 2010 were 1,104 planes, with aircraft orders of 574 and 530 for Airbus and Boeing, respectively. These orders represented a 146% increase over 2009 when Airbus and Boeing reported orders of 306 and 142, respectively. A rebound in order activity from emerging markets in Asia and the Middle East was a contributor to the higher level of demand. We believe the demand for replacement parts, the commencement of deferred maintenance and the increase in aircraft manufacturing will also translate into increased need for our products, such as bearing steel, alloy steels, high-temperature steels and structural steels. However, the commercial aerospace market may be adversely affected by future downturns in passenger traffic, freight traffic, order activity or other factors, which we may not be able to predict. See “Risk Factors—A substantial portion of our net sales is derived from the commercial aerospace and defense markets, and our net sales and earnings may be adversely affected by the cyclical nature of those markets.”

Defense

We anticipate continued demand for our products due to the fact that the United States military continues to commit troops and equipment to Iraq and Afghanistan and the military’s need to rebuild its military stock to the same level of readiness prior to the initiation of conflicts in these countries. Further, the nature of these conflicts creates strong demand for helicopters, which are ideal for rapid deployment of military personnel. The specialty metals and alloys that we manufacture can be found in helicopter shafts, bearings and gearboxes, as well as in missile casings and torsion bars for Bradley Fighting Vehicles. Even though on-the-ground personnel are declining, the military’s investment in equipment and vehicles remains strong due to the need to restock after years of fighting in the extreme physical conditions of Iraq and Afghanistan. However, more recently, budget cuts have been proposed by House Budget Committee Chairman Paul Ryan that call for overall spending to be limited to no more than 20% of annual GDP. Anticipated cuts related to these caps have focused primarily on non-defense spending. We cannot predict the effect that any future budget cuts could have on our business. In addition, we may be adversely affected due to the volatility of the defense end market, which can be impacted by a variety of factors, including international and domestic conditions, military conflicts and budget approval by Congress. See “Risk Factors—A substantial portion of our net sales is derived from the commercial aerospace and defense markets, and our net sales and earnings may be adversely affected by the cyclical nature of those markets.”

Oil and Gas Exploration and Production

We believe the demand outlook from this end market is favorable and that demand will be driven by: (i) the incentives created for increased drilling as a result of current high oil prices; (ii) new technologies such as directional drilling and hydraulic fracturing that have improved the economics of certain fields, particularly in North American shale formations; (iii) the ability to drill in more severe and remote environments, aided by these new technologies; and (iv) the concern that worldwide production could be curtailed in the future due to the ongoing political unrest in the Middle East and North Africa, causing a shift in drilling to regions such as North America. However, the oil and gas exploration and production markets can be highly cyclical, with a variety of factors influencing demand such as oil and natural gas pricing and demand for electricity. See “Risk Factors—A growing portion of our net sales are derived from the oil and gas exploration and production and power generation markets, and our net sales and earnings may be adversely affected by a reduction in demand from these markets.”

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Power Generation

We believe that the global growth in the construction of gas turbines, which require the use of high-temperature alloys, will continue to support the future demand for our products. Gas turbine demand is expected to increase due to the environmental and operational benefits that gas turbines provide, as well as the increasing availability of low-priced natural gas. According to the U.S. Department of Energy, gas turbines accounted for 15% of the U.S. power generation industry’s installed capacity in 1998 and are expected to account for 40% of the U.S. power generation industry’s installed capacity by 2020. Furthermore, the supply of natural gas is relatively abundant in North America and annual production is growing. The U.S. Energy Information Administration (“EIA”) expects North American natural gas production to increase from 19.2 trillion cubic feet in 2007 to 23.4 trillion cubic feet in 2035 due, in part, to the increased use of horizontal drilling and hydraulic fracturing. However, power generation markets can be highly cyclical, with a variety of factors influencing demand. See “Risk Factors—A growing portion of our net sales are derived from the oil and gas exploration market and power generation, and our net sales and earnings may be adversely affected by a reduction in demand from these markets.”

Industrial

Demand for high-speed and tool steels are highly correlated to the overall health of the industrial economy. Based on several key indicators such as industrial production, capacity utilization and manufacturers’ new orders that signal the current health of the industrial economy is improving, we believe demand for our products in the industrial market will strengthen in the near term.

Operational Factors Affecting Our Results

Various operational factors can affect our results of operations, many of which are outside of our control. During the last three years, our results of operations have been affected by the inclusion of raw material surcharges in our selling prices, cost reduction initiatives and growth initiatives. These factors may continue to affect our results in the future.

Raw Material Surcharges

Raw material surcharges are a pricing mechanism built into many of our customer agreements that are designed to pass through fluctuations, both upward and downward, in the price of our raw materials to our customers. For substantially all finished products, which represent significantly all of our net sales, the surcharge is calculated based on the monthly average of raw material prices determined from external market data during the three months prior to the month preceding shipment.

In the fiscal year ended September 30, 2008, our total net sales were higher than in the fiscal years ended September 30, 2010 and 2009 in part due to the inclusion of approximately $97.9 million of such raw material surcharges, which are included as part of our net sales. In the fiscal year ended September 30, 2009, as global economic conditions worsened, our net sales decreased due to our customers choosing to reduce their inventory levels instead of buying our products given weak end-market demand throughout the year. Additionally, our net sales were not as favorably impacted by raw material surcharges because raw material prices decreased from the fiscal year ended September 30, 2008. Raw material surcharges totaled approximately $42.9 million in the fiscal year ended September 30, 2009. In the fiscal year ended September 30, 2010, our net sales increased from the fiscal year ended September 30, 2009 as our customers replenished their inventory holdings following the inventory destocking period in the previous fiscal year. Raw material prices in the fiscal year ended September 30, 2010 also increased from the fiscal year ended September 30, 2009, which resulted in raw material surcharges that amounted to approximately $43.7 million in the fiscal year ended September 30, 2010.

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Cost Reduction Initiatives

Beginning in the fiscal year ended September 30, 2009 and continuing through the fiscal year ended September 30, 2010, we implemented several cost reduction initiatives, some as temporary measures, to realign our cost structure to better match the decrease in order activity, production volumes and net sales that occurred during the period. Temporary measures included: (i) an employee furlough program that began on May 1, 2009; (ii) a 12.5% salary reduction for members of senior management; (iii) the elimination of our 401(k) matching contribution program for our employees that began on May 1, 2009; and (iv) a shift in our manufacturing schedule from weekdays to nights in order to take advantage of “off-peak” pricing for electricity. We ended these temporary measures by the end of the fiscal year ended September 30, 2010. Permanent initiatives that will result in ongoing decreased costs include entering into certain arrangements that reduced fees with our insurance carriers and data infrastructure providers. These initiatives resulted in a direct reduction in our costs in the fiscal years ended September 30, 2010 and 2009.

Growth Initiatives

Our results of operation have been positively influenced by the growth initiatives we undertook in the past three years, including: (i) investing in increasing the production capacity for our highest margin products such as bearing steel, structural steels, nickel alloy and nickel-based super alloys; (ii) expanding our product portfolio to other high-margin end markets, including oil and gas exploration and production and power generation; (iii) extending our participation in global markets such as China; and (iv) increasing the number of metallurgists and engineers we employ.

Backlog

We define backlog in our Manufacturing segment as firm commitments from customers for delivery of product. Our Distribution segment processes orders on a “spot” basis for near immediate delivery, and as such, the concept of a backlog is not relevant for this segment. As of March 31, 2011, our order backlog was approximately $181.8 million, a 64% increase when compared to $110.7 million as of September 30, 2010. See “Business—Backlog” for a description of how we calculate backlog.

Key Line Items

Net Sales

We generate net sales through our two business segments: Manufacturing and Distribution. In both segments, we charge our customers by pounds sold. In our Manufacturing segment, net sales consist of the sale of specialty metals and alloys to our customers and raw material surcharges. In our Distribution segment, net sales consist of the sale of corrosion resistant steels, tool steels and powder metals to a combination of distributors and end users, and include charges for any value-added processing costs. Net sales in both segments are net of sales returns, collection allowances and customer rebates.

Cost of Sales

In our Manufacturing segment, cost of sales consists of direct raw material costs, labor costs and fixed and variable overhead costs, including costs associated with plant operation needed to get products to their final sellable condition. Our primary raw materials include molybdenum, nickel, scrap steel, cobalt, vanadium, tungsten and chromium. These raw materials are commodities that are available from a variety of sources in the marketplace. Molybdenum and nickel are our largest raw material costs. Our customer agreements contain a raw material surcharge mechanism to allow us to pass along increases or decreases in the price of raw materials to our customers. See “—Key Factors Affecting Our Results—Operational Factors Affecting Our Results—Raw Material Surcharges.”

Plant operation costs include, among other costs, electricity and natural gas costs. We purchase electricity under a fixed rate cap agreement, which will expire in December 2013, at which time we will be subject to

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market pricing unless we reach agreement on a new long-term supply arrangement. We have long-term supply and delivery contracts for natural gas. These contracts do not contain minimum purchase obligations but contain an indexed pricing mechanism. Our pricing policy with our Manufacturing customers allows us to collect a surcharge for natural gas costs in order to offset any price increases.

In our Distribution segment, cost of sales consists of direct raw material costs, labor costs and fixed overhead costs, including costs associated with service center operations, warehousing and shipping. Very few customer agreements contain a raw material surcharge mechanism due to the short time between the receipt of an order and shipment. Instead, prices are routinely updated to reflect market prices for raw materials. Service center operating costs include utilities, support personnel, depreciation and general supplies and support.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of sales commissions, agency costs, stock based compensation, and corporate overhead. Corporate overhead costs includes costs associated with corporate staff, corporate management, human resources, information technology, finance and other corporate support services. We expect our expenses to increase in future periods as a result of incurring additional expenses associated with being a public company, including increased personnel costs, legal costs, accounting costs, board compensation expense, investor relations costs, insurance premiums and costs associated with our compliance with Section 404 of the Sarbanes-Oxley Act of 2002, other applicable SEC regulations and the requirements of the NYSE.

Interest Expense

Interest expense represents amounts accrued and paid on the outstanding balances under our senior secured revolving credit facility, senior secured term loan and senior subordinated notes plus amortization of deferred financing costs. Our senior subordinated notes were repaid in full on July 30, 2010.

Income Tax Expense (Benefit)

We and our subsidiaries file a single consolidated income tax return. Income tax expense is comprised of federal and state taxes based on income in multiple jurisdictions. Our effective tax rate was 38.0% for each of the six months ended March 31, 2011 and 2010, and 37.8%, (32.9)% and 35.7% for the fiscal years ended September 30, 2010, 2009 and 2008, respectively. For the fiscal year ended September 30, 2010, our effective tax rate was comprised of federal tax rates, state income taxes and a credit for research and development costs and a deduction for qualifying domestic production activities. For the fiscal year ended September 30, 2009, our effective tax rate was comprised of federal tax rates, state income taxes, a credit for research and development costs and a deduction for qualifying domestic production activities taken in earlier years, which was reversed as a result of our election to carryback the 2009 taxable loss to prior years. For the fiscal year ended September 30, 2008, our effective tax rate was comprised of federal tax rates and state income taxes, reduced by the deduction for qualifying domestic production activities.

Other Expense (Income), Net

Other expense consists of the sale of assets, other than in the ordinary course of business, and foreign currency exchange gains and losses.

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Business Segment Results

The following table sets forth our net sales, operating income and total assets on a segment basis for the periods presented. For more detailed segment information, see “Note 18—Segment Information, Geographic and Product Data” to the Consolidated Financial Statements and “Note 14—Business Segments” to the Consolidated Unaudited Financial Statements.

(dollars in thousands)	Fiscal Year Ended September 30,							Six Months Ended March 31,
	2010		2009			2008		2011		2010
Net sales:
Manufacturing	$	198,480	$	215,027		$	327,494	$	134,753	$	83,824
Distribution		110,749		74,154			105,610		67,989		49,095
Total net sales	$	309,229	$	289,181		$	433,104	$	202,742	$	132,919
Operating income (loss):
Manufacturing	$	22,464	$	(5,109	)	$	53,303	$	18,254	$	754
Distribution		6,115		(2,091	)		14,275		6,498		549
Total operating income (loss)	$	28,579	$	(7,200	)	$	67,578	$	24,752	$	1,303
Total assets:
Manufacturing	$	248,230	$	226,753		$	293,354	$	316,588	$	216,356
Distribution		89,917		73,036			76,866		92,631		75,986
Total assets	$	338,147	$	299,789		$	370,220	$	409,219	$	292,342

Results of Operations

The following table sets forth selected statement of operations data for the periods presented.

(dollars in thousands)	Fiscal Year Ended September 30,							Six Months Ended March 31,
	2010		2009			2008		2011		2010
Net sales	$	309,229	$	289,181		$	433,104	$	202,742	$	132,919
Cost of sales		254,431		267,832			328,411		161,578		118,331
Selling, general and administrative expenses		26,219		28,549			37,115		16,412		13,285
Income (loss) from operations		28,579		(7,200	)		67,578		24,752		1,303
Interest expense and other financing costs		11,655		14,205			15,773		7,278		5,469
Income tax expense (benefit)		4,417		(7,259	)		17,859		6,391		(2,189	)

Six Months Ended March 31, 2011 Compared to Six Months Ended March 31, 2010

Net Sales

Consolidated net sales increased by $69.8 million, or 52.5%, to $202.7 million for the six months ended March 31, 2011 from $132.9 million for the six months ended March 31, 2010. The increase for the six months ended March 31, 2011 is primarily attributable to an increase in consolidated pounds sold as well as an increase in the average selling price per pound. Consolidated pounds sold increased by 12.7 million pounds, or 28.7%, to 56.9 million pounds for the six months ended March 31, 2011 from 44.2 million pounds for the six months ended March 31, 2010. The aggregate average selling price per pound increased by $0.53, or 17.4%, to $3.57 for the six months ended March 31, 2011 from $3.04 per pound for the six months ended March 31, 2010. The increase in shipments and average selling price was attributable to improved economic conditions, which resulted in market demand recovery in the six months ended March 31, 2011, as well as an increase in pounds sold from our new

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business development initiatives. These efforts are targeted at serving new and existing customers in the commercial aerospace, oil and gas exploration and production and power generation industries with difficult-to-produce specialty metals such as nickel-based super alloys. In addition, selling prices in the six months ended March 31, 2011 were impacted favorably by increased raw material surcharges.

Net sales for our Manufacturing segment increased by $51.0 million, or 60.8%, to $134.8 million for the six months ended March 31, 2011 from $83.8 million for the six months ended March 31, 2010. The increase was attributable to a 36.2% increase in pounds sold as well as an improvement in the average selling price per pound. These aggregate average selling prices were favorably impacted by raw material surcharges that increased by $17.7 million, or 112.7%, to $33.4 million for the six months ended March 31, 2011 from $15.7 million for the six months ended March 31, 2010. The increase resulted from the general economic recovery that began during the fiscal year ended September 30, 2010, as well as an increase in pounds sold from our new business development initiatives that are targeted at serving new and existing customers in the commercial aerospace, oil and gas exploration and production and power generation industries with difficult-to-produce specialty metals such as nickel-based super alloys.

Net sales for our Distribution segment increased by $18.9 million, or 38.5%, to $68.0 million for the six months ended March 31, 2011 from $49.1 million for the six months ended March 31, 2010. As was the case with our Manufacturing segment, the increase was due to an increase in pounds sold as well as to an increase in the average sales price per pound, both of which were attributable to the overall improvement in the economy and our agreement with Crucible Industries to become its exclusive powder metal distributor for the majority of its products. Pounds sold increased by 3.8 million pounds, or 19.5%, to 23.3 million pounds sold for the six months ended March 31, 2011 from 19.5 million pounds sold for the same period in the fiscal year ended September 30, 2010.

Cost of Sales

Cost of sales increased by $43.3 million, or 36.5%, to $161.6 million, or 79.7% of net sales, for the six months ended March 31, 2011 from $118.3 million, or 89.0% of net sales, for the six months ended March 31, 2010. The increase was primarily attributable to higher sales volume, higher raw material costs and increased production costs, such as staffing to meet the increased product demand levels. The increase was partially offset by the increased absorption of fixed operating costs being spread over higher production volumes as a result of increased product orders. Gross profit margin increased by $26.6 million, or 182.2%, to $41.1 million, or 20.3% of net sales, for the six months ended March 31, 2011 from $14.6 million, or 11.0% of net sales, for the six months ended March 31, 2010. Gross profit margin for the six months ended March 31, 2011 was impacted favorably by the sale of inventory that had a lower cost basis. During the six months ended March 31, 2010, we incurred idle capacity charges of $1.3 million that were primarily attributable to the reduction in operating levels caused by the recession. See footnote 4 of “Summary—Summary Historical Consolidated Financial and Other Data” for the reconciliation of Adjusted EBITDA to net income.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $3.1 million, or 23.5%, to $16.4 million for the six months ended March 31, 2011 from $13.3 million for the six months ended March 31, 2010. The increase was primarily attributable to higher compensation expense in the six months ended March 31, 2011 as a result of the elimination of temporary workforce pay reductions that were in effect for substantially all of the six months ended March 31, 2010. Also, the six months ended March 31, 2011 included higher incentive compensation and stock compensation expense. In addition, the six months ended March 31, 2010 included the reversal of compensation expense in the amount of $1.0 million in December 2009 attributable to the forfeiture of restricted stock by a former executive officer.

Operating Income (Loss)

As a result of the factors above, operating income for the six months ended March 31, 2011 was $24.8 million compared to $1.3 million for the six months ended March 31, 2010, an increase of $23.5 million.

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Interest Expense

Interest expense increased by $1.8 million, or 32.7%, to $7.3 million for the six months ended March 31, 2011 from $5.5 million for the six months ended March 31, 2010. The increase is attributable to a higher aggregate balance on our senior secured revolving credit facility due to increased working capital demands to fund higher levels of accounts receivable and inventory, partially offset by higher accounts payable. In addition, the six months ended March 31, 2011 reflected $0.8 million of incremental deferred financing fee amortization as compared to the six months ended March 31, 2010, which was attributable to our senior secured term loan and senior secured revolving facility refinancing cost deferrals occurring in March of the fiscal year ended September 30, 2010.

Income Tax Expense (Benefit)

Income tax expense was $6.4 million for the six months ended March 31, 2011 compared to an income tax benefit of $(2.2) million for the six months ended March 31, 2010, primarily due to a change in pretax income (loss). The effective tax rate was 38% for each of the six months ended March 31, 2011 and 2010.

Fiscal Year Ended September 30, 2010 Compared to Fiscal Year Ended September 30, 2009

Net Sales

Consolidated net sales increased by $20.1 million, or 6.9%, to $309.2 million for the fiscal year ended September 30, 2010 from $289.2 million for the fiscal year ended September 30, 2009. The increase for the fiscal year ended September 30, 2010 is primarily attributable to an increase in pounds sold of 15.0%. Consolidated pounds sold increased by 12.4 million pounds, or 14.9%, to 95.6 million pounds for the fiscal year ended September 30, 2010 from 83.2 million pounds for the fiscal year ended September 30, 2009. The increase in pounds sold is attributable to improved global economic conditions in the fiscal year ended September 30, 2010 as well as to the first signs of success from our new business development initiatives. These efforts are targeted at serving new and existing customers in the commercial aerospace, oil and gas exploration and production and power generation industries with difficult-to-produce specialty metals such as nickel-based super alloys. We began to see steadily improving business conditions starting in March 2010.

Net sales for our Manufacturing segment decreased by $16.5 million, or 7.7%, to $198.5 million for the fiscal year ended September 30, 2010 from $215.0 million for the fiscal year ended September 30, 2009. Pounds sold decreased by 0.2 million pounds, or 0.3%, to 54.4 million pounds for the fiscal year ended September 30, 2010 from 54.6 million pounds for the fiscal year ended September 30, 2009. The decrease in net sales was primarily attributable to product mix, as we sold a greater proportion of products with a lower price per pound, which resulted in a lower average selling price in the fiscal year ended September 30, 2010 as compared to the fiscal year ended September 30, 2009. The average selling price decreased by $0.29, or 7.4%, to $3.64 per pound for the fiscal year ended September 30, 2010 from $3.93 per pound for the fiscal year ended September 30, 2009. Our Manufacturing segment’s backlog as of September 30, 2010 was $110.7 million as compared to $65.0 million at September 30, 2009. The increase reflected the continual improvement in order entry levels seen in the second half of the fiscal year ended September 30, 2010.

Net sales for our Distribution segment increased by $36.6 million, or 49.3%, to $110.7 million for the fiscal year ended September 30, 2010 from $74.1 million for the fiscal year ended September 30, 2009. The increase was primarily attributable to the improvement in pounds sold as well as to a lesser degree an improvement in the average sales price per pound, both of which were due to the overall improvement in the economy and our agreement with Crucible Industries to become its exclusive powder metal distributor for the majority of its products. Pounds sold increased by 12.6 million pounds, or 44.2%, to 41.2 million pounds for the fiscal year ended September 30, 2010 from 28.6 million pounds for the fiscal year ended September 30, 2009.

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Cost of Sales

Cost of sales decreased by $13.4 million, or 5.0%, to $254.4 million, or 82.3% of net sales, for the fiscal year ended September 30, 2010 from $267.8 million, or 92.6% of net sales, for the fiscal year ended September 30, 2009. Gross profit margin increased by $33.5 million, or 157.3%, to $54.8 million, or 17.7% of net sales, for the fiscal year ended September 30, 2010 from $21.3 million, or 7.4% of net sales, for the fiscal year ended September 30, 2009. In the fiscal year ended September 30, 2009, we recorded writedowns to inventory to the lower of cost or market and for idle capacity in an aggregate amount of $10.1 million resulting from global economic conditions. Gross profit margin for the year ended September 30, 2010 was impacted favorably by the sale of inventory that had a lower cost basis. See footnote 4 of “Summary—Summary Historical Consolidated Financial and Other Data” for a reconciliation of Adjusted EBITDA to net income.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased by $2.3 million, or 8.1%, to $26.2 million for the fiscal year ended September 30, 2010 from $28.5 million for the fiscal year ended September 30, 2009. The decrease was primarily attributable to lower stock compensation, professional fees and consulting expenses.

Operating Income (Loss)

As a result of the factors above, operating income for the fiscal year ended September 30, 2010 was $28.6 million compared to an operating loss of $(7.2) million for the fiscal year ended September 30, 2009.

Interest Expense

Interest expense decreased by $2.5 million, or 17.9%, to $11.7 million for the fiscal year ended September 30, 2010 from $14.2 million for the fiscal year ended September 30, 2009.

Income Tax Expense (Benefit)

Income tax expense was $4.4 million for the fiscal year ended September 30, 2010 compared to a benefit of $(7.3) million for the fiscal year ended September 30, 2009. The effective tax rate for the fiscal year ended September 30, 2010 was 37.8% compared to 32.9% for the fiscal year ended September 30, 2009. The 2009 tax benefit was reduced by a deduction for qualifying domestic production activities taken in earlier years, which was reversed as a result of our election to carryback the 2009 taxable loss to prior years.

Fiscal Year Ended September 30, 2009 Compared to Fiscal Year Ended September 30, 2008

Net Sales

Consolidated net sales decreased $143.9 million, or 33.2%, to $289.2 million for the fiscal year ended September 30, 2009 from $433.1 million for the fiscal year ended September 30, 2008. The decrease for the fiscal year ended September 30, 2009 is primarily attributable to a decrease in pounds sold as well as a decrease in the average selling price per pound. Total pounds sold decreased by 30.7 million pounds, or 27%, to 83.2 million pounds for the fiscal year ended September 30, 2009 from 113.9 million pounds for the fiscal year ended September 30, 2008. The average selling price per pound decreased by $0.32, or 8.4%, to $3.48 for the fiscal year ended September 30, 2009 from $3.80 for the fiscal year ended September 30, 2008. The global economic recession and resulting increased competition unfavorably impacted both pounds sold and average selling price for both segments. Raw material prices declined due to the weak economic environment which led to significantly lower raw material surcharges as well.

Net sales for our Manufacturing segment decreased by $112.5 million, or 34.3%, to $215.0 million for the fiscal year ended September 30, 2009 from $327.5 million for the fiscal year ended September 30, 2008. Pounds

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sold decreased by 13.3 million pounds, or 19.6%, to 54.6 million pounds for the fiscal year ended September 30, 2009 from 67.9 million pounds for the fiscal year ended September 30, 2008. The decrease in net sales was primarily attributable to lower pounds sold as well as a lower average selling price in the fiscal year ended September 30, 2009 as compared to the fiscal year ended September 30, 2008. The average selling price decreased by $0.89, or 18.5%, to $3.93 per pound for the fiscal year ended September 30, 2009 from $4.82 per pound for the fiscal year ended September 30, 2008. The decrease in both pounds sold and average selling price was due to the effect of the economic recession and increased competition. Average selling price was also impacted negatively by the significant decrease in raw material prices, again due to the economic downturn, which resulted in lower raw material surcharges. Our Manufacturing segment’s backlog as of September 30, 2009 was $65 million as compared to $205 million as of September 30, 2008.

Net sales for our Distribution segment decreased by $31.4 million, or 29.8%, to $74.2 million for the fiscal year ended September 30, 2009 from $105.6 million for the fiscal year ended September 30, 2008. Pounds sold decreased by 17.4 million pounds, or 37.9%, to 28.6 million pounds for the fiscal year ended September 30, 2009 from 46.0 million pounds for the fiscal year ended September 30, 2008. The fiscal year ended September 30, 2009 includes the full year results of Specialty Steel Supply, which was purchased in September 2008 and had an insignificant contribution to results for the fiscal year ended September 30, 2008. Excluding Specialty Steel Supply sales, our Distribution segment’s net sales decreased by $47.6 million, or 45.1%, to $58.0 million for the fiscal year ended September 30, 2009 from $105.6 million for the fiscal year ended September 30, 2008. The decrease was primarily attributable to the recessionary economy, which led to an overall destocking of inventory throughout our Distribution segment’s customer base.

Cost of Sales

Cost of sales decreased by $60.6 million, or 18.5%, to $267.8 million, or 92.6% of net sales, for the fiscal year ended September 30, 2009 from $328.4 million, or 75.8% of net sales, for the fiscal year ended September 30, 2008. The decrease was primarily attributable to lower pounds sold, cost reduction initiatives and workforce reductions. Gross profit margin decreased by $83.4 million, or 79.7%, to $21.3 million, or 7.4% of net sales, for the fiscal year ended September 30, 2009 from $104.7 million, or 24.2% of net sales, for the fiscal year ended September 30, 2008. The fiscal year ended September 30, 2009 included lower of cost or market and idle capacity writedowns attributable to general economic conditions in the amount of $10.1 million, as well as lower base price and raw material surcharge revenue. Cost of sales for the fiscal year ended September 30, 2008 was impacted unfavorably in the amount of $10.0 million as a result of a labor stoppage while the collective bargaining agreement was negotiated. See footnote 4 of “Summary—Summary Historical Consolidated Financial and Other Data” for a reconciliation of Adjusted EBITDA to net income.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased by $8.6 million, or 23.1%, to $28.5 million for the fiscal year ended September 30, 2009 from $37.1 million for the fiscal year ended September 30, 2008. The improvement was primarily attributable to lower business activity, which resulted in lower sales expense, workforce pay reductions implemented in the second half of the fiscal year ended September 30, 2009 and lower stock compensation, professional fees and consulting expenses. In addition, the fiscal year ended September 30, 2008 included approximately $5.0 million of extra expenses related to a strike of our unionized workers on May 1, 2008 in Latrobe, Pennsylvania that continued for 81 days.

Operating Income (Loss)

As a result of the factors above, the operating loss for the fiscal year ended September 30, 2009 was $(7.2) million compared to operating income of $67.6 million for the fiscal year ended September 30, 2008.

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Interest Expense

Interest expense decreased by $1.6 million, or 9.9%, to $14.2 million for the fiscal year ended September 30, 2009 from $15.8 million for the fiscal year ended September 30, 2008. The decrease is primarily attributable to a lower average revolver balance during the fiscal year ended September 30, 2009 as a result of the liquidation of inventory during the global recessionary period. The reduction in our aggregate loan balance and interest expense during the fiscal year ended September 30, 2009 was attributable to aggressive inventory reductions and working capital management during the fiscal year ended September 30, 2009.

Income Tax Expense (Benefit)

Income tax benefit was $(7.3) million for the fiscal year ended September 30, 2009, compared to an expense of $17.9 million for the fiscal year ended September 30, 2008. The effective tax rate for the fiscal year ended September 30, 2009 was 32.9% compared to 35.7% for the fiscal year ended September 30, 2008. For the fiscal year ended September 30, 2009, the income tax benefit presented differs from the amount computed by applying the U.S. federal income tax rate of 35% to pretax income due to the effect of state income taxes and a credit for research and development costs, reduced by the reversal of a deduction taken in prior years for qualifying domestic production activities, which was reversed as a result of our election to carryback the fiscal year ended September 30, 2009 taxable loss to prior years.

For the fiscal year ended September 30, 2008, the income tax expense presented differs from the amount computed by applying the U.S. federal income tax rate of 35% to pretax income due to the effect of state income taxes, reduced by the deduction for qualifying domestic production activities.

Quarterly Consolidated Results of Operations (Unaudited)

The following table sets forth our results of operations on a quarterly basis for the year ended September 30, 2010.

(dollars in thousands, except per share amount)	Quarter Ended
	December 31			March 31		June 30		September 30
Net sales	$	57,361		$	75,558	$	87,111	$	89,199
Gross profit		2,362			12,226		21,692		18,518
Net income (loss)		(3,884	)		312		7,298		3,544
Income (loss) per share:
Basic	$	(4.11	)	$	0.01	$	0.14	$	0.06
Diluted	$	(4.11	)	$	0.01	$	0.14	$	0.06

Liquidity and Capital Resources

Our primary sources of liquidity are cash flow from operating activities and borrowings under our $175.0 million senior secured revolving credit facility. As of March 31, 2011, we had availability of $39.4 million under our senior secured revolving credit facility. See “—Contractual Obligations and Commitments—Senior Secured Revolving Credit Facility” below.

Historically, our primary uses of cash have been for raw material purchases, payroll and benefits, manufacturing operating supplies, capital expenditures, debt service payments and tax payments. Our senior secured revolving credit facility currently requires us to pay down any funds we receive daily in excess of our daily disbursements. As such, cash and cash equivalents at the end of a typical fiscal period is zero. The most significant components of our working capital are inventories, accounts receivable, accounts payable and other current assets and other current liabilities. Our primary uses of cash over the next twelve months are expected to consist of expenditures related to funding operations, capital expenditures, pension plan funding and taxes.

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For the fiscal year ending September 30, 2011, capital expenditures are targeted to be approximately $15.3 million before giving effect to any DoD reimbursements we may receive. $5.5 million of the budgeted $15.3 million capital budget for the fiscal year ended September 30, 2011 is expected to be for recurring plant and equipment projects, with $4.0 million related to routine maintenance projects. The remaining $5.8 million of the budgeted $15.3 million is expected to be spent on growth and new product development, including $2.8 million for our edgewire product line at our Wauseon, Ohio facility and $1.6 million for a nickel-based product expansion.

We believe that our cash flow from operations and availability under our senior secured revolving credit facility will provide us with sufficient capital to meet our working capital requirements, to finance capital expenditures and to meet our debt service and other obligations. As we continue to expand our business, we may in the future require additional capital to fund working capital, capital expenditures or acquisitions.

Cash Flow

Six months ended March 31, 2011 compared to six months ended March 31, 2010

The following table summarizes our cash flows by category for the periods presented:

(dollars in thousands)	Six Months Ended March 31,						Change			Change (%)
	2011			2010
Net cash provided by (used in) operating activities	$	(44,236	)	$	24,943		$	(69,179	)		(277.3	)%
Net cash (used in) investing activities	$	(3,170	)	$	(2,091	)	$	(1,079	)		(51.6	)%
Net cash provided by (used in) financing activities	$	47,406		$	(22,852	)	$	70,258			307.4	%

Net cash provided by (used in) operating activities decreased by $69.2 million, or 277.3%, to $(44.2) million for the six months ended March 31, 2011 from $24.9 million for the six months ended March 31, 2010. The decrease was primarily attributable to $53.7 million of cash used to increase inventory levels during the six months ended March 31, 2011. This amount was $63.6 million higher than cash provided by decreased inventory balances of $9.9 million in the six months ended March 31, 2010. In addition, net income (loss) increased by $14.0 million to a net income of $10.4 million for the six months ended March 31, 2011 from a net loss of $(3.6) million for the six months ended March 31, 2010. The primary reason for the higher inventory balances and the increase in net income was the improvement in our operating levels due to the recovery of the economy and the need to carry additional inventory as part of our new business development initiatives that are targeted at serving new and existing customers in the commercial aerospace, oil and gas exploration and production and power generation industries.

Net cash (used in) investing activities increased by $1.1 million, or 51.6%, to $(3.2) million for the six months ended March 31, 2011 from $(2.1) million for the six months ended March 31, 2010. Net cash (used in) investing activities for the six months ended March 31, 2011 was attributable to the purchase of property, plant and equipment of $5.1 million offset by reimbursements of $1.9 million from the DoD. The net cash (used in) investing activities for the six months ended March 31, 2010 was attributable to property, plant and equipment purchases of $2.9 million offset by reimbursements from the DoD of $0.8 million.

Net cash provided by (used in) financing activities increased by $70.3 million, or 307.4%, to $47.4 million for the six months ended March 31, 2011 from $(22.9) million for the six months ended March 31, 2010. Net cash provided by financing activities for the six months ended March 31, 2011 was primarily attributable to net borrowings on our senior secured revolving credit facility, which was used for working capital needs necessitated by steadily improving orders and production activity. Net cash used in financing activities for the six months ended March 31, 2010 was attributable to net payments on the senior secured revolving credit facility following significant inventory reductions during the period.

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Fiscal year ended September 30, 2010 compared to fiscal year ended September 30, 2009

The following table summarizes our cash flows by category for the periods presented:

(dollars in thousands)	Fiscal Year Ended September 30,						Change			Change (%)
	2010			2009
Net cash provided by operating activities	$	18,796		$	67,102		$	(48,306	)		(72.0	)%
Net cash (used in) investing activities	$	(7,586	)	$	(6,997	)	$	(589	)		(8.4	)%
Net cash (used in) financing activities	$	(11,210	)	$	(60,105	)	$	48,895			81.3	%

Net cash provided by operating activities decreased by $48.3 million, or 71.9%, to $18.8 million for the fiscal year ended September 30, 2010 from $67.1 million for the fiscal year ended September 30, 2009. This decrease was primarily attributable to a $73.3 million decrease in cash flows from net changes in operating assets and liabilities. Changes in operating assets and liabilities in the fiscal year ended September 30, 2010 were primarily driven by an increase in inventories of $21.4 million and an increase of $18.4 million in accounts receivable, offset by increases in accounts payable of $19.3 million and an increase in accrued liabilities and income tax payable of $18.7 million. This compares to changes in operating assets and liabilities in the fiscal year ended September 30, 2009 that were primarily driven by inventories decreasing $66.7 million and accounts receivable decreasing $25.1 million, partially offset by decreases in accounts payable of $16.9 million and a decrease in income tax payable of $9.5 million. The decrease in cash flows from the net change in operating assets and liabilities was partially offset by the $22.1 million increase in net income when comparing the net income of $7.3 million for the fiscal year ended September 30, 2010 to the net loss of $(14.8) million for the fiscal year ended September 30, 2009. The decrease in cash flows from the net change in operating assets and liabilities as well as the increase in cash flows from the increase in net income, are attributable to the improvement in orders and production levels that were the result of the economy moving out of a recessionary environment.

Net cash (used in) investing activities increased by $0.6 million, or 8.4%, to $(7.6) million for the fiscal year ended September 30, 2010 from $(7.0) million for the fiscal year ended September 30, 2009. Net cash (used in) investing activities for the fiscal year ended September 30, 2010 was attributable to property, plant and equipment purchases of $9.1 million offset by reimbursements from the DoD of $1.5 million. Net cash (used in) investing activities for the fiscal year ended September 30, 2009 was primarily attributable to property, plant and equipment purchases of $20.2 million offset by reimbursements from the DoD of $13.2 million.

Net cash (used in) financing activities decreased by $48.9 million, or 81.3%, to $(11.2) million for the fiscal year ended September 30, 2010 from $(60.1) million for the fiscal year ended September 30, 2009. Net cash (used in) financing activities for the fiscal year ended September 30, 2010 was primarily attributable to net payments on our senior secured revolving credit facility of $31.8 million, offset by a net increase in long term debt of $16.6 million as well as proceeds of $10.0 million from the issuance of additional preferred stock and cash payments for deferred financing cost of $5.9 million. Net cash (used in) financing activities during the fiscal year ended September 30, 2009 was attributable to net payments on our senior secured revolving credit facility.

Fiscal year ended September 30, 2009 compared to fiscal year ended September 30, 2008

The following table summarizes our cash flows by category for the periods presented:

(dollars in thousands)	Fiscal Year Ended September 30,						Change			Change (%)
	2009			2008
Net cash provided by operating activities	$	67,102		$	32,293		$	34,809			107.8	%
Net cash (used in) investing activities	$	(6,997	)	$	(53,496	)	$	46,499			86.9	%
Net cash provided by (used in) financing activities	$	(60,105	)	$	21,203		$	(81,308	)		(383.5	)%

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Net cash provided by operating activities increased by $34.8 million, or 107.8%, to $67.1 million for the fiscal year ended September 30, 2009 from $32.3 million for the fiscal year ended September 30, 2008. This increase was primarily attributable to a $67.4 million increase in cash flows from net changes in operating assets and liabilities. Changes in operating assets and liabilities in the fiscal year ended September 30, 2009 were primarily driven by a decrease in inventories of $66.7 million (which includes a $6.4 million increase in inventory reserves) and a decrease in accounts receivable of $25.1 million, partially offset by decreases in accounts payable of $16.9 million and a decrease in income taxes payable of $9.5 million. This compares to changes in operating assets and liabilities in the fiscal year ended September 30, 2008 that were primarily driven by inventories increasing $15.3 million, and accounts receivable decreasing $6.6 million. The increase in cash flows from the net change in operating assets and liabilities as well as the increase in non-cash inventory reserves was offset by the $46.9 million decrease in net income when comparing the net loss of $(14.8) million for the fiscal year ended September 30, 2009 to net income of $32.1 million for the fiscal year ended September 30, 2008. The increase in cash flows from the net change in operating assets and liabilities as well as the decrease in cash flows from the decrease in net income, are attributable to the significant downturn in business operating levels that were brought about by the recession in the worldwide economy.

Net cash (used in) investing activities decreased by $46.5 million, or 86.9%, to $(7.0) million for the fiscal year ended September 30, 2009 from $(53.5) million for the fiscal year ended September 30, 2008. Net cash (used in) investing activities for the fiscal year ended September 30, 2009 was primarily attributable to property, plant and equipment purchases of $20.2 million offset by reimbursements from the DoD of $13.2 million. Net cash (used in) investing activities for the fiscal year ended September 30, 2008 was primarily attributable to property, plant and equipment purchases of $44.7 million, as well cash invested of $13.3 million for the acquisition of the net assets of Specialty Steel Supply, our Houston based distributor of specialty metals and alloys that are consumed in oil and gas exploration and production. The fixed asset additions in the fiscal year ended September 30, 2008 were primarily related to the construction of our new VIM and VAR melting capacity.

Net cash provided by (used in) financing activities decreased by $81.3 million, or 383.5%, to $(60.1) million for the fiscal year ended September 30, 2009 from $21.2 million for the fiscal year ended September 30, 2008. Net cash used in financing activities for the fiscal year ended September 30, 2009 was attributable to net payments on our senior secured revolving credit facility. Net cash provided by financing activities during the fiscal year ended September 30, 2008 was attributable to net borrowings of $56.9 million on our senior secured revolving credit facility, offset by net payments related to the refinancing of our long debt of $29.6 million and deferred financing fees paid of $6.1 million.

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Contractual Obligations and Commitments

In the normal course of business, we enter into various contractual and other commercial commitments that impact, or could impact, our liquidity. The following table outlines the commitments as of March 31, 2011:

(dollars in thousands)	Total Amounts		Less than 1  Year		1-3 Years		4-5 Years		Over 5   Years
Senior secured revolving credit facility principal(1)	$	119,709	$	119,709		—		—		—
Senior secured term loan principal		48,750		3,750	$	45,000		—		—
Estimated interest payments on senior secured revolving credit facility(2)		10,003		5,219		4,784		—		—
Estimated interest payments on senior secured term loan(2)		17,672		7,313		10,359		—		—
Operating leases		9,408		2,726		4,311		2,035		336
Pension plan(3)		44,169		9,301		18,000		16,868		N/A
Other post-retirement benefits(4)		17,157		3,214		6,764		7,179		N/A
Natural gas commitment(5)		4,767		4,767		—		—		—
Total contractual obligations	$	271,635	$	155,999	$	89,218	$	26,082	$	336

(1) We plan to use a portion of the proceeds from this offering to pay down a portion of our senior secured revolving credit facility. See “Use of Proceeds.” The amounts owed under our senior secured revolving credit facility mature on March 6, 2013.

(2) Assumes weighted average interest rates in effect for the quarter ended March 31, 2011.

(3) Pension plan contributions represent required minimum contributions for the plan year beginning January 1, 2010, and quarterly installment contributions for the plan year beginning January 1, 2011. Future quarterly installments are based upon projected required minimum contributions for each applicable plan year. These amounts were calculated based on actuarial valuations as prescribed by pension funding regulations in the United States. Required pension contributions in future periods are dependent on actuarial valuations to be prepared in future periods.

(4) Post-retirement benefits represents estimated future benefit payments that are expected to be paid from corporate assets.

(5) Assumes average New York Mercantile Exchange settlement price of $4.20 per MMBTU.

Our debt obligations consist primarily of our senior secured revolving credit facility and our senior secured term loan.

Senior Secured Revolving Credit Facility

On March 6, 2008, we entered into a $200.0 million senior secured revolving credit facility with Wachovia Bank, National Association (now known as Wells Fargo Bank, National Associations) and certain other lenders. The senior secured revolving credit facility matures on March 16, 2013 and initially provided for borrowings of up to $200.0 million with up to a $10.0 million letter of credit sub-limit. On May 29, 2009, Wells Fargo informed us that we were not in compliance with the fixed charge coverage ratio covenant under the senior secured revolving credit facility, which was waived on March 17, 2010, when we entered into an amendment that reduced the maximum available borrowings to $175.0 million. Under the facility, we are subject to a daily cash sweep to pay down amounts outstanding from our existing cash and cash equivalents.

The senior secured revolving credit facility is secured by substantially all of our assets. The outstanding borrowings drawn under the facility cannot exceed our borrowing base, which is calculated based upon specified percentages of eligible accounts receivable and inventories. Borrowings under the facility bear interest at our option at either the greater of Wells Fargo’s “Prime Rate” or federal funds open rate plus 0.5%, plus up to 3.25% per annum, or the adjusted Eurodollar rate used by the lender, plus up to 4.50% per annum. As of March 31, 2011, the facility had an outstanding balance of $119.7 million. In addition, we must pay monthly, in arrears, a commitment fee of 0.75% per annum on the unused amount of the facility’s total commitment. As of March 31, 2011, $5.9 million of standby letters of credit were issued against the facility. The facility also requires a $10.0 million general reserve, which lowers our availability. The remaining availability related to the facility was $39.4 million as of March 31, 2011, which is based upon the borrowing base collateral of $175.0 million at that date. We are subject to certain covenants as to minimum availability and fixed charge coverage

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ratios and other customary covenants, including covenants restricting the incurrence of indebtedness, the granting of liens, the sale of assets, the amount of annual capital expenditures and the declaration of dividends and other distributions on our capital stock. We were in compliance with all such covenants at March 31, 2011. However, the availability of the senior secured revolving credit facility could be reduced if the levels of the accounts receivable and inventory securing the facility were to fall or restricted altogether if we fail to satisfy our financial covenants. In addition, if our outstanding balances exceeded the amounts we were eligible to borrow at the end of any period, we would have to repay that excess. Also, if we fail to satisfy the covenants, it could result in an event of default occurs under the facility. If an event of default occurred as a result of a failure to satisfy a covenant or otherwise, the maturity of the loans could be accelerated. There is no assurance we would have the funds available to repay the excess or the balance of the facility.

Senior Secured Term Loan

On July 30, 2010, we entered into a $50.0 million senior secured term loan with DDJ Capital Management LLC. The senior secured term loan facility is secured by a first lien on certain of our fixed assets. The term loan is payable in quarterly installments of $625,000, which commenced on December 31, 2010 and increase to $1.25 million quarterly starting December 31, 2011, with the remaining balance due on September 6, 2013. The term loan includes a prepayment requirement starting with the fiscal year ending September 30, 2011, in the event that “excess cash flows,” as defined in the senior secured term loan agreement, are generated. The term loan bears interest at the applicable margin of 13.5% plus the adjusted Eurodollar rate in effect with a minimum floor of 1.5%. The interest rate as of March 31, 2011 was 15.0%. We are subject to certain covenants as to minimum excess availability and fixed charge coverage and leverage ratios and other customary covenants, including covenants restricting the incurrence of indebtedness, the granting of liens, the sale of assets, the amount of annual capital expenditures and the declaration of dividends and other distributions on our capital stock. As of March 31, 2011, the most recent required measurement date under the senior secured term loan, we were in compliance with these covenants. However, if we fail to satisfy the covenants, it could result in an event of default occurs under the term loan. If an event of default occurred as a result of a failure to satisfy a covenant or otherwise, the maturity of the loan could be accelerated. There is no assurance we would have the funds available to repay the balance of the term loan.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements (except the operating leases noted under “—Contractual Obligations and Commitments”) that are reasonably likely to have a material effect on our financial condition, results of operations, liquidity or capital resources.

Inflation

We do not believe that inflation has had a material effect on our results of operations. However, our business could be affected by inflation in the future.

Quantitative and Qualitative Disclosure About Risk

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. We are exposed to various market risks, including fluctuations in interest rates, foreign currency exchange rates, the price of raw materials (in particular nickel, which is a commodity) and natural gas market price increases.

Fluctuations in interest rates affect our interest expense on variable rate debt. Our senior secured revolving credit facility bears interest at a variable rate. Likewise the senior secured term loan bears interest at a variable rate, subject to a minimum floor. The term loan bears interest at the applicable margin of 13.5% plus the adjusted Eurodollar rate in effect with a minimum floor of 1.5%. From time to time, we utilize interest rate swaps to economically hedge our interest rate risk. As of March 31, 2011, we did not have any derivative instruments to

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hedge the effects of changes in interest rates. As of March 31, 2011, assuming no change in the outstanding balance of $119.7 million of the senior secured revolving credit facility, a one percent change in interest rates would result in an approximate $0.7 million change in our results of operations, after consideration of the effect of income taxes. Additionally, as of March 31, 2011, assuming no change in the outstanding balance of $48.8 million of the senior secured term loan, a one percent change in interest rates would result in an approximate $0.3 million change in our results of operations, after consideration of the effect of income taxes.

The cost of raw materials is a significant component of our total cost of products sold, representing approximately 48% of our total cost of products for each of the six months ended March 31, 2011 and 2010. Raw material prices vary based on numerous factors, including quality, and are subject to frequent market fluctuations. Future raw material prices cannot be predicted with any degree of certainty. We do not maintain any long-term written agreements with any of our raw material suppliers, excluding natural gas.

We have implemented a raw material surcharge pricing mechanism on our manufactured products to help offset the impact of raw material price fluctuations. For substantially all semi-finished products, the surcharge is calculated at the time of order entry, based on current raw material prices. For substantially all finished products, the surcharge is calculated based on the monthly average raw material prices during the three months prior to the month preceding shipment. While the raw material surcharge mechanism is designed to offset modest fluctuations in raw material prices, it cannot immediately absorb significant changes in raw material prices. A material change in raw material prices within a short period of time could have a material effect on our financial results and there can be no assurance that the raw material surcharge mechanism will completely offset immediate changes in our raw material costs.

Fluctuations in the price of molybdenum and nickel, our two most significant raw materials, subject us to commodity price risk. We manage our exposure to this market risk through internally established policies and procedures, including negotiating raw material escalators within product sales agreements and continually monitoring and revising customer quote amounts to reflect the fluctuations in market prices for nickel. We do not presently use derivative instruments to manage this market risk, but may do so in the future. We monitor our underlying market risk exposure to a rapid change in nickel prices on an ongoing basis and believe that we can modify or adapt our strategies as necessary. However, there is a risk that we may not be able to successfully offset a rapid increase in the cost of raw material in the future as we have been able to in the past.

We have foreign currency exchange risk primarily because our foreign subsidiaries maintain receivables and payables denominated in currencies other than their functional currency. These foreign subsidiaries manage their own foreign currency exchange risk. Our U.S. operations transact their foreign sales in U.S. dollars, thereby avoiding fluctuations in foreign exchange rates. We are not currently party to any currency contracts. Currently, the impact from any changes in foreign currency exchange rates is not expected to have a material impact on the financial condition of the Company.

The manufacturing of certain of our products requires a significant volume of natural gas. We have long-term delivery contracts for natural gas for our Latrobe facility that will expire in March 31, 2012. These natural gas contracts do not obligate us to purchase a specific quantity but contain an indexed pricing mechanism.

As of March 31, 2011, we were party to 20 contracts to purchase natural gas for the months of April 2011 through December 2011. The contracts range between 10,000 and 20,000 mcf per month each at fixed prices of $3.985 to $4.810 per mcf. We are obligated to purchase the agreed upon amount at the agreed upon prices plus a basis cost of $0.19 per mcf, a transportation cost of $0.36 per mcf and a pool fee of $0.08 per mcf.

Critical Accounting Policies

Our financial statements are compiled in accordance with GAAP. Our critical accounting policies are those accounting policies that involve the use of complicated processes assumptions and/or judgments in the preparation of our financial statements. We have identified the following critical accounting policies for the current year.

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The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. The more significant areas requiring the use of management estimates and assumptions relate to the accounting estimates, trade accounts receivable—allowance for doubtful accounts, inventory obsolescence and valuation, goodwill and identifiable intangible assets and their impairment, revenue recognition, property, plant and equipment and its impairment, pension and other postretirement plans, stock-based compensation and income taxes. Our management bases its estimates on historical experience, expectations of the future and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.

Trade Accounts Receivable—Allowances for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. We maintain an allowance for doubtful accounts for estimated losses inherent in our accounts receivable portfolio. In establishing the allowance for doubtful accounts, our management considers historical losses experienced by us, as well as trends, current receivables aging, and existing industry and national economic data. The allowance for doubtful accounts is reviewed monthly and adjustments are made when necessary. Account balances are charged off against the allowance for doubtful accounts after all means of collection have been exhausted and the potential for recovery is considered remote. We do not have any off-balance sheet credit exposure related to our customers.

Inventory Obsolescence and Valuation

Our inventories are stated at the lower of cost or market. Latrobe uses the first in, first out method to determine cost, while two of our subsidiaries, Latrobe Specialty Metals Distribution, Inc. and Specialty Steel Supply, Inc., use the average cost method. Such costs include the acquisition cost for raw materials and supplies, direct labor and applied manufacturing overhead within the guidelines of normal plant capacity. Provisions are made for slow moving and obsolete inventory based upon management’s expected method of disposition.

Goodwill and Identifiable Intangible Assets and Impairment

Goodwill is an asset representing future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized.

Goodwill is tested for impairment annually as of the balance sheet date and whenever events or circumstances indicate that the carrying value may not be recoverable. The evaluation of impairment involves comparing the fair value of the associated reporting unit to its carrying value, including goodwill. Fair value is estimated using discounted future cash flows and, if available, comparable market values.

Identifiable intangible assets are recorded based upon estimated fair value. Intangible assets are amortized over their respective estimated useful lives and reviewed for impairment whenever events or circumstances indicate that the carrying amounts may not be recoverable. Our intangible assets consist of customer relationships and patents.

Revenue Recognition

We recognize revenue when title is transferred either when products are shipped from us or received by the customer, the customer takes ownership and assumes the risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable. Sales tax collected from customers and remitted to governmental authorities is accounted for on a net basis and therefore is excluded from revenues in the consolidated statement of operations.

Property, Plant and Equipment and Impairment

Property, plant and equipment are stated at cost. Maintenance and repairs are expensed as incurred, while replacements and betterments are capitalized if they extend the useful life of the related asset. Costs for major

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maintenance activities are expensed as incurred. Depreciation of plant and equipment for financial reporting purposes is calculated on the straight line method over the estimated remaining useful lives of the assets, as follows:

Buildings	21—45 years
Machinery and equipment	2—20 years

Approximately 90% of depreciation expense is capitalized as part of the cost of producing inventory and expensed as cost of sales as inventory is sold, and 10% is recorded in selling, general and administrative expense in each year. Assets acquired in business combinations are depreciated over their remaining useful lives. We review the carrying value of our long lived assets for impairment whenever events or circumstances indicate that the carrying amounts may not be recoverable. Should circumstances arise where the expected future undiscounted cash flows are less than asset carrying values, we would recognize an impairment loss for the excess of the carrying value over the fair value, if any. Fair value would be determined based upon discounted estimated future cash flows.

Pension and Other Postretirement Plans

We have a noncontributory defined benefit pension plan covering substantially all of Latrobe’s hourly employees upon their retirement. The benefits are based on age, years or service and the greater of the benefit level at the time of retirement or termination of employment, or the level of compensation during the last five years of the last ten years before retirement. We also sponsor a defined benefit health care plan for substantially all retirees and full-time employees.

We record annual amounts relating to our pension and postretirement plans based on calculations that incorporate various actuarial and other assumptions, including discount rates, mortality, assumed rates of return, compensation increases, turnover rates and healthcare cost trend rates. We review our assumptions on an annual basis and make modifications to the assumptions based on current rates and trends when it is appropriate to do so. The effect of these modifications to those assumptions is recorded in accumulated other comprehensive income and amortized to net periodic cost over future periods using the corridor method. We believe that the assumptions utilized in recording our obligations under our pension and postretirement plans are reasonable based on our experience and market conditions.

The net periodic costs are recognized as employees render the services necessary to earn the postretirement benefits.

Income Taxes

We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We record interest related to unrecognized tax benefits in interest expense and penalties in selling, general, and administrative expenses to the extent necessary to provide such amounts.

Beginning with the adoption of Financial Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (included in FASB ASC Subtopic 740 10, Income Taxes—Overall), as of October 1, 2009, we recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is

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greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Prior to the adoption of Interpretation 48, we recognized the effect of income tax positions only if such positions were probable of being sustained. The adoption of Interpretation 48 did not have a material impact on our consolidated financial statements.

Share-Based Payment Arrangements

We account for our employee stock-based compensation awards in accordance with ASC Topic 718, Compensation—Stock Compensation. ASC Topic 718 requires that all employee stock-based compensation is recognized as a cost in the financial statements and that for equity-classified awards such cost is measured at the grant date fair value of the award. We estimate grant date fair value using the Black-Scholes-Merton option-pricing model. We have elected to treat awards with graded-vesting schedules as individual awards (tranches) for each separately vesting portion of the awards as long as the vesting is solely based on a service condition.

New Accounting Pronouncements

We have reviewed all new accounting pronouncements and have concluded that none of the recently issued pronouncements will have a material impact on our consolidated results of operations, financial condition or financial disclosure.

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INDUSTRY AND MARKET DATA

This prospectus includes industry and market data that we obtained from periodic industry publications, third-party studies and surveys, filings of public companies in our industry and internal company surveys. These sources include Airbus, Baker Hughes, Boeing, GlobalData, the International Civil Aviation Organization, the U.S. Census Bureau, the U.S. Geological Survey, the U.S. Department of Energy and the EIA. The data that was used is publicly available or available through subscriptions that are available to the public for a fee. Industry publications and surveys generally state that the information contained therein has been obtained from sources believed to be reliable. While we believe that each of these publications and surveys is reliable, we have not independently verified market and industry data from third-party sources. Also, some data is based on our management’s internally derived good faith estimates, which are based on, among other things, third-party sources, internal market research, publicly available information about our competitors and feedback from distributors and customers.

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BUSINESS

Our Company

We are one of the largest manufacturers and a global distributor of high-performance specialty metals and alloys. We serve a diversified group of end markets, including the commercial aerospace, defense, oil and gas exploration and production, power generation and industrial markets. We develop, produce and market over 350 grades of specialty metals and alloys that are used in demanding applications such as the manufacture of: (i) landing gear, helicopter shafts, jet engine fasteners and jet engine bearings for the commercial aerospace and defense markets; (ii) downhole logging tools, completion tubes and valves for the oil and gas exploration and production market; (iii) turbine bolts, shafts, pins and blades for the power generation market; and (iv) metal cutting, punching, sawing and stamping dies for the industrial market. To meet the exacting requirements of our customers, we produce materials that possess specific metallurgical properties, including high-strength, corrosion resistance, hardness, fatigue resistance, fracture toughness and temperature resistance. We are able to produce these advanced materials as a result of the highly specialized equipment we have installed at our facilities, the talented team of metallurgists and engineers that we employ and the knowledge we have gained from decades of manufacturing specialty metals.

We have been in continuous operation since 1913 and have manufactured specialty metals for the commercial aerospace and defense industries for over 50 years. We were acquired by our current stockholders in December 2006 from Timken, which had owned our Company since 1975. Since our acquisition from Timken, we have implemented a strategy to increase our production of higher value-added specialty metals and to target underserved end markets and customers that require difficult-to-produce grades of metals. As part of this strategy, we have invested approximately $60 million in state-of-the-art equipment and facilities to, among other things, increase our VIM furnace capacity by approximately 200% and to increase the number of our VAR furnaces by approximately 30%. This new equipment was placed into service in September 2008 on schedule and on budget, and received subsequent certifications in 2009. This increased capacity provides the basis for our aggressive expansion into new products, such as nickel-based super alloys, and new end markets, such as oil and gas exploration and production and power generation. We have received a wide assortment of critical end-user qualifications and certifications on this new equipment that are required to generate commercial sales.

We operate through two segments: Manufacturing and Distribution. We conduct our manufacturing activities at facilities in Latrobe, Pennsylvania; Franklin, Pennsylvania; and Wauseon, Ohio. We also operate warehouse facilities in Germany and the United Kingdom to fulfill the needs of our Manufacturing customers. The centerpiece of our Manufacturing facilities are two of the largest operating VIM furnaces in the world and 17 VAR furnaces, including four of the largest in the world. Our Manufacturing facilities also include equipment and other assets used for primary melting, forging, rolling, finishing and metallurgical testing, all of which allow us to meet the specific needs of our customers. For the fiscal year ended September 30, 2010, our Manufacturing segment accounted for approximately 64% of our net sales and 79% of our operating income.

Our Distribution segment globally sources and distributes corrosion resistant steels, tool steels and powder metals for a wide range of industries. We are a leading distributor of tool steels in North America, and we operate eight service centers that are strategically located in the United States and Canada to fulfill the needs of our Distribution customers. We believe our Distribution segment is differentiated from its competitors by the breadth and depth of our value-added machining services. Over 70% of the products we distribute undergo a value-added process such as cutting, milling, grinding, precision straightening, center-less grinding to exact tolerances or CNC machining to meet our customers’ specific requirements. Like our Manufacturing segment, our Distribution segment continually targets opportunities to distribute and process higher value-added metals to new end markets and new customers. An example of our implementation of this strategy was our 2010 agreement with Crucible Industries to become its exclusive North American distributor for the majority of its CPM branded products. These products are used by a large base of industrial, medical and aerospace companies in attractive, growing applications, and CPM is one of the most well-respected brands in the powder metal market. In addition, in September 2008, we acquired Specialty Steel Supply, a Houston, Texas-based distributor of nickel-based super

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alloys and high-end corrosion resistant alloys to gain entry into the oil and gas exploration and production market. For the fiscal year ended September 30, 2010, our Distribution segment accounted for 36% of our net sales and 21% of our operating income.

Our direct customers, which typically include forgers, machine shops and distributors, further process the specialty metals and alloys that we manufacture for ultimate use by a variety of OEMs and end users. Direct Manufacturing customers include Canton Drop Forge, Firth Rixson Limited, SIFCO Industries, Inc., Specialty Ring Products, Inc. and Wyman-Gordon Company. The end users of the specialty metals and alloys that we manufacture include AMCOM, Airbus, Augusta Engine Parts Inc., Bell Helicopter Textron Inc., Boeing, Caterpillar Inc., Central Wire, FAG Kugelfischer Georg Schaefer AG, General Electric Company, Halliburton, Kennametal Inc., Lockheed Martin Corporation, National Oilwell Varco, Newell Rubbermaid Inc., Rolls-Royce Plc, Schlumberger Ltd., SKF Group, Snecma S.A. and United Technologies Corporation. The end users of the specialty metals and alloys sold through our Distribution segment include Alcoa Inc., Cummins Inc., Eaton Corporation, General Dynamics Corporation, GKN plc, Halliburton, Timken and Weatherford International Ltd.

Business Strengths

We believe that we have the following competitive strengths:

• Extensive Product Portfolio Serving Attractive End Markets. We are one of largest manufacturers of specialty metals and alloys, producing over 350 grades of metals that are used in healthy, growing end markets such as commercial aerospace and defense, oil and gas exploration and production and power generation. We have been a supplier to the commercial aerospace industry over the last 50 years and have a leading market position supplying mission critical specialty metals for the defense industry. We have recently expanded our market position in other attractive, high-margin end markets such as oil and gas exploration and production and power generation.

• Strong Competitive Position and High Barriers to Entry. Many of our customers, OEMs and other end users in the markets we serve require us to complete rigorous qualification processes. These qualification processes are expensive both for the end user and the company seeking qualification. They often require two to three years to complete, and they require a high degree of metallurgical and technical expertise. We believe these qualifications cannot be achieved easily by new market entrants, leading to high barriers to entry. For example, we are one of only three globally qualified producers of specialty metal for the Airbus A380 landing gear. We are also the only qualified supplier of specialty metals for the solid rocket boosters used by NASA. Additionally, we have undergone numerous certification processes to be eligible to supply metals for mission critical parts to the commercial aerospace and defense markets, including ISO 9001:2000, AS9100 and the NADCAP. We also benefit from the fact that the United States military, an important end user of our specialty metals, is required by statute to maintain a preferential supplier policy for domestic manufacturers, which enhances our position with the U.S. military relative to foreign competitors.

• Value-Added Production Process. We own and operate state-of-the-art manufacturing assets that enable us to produce high value-added specialty metals and alloys. From June 2007 to March 2010, we invested approximately $60 million into our Latrobe and Franklin, Pennsylvania facilities to increase the production capacity for our highest margin products, to expand our market share, to shorten our lead times to customers and to enable us to produce new, difficult-to-produce materials such as nickel-based super alloys that earn attractive profit margins. Our new VIM furnace was placed into service in September 2008 on schedule and on budget and received the rigorous, critical end-user qualifications in 2009 that are necessary for manufacturing commercial aerospace, oil and gas exploration and production and power generation specialty metal grades. This additional capacity provides the basis for our future growth.

• Critical Technical Expertise. Our manufacturing assets are complemented by a staff of well-trained, talented and experienced engineers and metallurgists. Our engineering and metallurgical expertise enables us to design and manufacture specialty metals and alloys that meet or exceed our customers’ needs for

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quality, consistency and process control. Since our materials are often used in applications with no tolerance for failure, a key requirement of our customers and the end markets they serve is our ability to document each detail of our manufacturing process to demonstrate conformity to standards. These process controls are not replicated easily by new market entrants. As a result, we believe we are recognized among our customers for our ability to consistently meet or exceed their technical specifications and those of the end users in the markets we serve.

• Diversified Customer Base with Long-Standing Relationships. We believe that the high quality of our products, our high level of customer service and our ability to serve as a one-stop supplier for a wide range of products and value-added services enables us to achieve a high rate of customer retention and to win new business. We have long-standing relationships with many of our customers and have supplied our top ten Manufacturing customers (based on net sales for the last twelve months ended March 31, 2011) for over 25 years on average. We have a diversified customer base and no significant revenue concentration with any one customer. In the aggregate, our top ten customers accounted for approximately 18% of our net sales for the last twelve months ended March 31, 2011, and none of our customers accounted for more than 3.5% of our net sales during that period.

• Strong Distribution and Value-Added Services Capabilities. Through our Distribution segment, we distribute corrosion resistant steels, tool steels and powder metals and we provide rapid, on-time delivery, excellent customer service and a wide product selection. We also provide value-added processing services including cutting, grinding and CNC machining to meet our customers’ specific requirements. We believe we derive competitive benefits from our participation in both the manufacturing and distribution of specialty metals and alloys. Our manufacturing capability gives us the flexibility to source specialty metals and alloys either internally or from our broad range of global suppliers, depending on availability, and thus to adjust our mix of distribution products. In addition, the ability to source products from our Manufacturing segment allows our Distribution segment to offer our customers shorter lead times and to ensure adequate inventory levels. Similar to our efforts in our Manufacturing segment, we constantly strive to improve our product mix by distributing and processing higher value-added products.

• Seasoned Management Team and Experienced Workforce. We are led by an experienced management team whose members have an average tenure of over 15 years in the specialty metals manufacturing industry. Our senior management team has extensive experience in managing capital expenditure projects on time and on budget and was responsible for Latrobe winning the 2010 American Metal Market Steel Excellence Award for Best Operational Improvement related to the capacity expansion of our Manufacturing operations. Our current management team is largely responsible for leading our strategic transformation since 2007. Furthermore, their efforts during the economic downturn positioned us to increase market share, to profit from the current favorable market conditions and to increase operating efficiency through the implementation of continuous improvement programs. Our workforce numbered approximately 800 employees as of March 31, 2011. We are able to attract and retain qualified employees due to our reputation in the marketplace, our good standing within the communities in which we operate, our ability to continue to operate through economic cycles and the emphasis we place upon operating safety.

Business Strategy

We intend to expand our business and to increase stockholder value by pursuing the following strategies:

• Strengthen Our Existing Position in Commercial Aerospace and Defense. To strengthen our leading position within the commercial aerospace and defense industries, we intend to meet the needs of our customers by reducing lead times and supplying metals for innovative applications. We are leveraging the installation of the largest VIM capacity in North America by introducing high technology alloys that support the commercial aerospace and defense industries. These nickel-based super alloys are difficult to produce and are characterized by their high-temperature and high-strength attributes resulting from the manufacturing process path they follow. Our ability to produce these metals in large, 30-ton batch sizes allows greater

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responsiveness to customer needs by producing larger quantities of material with more reliable lead times. Comparatively, our competitors typically melt in batch sizes of 20 tons or less.

• Expand to New, High-Margin Markets Through New Product Development. We plan to continue Latrobe’s long history of manufacturing innovation and to enhance our product mix by manufacturing new, complex and higher value-added specialty metals that fulfill our customers’ needs. The key aspects of this strategy include identifying new customers that are underserved, addressing end markets with attractive long-term growth dynamics and developing the required metallurgical expertise. Target markets for our product development portfolio are global oil and gas exploration and production, power generation and precision cutting applications. Since 2007, we have formed new relationships with Grupo Frisa, National Oilwell Varco, Halliburton and GE Energy, enabling us to increase significantly our exposure to these target markets. We believe the rapid industry acceptance of our recent entry into the nickel-based super alloy business demonstrates our ability to introduce new products successfully. These new metals address the most demanding applications, such as for downhole production tools in oil and gas, land-based gas turbine blades and shaft materials for power generation and commercial aerospace components. These new materials are designed to meet the needs of the largest OEMs such as GE Energy, Siemens, Airbus, Boeing, COMAC, Firth Rixson Limited and Timken Aerospace, and they demonstrate Latrobe’s commitment and ability to continue to expand its product offerings.

• Extend Participation in Global Markets. From 1995 to 2004, commercial aircraft orders from emerging markets rarely exceeded 50 planes and generally (with a few exceptions) accounted for 5% or less of Boeing’s total annual orders. However, beginning in 2005, demand from emerging market economies increased significantly, representing aircraft orders of roughly 200 planes or more and between 15% to 25% share of total global aircraft orders from Airbus and Boeing, before falling in 2008 and 2009. In 2010, emerging market demand returned to roughly 150 planes and 25% of total global aircraft orders from Airbus and Boeing. As a result of this increased demand, commercial aerospace production has begun to expand to developing nations. In anticipation of this shift, we made an initial investment in China and have begun to develop deeper customer relationships in Asia. For example, we have recently expanded our China and Asia platforms by winning key approvals for China’s COMAC C919 single aisle aircraft that enable us to supply its specialty metals. Additionally, we have extended our global reach by competing in the South Korean helicopter and fighter jet markets. During the current fiscal year, we are scheduled to open a Chinese service center that will enable us to supply existing and new aerospace customers more effectively. We are also evaluating additional global investments in Asia that would increase our service capabilities.

• Continue to Expand Critical Technical Expertise and Technology. We are expanding capacity and improving operating efficiencies through ongoing staff development and capital investments in our manufacturing facilities and equipment. To augment our metallurgical and operating expertise, we have increased the number of our metallurgists by 15% and our engineers by 14% since the prior calendar year. Since March 2007, we have increased the number of our metallurgists by 43% in conjunction with our expansion of manufacturing capacity and our business development initiatives. This has enabled us to broaden our product offerings, such as nickel-based super alloys, and to selectively forward integrate with products such as edgewire, a highly technical product used in the manufacture of industrial bandsaws. Although a substantial portion of our new production capacity will be utilized to meet the needs of current customers for our existing products, a meaningful amount of this new capacity will be available to develop and manufacture new products for new customers. As demonstrated by our recent installation of new VIM and VAR capacity, we intend to anticipate the needs of our customers by implementing new technology and capacity enhancement projects ahead of our peers.

• Maintain Financial Strength. Upon completion of this offering and the resulting reduction of our debt, we will have $             million of debt and a financial leverage ratio of less than             x, as measured by debt divided by $            million of EBITDA for the trailing twelve month period ended March 31, 2011. Additionally, upon completion of this offering, we will have $             million of excess availability under our senior secured revolving credit facility. We believe that having a strong balance sheet will give us a

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favorable position versus our competition, enable us to remain strong financially throughout business cycles and permit us to pursue acquisitions and fund capital expenditures that may enhance our strategic position within the industry.

Our Industry

We operate in the specialty metals and alloys sector of the steel industry, a sector that represented approximately 6% of U.S. steel shipments in 2009. We consider specialty metals and alloys to include high-performance alloys, nickel-based alloys and super alloys, high-speed and tool steels, titanium, stainless steels, electronic and thermostatic alloys and electrical steels. In contrast to high-volume carbon steel producers, manufacturers of specialty metals and alloys use highly customized equipment to produce relatively small quantities of product with specific technical and metallurgical properties designed to meet the needs of customers and their applications. Specialty metals and alloys contain a higher quantity of elements such as nickel, chromium, molybdenum, niobium, tungsten, manganese, titanium and cobalt than does basic carbon steel in order to create physical, chemical or metallurgical properties not possessed by basic carbon steel. These properties include high strength, corrosion resistance, hardness, fracture toughness and temperature resistance. Because of the critical importance of these properties to the end users of specialty metals and alloys, particularly end users employing them in commercial aerospace and defense applications with no tolerance for failure, and the inherent need for uniformity of quality, a reputation for high quality production is paramount to a specialty metal manufacturer’s success. Given the higher value added nature of specialty metals and alloys and the cost of the raw material inputs that are used in the manufacturing process for these products, specialty metals and alloys generally carry a higher selling price per pound than basic carbon steel.

The following chart shows the volume of steel shipments in the United States in 2009, including carbon steel and certain types of specialty metals and alloys, which are labeled as specialty steel.

Source: 2009 U.S. Geological Survey Iron and Steel Industry Survey and U.S. Census Bureau Annual Survey of Manufacturers.

We operate in all of the markets for specialty steel shown above.

Specialty metals and alloys are produced in a variety of forms, including sheet, strip, plate, wire, rod, bar and tubing. Specialty metals and alloys are commonly used in the manufacture of critical aerospace components

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and structures, military and defense products, drilling equipment, energy exploration equipment, components for land based gas turbines, power generation and distribution equipment, automotive parts, appliances, communications and electronics equipment, marine equipment, environmental equipment and medical and health equipment. Other common, lower value-added uses of specialty metals and alloys are for the manufacture of home utensils and cutlery, construction products, tools, dies and food and chemical processing equipment.

The products we manufacture and finish consist primarily of high-strength alloy steel, corrosion-resistant steel, high-temperature resistant alloys, high-performance bearing steel, high-speed steel, nickel-based super alloys, titanium and tool steel.

Our Markets

The principal markets into which we sell our products are commercial aerospace, defense, oil and gas exploration and production, power generation and industrial.

Commercial Aerospace

Growth in passenger travel

In the six months ended March 31, 2011, our net sales to the commercial aerospace market represented approximately 55% of Manufacturing net sales. We also sell to the commercial aerospace market through our Distribution segment. The commercial aerospace industry has demonstrated steady growth over the last 40 years driven by, among other factors, the emergence of an increasingly affluent middle class population who travel more frequently for business and pleasure and an increased level of demand for air travel in rapidly growing emerging regions such as Asia and the Middle East. Within the commercial aerospace industry, the primary measure of air travel volume is a metric known as RPKs which quantifies the number of kilometers flown by all paying passengers within a certain time period. RPKs have increased at a 5.0% compounded annual growth rate from 1978 to 2010, exceeding the rate of growth in global GDP of 2.8% per year during the same time period. Even in the face of significant shocks such as the September 11, 2001 terrorist attacks, the 2003 SARS epidemic in Asia and the financial crisis of 2008 to 2009 that adversely affect air travel, experience has shown such declines in RPKs to be relatively short-lived.

The graph below highlights the steady growth of RPKs over the last 32 years as well as the resiliency of the commercial aerospace business, even in the face of major systemic shocks:

Source: International Civil Aviation Organization

Air traffic volume has grown steadily for most of the last two years after a period of decline during the global financial crisis of 2008 and 2009. Passenger air traffic, as measured by RPKs, has increased on a year over year basis in every month from September 2009 to March 2011 (except April 2010 due to the Icelandic volcano eruption). Freight air traffic has also increased on a year over year basis in every month from November 2009 to April 2011, with greater than 20% increases in each month from December 2009 to July 2010. In 2010, global passenger air travel, as measured by RPKs, increased by 6.3% over 2009, while cargo traffic increased by 6.7% versus 2009.

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Airbus and Boeing recorded a doubling of orders in 2010

Within the commercial aerospace industry, aircraft orders are a closely watched indicator of future demand for, among other things, specialty metals, aerospace components, structures and, ultimately, replacement parts. In 2010, new aircraft orders rebounded substantially from 2009, a year which represented the lowest level of orders since 2002. Aggregate net aircraft orders for 2010 were 1,104 planes, with aircraft orders of 574 and 530 for Airbus and Boeing, respectively. These orders represented a 146% increase over 2009 when Airbus and Boeing reported orders of 306 and 142, respectively. The table below shows Airbus and Boeing’s annual aircraft orders from 2001 to 2010.

	2001		2002			2003			2004			2005			2006			2007			2008			2009			2010
Airbus		260		234			254			370			1,056			791			1,341			777			306			574
Boeing		191		187			239			272			1,002			1,044			1,413			662			142			530
Total		451		421			493			642			2,058			1,835			2,754			1,439			448			1,104
Growth %				(6.7	%)		17.1	%		30.2	%		220.6	%		(10.8	%)		50.1	%		(47.7	%)		(68.9	%)		146.4	%

Source: Wall Street research derived from announcements by Airbus and Boeing.

Increase in emerging market demand

The rebound in order activity during 2010 was driven by the stabilization of the world economy, an increase in the availability of aircraft financing on attractive terms and a rebound in orders from air carriers in emerging economies. From 1995 to 2004, orders from emerging markets rarely exceeded 50 planes and generally (with a few exceptions) accounted for 5% or less of Boeing’s total annual orders. However, beginning in 2005, demand from emerging market economies increased significantly, representing aircraft orders of roughly 200 planes or more and between 15% to 25% share of total global aircraft orders from Airbus and Boeing, before falling in 2008 and 2009. In 2010, emerging market demand returned to roughly 150 planes and 25% of total global aircraft orders from Airbus and Boeing. The graph below depicts the actual aircraft orders and order share from emerging market economies from 1995 to 2010.

Source: Boeing

Emerging market order activity is closely watched given the significant size of this largely untapped market. As an example, Airbus estimated in 2006 that while the average American would make 2.2 airplane trips in 2006, only one out of 44 Indians were expected to travel by airplane that year. The strength in emerging market aircraft orders appears to be continuing into 2011, as demonstrated by Airbus’s January 2011 announcement that IndiGo, an Indian-based budget airline, had placed the largest commercial aircraft order in aviation history, a $15.6 billion deal to purchase 180 planes. In China, industry analysts continue to predict that rapid urbanization and China’s ongoing investment in infrastructure will make it the largest market for commercial aircraft outside the United States, with forecasted deliveries of 4,330 new airplanes over the next 20 years valued at approximately $480 billion. These planes are expected to be needed to carry the 214 million new air travelers that the International Air Travel Association predicts China will add by the end of 2014.

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Future aircraft orders are also expected to be driven by North American and European carriers’ need to replace their aging, fuel-inefficient fleets, a need that becomes a higher priority during periods of high crude oil prices and therefore high jet fuel prices. According to data from Boeing, it is estimated that approximately 13,490 airplanes will be replaced over the next 20 years due to rising fuel prices and the increasing burden of older, less efficient airplanes in circulation. At this replacement rate, 84% of the world’s fleet operating in 2029 will have been delivered after 2010, which would result in significant demand for specialty metals and alloys.

Airbus and Boeing have a substantial order backlog

As of December 31, 2010, Airbus and Boeing had a combined order backlog of 6,995 planes, representing a 1.9% increase in their backlog as measured against December 31, 2009. The backlog increase was driven by a more than doubling of orders in 2010 as compared to 2009. The order backlog for Airbus and Boeing represents over seven full years of deliveries (based upon 2010 delivery rates).

The graph below represents the historical backlog for world jet aircraft fleet:

Source: Airline Monitor and Airbus and Boeing company filings.

In response to this demand, Airbus and Boeing have announced a number of production rate increases to their supply chain that are planned to occur in 2011, 2012 and 2013. In February 2011, Airbus announced it will raise production rates for its A330 family to ten aircraft per month, up from eight aircraft per month, beginning in the second quarter of 2013 given strong market demand in the long-range, mid-size category. Additionally, in May 2011, Airbus announced that it was raising production rates for its A320 family from 36 aircraft per month to 42 aircraft per month beginning in the fourth quarter of 2012. Boeing also announced 777 program production increases in December 2010 to 8.3 aircraft per month starting in the first quarter of 2013, up from 7 aircraft per month previously, the second such production rate increase announcement in 2010. As Airbus and Boeing increase capacity and production rates, the entire aerospace supply chain, beginning with manufacturers of specialty metals and alloys, is expected to experience a significant increase in demand.

The table below represents historical and projected large commercial aircraft deliveries for Airbus and Boeing:

	2006		2007			2008			2009			2010			2011			2012			2013			2014			2015
Airbus		434		453			483			498			506			558			610			632			608			579
Boeing		398		441			375			481			462			487			603			658			691			666
Total		832		894			858			979			968			1,045			1,213			1,290			1,299			1,245
Growth %				7.5	%		(4.0	%)		14.1	%		(1.1	%)		8.0	%		16.1	%		6.3	%		0.7	%		(4.2	%)

Source: Wall Street research derived from announcements by Airbus and Boeing.

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In addition to demand for new plane deliveries, it is also generally believed that the aftermarket for replacement parts will improve in 2011 as airlines begin to carry out significant maintenance that was deferred during the global financial crisis of 2008 to 2009.

Defense

In the six months ended March 31, 2011, our net sales to the defense market represented approximately 12% of Manufacturing net sales. We also sell to the defense market through our Distribution segment. We anticipate continued demand for our products due to the fact that the United States military continues to commit troops and equipment to Iraq and Afghanistan and the military’s need to rebuild its military stock to the same level of readiness prior to the initiation of conflicts in these countries. Further, the nature of these conflicts creates strong demand for helicopters, which are ideal for rapid deployment of military personnel. The specialty metals and alloys that we manufacture can be found in helicopter shafts, bearings and gearboxes, as well as in missile casings and torsion bars for Bradley Fighting Vehicles.

Congress recently approved the fiscal year 2011 defense budget of $549 billion, excluding funding for Overseas Contingency Operations (“OCO”) for Iraq and Afghanistan, which represents a 3.4% increase versus the 2010 base budget and an 85% increase over the fiscal year 2001 base budget of $297 billion. The fiscal year 2011 budget allocates $113 billion for the procurement of new equipment, a 7.7% increase over the fiscal year 2010 budget.

The graph below represents the historical and proposed DoD budget, with U.S. dollars in billions:

Source: U.S. Department of Defense

On February 14, 2011, the U.S. President released his proposed defense budget for fiscal year 2012. This plan calls for a base budget of $553 billion, representing a 0.7% increase from fiscal year 2011, and OCO funds of $118 billion, representing a 26.1% decrease from fiscal year 2011. The plan outlines a number of “efficiencies” that are expected to result in total cost savings of $178 billion, of which $100 billion will be reinvested in “high priority requirements,” including military vehicles such as Bradley Fighting Vehicles, Abrams tanks and other equipment. Even though on-the-ground personnel are declining, the military’s investment in equipment and vehicles remains steady due to the need to restock after years of fighting in the extreme physical conditions of Iraq and Afghanistan. More recently, budget cuts have been proposed by House Budget Committee Chairman Paul Ryan that call for overall spending to be limited to no more than 20% of annual GDP. Anticipated cuts related to these caps have focused primarily on non-defense spending. We cannot predict the effect that any future budget cuts could have on our business.

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Oil and Gas Exploration and Production

In the six months ended March 31, 2011, our net sales to the oil and gas exploration and production markets represented approximately 3% of Manufacturing net sales. We believe the demand outlook from this end market is favorable and that demand will be driven by: (i) the incentives created for increased drilling as a result of current high oil prices; (ii) new technologies such as directional drilling and hydraulic fracturing that have improved the economics of certain fields, particularly in North American shale formations; (iii) the ability to drill in more severe and remote environments, aided by these new technologies and (iv) the concern that worldwide production could be curtailed in the future due to the ongoing political unrest in the Middle East and North Africa, causing a shift in drilling to regions such as North America.

Recovery in global oil demand

Driven by an improved global economy, the price of crude oil has increased substantially over the last two years from a low of $33.98 per barrel in February 2009 to roughly $100 per barrel in May 2011. The increase in prices has spurred increased drilling and exploration activity. The demand for oil is anticipated to remain strong over the next five years, with the Organization of Petroleum Exporting Countries projecting an increase in global oil demand from 85.5 million barrels per day (“mb/d”) in 2010 to 90.2 mb/d in 2015. This demand is expected to be driven by a rebound in U.S. consumption as industrial production picks up and by significant new demand from rapidly growing emerging economies such as China, India and Brazil. In order to meet this surge in demand, we believe significant production increases from the U.S. and Canada may be required.

The following graph shows the price per barrel of light sweet crude oil over the last two years in U.S. dollars per barrel:

Source: Bloomberg

Increased active drilling rigs and drilling activity

The recovery in oil and gas exploration and production is illustrated by the recent increase in the number of active drilling rigs in North America. Active rig counts fell substantially during the global economic recession due to the decline in oil and gas prices, with the active rig count reaching 916 rigs in July 2009. In the nearly two years since, North American rig counts have surged to 1,830 rigs as of April 29, 2011, representing an increase of 99% from July 2009. We believe that the projected increase in global drilling activity will drive demand for our products used in downhole logging tools and other oil field components. We manufacture a nickel-based super alloy commonly known as 718 that is used in these applications.

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The following graph represents the historical and projected North American active rig counts:

Source: Baker Hughes, Wall Street research

Increased use of horizontal drilling and hydraulic fracturing

One of the most significant trends in the oil and gas industry in recent years has been the shift to an increased use of horizontal drilling and hydraulic fracturing. Horizontal drilling is the process of drilling a vertical well from the surface to a location just above the target oil or gas reservoir and then curving the drilling angle from a vertical plane to a plane that intersects with the reservoir at a near-horizontal angle. By increasing contact with the oil and gas formation in this way, a producer can increase the yield, or amount of oil and gas produced, it gets from a reservoir.

The shift to horizontal drilling has been accompanied by the increasing use of hydraulic fracturing techniques to extract oil and natural gas within shale formations. Hydraulic fracturing is a procedure that can increase the flow of oil or gas from a well by pumping liquids down the well into subsurface rock under high pressure. The pressure is high enough to fracture the rock and create a network of interconnected fractures that serve as channels to direct oil and natural gas to the well bore. Hydraulic fracturing combined with horizontal drilling has substantially improved the return on drilling investments in a number of the important shale formations in the United States. The Marcellus Shale, the Permian Basin and the Bakken and Eagle Ford formations are regions within the United States where oil and gas drilling activity has increased substantially due to the effectiveness of hydraulic fracturing.

The shift to horizontal drilling and hydraulic fracturing requires heavier grade equipment that is made from corrosion resistant steel, high-temperature alloys and nickel-based super alloys. These metals are critical given the corrosive sand, fluids and proppants involved in the hydraulic fracturing process. As shown by the table below, horizontal rigs represented less than 7% of the total rig count as recently as 2003. In the latest Baker Hughes rig count, dated April 29, 2011, horizontal rigs now comprise approximately 57% of all North American rigs in service.

The following graph represents drilling by well type in North America since 1991:

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Source: Baker Hughes

Driven by advances in technology, drilling is also going to ever-greater well depths, the continuation of a thirty-five year trend. According to research from the EIA, the average feet drilled per well in 2009 was approximately 6,000 feet, an increase of 20% from roughly 5,000 feet as recently as 2000. Deeper well depths consume a larger quantity of downhole logging tools and equipment that are utilized in the drilling process and accordingly more specialty metals and alloys. We believe this trend will continue in the future aided by rapid improvements in technology.

The following graph shows the average feet drilled per U.S. well from 1949 to 2009:

Source: EIA

Power Generation

In the six months ended March 31, 2011, our net sales to the power generation market represented approximately 5% of net sales for the Manufacturing segment. We also sell to the power generation market through our Distribution segment.

We believe that the global growth in the construction of gas turbines, which require the use of high-temperature alloys, will continue to support the future demand for our products. Gas turbine demand is expected to increase due to the environmental and operational benefits that gas turbines provides, as well as the increasing availability of low-priced natural gas. Because natural gas produces less carbon dioxide when it is burned than does either coal or petroleum, governments implementing national or regional policies to reduce greenhouse gas emissions are encouraging the use of natural gas and potentially displacing other fossil fuels. In addition to the environmental benefits, other factors that drive the future demand for gas turbines include construction efficiencies (modular construction, fewer permit requirements than coal or nuclear, quick construction timelines and low installation costs), low operational costs after installation and public resistance to alternatives (for example nuclear power and clean coal technologies). According to the U.S. Department of Energy, gas turbines accounted for 15% of the U.S. power generation industry’s installed capacity in 1998 and are expected to account for 40% of the U.S. power generation industry’s installed capacity by 2020. Furthermore, the supply of natural gas is relatively abundant in North America and annual production is growing. The EIA expects North American natural gas production to increase from 19.2 trillion cubic feet in 2007 to 23.4 trillion cubic feet in 2035 due, in part, to the increased use of horizontal drilling and hydraulic fracturing.

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The following table represents the global gas turbine market by unit shipments:

Source: GlobalData, primary interviews with industry experts

Industrial

In the six months ended March 31, 2011, our net sales to the industrial market represented approximately 20% of net sales for the Manufacturing segment. Additionally, the majority of net sales for our Distribution segment is derived from the industrial end-market. Demand for high-speed and tool steels are highly correlated to the overall health of the industrial economy. Based on several key indicators (described below) that signal the current health of the industrial economy is improving, we believe demand for our products in the industrial market will strengthen in the near term.

Industrial production

Since the beginning of the third quarter of 2009, a rise in the international demand for goods combined with the continued replenishment of inventory levels has led to a surge in manufacturing output. Over the last six quarters, industrial production has grown at an annualized average rate of 5.8% and is forecasted to grow at an annual rate of 4.6% in 2011 and 5.0% in 2012.

Capacity utilization

Capacity utilization in the United States (a key measure of manufacturing output) has recovered from a low of 67.3% in the second quarter of 2009 to 76.8% at the end of 2010, the highest level since August 2008, but remains below the 1972 to 2010 average of 80.4%. Going forward, capacity utilization is forecasted to recover moderately as industrial production continues to improve.

Manufacturers’ new orders

Manufacturers’ new orders continue to gradually recover from the low observed during the economic recession, growing at an average annual rate of 15% since the first quarter of 2009. The growth in new orders is expected to continue at a moderate pace throughout the fiscal year ended September 30, 2011 and should provide for a favorable operating environment and continued demand for our products.

Our Products

The products we manufacture, process, distribute and sell to our customers can be grouped into categories based upon similarity of chemistry. These categories are high-temperature alloys, hot and cold worked tool steels, high-speed steel, alloy steels, corrosion resistant steels, bearing steels and nickel-based super alloys.

High-temperature alloys are nickel-based alloys to which various quantities of alloying elements such as cobalt, chromium and titanium are added, giving the final product enhanced properties such as improved corrosion resistance or high tensile strength at elevated temperatures. High-speed steel, hot and cold worked tool

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steels, alloy steels, corrosion resistant steels, bearing steels and nickel-based super alloys are iron-based alloys to which various quantities of alloying elements are added, including nickel, molybdenum, cobalt, tungsten, vanadium, chromium and manganese. These alloy additions result in a final product with certain desirable properties that are designed to meet the application needs of our customers. These properties include high-strength, improved ductility, increased corrosion resistance and high-wear resistance. High-speed steel and tool steels are generally only air melted products. Alloy steels, corrosion resistant steel, bearing steels and high-temperature alloys are produced by either vacuum induction melting, vacuum arc remelting or both.

For the commercial aerospace and defense markets, we generally produce and sell alloy steels, corrosion resistant steels, bearing steels and high-temperature or nickel-based super alloys. All of these products are vacuum arc remelted and some of these products are also vacuum induction melted, which results in a product that is free of defects and uniform in chemistry. Within the commercial aerospace and defense markets, we sell billet, bar and coil ranging in size from under 0.2” round to 32” square to various machine shops, forge shops, distributors and OEMs.

For the industrial markets, we manufacture tool steels and high-speed steels. We sell bar and coil to these markets ranging in size from under 0.1” round to 24” round. Our Distribution segment also globally sources and distributes products such as tool steels, high-speed steels, alloys and powdered metal, each produced by other manufacturers, for use in the industrial markets. In our Distribution facilities, we further process the material to customize it to our customer’s requirements, utilizing various machining and cutting processes. The products shipped to our customers include full length mill produced bars, cut pieces ready for further processing and partially machined components. These products are sold to machine shops, other distributors and OEMs.

For the oil and gas exploration and production and power generation markets, we produce corrosion resistant steels, high-temperature or nickel-based super alloys and high-temperature alloys. Much of the corrosion resistant steels are air melted products, while the high-temperature alloys or nickel-based super alloys are generally vacuum induction melted and vacuum arc remelted. We produce cross sections of corrosion resistant alloys generally ranging from 1” rounds to 24” rounds. We produce high-temperature alloys in sizes ranging from 0.222” rounds to 12” rounds. These products are sold to machine shops, forge shops, distributors and OEMs.

Customers

Our direct Manufacturing and Distribution segment customers include forgers, machine shops and distributors who further process the specialty metals and alloys for ultimate use by a variety of OEMs and end users. Our Distribution segment also sells products directly to OEMs. We have long-standing relationships with many of our customers and have supplied our top ten customers, based on net sales for the fiscal year ended September 30, 2010, for an average of 25 years. We have a broad customer base and no significant revenue concentration with any one customer. For the last twelve months ended March 31, 2011, no customer or group of affiliated customers accounted for more than 3.5% of our net sales, and in the aggregate, our top ten customers accounted for only approximately 18% of our net sales. We have long term agreements with some of our customers, which range in duration from three to five years. Over 90% of our net sales for the fiscal year ended September 30, 2010 were to companies in the United States, with 10% to customers outside the United States.

During the fiscal year ended September 30, 2010, our Manufacturing segment sold products to over 900 customers, a majority of which manufacture components for the commercial aerospace, defense, industrial and energy markets. The top ten customers of our Manufacturing segment represented approximately 27% of the net sales for the Manufacturing segment for the last twelve months ended March 31, 2011. Direct Manufacturing customers include Canton Drop Forge, Firth Rixson Limited, SIFCO Industries, Inc., Specialty Ring Products, Inc. and Wyman-Gordon Company. The end users of the specialty metals and alloys that we manufacture include AMCOM, Agusta Engine Parts Inc., Airbus, Bell Helicopter Textron Inc., Boeing, Caterpillar Inc., Central Wire, FAG Kugelfischer Georg Schaefer AG, General Electric Company, Halliburton, Kennametal Inc., Lockheed Martin Corporation, National Oilwell Varco, Newell Rubbermaid Inc., Rolls-Royce Plc, Schlumberger Ltd., SKF Group, Snecma S.A. and United Technologies Corporation.

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At September 30, 2010, our Distribution segment had over 2,100 active customer accounts, approximately 1,100 of which were added since the fiscal year ended September 30, 2008. Approximately 40% of net sales for the Distribution segment were generated by sales to other distributors and 60% by sales directly to end-user customers for the fiscal year ended September 30, 2010. New customers are identified in market segments that are not served by our retail distributor customers, in order to minimize direct competition with our distribution customers. Both the direct and the retail distributor customers of our Distribution segment are located primarily in North America, and the top ten customers of our Distribution segment represented approximately 30% of the net sales for our Distribution segment in the last twelve months ended March 31, 2011. The end users of the specialty metals and alloys sold through our Distribution segment include Alcoa Inc., Cummins Inc., Eaton Corporation, General Dynamics Corporation, GKN plc, Halliburton, Timken and Weatherford International Ltd.

Sales and Distribution

We sell our products through an integrated global sales team consisting of a 16-person, in-house sales force, including two full-time salespersons in China, and 11 exclusive sales representatives who focus on Europe, Asia and the Middle East. Our full-time sales force has an average of over 25 years of industry experience and an average of 12 years of experience with Latrobe, and our relationships with our sales representatives range from one to 25 years. Each member of our in-house sales force and each sales representative is responsible for selling the products we manufacture in our Manufacturing segment and those we distribute through our Distribution segment in one of nine assigned global territories. The products we manufacture and distribute are also sold through a network of over 400 active distributors.

An important aspect of our marketing strategy is to provide technical and performance analyses to our customers. These analyses enable us to evaluate the performance of our products in order to meet the specifications required by our customers. We believe our combination of direct sales, engineering, metallurgical testing and customer support is valued by our customers and provides an advantage over many other manufacturers of high-performance specialty metals and alloys.

Raw Materials

We consume raw materials primarily in connection with our Manufacturing operations. Our primary raw materials include molybdenum, nickel, scrap steel, cobalt, vanadium, tungsten and chromium. These raw materials are commodities that are available from a variety of sources. Molybdenum and nickel are our largest raw material costs, representing nearly half of our total raw material purchases. We have a history of strong relationships with our raw material suppliers, with over ten years of purchasing from each of our top ten suppliers.

We enter into annual supply contracts for the purchase of our primary raw materials with various suppliers in order to ensure supply. These supply contracts do not obligate us to purchase any specific quantity of raw material and do not contain fixed pricing terms. Rather, the actual monthly purchase price of the raw materials is determined based upon a negotiated formula using published commodity market prices for each raw material. We currently do not engage in price hedging for raw materials.

To offset increases in the price of raw materials, our customer agreements generally contain a raw material surcharge mechanism that allows us to pass along to our customers fluctuations in the price of raw materials. When we ship an order to a customer, we calculate the surcharge based on the average price of raw materials for the three months prior to the month preceding shipment. The prices used for each raw material are based upon published commodity market prices for each of the raw materials for the months included in the calculation. Therefore, to the extent that the price of raw materials declines from the date of purchase of raw materials to the date we ship finished products to our customers, our raw materials surcharge may not fully compensate us for our actual raw material cost.

In addition to raw materials, our Manufacturing process consumes large amounts of electricity and natural gas at our Latrobe, PA facility. We currently satisfy the electrical needs of our Latrobe facility by purchasing

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electricity under a fixed rate cap agreement, which will expire in December 2013, at which time we will be subject to market pricing unless we negotiate a new agreement. With respect to natural gas, we have long-term delivery contracts for our Latrobe facility that will expire in March 31, 2012. These natural gas contracts do not obligate us to purchase a specific quantity but contain an indexed pricing mechanism. As of March 31, 2011, approximately 30% of our planned consumption for the next six months is covered under natural gas contracts. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosure About Risk.” Additionally, in order to offset increases in the price of natural gas, we have a pricing policy with our customers that allows us to collect a surcharge for natural gas costs. Historically, we have been adequately supplied with electricity and natural gas.

Manufacturing Process

Our manufacturing process incorporates equipment that is different from that used in the carbon steel industry. This highly specialized equipment is designed to manufacture products meeting the specifications of the end markets we serve and to produce efficiently a variety of grades of specialty metals and alloys for our end markets. The key steps in our manufacturing process are shown in the diagram described below.

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Melting

The manufacturing process starts in our Latrobe facility at the melt shop where we melt scrap steel in a 35-ton electric arc furnace (“EAF”). In the EAF, heat is generated from electricity that arcs from graphite electrodes creating a high-temperature plasma that melts the scrap metal. The melted scrap metal mixture is carefully controlled and blended to maximize the utilization of the alloying elements present in the scrap.

The liquid metal is then transferred to an argon oxygen decarburization (“AOD”) furnace. The AOD furnace utilizes a mixture of oxygen, argon and nitrogen to heat and refine the liquid metal. In the AOD furnace, the liquid metal is carefully modified to meet the desired final chemistry required by our customers. During this process, alloys are added and elements such as carbon and sulfur are reduced. The amount of each alloying element added to the mixture is determined by our proprietary computer model, which was developed in-house and designed to provide the most cost effective composition elements for each particular product manufactured. The result is a very tightly controlled combination of metal and alloying elements with minimal variation from one batch to the next.

At the conclusion of the AOD process, the liquid metal is poured into ingot molds. The mold size varies depending upon the grade and final size requirements of the customer. The high-speed steel and tool steel ingots undergo a forging process while the ingots produced for commercial aerospace and defense applications are generally transferred to the VAR facility for further refining.

Prior to the transfer to the VAR facility, an additional step is needed for the most demanding aerospace applications such as jet engine bearing steels and helicopter transmission, rotor and shaft materials. The specialty metals and alloys for these applications are melted in our two VIM furnaces, which are two of the largest such furnaces operating in the world. Processing in the VIM furnace further reduces the gas and inclusion content of the specialty metals and alloys through carefully controlled melting under vacuum conditions, a process that has been refined over a period of 50 years.

After the VIM process, if applicable, our products are transferred to our VAR facility, which includes 17 VAR furnaces, four of which are among the largest in the world. The additional refining for aerospace applications produces specialty metals and alloys that are very homogenous and possess low gas content and minimal inclusions, thereby enhancing the strength, ductility and fracture toughness of the specialty metals and alloys. These qualities are critical for aerospace applications such as landing gear, flaptracks and space vehicle booster rockets.

Forging and Rolling

Once the melting operations are completed, all of the specialty metals and alloys that we produce are forged or rolled as needed to make the size and shape desired by the customer. Our forging operations include a 3,250-ton open die press capable of forging specialty metals and alloys large enough to manufacture landing gear for the largest commercial aircraft, as well as a high-speed, fully-automated rotary forging machine. Both our melting and forging operations incorporate tightly controlled heating and cooling processes, along with precise forging software programs to optimize the final properties of our specialty metals and alloys products. Our operations also include a continuous rolling mill that we use to roll the metals and alloys we produce into bars and coils of specified dimensions.

Finishing

Once forged or rolled, a significant amount of the specialty metals and alloys we produce are finished at our machining facility in Franklin, Pennsylvania. Our other operations in Latrobe, Pennsylvania and Wauseon, Ohio finish products that require milling, drawing, cutting and ultrasonic testing. The result of these processes is that we are able to produce products in a wide range of sizes and shapes that satisfy customer requirements.

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Metallurgical Testing

Incorporated into the production of all our specialty metals and alloys is metallurgical testing to ensure that the quality of our specialty metals and alloys meets the customer and end user specifications. A high percentage of our specialty metals and alloys is also subjected to non-destructive testing to verify the internal soundness of the material. Much of this testing is mandated by the end user’s specifications and is incorporated into the certification we supply to our customers.

Technical Expertise and Process Quality Control

We have developed extensive technical engineering and metallurgical expertise in the production of specialty metals and alloys during the 98 years of participation in the specialty metals and alloys industry and during our 53 years of producing specialty metals and alloys for the commercial aerospace market. We have a staff of highly-trained and experienced scientists, engineers and metallurgists who provide our customers with technical support and perform metallurgical, chemical and non-destructive testing and certifications. Our technical engineering and metallurgical expertise enables us to design, manufacture and deliver specialty metals and alloys that meet or exceed our customers’ requirements for high quality and consistency.

We are constantly looking for new and innovative material solutions for our customers. Our research and development efforts are a collaboration between our internal metallurgical engineering team and QuesTek Innovations LLC (“QuesTek”), an Illinois-based company that focuses on designing and developing new materials for a variety of applications. We work with QuesTek to develop and market new materials, and we license some of QuesTek’s existing technology. We have two development and four license agreements with QuesTek for a variety of products. These licenses may be terminated by either party for convenience upon 180 days notice. Our collaboration with QuesTek allows us to save on research and development and related costs while allowing us to benefit from the development of new technology. We have been working closely with QuesTek to develop and market new materials for our military and commercial aerospace customers. The commercially-available alloys we license from QuesTek include Ferrium^® S53^®, Ferrium M54™, Ferrium C61™ and Ferrium C64™, some of which are exclusive licenses.

In addition to our technical engineering and metallurgical expertise, we maintain stringent process quality control. We are required to undergo qualification processes by many of our customers and the end users in the markets we serve in order to supply the specialty metals and alloys used in their demanding applications. These qualification processes are expensive, both for the end user and the company seeking qualification, they often require two to three years to complete, and they require a high degree of metallurgical and technical expertise. For example, we are one of only two globally qualified producers of specialty metals and alloys for Airbus A380 landing gear. Additionally, we have undergone several certification processes to be eligible to supply specialty metals and alloys for mission critical parts to the commercial aerospace and defense markets, including ISO 9001:2008, AS9100 and NADCAP, which promulgates standards for certain steel products ultimately supplied to major aerospace end users. Both the certifications and end-user qualifications require us to document each step of our manufacturing process to demonstrate conformity to standards and to process control. This documentation process is extensive and difficult to replicate, and it serves as an important barrier to entry versus companies such as ours that are already qualified and certified.

Intellectual Property

We own or license a number of patents, trademarks, service marks and other intellectual property rights that relate to our products and services. Our intellectual property includes ten U.S. issued patents, 11 foreign issued patents, five foreign patent applications, a number of registered trademarks, including a registered trademark on our corporate logo, domain names and our unregistered trademarks “Latrobe Steel” and “Specialty Steel Supply.”

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Backlog

We define backlog as firm commitments from customers for delivery of product. Our backlog as of April 25, 2011, which pertains solely to our Manufacturing segment, represents approximately $186.3 million in future net sales, a 68% increase when compared to our backlog as of September 30, 2010, representing approximately $110.7 million in future net sales. Approximately 85% of our backlog is expected to be shipped to our customers in the next six months. The commitments in our backlog are subject to price adjustments based on raw material surcharges. The backlog figures do not reflect that portion of our business conducted on a spot basis.

Distribution Operations

As a master distributor of specialty metals and alloys, we provide a broad product offering, global sourcing capabilities, value-added services, an extensive distribution network and a track record of high rates of on-time delivery. Our Distribution segment offers an extensive range of specialty metals and alloys in a variety of grades, shapes and sizes, including approximately 120 grades of tool steel, high-speed steel, stainless steel, nickel alloy and powder metals. In each product category, we strive to maintain long-term supplier relationships that give us the most favorable lead times, product availability and price. While we have the ability to purchase from a number of suppliers, we concentrate our Distribution segment purchases with a few select suppliers, which allows us to negotiate favorable pricing, terms and purchasing programs. We employ a global sourcing strategy that enables us to sell directly to hundreds of customers in the extrusion, machine knife, gear, bearing, roll form, oil and gas drilling, wheel mold and punch end markets through exclusive and semi-exclusive sales agreements.

We also offer a variety of value-added finishing services to our distribution customers. These services include saw cutting, grinding, trepanning, lathe turning and CNC machining. To provide these services, we operate 88 saws, five plate grinders and five CNC machines, as well as various other tools. We believe that our machining capacity and the complexity of our value-added processing operations are superior to that of most of our competitors. These capabilities enable us to offer our customers a wide range of services with short order lead times. Over 70% of the products we distribute undergo a value-added process.

We operate eight service centers that are located close to our customers’ locations in the United States and Canada. This enables us to provide next day delivery to over 90% of our customers who do not require processing services. For customers requiring processing services, orders generally ship in 48 to 96 hours. Our Distribution segment’s customer base has expanded significantly over the past five years as a result of adding new products and services. Approximately 1,600 new customer accounts were added since the fiscal year ended September 30, 2008, reaching over 2,500 active customers at September 30, 2010.

Competition

The markets for our products and services in each of our Manufacturing and Distribution segments are highly competitive, and we face competition from both domestic and foreign companies. We compete with many manufacturers and distributors who, depending on the product involved, range from large diversified enterprises to smaller companies specializing in particular products. Factors that affect our competitive position include the quality of our products, our service and delivery capabilities, our ability to produce specialty materials in marketable alloys and product forms, our technological capabilities, our marketing strategies and the prices for our products and services.

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Our Manufacturing segment currently has a number of major competitors in each of the product segments it serves. Our Manufacturing segment competes based on lead times, product quality, customer service, on-time delivery and technological innovation. Our Distribution segment competes across four major high-speed and tool steel product platforms: round, plate, sheet and powder. Our Distribution segment distinguishes itself from its competitors by providing short lead times, on-time delivery rates and extensive processing capabilities, including cutting bar from plate, a capability most of our competitors lack. As a result, we enjoy strong demand for our cutting services from small to medium sized distributors that lack in-house plate saws and larger distributors that need to supplement their existing capabilities. The major competitors of our Manufacturing and Distribution segments and the end markets in which we compete are shown in the table below.

Competitors	Aerospace/Defense	Industrial	Energy(1)
Allegheny Technologies Inc.	Manufacturing		Manufacturing
Aubert & Duval	Manufacturing
Boehler-Uddeholm AG	Manufacturing	Manufacturing and Distribution	Manufacturing
Carpenter Technology Corp.	Manufacturing	Distribution	Manufacturing
Electralloy, G.O. Carlson Inc.	Manufacturing		Manufacturing
Ellwood Group Investment Corp.	Manufacturing	Distribution
Erasteel S.A.S.		Manufacturing and Distribution
Gloria Material Technology Corp.	Manufacturing	Manufacturing	Manufacturing
Precision-Marshall Steel Company		Distribution
Republic Special Metals	Manufacturing
SB Specialty Metals		Distribution
Schmolz + Bickenbach AG		Distribution
Tata Specialty Steels (formerly Corus Engineering Steels)	Manufacturing
ThyssenKrupp AG	Manufacturing	Manufacturing
Universal Stainless & Alloy Products, Inc.	Manufacturing	Manufacturing	Manufacturing
Valbruna Stainless	Manufacturing		Manufacturing

(1) Represents the oil and gas exploration and production and power generation end markets.

We may face additional competition in the future to the extent new materials are developed, such as plastics or ceramics, that may be substituted for our products. We also believe that we will face increased competition from non-U.S. entities, especially from competitors located in Eastern Europe and Asia.

Employees

As of March 31, 2011, we employed over 800 salaried and hourly employees worldwide. The majority of our non-management employees are covered by collective bargaining agreements. Approximately 360 employees at our Latrobe, Pennsylvania manufacturing facility are members of the USWA, with another three employees at our Detroit, Michigan warehouse belonging to the Teamsters. Our current collective bargaining agreement with the USWA expires August 1, 2013, and our current collective bargaining agreement with the Teamsters expires March 31, 2014. Beginning on May 1, 2011, our collective bargaining agreement with the USWA allows employees to renegotiate wages set by the collective bargaining agreement. If an agreement is not reached, the USWA workers have a limited right to engage in a strike beginning on August 1, 2011. We expect that negotiations with the USWA will begin in July 2011. We believe that we have good relations with the USWA, the Teamsters and our labor force. However, there can be no assurance that the renegotiation of the USWA or Teamsters collective bargaining agreements will not lead to a labor stoppage, which could have a negative effect on earnings.

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Properties

Our headquarters are located in Latrobe, Pennsylvania. The chart below shows the location, ownership status, size and activities of our properties as of March 31, 2011.

Location	Owned / Leased					Activities
				Square Footage
Manufacturing:
Latrobe, PA		Owned			1,075,254	Corporate and Manufacturing segment headquarters; melting, forging, rolling, finishing, thermal treating and metallurgical testing
Franklin, PA		Owned			131,585	Finishing/warehouse
Wauseon, OH		Owned			86,260	Finishing/warehouse
Sheffield, U.K.		Leased			50,000	Warehouse
Ludwigshafen, Germany		Leased	(1)			Warehouse
Distribution:
Vienna, OH		Leased			183,543	Distribution segment headquarters; service center
White House, TN		Owned			90,000	Service center
Detroit, MI		Leased			22,477	Service center; warehouse and offices
Chicago, IL		Leased			33,960	Service center; warehouse
Northborough, MA		Owned			60,000	Service center; warehouse
Marlborough, MA		Leased			2,000	Office space
Pinehurst, TX		Leased			42,000	Oil and gas distribution headquarters, service center
Prichard, AL		Leased			21,000	Service center
Blenheim, Ontario, Canada		Leased			25,000	Service center; warehouse and offices

(1) Represents shared warehouse space with a customer location.

Environmental Matters

Our business is subject to numerous federal, state and local laws and regulations relating to the protection of the environment and worker safety. Environmental laws and regulations include the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act and the Comprehensive Environmental Response, Compensation and Liability Act with respect to releases and remediation of hazardous substances. Worker safety laws include the Occupational Safety and Health Act. In addition, we are subject to similar state laws. These laws are constantly evolving and becoming increasingly stringent. The ultimate impact of complying with existing laws and regulations is not always clearly known or determinable, due in part to the fact that certain implementing regulations for some of the laws described above have not yet been promulgated or in certain instances are undergoing revision. These laws and regulations could result in substantially increased capital, operating and compliance costs. We had no capital expenditures for environmental matters for the fiscal years ended September 30, 2010 and 2009.

Safety and Health Matters

We aim to achieve excellent safety and health performance. We measure our success in this area primarily through the use of accident frequency rates administered by the Occupational Safety and Health Administration (“OSHA”). We believe that a superior safety record is inherently tied to achieving our productivity and financial goals. We seek to implement this goal by:

• training employees in safe work practices;

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• encouraging an atmosphere of open communications;

• involving employees in establishing safety standards; and

• recording, reporting and investigating all accidents to avoid reoccurrence.

Over the last ten years, we have significantly reduced our OSHA recordable injury rates to levels that are at or below the norms for our industry.

Legal Proceedings

From time to time, we are party to litigation that arises in the ordinary course of our business. We do not have any pending litigation that, separately or in the aggregate, would, in the opinion of management, have a material adverse effect on our results of operations or financial condition.

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MANAGEMENT

Executive Officers and Directors

Set forth below are the names, ages and positions of our directors and executive officers as of the date of this prospectus.

Name	Age		Position
Executive Officers:
B. Christopher DiSantis		40	Director, President and Chief Executive Officer
Dale B. Mikus		47	Vice President and Chief Financial Officer
Daniel G. Hennessy		52	Executive Vice President
David A. Murray		60	Senior Vice President and General Manager, Distribution
Mark T. Weberding		49	Vice President, Marketing and Sales
Dudley J. Merchant		56	Vice President, Business Development
Non-Employee Directors:
Robert W. Ackerman		72	Director
Thomas O. Hicks		65	Director
Steven E. Karol		57	Director
Robert M. Swartz		59	Director

The following are biographical summaries, including experience, of those individuals who serve as our executive officers:

B. Christopher DiSantis has served as our President and Chief Executive Officer since January 2011 and was appointed to our board of directors in May 2011. Prior to joining us, Mr. DiSantis was President and Chief Operating Officer of Hawk Corporation, formerly a publicly traded specialized components manufacturer, until December 2010. Mr. DiSantis joined Hawk Corporation in 2000 and served as the president of every division of Hawk Corporation during his tenure, including: Wellman Products Group, which manufactures friction braking solutions for OEMs and for sale in the aftermarket; Hawk Motors, which manufactures electrical motor components; Hawk Precision Components, which manufactures powder metal parts; and Hawk Racing Group, which manufactures driveline and braking components for the racing market. Mr. DiSantis began his career at BT Investment Partners Inc. (“BT”), the private equity arm of Bankers Trust, in 1993. In 1995, Mr. DiSantis joined Acutus Gladwin Corporation, a BT portfolio company and a leading steel continuous casting service and engineering firm located in Pittsburgh, Pennsylvania. Mr. DiSantis graduated summa cum laude from Dartmouth College in 1993 with a bachelor’s degree in mathematics and economics. In 2009, Crain’s Cleveland Business named him to its Forty Under 40 Class of 2009. Mr. DiSantis was selected to our board of directors because of his business experience with manufacturing companies and track record of leadership.

Dale B. Mikus has served as our Vice President and Chief Financial Officer since June 2007. Prior to joining us, Mr. Mikus served as Vice President and Chief Financial Officer of Copperweld Corporation, a carbon and alloy steel tube and pipe manufacturer, from December 2003 to October 2005. From October 2005 to June 2007, Mr. Mikus pursued personal interests. Prior to joining Copperweld, Mr. Mikus worked for oil field services companies Dresser Industries, Inc., Dresser Equipment Group Inc., Halliburton Company and Dresser, Inc. in various executive management positions from April 1997 to October 2003, including Assistant Controller—Manager—Corporate Accounting, Vice President—Finance and Chief Accounting Officer and Vice President—Chief Financial Officer. Prior to the various executive management positions he held from April 1997 to October 2003, Mr. Mikus was Director of Audit and Business Advisory Services for PricewaterhouseCoopers, focusing on the manufacturing and metals industries. Mr. Mikus graduated from Robert Morris University in 1985 with a bachelor’s in science degree in business administration and accounting. He is a certified public accountant in Pennsylvania and Texas.

Daniel G. Hennessy has served as our Executive Vice President since September 2010. Prior to that, Mr. Hennessy was Senior Vice President—Manufacturing Division and Vice President—Manufacturing since

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January 2001. Prior to the sale of Latrobe to the Timken Company, Mr. Hennessy was with the Timken Company, a steel manufacturer, which he joined in 1982. Mr. Hennessy transferred to its Latrobe division in 1989. During his tenure at the Timken Company and its Latrobe division, he held several positions in research, manufacturing, quality management and marketing, including process metallurgist, Business Manager—Aerospace Steel and General Manager—Primary Operations and Technology. Mr. Hennessy graduated from Rensselaer Polytechnic Institute with a bachelor’s and master’s degrees in materials engineering and attended an executive program at Carnegie Mellon University.

David A. Murray has served as our Senior Vice President and General Manager, Distribution since May 2001. Mr. Murray joined us in 1996 when we acquired Houghton & Richards, Inc. Mr. Murray started with Houghton & Richards, Inc. in 1989 and held several positions in purchasing and sales. In 2001, Mr. Murray was promoted to Vice President and General Manager of Distribution. Prior to joining Houghton & Richards, Inc., Mr. Murray spent four years as the Supervisor of Purchasing at MicroWave Associates, Inc., a government defense company that manufactures missile guidance systems. He also worked for six years at Simonds Industries Inc. as a purchasing agent for tool steel knife products. Mr. Murray graduated from Fitchburg State College with a master’s degree in English.

Mark T. Weberding has served as our Vice President, Marketing & Sales since 2005. Prior to that, Mr. Weberding joined the Timken Company in 1985 as a research engineer specializing in fracture mechanics and hot work deformation for structural and corrosion resistant alloys. In 1992, Mr. Weberding was promoted to Manager—Tool Steel Technology, and in 1994, he was promoted to Business Manager—Tool Steels. In 1998, Mr. Weberding was named the Business Manager—Vacuum Melted Alloys. Mr. Weberding graduated from the University of Cincinnati with a bachelor’s degree in metallurgy.

Dudley J. Merchant has served as our Vice President, Business Development since September 2007. In this role, Mr. Merchant is responsible for the commercialization of a number of new initiatives designed to expand our manufacturing operations to serve new products, such as nickel based super alloys, and new end markets, such as oil and gas exploration and production and power generation. Prior to joining us, Mr. Merchant was Vice President Commercial for Theis Precision Steel Corporation from June 2006 to September 2007. Prior to joining Theis, Mr. Merchant held the position of Vice President of Sales and Marketing for Universal Stainless & Alloy Products, Inc. (“Universal Stainless”) from January 2004 to March 2006. During his tenure at Universal Stainless, Merchant actively led the stainless long products industry implementation of surcharge formulas that allowed the full recovery of costs. Prior to Universal Stainless, Mr. Merchant held management positions with ATI Allegheny Ludlum Steel Corporation and Industrial Steel and Wire Company. Mr. Merchant graduated from Hampshire College with a bachelor’s degree in English, and completed graduate work at Yale University.

The following are biographical summaries, including experience, of those individuals who serve as our directors:

Robert W. Ackerman was appointed to our board of directors in May 2011. He has been a partner at Watermill Group since 2000. Prior to that he was President and CEO of Sheffield Steel Corporation, a mini-mill steel manufacturer, President and CEO of Lincoln Pulp & Paper Corporation, an integrated producer of pulp, paper and tissue products and President of Premoid Corporation, a specialty paper manufacturer. Mr. Ackerman served as President and CEO of Sheffield Steel Corporation until 1999 and served as Chairman and CEO until 2000. Sheffield Steel Corporation filed a petition for relief under Chapter 11 of the U.S. Bankruptcy Code on or about December 7, 2001. He was on the faculty of The Harvard Business School from 1968 to 1974 and again from 1986 to 1988. Mr. Ackerman was Chairman of The Steel Manufacturers Association from 1998 to 2000, representing the North American electric steel producers. He is a director and chairman of the audit committee of WGI Heavy Minerals, Inc. and a director of LiteControl Corporation. In addition, Mr. Ackerman has been chairman of the Massachusetts chapter of The Nature Conservancy and is now a Trustee and Treasurer of The New England Forestry Foundation and Chairman of Investments at First Church in Cambridge. Mr. Ackerman has DBA and MBA degrees from The Harvard Business School and a BS from Yale University where he was elected to Tau Beta Pi. He has authored several books and is a CPA. Mr. Ackerman was selected to our board of directors because of his extensive experience with manufacturing companies and management expertise.

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Thomas O. Hicks has been a member of our board of directors since our inception. Since 2005, Mr. Hicks has served as the founder, chairman and CEO of Hicks Equity Partners LLC, a Dallas, Texas based private equity firm that invests in middle market companies with enterprise values of $50 million to $200 million. In addition to Latrobe, Hicks Equity Partners’ other private equity investments include: Ocular LCD, Inc., a designer, manufacturer and marketer of high-performance liquid crystal displays, modules and systems; Grupo Pilar, an animal feed and pet food company in Argentina; and Anvita Health, a provider of decision support systems for healthcare professionals. A sale of Major League Baseball’s Texas Rangers, formerly held by Mr. Hicks and his affiliates, was completed in August 2010 through a court-supervised auction process under Chapter 11 of the U.S. Bankruptcy Code. In September 2007, Mr. Hicks founded and served as Chairman of Hicks Acquisition Company I, Inc., a $552 million special purpose acquisition company (“SPAC”) which completed a merger with Resolute Natural Resources on September 25, 2009 to form Resolute Energy Corporation, which is listed on the NYSE under the ticker symbol “REN.” Based on the success of this transaction, in October 2010, Mr. Hicks founded Hicks Acquisition Company II, Inc., a $150 million SPAC that has 21 months from the date of its initial public offering to consummate an acquisition. Mr. Hicks co-founded Hicks, Muse, Tate & Furst, a nationally prominent private equity firm in the United States that specialized in middle market private equity investments, and served as chairman from 1989 through 2004. During Mr. Hicks’ tenure, Hicks Muse raised over $12 billion of private equity funds and consummated over $50 billion of acquisitions, making it one of the most active private investment firms in the country. Mr. Hicks also co-founded and served as co-chief executive officer of the leveraged buyout firm, Hicks & Haas, from 1984 until 1989. Mr. Hicks received a Master of Business Administration degree from the University of Southern California in 1970 and a Bachelor of Business Administration degree from the University of Texas in 1968. Mr. Hicks was selected to serve on our board of directors because of his extensive business experience with both public and private companies.

Steven E. Karol has been a member of our board of directors since our inception. Mr. Karol is Managing Partner and founder of Watermill Group, a strategy driven private investment firm. Since 1978, Mr. Karol has served as Chairman of the Board and CEO of HMK Enterprises, a privately held investment company specializing in strategic and operational management. Other current Watermill Group investments include C&M Corporation, a vertically integrated cable manufacturer, FutureMark Paper Company, a North American environmental paper manufacturer, and MultiLayer Coating Technologies, a contract manufacturer of high precision roll-to-roll coating of flexible substrates. Mr. Karol is currently a member of the Board of advisors of J. Walter Company. He has also served as Chairman of the Board at Mooney Aircraft Company, Director and Chairman of the audit committee at StockerYale, and as a Director for Jeepers! Inc., Intelligent Energy Limited and Inter-Tel Corp. Mr. Karol is currently a member of World President’s Organization (WPO) and has served as a member of the leadership team for the Young President’s Organization (YPO). While with YPO, Mr. Karol served on the International Board of Directors (1991- 2001), Chairman of Strategic Planning (1993 – 1996), and as International President (1999 to 2001). He is Chairman of the Overseers for the School of Engineering of Tufts University and recent recipient of the 2009 Tufts Distinguished Service Award. He is also Chairman of the Board of Trustees of Vermont Academy, and a Director Emeritus of the Brain Tumor Society. Mr. Karol served as President and CEO of Sheffield Steel Corporation from 2000 to 2002, which filed a petition for relief under Chapter 11 of the U.S. Bankruptcy Code on or about December 7, 2001. Mr. Karol is a co-founder and President of the Herbert M. Karol Cancer Foundation. He formerly served as a member of the Board of the Boston Symphony Orchestra and as a Trustee and member of the Executive Committee of the Boston Ballet. Mr. Karol received his B.S. at Tufts University, and he is a graduate of the Presidents’ Program on Leadership (PPL) at Harvard Business School. Mr. Karol was selected to serve on our board of directors because of his extensive business experiences with both public and private companies.

Robert M. Swartz was appointed to our board of directors in May 2011. Effective January 1, 2011, Mr. Swartz became Executive Vice President and Chief Operating Officer of Glazer’s Distributors Inc. He was previously Managing Director and Partner of Hicks Equity Partners LLC from July 2007 to January 2011. He was Chief Executive Officer of Hicks Acquisition Company II, Inc. from September 2010 to December 2010. He was a Senior Vice President of Hicks Acquisition Company I, Inc. from September 2007 until September 2009. Mr. Swartz was elected to the Board of Directors of Resolute Energy Corporation in September 2009. Mr. Swartz has been a member of the Audit Committee for Resolute Energy Corporation since September 25, 2009, and was also a member of the Compensation and Corporate Governance/Nominating Committees for Resolute Energy Corporation between September 25, 2009 and December 15, 2009. Resolute Energy Corporation is listed on the

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NYSE under the ticker symbol “REN.” From 1999 until 2007, Mr. Swartz served in various positions at Centex Corporation, a home building company, serving as Senior Vice President of Strategic Planning and Mergers and Acquisitions from 1999 to 2000, and serving as Chairman and Chief Executive Officer of Centex HomeTeam Services from 2000 to 2007. Mr. Swartz is on the Board of Directors of Anvita, Inc. and Ocular LCD, Inc., both portfolio companies of Hicks Equity Partners. Mr. Swartz received a Bachelor’s of Science degree in accounting from the State University of New York in Albany in 1973 and a Master of Business Administration degree in finance from New Hampshire College in 1976. Mr. Swartz is a certified public accountant. Mr. Swartz was selected to serve on our board of directors because of his experience and expertise in operations, mergers and acquisitions, finance, accounting and management.

Board of Directors

Our board of directors is currently composed of five directors. Upon the completion of this offering, we will amend and restate our current certificate of incorporation and file such amended and restated certificate of incorporation with the State of Delaware. Pursuant to such amended and restated certificate of incorporation, our board of directors will consist of at least six directors. A majority of directors will constitute a quorum for board meetings. The convening of a special meeting will be subject to advance written notice to all directors.

In general, the NYSE’s Listed Company Manual requires that a NYSE listed company have a majority of independent directors on its board of directors. We intend to comply with the requirements of NYSE’s Listed Company Manual by appointing the required number of independent directors prior to becoming a NYSE listed company.

Committees of the Board

Our board of directors directs the management of our business and affairs, as provided by Delaware law, and conducts its business through meetings of the board of directors. Upon completion of this offering, our board of directors will have three standing committees: an audit committee, a compensation committee and a nominating and corporate governance committee. Our board of directors may establish other committees to facilitate the management of our business.

Audit Committee

Upon completion of this offering, the audit committee of our board of directors will be responsible for overseeing management and our independent auditor, financial reporting practices, internal controls, risk management and legal and ethical compliance. The audit committee will consist of Messrs.             ,              and             . Mr.                      will be the chair of our audit committee. The board of directors will determine that Messrs.             and              qualify as an audit committee financial experts as defined in Item 401(h) of Regulation S-K. We expect that the board of directors will determine that all members of the audit committee are independent as independence is defined in the Exchange Act and under the NYSE Listed Company Manual.

The principal duties of the audit committee will be:

• to monitor our financial reporting process and internal control system;

• to appoint and replace our independent registered public accounting firm from time to time, determine their compensation and other terms of engagement and oversee their work;

• to oversee the performance of our internal audit function; and

• to oversee our compliance with legal, ethical and regulatory matters.

The audit committee will have the power to investigate any matter brought to its attention within the scope of its duties. It will also have the authority to retain counsel and advisors to fulfill its responsibilities and duties.

Compensation Committee

Upon the completion of this offering, the compensation committee will support our board of directors by overseeing management and director compensation policies and practices. Our compensation committee will

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consist of Messrs.             ,              and             . Mr.                      will be the chairman of the compensation committee. We expect that the board of directors will determine that all members of the compensation committee are independent as independence is defined in the Exchange Act and under the NYSE Listed Company Manual. The principal duties of the compensation committee will be:

• to provide oversight on the development and implementation of the compensation policies, strategies, plans and programs for our key employees and outside directors and disclosure relating to these matters;

• to review and approve the compensation of our chief executive officer and the other executive officers; and

• to provide oversight concerning the compensation of our chief executive officer, succession planning, performance of the chief executive officer and related matters.

Nominating and Corporate Governance Committee

Upon the completion of this offering, the nominating and corporate governance committee will assist our board of directors in determining individuals qualified to serve as directors and overseeing, implementing and reviewing our overall corporate governance. Our nominating and corporate governance committee will consist of Messrs.             ,              and             . Mr.                      will be the chairman of the nominating and corporate governance committee. We expect that the board of directors will determine that all members of the nominating and corporate governance committee are independent as independence is defined in the Exchange Act and under the NYSE Listed Company Manual. The principal duties of the nominating and corporate governance committee are:

• to establish criteria for board and committee membership and recommend to our board of directors proposed nominees for election to the board of directors and for membership on committees of the board of directors; and

• to make recommendations to our board of directors regarding board governance matters and practices.

Compensation Committee Interlocks and Insider Participation

Upon the completion of this offering, none of our executive officers will serve on the compensation committee or board of directors of any other company of which any of the members of our compensation committee is an executive officer. During the year ended September 30, 2010, our compensation committee consisted of Steven E. Karol. Mr. Karol is Managing Partner of Watermill. Watermill provides us with advisory services pursuant to its monitoring and oversight agreement and has entered into other transactions with us. See “Certain Relationships and Related Party Transactions.”

Code of Business Conduct and Ethics

Prior to the completion of this offering, we will adopt a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees, including our chief executive officer and chief financial officer. The Code of Business Conduct and Ethics will be designed to affirm our high standards of business conduct and to emphasize the importance of integrity and honesty in the conduct of our business. We believe that the ethical foundations outlined in our corporate governance principles and the code are critical to our ongoing success.

Upon the effectiveness of the registration statement of which this prospectus is a part, the full text of our Code of Business Conduct and Ethics will be posted on our website at www.latrobemetals.com under the Investor Relations section. We intend to disclose future amendments to certain provisions of our Code of Business Conduct and Ethics, or waivers of such provisions, at the same location on our website identified above and also in future public filings. The information contained on our website is not part of this prospectus.

Indemnification

We maintain directors’ and officers’ liability insurance. Our certificate of incorporation and by-laws include provisions limiting the liability of directors and officers and indemnifying them under certain circumstances. See “Description of Capital Stock—Liability and Indemnification of Officers and Directors” for further information.

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EXECUTIVE AND DIRECTOR COMPENSATION

The following compensation discussion and analysis contains statements regarding future individual and company performance measures, targets and other goals. These goals are disclosed in the limited context of our executive compensation program and should not be understood to be statements of management’s expectations or estimates of results or other guidance. We specifically caution investors not to apply these statements to other contexts.

Compensation Discussion and Analysis

Named Executive Officers

This section discusses the material elements of compensation awarded to, earned by or paid to our chief executive officer, our chief financial officer and our four other most highly compensated executive officers. These individuals are referred to in this analysis as the “named executive officers.” For the fiscal year ended September 30, 2010, we operated without a president and chief executive officer for the majority of the period due to the resignation of our former President and Chief Executive Officer.

For the fiscal year ended September 30, 2010, our named executive officers were:

• Hans J. Sack, President and Chief Executive Officer, for a portion of the fiscal year ended September 30, 2010;

• Dale B. Mikus, Vice President and Chief Financial Officer;

• Daniel G. Hennessy, Executive Vice President;

• David A. Murray, Senior Vice President and General Manager, Distribution;

• Dudley J. Merchant, Vice President, Business Development; and

• Mark T. Weberding, Vice President, Marketing & Sales.

On December 31, 2009, Hans J. Sack resigned as our President and Chief Executive Officer. For the balance of the fiscal year ended September 30, 2010, we were led by a five person Management Operating Committee that consisted of Messrs. Hennessy, Mikus, Murray, Merchant and Weberding and reported to Messrs. Hicks and Karol. Effective January 17, 2011, B. Christopher DiSantis was hired as our President and Chief Executive Officer.

Evolution of our Compensation Approach

Our compensation approach is necessarily tied to our stage of development. Historically, our board of directors approved the compensation of our named executive officers in reliance on the recommendations of our compensation committee. Our compensation committee consisted of Steven E. Karol from our board of directors. Upon consummation of this offering, our compensation committee will consist of Messrs.             ,              and             . Mr.                      will be the chairman of the compensation committee.

Our compensation committee reviews and approves the compensation of our named executive officers and oversees and administers our executive compensation programs and initiatives. We expect that the specific direction, emphasis and components of our executive compensation program will continue to evolve.

Objectives and Overview of our Executive Compensation Program

We have sought to create an executive compensation program that balances short-term versus long-term payments and awards, cash payments versus equity awards and fixed versus contingent payments and awards in ways that we believe are most appropriate to motivate our named executive officers.

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The objectives of our executive compensation program are:

• to provide competitive compensation packages to attract and retain superior executive talent;

• to motivate and reward executives whose knowledge, skills and performance are critical to our success;

• to reward successful performance by the executive and the company by linking a significant portion of compensation to our financial and business results;

• to ensure fairness among the executive management team by recognizing the contributions each executive makes to our success; and

• to further align the interests of executive officers with those of our stockholders by providing long-term equity compensation and meaningful equity ownership.

The compensation committee is committed to a strong, positive link between our overall company objectives and our compensation practices. Our compensation philosophy allows for flexibility in establishing executive compensation based on an evaluation of information prepared by management or other advisors and other objective and subjective considerations deemed appropriate by the compensation committee. This flexibility is important to ensure our compensation programs are competitive and that our compensation decisions appropriately reflect the unique contributions and characteristics of our executive officers.

After the consummation of this offering, our compensation committee will review annually each named executive officer’s performance. In consideration of the objectives described above and the principles described below, the compensation committee will approve for each executive officer the appropriate base salary, cash performance awards and grants of long-term equity incentive awards. The compensation committee may retain the services of independent compensation consultants to assist in its strategic review of programs and arrangements relating to executive compensation and performance.

In determining the compensation of our named executive officers, we are guided by the following key principles:

• Competition. Compensation should reflect the competitive marketplace in order to retain, attract and motivate talented executives.

• Accountability for Business Performance. Compensation should be tied to our financial performance to hold executives accountable for their contributions to our performance as a whole through the performance of aspects of our business for which they are responsible.

• Accountability for Individual Performance. Compensation should be tied to the individual’s performance to encourage and reflect individual contributions to our performance. We consider individual performance as well as the performance of the businesses and responsibility areas that an individual oversees, and we weigh these factors as we consider appropriate in assessing a particular individual’s performance.

• Alignment with Stockholder Interests. Compensation should be tied to our financial performance through equity awards to align the interests of our named executive officers and key employees with those of our stockholders.

• Fair and Equitable Compensation. The total compensation program should be fair and equitable to both our named executive officers and our stockholders and should be fair relative to the compensation paid to other professionals in our organization.

Role of Executive Officers in Compensation Decisions

In the fiscal year ended September 30, 2010, salary adjustments, cash incentive payments and grants of options and restricted stock were determined by our board of directors upon the recommendation of our

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compensation committee, with input from our chief executive officer for named executive officers, other than himself. After the consummation of this offering, the compensation committee will continue to work with management to support the development and review of executive officer compensation.

Chief Executive Officer Compensation

While we did not have a chief executive officer for a majority of the fiscal year ended September 30, 2010, the compensation committee would normally make recommendations to the board of directors regarding the chief executive officer’s compensation. The recommendations are based on factors deemed appropriate by the compensation committee. The compensation committee discusses and evaluates our chief executive officer’s compensation in an executive session attended only by the compensation committee members and certain individual members of our largest equity holders. Management did not have any role in the development of our chief executive officer compensation except for providing to the compensation committee relevant data relating to our chief executive officer’s performance and compensation history.

Other Named Executive Officer Compensation

The chief executive officer would normally make recommendations to the compensation committee relating to compensation for the named executive officers, other than himself, including with respect to salary adjustments and annual cash incentive award amounts. The recommendations are made primarily based on the achievement of individual yearly performance goals set by the compensation committee and our chief executive officer for each named executive officer, other than himself and our annual cash incentive plan, as described below for annual cash incentive awards, and other factors deemed appropriate by our chief executive officer.

Role of the Compensation Committee in Compensation Decisions

The compensation committee administers our compensation policies and programs for executive officers, including the named executive officers. The compensation committee reviews, analyzes and approves the design of our executive compensation policies and programs and reviews and approves all compensation decisions relating to our executive officers, including the named executive officers. The compensation committee also reviews and approves any benefit plans or perquisites offered to named executive officers, including eligibility and the level and types of benefits or perquisites provided.

Role of Outside Compensation Consultant in Compensation Decisions

We did not engage an outside compensation consultant to provide market data for compensation in the fiscal year ended September 30, 2010. However, we have engaged outside compensation consultants historically and after the consummation of this offering, the compensation committee will have the sole authority to retain consultants, counsel, accountants and others to assist it in the performance of its duties, including the evaluation of executive compensation levels and programs. When examining the data provided by any compensation consultants regarding salary adjustments, the compensation committee does not support rigid adherence to benchmarks or compensatory formulas and strives to make compensation decisions which effectively support our compensation objectives and reflect the unique attributes of our company and each executive.

If the compensation committee engages a compensation consultant, the engagement will be to provide competitive market data regarding the compensation of the named executive officers. The consultant will report directly to the compensation committee. The compensation committee may request that the consultant provide the company with other assistance, including assisting the compensation committee in developing executive compensation programs and executive pay levels and generally provide advice to the compensation committee on executive compensation issues. Outside of the services performed for the compensation committee, the compensation consultant will provide no services to us except with prior notification to the compensation committee chair.

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Elements of Compensation

Our executive compensation program for our executive officers, including the named executive officers, is currently comprised of the following elements:

• base salary;

• annual cash incentive awards;

• equity and non-equity awards; and

• other benefits including retirement and welfare benefits, and perquisites.

Each of the elements of our executive compensation package is discussed in the following paragraphs.

Base Salary

The primary component of compensation of our executives has historically been base salary. We provide the named executive officers with a base salary to compensate them for services rendered during each fiscal year. In the fiscal year ended September 30, 2010, the base salaries of our named executive officers were adjusted upward to reinstate their prior base salaries, which we had temporarily cut during the fiscal year ended September 30, 2009 as part of our cost reduction initiatives undertaken in response to the global economic conditions. Additionally, in the fiscal year ended September 30, 2010, merit increases were provided to our named executive officers effective April 1, 2010. Furthermore, effective September 16, 2010, Mr. Hennessy was promoted to Executive Vice President and his base salary was adjusted accordingly.

After the consummation of this offering, the compensation committee will review base salary for each named executive officer each year. The compensation committee will take into consideration individual performance and the individual’s skills, experience and background when reviewing base salary for a named executive office. Additionally, if the compensation committee engages an outside compensation consultant, the committee may take into consideration market data provided by the consultant.

As of September 30, 2010, the base salaries of Messrs. Mikus, Hennessy, Murray, Merchant and Weberding were $233,000, $250,000, $205,000, $168,000 and $168,000. At the time of Mr. Sack’s resignation on December 31, 2009, Mr. Sack’s base salary was $300,912. The base salaries paid to our named executive officers in the fiscal year ended September 30, 2010 are set forth below in the Summary Compensation Table.

Annual Cash Incentive Awards

We believe that cash incentive awards focus our named executive officers’ efforts and reward named executive officers for annual results of operations that help create value for our stockholders. We provide the named executive officers with an annual cash incentive award as part of the overall executive compensation program. In the fiscal year ended September 30, 2010, the compensation committee set a yearly performance target for each named executive officer (the “2010 Bonus Plan”).

Performance targets for the named executive officers in the fiscal year ended September 30, 2010 consisted of three components: (i) overall company performance based on consolidated EBITDA (subject to any adjustments to EBITDA considered by the compensation committee due to extraordinary and unforeseen events), weighted at 50%; (ii) overall company performance based on working capital, asset utilization, liquidity and cash management, as measured by return on net assets (“RONA”) and weighted at 25%; and (iii) individual performance goals, weighted at 25%. Each component was calculated independently of the other component and was expressed in terms of a percentage of the total possible cash incentive award.

Targeted EBITDA and RONA percentages were selected as the relevant performance goals because the compensation committee believed that EBITDA growth and efficient RONA percentages were consistent with the overall goals and long-term strategic direction that the board of directors had set for the company. RONA is

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defined as the return on net assets, with net assets defined as accounts receivable, inventory, property, plant and equipment and accounts payable. The compensation committee believes that both these metrics effectively measure our financial and operational improvements and growth.

The potential bonus payouts under various scenarios in the fiscal year ended September 30, 2010 for our named executive officers, other than our chief executive officer, were as follows:

Component	Weight			Threshold(1)			Target(1)			Stretch Target(1)
EBITDA		50.00	%		22.00	%		27.50	%		33.00	%
RONA		25.00	%		11.00	%		13.75	%		16.50	%
Individual Performance		25.00	%		11.00	%		13.75	%		16.50	%
Total		100.00	%		44.00	%		55.00	%		66.00	%

(1) Each percentage listed in the table under “Threshold,” “Target” and “Stretch Target” represents a percentage of the named executive officer’s base salary. For example, if a named executive officer achieves the threshold EBITDA target, as described below, he would receive 22.0% of his base salary as part of his annual cash incentive award.

Although there was no annual cash incentive award granted to Mr. Sack, our President and Chief Executive Officer for a portion of the fiscal year ended September 30, 2010, if he had remained our President and Chief Executive Officer at the end of the fiscal year ended September 30, 2010, his potential bonus payouts under various scenarios would have been as follows:

Component	Weight			Threshold(1)			Target(1)			Stretch Target(1)
EBITDA		50.00	%		40.00	%		50.00	%		60.00	%
RONA		25.00	%		20.00	%		25.00	%		30.00	%
Individual Performance		25.00	%		20.00	%		25.00	%		30.00	%
Total		100.00	%		80.00	%		100.00	%		120.00	%

(1) Each percentage listed in the table under “Threshold,” “Target” and “Stretch Target” represents a percentage of our chief executive officer’s base salary. For example, if our chief executive officer achieves the threshold EBITDA target, as described below, he would receive 40.0% of his base salary as part of his annual cash incentive award.

In the fiscal year ended September 30, 2010, our EBITDA target was $30.1 million. Our threshold EBITDA target was $20.1 million and our stretch EBITDA target was $40.0 million. Our RONA target was 8.23%. Our threshold RONA target was 4.94% and our stretch RONA target was 11.07%. These EBITDA and RONA targets should not be understood as management’s predictions of future performance or other guidance and investors should not apply these in any other context.

The following briefly outlines the individual performance goals for the fiscal year ended September 30, 2010 for each of our named executive officers, other than Mr. Sack, who, due to his resignation on December 31, 2009, was not eligible for an annual cash incentive award. Mr. Mikus’s individual annual performance goals included reducing costs and spending, providing adequate liquidity to support business needs, completing the refinancing of our existing debt, enhancing financial reporting systems and ensuring compliance with financial and tax regulations. Mr. Hennessy’s individual annual performance goals included improving the productivity of our manufacturing processes, improving the efficiency of our inventory management, maintaining capital expenditures, increasing the sales of new products and developing new products. Mr. Murray’s individual annual performance goals included increasing sales and margins, expanding our Distribution segment’s target end markets, improving the efficiency of our inventory management and maintaining our on-time delivery performance. Mr. Merchant’s individual annual performance goals included ensuring the proper implementation of our growth initiatives, expanding the geographic market for our products and growing the business of Specialty Steel Supply. Mr. Weberding’s individual annual performance goals included developing new customers, markets and products, developing a program to increase our product margins and expanding the geographic market for our products. Our compensation committee exercises its discretion to determine if each named executive officer’s individual performance goals are met.

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Annual performance that falls between the threshold target, target and stretch target results in an annual cash incentive award that is calculated in a linear manner. Additionally, there is no maximum potential award under our 2010 Bonus Plan. Performance above the stretch target results in an annual cash incentive award that is calculated in a linear manner.

For the fiscal year ended September 30, 2010, actual EBITDA was $34.6 million and our RONA was 11.4%. Based on our achievement of EBITDA, RONA and individual performance goals for each named executive officer, the compensation committee approved annual cash incentive awards of approximately 62%, 62%, 60%, 61% and 60% of base salary for each of Messrs. Mikus, Hennessy, Murray, Merchant and Weberding, respectively.

Upon the consummation of this offering, the compensation committee will be responsible for establishing the components of the performance targets, which may be different than those utilized in the fiscal year ended September 30, 2010. Further, the compensation committee will be responsible for setting individual performance goals for the named executive officers and reviewing their performance based on feedback from the executive officers and our chief executive officer.

Annual cash incentive awards paid to the named executive officers are reflected in the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table.

Equity and Non-Equity Incentive Awards

We believe that our long-term performance is fostered by a compensation methodology that compensates named executive officers and other company employees through the use of equity-based awards, such as stock options, restricted stock awards and other rights to receive compensation based on the value of our equity. We also believe that when our named executive officers possess an ownership interest in our company, they have a continuing stake in our long-term success. In addition, from time to time, our compensation committee may award special, discretionary non-equity incentive awards to compensate named executive officers for their performance and to be competitive in our executive retention efforts.

Certain of our named executive officers currently own outstanding options that were granted under the 2006 Equity Plan. On January 26, 2010, we granted time vesting options to certain members of our management, including Messrs. Mikus, Hennessy, Murray, Merchant and Weberding. See “2010 Grants of Plan-Based Awards.” Additionally, on November 2, 2010, we granted time-vesting options to certain members of our management, including an option to purchase 90,000 shares of common stock at an exercise price of $2.82 to Mr. Merchant. Pursuant to Mr. DiSantis’s employment agreement, on January 17, 2011, we granted a time-vesting option to purchase 900,000 shares of common stock at an exercise price of $2.82 to Mr. DiSantis, our new President and Chief Executive Officer. All these options were granted to aid in retention of our named executive officers. Consistent with this goal, each of these options vests ratably on the grant date over the following four years.

All of our outstanding options are subject to certain forfeiture rights contained within each individual stock option agreement. Generally, the stock option agreements provide for termination of the option upon the earliest of certain events to occur including: (i) ten years after the option was granted; (ii) five years after the option was granted if the individual holds more than 10% of the total combined voting power of all classes of common stock; (iii) three months after termination of employment if such individual was terminated other than for death, disability, as defined in the 2006 Equity Plan, or cause; (iv) one year after termination of employment if such individual was terminated and became disabled or died within three months after termination; (v) immediately if the employee was terminated for cause, as defined in the 2006 Equity Plan; and (vi) one year after termination of employment in the event of disability or death of the employee.

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The following table provides information as of September 30, 2010 about the common stock that may be issued upon exercise of options under the 2006 Equity Plan, our only equity compensation plan as of September 30, 2010:

Plan Category	Number of Shares to Be Issued Upon Exercise of Outstanding Options		Weighted Average Exercise Price of Outstanding Options		Number of Securities Remaining Available  for Future Issuance(1)
Equity compensation plans approved by security holders		669,927	$	2.82		0
Equity compensation plans not approved by security holders		—		—		—
Total		669,927	$	2.82		0

(1) The 2006 Equity Plan was amended on May 20, 2011 to increase the number of shares that may be issued under the 2006 Equity Plan to 3,542,822 shares of our common stock.

For additional information concerning the options awarded in the fiscal year ended September 30, 2010, see “2010 Grants of Plan-Based Awards” and “Outstanding Equity Awards at Fiscal Year-End.”

On September 16, 2010, in connection with Mr. Hennessy’s promotion to Executive Vice President, we entered into an arrangement with Mr. Hennessy for a discretionary cash bonus of $125,000 that was to be earned six months after the appointment of a new chief executive officer contingent upon Mr. Hennessy’s continued employment at the company.

Other Benefits

Retirement Benefits. We offer two defined contribution 401(k) savings plans for all eligible employees. The Latrobe Steel Company Voluntary Investment Program Plan covers all union employees at our Latrobe, Pennsylvania facility, and the Latrobe Steel Company Savings and Investment Program Plan covers all salaried and all non-union employees of our company, including the named executive officers. Employees are generally eligible to enroll upon completion of one full calendar month of employment.

Welfare Benefits. We provide welfare benefits to the named executive officers, including medical, dental, life insurance and disability coverage. These benefits are offered to all of our eligible employees including the named executive officers. The various benefit plans are part of our overall total compensation offering and are intended to be competitive with peer companies.

Perquisites. We provide certain named executive officers with perquisites and other personal benefits, reflected in the All Other Compensation column in the Summary Compensation Table. We and the compensation committee believe these perquisites are reasonable and consistent with our overall executive compensation program. We offer these benefits to better enable us to attract and retain superior executive talent for key positions. The compensation committee periodically reviews the levels of perquisites and other personal benefits provided to the named executive officers. These perquisites include country club membership, consistent with industry practice, for business entertainment purposes.

Risk Review

As part of its oversight of our executive compensation program, our compensation committee considers the impact of the program and the incentives created by the compensation awards that the program administers on our risk profile. In addition, we review all of our compensation policies and procedures, including the incentives that they create and factors that may reduce the likelihood of excessive risk taking to determine whether they present a significant risk to us. Based on this review, we have concluded that our compensation policies and procedures are not reasonably likely to have a material adverse effect on us.

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Employment Agreement

B. Christopher DiSantis became our President and Chief Executive Officer on January 17, 2011. In connection with his appointment, we entered into an employment agreement with Mr. DiSantis that can be terminated at any time at will. Pursuant to the employment agreement, Mr. DiSantis is entitled to an annual base salary of $425,000, which amount is to be reviewed by our board of directors in January 2012 and periodically thereafter. Mr. DiSantis’s employment agreement further provides that he is eligible to receive an annual target bonus payment equal to 100% of his base salary then in effect in accordance with the annual bonus plan adopted by our board of directors and our compensation committee in such year. The employment agreement also provides that Mr. DiSantis is entitled to participate in our employee benefit plans or programs on a basis comparable to our other senior management employees.

Pursuant to Mr. DiSantis’s employment agreement, on January 17, 2011, we issued 460,993 shares of common stock to Mr. DiSantis for an aggregate purchase price of approximately $1.3 million. From the issuance date until the first anniversary thereof, all of these shares are subject to our right to repurchase the shares at fair market value. On each subsequent anniversary date until the third anniversary date, the number of shares subject to the repurchase right decreases by one-third. After the third anniversary date, no shares are subject to the repurchase right. In addition, we granted a time-vesting option to purchase 900,000 shares of common stock at an exercise price of $2.82 to Mr. DiSantis. These options vest ratably over a four year period on the anniversary date of their grant.

Concurrent with the execution of his employment agreement, Mr. DiSantis entered into a confidentiality, assignment of inventions and non-competition agreement. Pursuant to such agreement, Mr. DiSantis has agreed (i) not to compete with us during his employment with us and for a period of two years after his termination, (ii) not to solicit any of our employees during their employment with us and for a period of six months after they cease to be employed with us, (iii) to maintain certain information as confidential, and (iv) that all ideas, discoveries and other innovations as described in the agreement, which may be used in conducting our business, are our sole and exclusive property.

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Summary Compensation Table

The following table sets forth certain information with respect to the total compensation paid or earned by each of the named executive officers for the fiscal year ended September 30, 2010.

Name and Principal Position	Fiscal Year		Salary ($)		Option Awards ($)(1)		Non-Equity Incentive Plan Compensation ($)(2)		All Other Compensation ($)(3)		Total ($)
Hans J. Sack(4)		2010	$	92,882	$	175,861		—	$	1,231	$	269,974
President and Chief Executive Officer
Dale B. Mikus		2010	$	221,351	$	175,861	$	143,271	$	5,880	$	546,363
Vice President and Chief Financial Officer
Daniel G. Hennessy		2010	$	201,169	$	175,861	$	155,444		—	$	532,474
Executive Vice President—Manufacturing
David A. Murray		2010	$	194,747	$	175,861	$	123,236		—	$	493,844
Senior Vice President and General Manager, Distribution
Dudley J. Merchant		2010	$	159,600	$	175,861	$	102,610	$	8,935	$	447,006
Vice President—Business Development
Mark T. Weberding		2010	$	159,600	$	175,861	$	100,300	$	10,722	$	446,483
Vice President—Marketing & Sales

(1) Represents the aggregate grant date fair value of the stock option awards granted during the fiscal year ended September 30, 2010, in accordance with ASC Topic 718 with respect to options to purchase shares of our common stock awarded to the named executive officers in 2010 under the 2006 Equity Plan. See “Note 14—Share-Based Payment Arrangements” to the Consolidated Financial Statements.

(2) Represents annual cash incentive awards granted to our named executive officers under our 2010 Bonus Plan, paid on December 31, 2010. See “—Compensation Discussion and Analysis—Elements of Compensation—Annual Cash Incentive Awards.”

(3) All other compensation consists of country club membership dues, consistent with industry practice, for business entertainment purposes.

(4) On December 31, 2009, Mr. Sack resigned as President and Chief Executive Officer.

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2010 Grants of Plan-Based Awards

The following table sets forth certain information with respect to grants of plan-based awards for the year ended September 30, 2010 with respect to the named executive officers.

Name	Grant Date	Estimated Possible Payments Under Non-Equity Incentive Plan Awards(1)						All Other Option Awards: Number of Securities Underlying Options (#)(3)		Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Option Awards
		Threshold ($)		Target ($)		Maximum ($)(2)
Hans J. Sack	N/A	$	240,730	$	300,912				—		—		—
Dale B. Mikus	N/A	$	102,520	$	128,150				—		—		—
	1/26/10		—		—		—		93,048	$	2.82	$	175,861
Daniel G. Hennessy	N/A	$	110,000	$	137,500				—		—		—
	1/26/10		—		—		—		93,048	$	2.82	$	175,861
David A. Murray	N/A	$	90,200	$	112,750				—		—		—
	1/26/10		—		—		—		93,048	$	2.82	$	175,861
Dudley J. Merchant	N/A	$	73,920	$	92,400				—		—		—
	1/26/10		—		—		—		93,048	$	2.82	$	175,861
Mark T. Weberding	N/A	$	73,920	$	92,400				—		—		—
	1/26/10		—		—		—		93,048	$	2.82	$	175,861

(1) The awards shown in the columns under Estimated Possible Payments Under Non-Equity Incentive Plan Awards are the 2010 award opportunities established by our compensation committee. For each of our named executive officers, the threshold was 44% of base salary and the target was 55% of base salary. See “Compensation Discussion and Analysis—Elements of Compensation—Annual Cash Incentive Awards.”

(2) No maximum possible payment is listed because our 2010 Bonus Plan does not set forth any maximum possible payments. See “Compensation Discussion and Analysis—Elements of Compensation—Annual Cash Incentive Awards.”

(3) The awards shown in this column reflect the stock options granted on January 26, 2010 to our named executive officers that vests ratably over the next four years. See “Compensation Discussion and Analysis—Elements of Compensation—Equity and Non-Equity Incentive Awards.”

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Outstanding Equity Awards at Fiscal Year-End

The following table includes certain information with respect to options held by the named executive officers as of September 30, 2010.

Name	Option Awards
	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plan  Awards: Securities  of Underlying Unexercised Unearned Options (#)		Option Exercise Price ($)		Option Expiration Date
Hans J. Sack		—		—		—		—		—
Dale B. Mikus(1)		—		93,048		—	$	2.82		1/26/20
Daniel G. Hennessy(1)		—		93,048		—	$	2.82		1/26/20
David A. Murray(1)		—		93,048		—	$	2.82		1/26/20
Dudley J. Merchant(1)		—		93,048		—	$	2.82		1/26/20
Mark T. Weberding(1)		—		93,048		—	$	2.82		1/26/20

(1) 25% of these options vested on January 26, 2011. The remaining options will vest ratably over the next three years and will vest in full as of January 26, 2014.

Option Exercises and Stock Vested in 2010

The named executive officers did not exercise any options during the fiscal year ended September 30, 2010. Other than stock options, there are no outstanding stock awards that vest.

Potential Payments Upon Termination or Change of Control

Employment Agreement

Pursuant to Mr. DiSantis’s employment agreement, in the event his employment is terminated by us without “cause” or by the executive for “good reason,” we are obligated to provide certain severance benefits as described below. Cause is defined as: (i) any failure to perform such duties as are reasonably requested by our board of directors, which duties must be consistent with the duties of an executive at the same level; (ii) any failure to observe our and our subsidiaries material policies that are applicable and communicated in writing; (iii) any act or omission constituting gross negligence or willful misconduct in the performance of his duties; (iv) breach of any material provision of his employment agreement; (v) any act or omission constituting fraud, embezzlement, disloyalty or dishonesty against us or our subsidiaries; or (vi) any conviction of, or a plea of nolo contendere to, a felony. Good reason is defined as: (i) a material diminishing of Mr. DiSantis’s duties, authority, responsibility or base salary without performance justification; (ii) a material breach by us of the employment agreement; (iii) relocation of the principal office of Mr. DiSantis to a location more than fifty miles from Pittsburgh, Pennsylvania, (iv) a change in the person or entity to whom Mr. DiSantis reports, from our board of directors or the Chairman of the board of directors, except in the case of a change of control arising from an acquisition of us or our operating subsidiary by an entity with greater than $1 billion in annual revenue that results in Latrobe being operated as a division or wholly owned subsidiary of the acquiring company.

If Mr. DiSantis is terminated with cause, then he is only entitled to receive any benefits he may otherwise be entitled to under any other employee benefit plan. If Mr. DiSantis is terminated without cause or Mr. DiSantis terminates his employment with good reason or in the event of his death or permanent incapacity, he or his estate would be entitled to receive, pursuant to his signing of a separation agreement and general release of all claims: (i) a cash lump sum payment equal to two times his base salary in effect at the date of termination or resignation;

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(ii) a cash lump sum payment equal to his bonus under the bonus plan in effect at the date of termination or resignation, prorated based on his actual performance through the month of his termination or resignation; and (iii) if he elects to continue his group health insurance coverage, the full amount of the premium for health insurance coverage for 18 months, unless it is determined by our board of directors that such coverage would violate any federal or state tax laws.

Accelerated Vesting of Options

Pursuant to stock options granted to Mr. DiSantis on January 17, 2011, upon a change of control prior to January 17, 2012, 50% of his unvested options will vest and become exercisable immediately and the remaining 50% will vest ratably over the next four years. Upon a change of control on or after January 17, 2012, all of his unvested options will vest and become exercisable immediately.

Compensation of Directors

We have not paid any compensation to the members of our board of directors for their services as directors. After the consummation of this offering, we expect to adopt a compensation program for our non-employee directors.

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the ownership of common stock both before and after giving effect to this offering. Information is presented for: (1) each person who is known by the company to be the beneficial owner of more than five percent of the outstanding shares of common stock on an as converted basis; (2) each director of the company; (3) each executive officer named in the Summary Compensation Table; (4) all executive officers and directors of the company as a group; and (5) the selling stockholders.

Beneficial ownership of shares is determined under rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. Except as noted by footnote, and subject to community property laws where applicable, we believe based on the information provided to us that the persons and entities named in the table below have sole voting and investment power with respect to all shares of our common stock shown as beneficially owned by them. Beneficial ownership and percentage of beneficial ownership is based on              shares of our common stock outstanding after giving effect to (i) the conversion of our outstanding Series A and Series B Preferred Stock into common stock on a one-for-one basis prior to the completion of this offering; (ii) a one-to-              reverse stock split of our common stock, which will be effected immediately prior to the completion of this offering; and (iii)              shares of common stock to be outstanding after the completion of this offering, assuming no exercise of the underwriter’s over-allotment option, or              shares, assuming full exercise of the underwriter’s over-allotment option. Shares of common stock subject to options currently exercisable or exercisable within 60 days of the date of this prospectus are deemed to be outstanding and beneficially owned by the person holding the options for the purpose of computing the percentage of beneficial ownership of that person and any group of which that person is a member, but are not deemed outstanding for the purpose of computing the percentage of beneficial ownership for any other person.

Unless otherwise indicated, the address of each executive officer and director is c/o Latrobe Specialty Metals, Inc., 2626 Ligonier Street, Latrobe, Pennsylvania 15650.

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	Shares Beneficially Owned Before This Offering		Shares Offered	Shares Beneficially Owned After This Offering		Shares Beneficially Owned After This Offering Assuming Full Exercise of the Over-allotment Option
	Number of Shares	Percentage		Number of Shares	Percentage	Number of Shares	Percentage
Principal stockholders:
Toolrock Investments, LLC(1)
HHEP-Latrobe, L.P.(2)
The Watermill Group(3)
Sankaty Funds(4)
Named executive officers and directors:
B. Christopher DiSantis
Dale B. Mikus
Daniel G. Hennessy
Dudley J. Merchant
David A. Murray
Mark T. Weberding
Thomas O. Hicks(5)
Steven E. Karol(6)
Robert W. Ackerman(7)
Robert M. Swartz
All executive officers and directors as a group (10 persons)

* Less than one percent.

(1) HHEP-Latrobe, L.P., The Watermill Group and Sankaty Advisors LLC own 51.5%, 32.5% and 15.9% of Toolrock Investment, LLC, respectively.

(2) The general partner of HHEP-Latrobe, L.P. is HHEP-Latrobe GP, L.P. The general partner of HHEP-Latrobe GP, LP is HHEP-Latrobe GP LLC. Thomas O. Hicks is the sole member and sole owner of HHEP-Latrobe GP LLC, and as such, has sole voting and dispositive authority over the shares held by HHEP-Latrobe, L.P. Mr. Hicks disclaims beneficial ownership of the shares owned directly or indirectly by HHEP-Latrobe, L.P., except to the extent of his pecuniary interest therein, if any. The address for Mr. Hicks and each of the entities is 100 Crescent Court, Suite 1200, Dallas, TX 75201.

(3) Represents              shares held by Watermill-Toolrock Partners, L.P.,              shares held by Watermill-Toolrock Partners II, L.P. and              shares held by Watermill–Toolrock Enterprises, LLC. Watermill–Toolrock Enterprises, LLC is the general partner of Watermill-Toolrock Partners, L.P. and Watermill-Toolrock Partners II, L.P. Steven E. Karol is the controlling member of Watermill-Toolrock Enterprises, LLC, and, as such, has sole voting and dispositive authority over the shares held by Watermill-Toolrock Partners, L.P., Watermill-Toolrock Partners II, L.P. and Watermill–Toolrock Enterprises, LLC. Mr. Karol disclaims beneficial ownership of the shares owned directly or indirectly by Watermill-Toolrock Partners, L.P., Watermill-Toolrock Partners II, L.P. and Watermill–Toolrock Enterprises, LLC, except to the extent of his pecuniary interest therein, if any. The address for Mr. Karol and each of the entities is One Cranberry Hill, 750 Marrett Road, Suite 401, Lexington, MA 02421.

(4) Represents              shares held by Sankaty Credit Opportunities II, L.P. (“COPs II”),              shares held by Prospect Harbor Credit Partners, L.P. (“Pro”) and              shares held by Sankaty High Yield Partners III, L.P. (“SIII”). Jonathan Lavine is the managing member of Sankaty Credit Member, LLC (“SCM”), which is the managing member of Sankaty Credit Opportunities Investors II, LLC (“SCOI II”), and of Prospect Harbor Investors, LLC (“PHI”). Mr. Lavine is also the Managing member of Sankaty Investors III, LLC which is the general partner of Sankaty High Yield Asset Investors III, LLC (“SHYAI III”). SCOI II is the general partner of COPs II, PHI is the general partner of Pro and (“SHYAI III”) is the general partner of SIII. By virtue of these relationships, Mr. Lavine may be deemed to share voting and dispositive power with respect to the shares of common stock held by COPs II, Pro and SIII. Mr. Lavine and each of the entities noted above disclaims beneficial ownership of such securities except to the extent of its pecuniary interest therein. The address for COPs II, Pro and SIII is 111 Huntington Avenue, Boston, MA 02199.

(5) Excludes shares held by HHEP-Latrobe, L.P. Thomas O. Hicks is the chairman of Hicks Equity Partners LLC and a member of the general partner of HHEP-Latrobe, L.P. Mr. Hicks disclaims beneficial ownership of the shares owned directly or indirectly by HHEP-Latrobe, L.P., except to the extent of his pecuniary interest therein, if any.

(6) Excludes shares held by Watermill-Toolrock Partners, L.P., Watermill-Toolrock Partners II, L.P. and Watermill–Toolrock Enterprises, LLC. Steven E. Karol is the controlling member of Watermill-Toolrock Enterprises, LLC, which is the general partner of Watermill-Toolrock Partners, L.P. and Watermill-Toolrock Partners II, L.P., and as such, may be deemed to beneficially own the shares held by each entity. Mr. Karol disclaims beneficial ownership of the shares owned directly or indirectly by these entities, except to the extent of his pecuniary interest therein, if any.

(7) Excludes shares held by Watermill-Toolrock Partners, L.P., Watermill-Toolrock Partners II, L.P. and Watermill–Toolrock Enterprises, LLC. Robert W. Ackerman is a member of Watermill-Toolrock Enterprises, LLC, which is the general partner of Watermill-Toolrock Partners, L.P. and Watermill-Toolrock Partners II, L.P., and as such, may be deemed to beneficially own the shares held by each entity. Mr. Ackerman disclaims beneficial ownership of the shares owned directly or indirectly by these entities, except to the extent of his pecuniary interest therein, if any.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Related Party Transactions

As a public company, we will ensure that all transactions with related parties are fair, reasonable and in our best interest. In this regard, our audit committee will review material transactions between us and related parties to determine that, in their best business judgment, such transactions meet that standard. Set forth below is a description of certain transactions that have occurred since September 30, 2007 or that involve obligations that remain outstanding as of the date of this prospectus.

Hicks Monitoring and Oversight Agreement

In connection with our acquisition, we entered into a Monitoring & Oversight Agreement with Hicks Operating (the “Hicks M&O Agreement”). Hicks Operating is an affiliate of Hicks Holdings LLC and HHEP-Latrobe, L.P., a principal interest holder of our principal stockholder, Toolrock. The Hicks M&O Agreement provides that Hicks Operating will be paid an annual fee of $500,000 for financial monitoring and oversight services. This fee is prorated on a daily basis for any partial calendar year and payable in quarterly installments. The Hicks M&O Agreement continues until the earlier of (i) December 8, 2016 or (ii) the date on which Hicks Operating, or its successors or their respective affiliates, ceases to own any securities of Latrobe or our operating subsidiary, Latrobe Specialty Metals Company. In addition, the Hicks M&O Agreement provides for payment or reimbursement by Latrobe and Latrobe Specialty Metals Company to Hicks Operating for its reasonable disbursements and out-of-pocket expenses incurred for the account of Latrobe or Latrobe Specialty Metals Company or in connection with Hicks Operating’s financial monitoring and oversight services.

The Hicks M&O Agreement also provides that Latrobe and Latrobe Specialty Metals Company, jointly and severally, will indemnify Hicks Operating against all claims, liabilities, losses, damages and expenses arising in connection with the financial monitoring and oversight services provided by Hicks Operating.

Upon the completion of this offering, the Hicks M&O Agreement will be terminated and pre-paid, in an aggregate amount of $             million. See “Use of Proceeds.”

Mr. Hicks, a member of our board of directors, is chairman of Hicks Holdings LLC, an affiliate of Hicks Operating.

Watermill Monitoring and Oversight Agreement

In connection with our acquisition, we entered into a Monitoring & Oversight Agreement with Watermill Management (the “Watermill M&O Agreement”). Watermill Management is an affiliate of Watermill-Toolrock Partners, L.P. and Watermill-Toolrock Partners II, L.P., principal interest holders of our principal stockholder, Toolrock. The Watermill M&O Agreement provides that Watermill Management will be paid an annual fee of $750,000 for financial monitoring and oversight services. This fee is prorated on a daily basis for any partial calendar year and payable in quarterly installments. The Watermill M&O Agreement continues until the earlier of (i) December 8, 2016 or (ii) the date on which Watermill Management, or its successors or their respective affiliates, ceases to own any securities of Latrobe or our operating subsidiary, Latrobe Specialty Metals Company. In addition, the Watermill M&O Agreement provides for payment or reimbursement by Latrobe and Latrobe Specialty Metals Company to Watermill Management for its reasonable disbursements and out-of-pocket expenses incurred for the account of Latrobe or Latrobe Specialty Metals Company or in connection with the Watermill Management’s financial monitoring and oversight services.

The Watermill M&O Agreement also provides that Latrobe and Latrobe Specialty Metals Company, jointly and severally, will indemnify Watermill Management against all claims, liabilities, losses, damages and expenses arising in connection with the financial oversight and monitoring services provided by Watermill Management.

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Upon the completion of this offering, the Watermill M&O Agreement will be terminated and pre-paid, in an aggregate amount of $             million. See “Use of Proceeds.”

Mr. Karol, a member of our board of directors, is the Managing Partner of The Watermill Group, an affiliate of Watermill Management.

New Registration and Tag-Along Rights Agreement

Contemporaneously with the completion of this offering, we will enter into a Registration and Tag-Along Rights Agreement with Hicks, Watermill, Sankaty and other stockholders, including B. Christopher DiSantis, our President and Chief Executive Officer, pursuant to which: (i) the entities affiliated with Hicks will collectively be entitled to five demand registrations, and the entities affiliated with Watermill will collectively be entitled to five demand registrations; (ii) affiliates of Hicks, affiliates of Watermill, Sankaty and Mr. DiSantis will be entitled to participate in registrations initiated by us or certain stockholders party to the Registration and Tag-Along Rights Agreement; and (iii) affiliates of Hicks, affiliates of Watermill, Sankaty and Mr. DiSantis will be entitled to tag-along rights in connection with any unregistered sale of common stock by the other stockholders party to the Registration and Tag-Along Rights Agreement.

Existing Registration Rights Agreement

On March 17, 2010, we amended and restated the Registration Rights Agreement, dated as of December 8, 2006, with Hicks, Watermill, Sankaty and RGIP, LLC (the “Existing Registration Rights Agreement”). The Existing Registration Rights Agreement provides for: (i) demand registration rights, which require Latrobe to effect registration of the Registrable Securities (as defined in the Existing Registration Rights Agreement) upon a written request, subject to certain limitations; and (ii) piggy-back registration rights, after the occurrence of an initial public offering of Latrobe. In addition, we agreed to indemnify any selling stockholders with respect to registrations made pursuant to the above-mentioned registration rights. We intend to terminate this agreement upon the completion of this offering.

Transaction Service Agreements

On March 6, 2008, we entered into a transaction services agreement with affiliates of each of Hicks Holdings and The Watermill Group, pursuant to which Hicks Holdings and The Watermill Group would provide transaction and financial advice to us in connection with the negotiation and extension of our senior secured revolving credit facility and any other future debt and equity financing transactions. We intend to terminate this agreement upon the completion of this offering. In March 2008, each of Hicks Holdings and The Watermill Group received a cash fee of $1,500,000 for the advisory services they provided in connection with the senior secured revolving credit facility transaction. In January, 2011, each of Hicks Holdings and The Watermill Group received a cash fee of $500,000 for the advisory services they provided for the refinancing of our senior subordinated notes from Sankaty with our senior secured term loan.

Conversion of Series A and Series B Preferred Stock

As of March 31, 2011, there were 31,490,000 shares of Series A Preferred Stock outstanding held by Toolrock, certain members of our management and certain other key employees. Hicks, Watermill and Sankaty hold membership interests in Toolrock. Additionally, there were warrants to purchase 524,832 shares of Series A Preferred Stock held by Sankaty and RGIP, LLC. Pursuant to the corporate recapitalization, all warrants for Series A Preferred Stock will be exercised for an aggregate purchase price of $5,248. Additionally, pursuant to the corporate recapitalization, we will convert each holder’s shares of Series A Preferred stock into shares of common stock at a conversion rate of one-for-one. We are also required to pay a Series A Special Dividend of $0.022635 per share and a Series A Preferential Dividend of $0.90 per share in connection with the conversion of the Series A Preferred Stock. In connection with this offering and the corporate recapitalization, we will pay to Toolrock, our principal stockholder upon the completion of this offering, and Sankaty approximately $             million and $             million, respectively, in Series A Special Dividends, Series A Preferential Dividends and related conversion fees.

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As of March 31, 2011, there were 12,114,815 shares of Series B Preferred Stock outstanding held by Toolrock, certain members of our management and certain other key employees. Hicks, Watermill and Sankaty hold membership interests in Toolrock. Pursuant to the corporate recapitalization, we will convert each holder’s shares of Series B Preferred Stock into shares of common stock at a conversion rate of one-for-one. Additionally, we are required to pay any accrued but unpaid dividends on such shares of Series B Preferred Stock. Our Series B Preferred Stock accrues dividends daily at the rate of 15.0% per annum. In connection with this offering and the corporate recapitalization, we will pay to Toolrock approximately $             million in accrued but unpaid dividends. In addition, we will pay $ million to the holders of Series B Preferred Stock pursuant to its terms.

See “Corporate Recapitalization” for further discussion regarding the corporate recapitalization.

Issuances of Securities

On December 31, 2007, we issued a grant of 191,000, 99,000, 191,000, 191,000, 398,000 and 191,000 shares of common stock under the 2006 Equity Plan to Daniel G. Hennessy, Dudley J. Merchant, Dale B. Mikus, David A. Murray, Hans Sack and Mark T. Weberding, respectively. Mr. Sack’s shares were subsequently rescinded. Messrs. Hennessy, Merchant, Mikus, Murray and Weberding are executive officers. Mr. Sack was formerly our President and Chief Executive Officer.

On March 17, 2010, we issued 12,041,251 shares of Series B Preferred Stock to Toolrock for an aggregate purchase price of approximately $9.9 million. On this same date, we issued 11,615, 11,615, 23,231, 9,679 and 7,744 shares of Series B Preferred Stock to Messrs. Hennessy, Merchant, Mikus, Murray and Weberding, respectively, for an aggregate purchase price of approximately $53,000. In addition, we issued to Sankaty warrants to purchase 134,201 shares of our common stock and warrants to purchase 3,463,900 shares of our Series A Preferred Stock as part of the issuance of $10.0 million of additional senior subordinated notes discussed below. We retired 85% of these warrants in conjunction with our July 30, 2010 re-financing transaction with DDJ Capital Management LLC.

Senior Subordinated Notes

On March 17, 2010, Sankaty Credit Opportunities II, L.P. and Prospect Harbor Credit Partners, L.P., two of our principal stockholders, with RGIP, Inc. agreed to purchase, in cash, an additional $10,204,000 aggregate principal amount of 18% senior subordinated notes, due June 8, 2013 for an aggregate purchase price of $10,000,000. On July 30, 2010, our senior subordinated notes were fully paid off through the proceeds from our senior secured term loan.

Related Persons Transaction Policy

In connection with this offering, we plan to adopt a written Related Person Transaction Policy in order to address the reporting, review and approval or ratification of transactions with related persons. Our Related Person Transaction Policy will provide that our audit committee will primarily review each related party transaction.

The types of transactions to be covered by our Related Person Transaction Policy are those in which we and a related person participate, with such related person having a material, direct interest in the transaction at issue. Examples generally include sales, purchases or other transfers of real or personal property, use of property and equipment by lease or otherwise, services received or furnished and the borrowing and lending of funds.

Our directors, nominees for election as a director and executive officers who intend to enter into a related person transaction will be required under our Related Person Transaction Policy to disclose all material facts with respect to the transaction to our audit committee. If one of our officers or employees intend to enter into any related person transaction, that person will be required to disclose all material facts with respect to the transaction to his or her supervisor, who will report such information to our audit committee.

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Our audit committee has authority (i) to determine categories of transactions that are immaterial and not required to be reported to, reviewed by or approved or ratified, and (ii) to approve in advance categories of transactions that need not be reported or approved individually but instead will be reported and reviewed collectively on a periodic basis.

If we have a related person transaction that requires audit committee approval in accordance with the policies to be set forth in our Related Person Transaction Policy, we will seek that approval before we enter into the transaction. If we, in error, enter into a related party transaction that requires pre-approval by our audit committee, the transaction must be presented to our audit committee for its review upon discovery of such error and our audit committee will then make a recommendation to our board of directors whether rescission or any modification of the transaction is appropriate.

In determining whether to approve or ratify a related person transaction, our audit committee will consider whether the transaction is in our best interests, by considering the following items, among others:

• the related person’s relationship to us;

• the materiality of the transaction to the related person and us, including the dollar value of the transaction;

• the business purpose for the transaction;

• whether the transaction is comparable to a transaction that could be available on an arms-length basis;

• whether the transaction is in the ordinary course of our business; and

• the effect of the transaction on our business and operations.

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DESCRIPTION OF INDEBTEDNESS

The following is a summary of provisions relating to our indebtedness.

Senior Secured Revolving Credit Facility

General

On March 6, 2008, we entered into a five-year $200.0 million senior secured revolving credit facility with Wachovia Bank, National Association (now known as Wells Fargo Bank, National Association) and certain other lenders, which includes a $10.0 million letter of credit sub-limit. On March 17, 2010, we entered into an amendment that reduced the available revolving credit loans to $175 million. The senior secured revolving credit facility is secured by substantially all of our assets. Under the facility, we are subject to a daily cash sweep to pay down amounts outstanding from our existing cash and cash equivalents.

The outstanding borrowings drawn under the facility cannot exceed our borrowing base, which includes specified percentages of eligible accounts receivable and inventories. The facility requires a $10.0 million general reserve, which lowers our availability. As of March 31, 2011, the facility had an outstanding balance of $119.7 million and $5.9 million of standby letters of credit had been issued under the facility. The remaining availability related to the facility was $39.4 million as of March 31, 2011, which is based upon the borrowing base collateral of $175.0 million at that date. We are permitted to voluntarily prepay the facility, in whole or in part, without premium or penalty.

Interest and Fees

Borrowings under the facility bear interest at our option at either the greater of Wells Fargo’s “Prime Rate” or federal funds open rate plus 0.5%, plus up to 3.25% per annum, or the adjusted Eurodollar rate used by the lender, plus up to 4.50% per annum. In addition, we must pay monthly, in arrears, a commitment fee of 0.75% per annum on the unused amount of the facility’s total commitment. We must also pay, monthly in arrears, a letter of credit fee on the average daily maximum amount available to be drawn under all letters of credit issued under the senior secured revolving credit facility at a rate equal to the applicable margin for Eurodollar rate loans under the senior secured revolving credit facility.

Covenants

We are subject to certain affirmative, negative and financial covenants, in each case subject to certain exceptions and materiality thresholds. The affirmative covenants include, among other things, requirements with respect to maintenance of existence, compliance with laws, payment of taxes, maintenance of insurance and delivery of financial statements. The negative covenants restrict, among other things, and subject to certain exceptions, asset sales, grants of liens, incurrence of indebtedness, certain investments and restricted payments and transactions with affiliates. The financial covenants require us to maintain minimum excess availability and fixed charge coverage ratios and limit the amount of our annual capital expenditures.

Events of Default

The facility contains customary events of default, subject to exceptions, grace periods and materiality thresholds, including payment defaults, breaches of representations and warranties, covenant defaults, monetary judgments, certain events of bankruptcy and insolvency, cross-defaults to certain other indebtedness, the failure of any material provision of any guaranty or security document supporting the facility to be in full force and effect, the occurrence of an ERISA event and the occurrence of a change of control.

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Senior Secured Term Loan

General

On July 30, 2010, we entered into a $50.0 million senior secured term loan with DDJ Capital Management LLC. The senior secured term loan facility is secured by substantially all of our assets. The term loan is payable in quarterly installments of $625,000, which commenced on December 31, 2010 and increases to $1.25 million starting December 31, 2011, with the remaining balance due on September 6, 2013. The term loan includes a prepayment requirement starting with the fiscal year ending September 30, 2011, in the event that “excess cash flows,” as defined in the Senior Secured Term Loan Agreement, are generated. The term loan also includes, subject to customary reinvestment rights, prepayment requirements with respect to the proceeds of the sale of certain assets, issuances of stock or extraordinary receipts. We are permitted to voluntarily prepay the facility, in whole or in part, subject to a prepayment premium of 3.0% as of March 31, 2011 (which reduces over time to 2.0% on July 31, 2011 and 1.0% on July 31, 2012).

Interest

The term loan bears interest at the applicable margin of 13.5% plus the adjusted Eurodollar rate in effect with a minimum floor of 1.5%.

Covenants

We are subject to certain affirmative, negative and financial covenants, in each case subject to certain exceptions and materiality thresholds. The affirmative covenants include, among other things, requirements with respect to maintenance of existence, compliance with laws, payment of taxes, maintenance of insurance and delivery of financial statements. The negative covenants restrict, among other things, and subject to certain exceptions, asset sales, grants of liens, incurrence of indebtedness, certain investments and restricted payments and transactions with affiliates. The financial covenants require us to maintain minimum excess availability and fixed charge coverage ratios and limit the amount of our annual capital expenditures.

Events of Default

The senior secured term loan contains customary events of default, subject to exceptions, grace periods and materiality thresholds, including payment defaults, breaches of representations and warranties, covenant defaults, monetary judgments, certain events of bankruptcy and insolvency, cross-defaults to certain other indebtedness, the failure of any material provision of any guaranty or security document supporting the term loan to be in full force and effect, the occurrence of an ERISA event and the occurrence of a change of control.

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DESCRIPTION OF CAPITAL STOCK

Our amended and restated certificate of incorporation, which we refer to as our certificate of incorporation, provides for the authority to issue up to an aggregate of             shares of common stock, par value $0.01 per share. Upon completion of this offering, there will be             shares of common stock outstanding and no outstanding shares of preferred stock.

Selected provisions of our organizational documents are summarized below. Copies of our organizational documents will be provided upon request. In addition, you should be aware that the summary below does not give full effect to the terms of the provisions of statutory or common law which may affect your rights as a stockholder.

Common Stock

Voting Rights. Holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. The holders of common stock do not have cumulative voting rights in the election of directors.

Dividend Rights. Holders of common stock are entitled to receive ratably dividends if, as and when dividends are declared from time to time by our board of directors out of funds legally available for that purpose, after payment of dividends required to be paid on outstanding preferred stock, if any. Under Delaware law, we can only pay dividends either out of “surplus” or out of the current or the immediately preceding year’s net profits. Surplus is defined as the excess, if any, at any given time, of the total assets of a corporation over its total liabilities and statutory capital. The value of a corporation’s assets can be measured in a number of ways and may not necessarily equal its book value.

Liquidation Rights. Upon liquidation, dissolution or winding up, the holders of common stock are entitled to receive ratably the assets available for distribution to the stockholders after payment of liabilities and accrued but unpaid dividends and liquidation preferences on any outstanding preferred stock.

Other Matters. The common stock has no preemptive or conversion rights. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of our common stock are fully paid and non-assessable, and the shares of our common stock offered in this offering, upon payment and delivery in accordance with the underwriting agreement, will be fully paid and non-assessable.

Liability and Indemnification of Officers and Directors

We are a corporation organized under the laws of the State of Delaware. Section 145 of the DGCL permits a Delaware corporation to indemnify any person who was or is a party to or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise. A corporation may indemnify against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding if the person indemnified acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or

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settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation. In the case of an action or suit by or in the right of the corporation to procure a judgment in its favor, no indemnification may be made in respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware, or the court in which such action or suit was brought, shall determine upon application that, despite the adjudication of liability, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. Section 145 provides that, to the extent a present or former director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to above or in the defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith.

Our certificate of incorporation and by-laws contain provisions indemnifying our directors and officers to the fullest extent permitted by law. Among other things, these provisions generally provide indemnification for our directors and officers against liabilities for judgments in and settlements of lawsuits and other proceedings and for the advancement and payment of fees and expenses reasonably incurred by the director or officer in defense of any such lawsuit or proceeding if the director or officer acted in good faith and in a manner he or she reasonably believed to be in or not opposed to our best interests, and in certain cases only if the director or officer is not adjudged to be liable to us.

Section 102(b)(7) of the DGCL permits a Delaware corporation to include in its certificate of incorporation a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director: (i) For any breach of the director’s duty of loyalty to the corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under § 174 of this title; or (iv) for any transaction from which the director derived an improper personal benefit. Pursuant to authority conferred by Delaware law, our certificate of incorporation contains provisions providing that no director shall be liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that such exemption from liability or limitation thereof is not permitted under Delaware law as then in effect or as it may be amended. This provision is intended to eliminate the risk that a director might incur personal liability to us or our stockholders for breach of the duty of care.

These provisions do not limit or eliminate our rights or those of any stockholder to seek non-monetary relief, such as an injunction or rescission, in the event of a breach of a director’s fiduciary duty. These provisions will not alter a director’s liability under federal securities laws.

We expect to obtain directors’ and officers’ liability insurance to provide our directors and officers with insurance coverage for losses arising from claims based on any breaches of duty, negligence, or other wrongful acts, including violations of securities laws, unless such a violation is based on any deliberate fraudulent act or omission or any willful violation of any statute or regulation.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors or officers pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

These provisions may have the practical effect in certain cases of eliminating the ability of our stockholders to collect monetary damages from our directors and officers. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and officers.

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Anti-Takeover Effects of Provisions of Our Certificate of Incorporation and By-laws and Delaware Law

Our certificate of incorporation and by-laws and the DGCL contain certain provisions that could discourage potential takeover attempts and make it more difficult for our stockholders to change management or receive a premium for their shares.

Charter and Bylaw Provisions

Authorized But Unissued Preferred Shares. The authorization of our undesignated preferred stock makes it possible for our board of directors to issue our preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. These and other provisions may have the effect of deterring hostile takeovers or delaying changes of control of our management.

Staggered Board; Removal of Directors. Our certificate of incorporation and our by-laws divide our board of directors into three classes with staggered three-year terms. In addition, a director may be removed only for cause and only by the affirmative vote of the holders of at least 66 ²/3% of the voting power of our outstanding common stock. Any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office. The classification of our board of directors and the limitations on the removal of directors and filling of vacancies could make it more difficult for a third-party to acquire, or discourage a third-party from seeking to acquire, control of our company.

No Cumulative Voting. The DGCL provides that stockholders are not entitled to the right to cumulate votes in the election of directors or any other matter brought to a vote of our stockholders unless our certificate of incorporation provides otherwise. Under cumulative voting, a minority stockholder holding a sufficient percentage of a class of shares may be able to ensure the election of one or more directors. Our certificate of incorporation does not provide for cumulative voting.

Advance Notice Requirements for Stockholder Proposals. Our by-laws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of stockholders, including proposed nominations of persons for election to the board of directors. Stockholders at an annual meeting may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors or by a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has delivered timely written notice in proper form to our secretary of the stockholder’s intention to bring such business before the meeting. These provisions could have the effect of delaying until the next stockholder meeting stockholder actions that are favored by the holders of a majority of our outstanding voting securities.

Stockholder Action by Written Consent; Special Meetings. Our certificate of incorporation provides that any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of such holders and may not be effected by any consent in writing by such holders.

Amendment of Certificate of Incorporation and By-laws. The DGCL provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation’s certificate of incorporation or by-laws, unless a corporation’s certificate of incorporation or by-laws, as the case may be, requires a greater percentage. Our certificate of incorporation and by-laws require super-majority (66  ²/3%) voting to effect amendments to the board classification, board size and prohibition on cumulative voting provisions contained in our certificate of incorporation or by-laws.

Delaware Anti-Takeover Statute

We are subject to Section 203 of the DGCL, an anti-takeover law. In general, this section prevents certain Delaware companies under certain circumstances from engaging in a “business combination” with (a) a stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an “interested stockholder”), (b) an affiliate of an interested stockholder, or (c) an associate of an interested stockholder, for three years following the date that the stockholder became an “interested stockholder.” A “business combination” includes a merger or sale of 10% or more of our assets.

Transfer Agent and Registrar

Our transfer agent and registrar for our common stock will be                     .

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SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, our common stock was not listed on any national securities exchange and there was no public market for our common stock.

Sale of Restricted Securities

After this offering, there will be             shares of our common stock outstanding. Of these shares, all of the shares sold in this offering will be freely tradable without restriction under the Securities Act, unless purchased by our “affiliates” as that term is defined in Rule 144 under the Securities Act. The remaining shares of common stock that will be outstanding after this offering are “restricted securities” within the meaning of Rule 144 under the Securities Act. Restricted securities may be sold in the public market only if they are registered under the Securities Act or are sold pursuant to an exemption from registration under Rule 144 under the Securities Act, which is summarized below.

Lock-Up Arrangements

In connection with this offering, we, each of our directors, executive officers, the selling stockholders and certain other stockholders have entered into lock-up agreements described under “Underwriting” that restrict the sale of shares of our common stock for up to 180 days after the date of this prospectus, subject to an extension in certain circumstances. Following the lock-up periods, all of the shares of our common stock that are restricted securities or are held by our affiliates as of the date of this prospectus will be eligible for sale in the public market in compliance with Rule 144 under the Securities Act.

Rule 144

The shares of our common stock sold in this offering will generally be freely transferable without restriction or further registration under the Securities Act, except that any shares of our common stock held by an “affiliate” of ours may not be resold publicly except in compliance with the registration requirements of the Securities Act or under an exemption under Rule 144 or otherwise. Rule 144 permits our common stock that has been acquired by a person who is an affiliate of ours, or has been an affiliate of ours within the past three months, to be sold into the market in an amount that does not exceed, during any three-month period, the greater of:

• one percent of the total number of shares of our common stock outstanding; or

• the average weekly reported trading volume of our common stock for the four calendar weeks prior to the sale.

Such sales are also subject to specific manner of sale provisions, a six-month holding period requirement, notice requirements and the availability of current public information about us.

Approximately             shares of our common stock that are not subject to lock-up arrangements described above will be eligible for sale under Rule 144 immediately upon the closing of this offering.

Rule 144 also provides that a person who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has for at least six months beneficially owned shares of our common stock that are restricted securities, will be entitled to freely sell such shares of our common stock subject only to the availability of current public information regarding us. A person who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned for at least one year shares of our common stock that are restricted securities, will be entitled to freely sell such shares of our common stock under Rule 144 without regard to the current public information requirements of Rule 144.

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U.S. FEDERAL INCOME TAX CONSIDERATIONS TO NON-U.S. HOLDERS

The following is a summary of certain material U.S. federal income and estate tax considerations relating to the ownership and disposition of our common stock by persons that are non-U.S. holders (as defined below), but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings, and decisions thereunder now in effect, all of which are subject to change or differing interpretations, possibly on a retroactive basis. This summary addresses only non-U.S. holders that will hold our common stock as “capital assets” (generally, property held for investment) and does not address tax considerations applicable to investors that may be subject to special tax rules. If a partnership, including any entity treated as a partnership for U.S. federal income tax purposes, holds our common stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. If you are a partnership, or a partner in such partnership, holding our common stock, you should consult your tax advisor regarding the tax consequences of the purchase, ownership and disposition of our common stock. Moreover, this summary does not discuss U.S. federal alternative minimum tax consequences, if any, or any state, local or foreign tax consequences to holders of the common stock. INVESTORS CONSIDERING THE PURCHASE OF COMMON STOCK ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME AND ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER U.S. FEDERAL GIFT OR ALTERNATIVE MINIMUM TAX LAWS AND THE LAWS OF ANY STATE, LOCAL, OR FOREIGN TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.

As used in this discussion, a “non-U.S. holder” is a beneficial owner of common stock that for U.S. federal income tax purposes is a:

• non-resident alien individual, other than certain former citizens and residents of the United States subject to U.S. federal income tax as expatriates;

• foreign corporation; or

• foreign estate or trust.

Dividends

We do not expect to declare or pay any dividends on our common stock in the foreseeable future. However, if we do pay a dividend, any dividend paid to a non-U.S. holder of common stock ordinarily will be subject to withholding of U.S. federal income tax at a rate of 30% or such lower rate as may be specified under an applicable income tax treaty. In order to receive a reduced treaty rate, a non-U.S. holder must provide us with an Internal Revenue Service (“IRS”) Form W-8BEN (or successor form) or other appropriate version of IRS Form W-8 certifying eligibility for the reduced rate. A non-U.S. holder of shares of our common stock eligible for a reduced rate of U.S. withholding tax pursuant to an income tax treaty may obtain a refund from the IRS for any excess amounts withheld by timely filing an appropriate claim for refund with the IRS.

Dividends paid to a non-U.S. holder that are effectively connected with a trade or business conducted by the non-U.S. holder in the United States (and, where a tax treaty applies, are attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the United States) generally will be exempt from the withholding tax described above and instead will be subject to U.S. federal income tax on a net income basis in the same manner as if the non-U.S. holder were a U.S. person. In order to obtain this exemption from withholding tax, a non-U.S. holder must provide us with an IRS Form W-8ECI properly certifying eligibility for such exemption. Dividends received by a corporate non-U.S. holder that are effectively connected with a trade or business conducted by such corporate non-U.S. holder in the United States may also be subject to an additional branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable income tax treaty.

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Gain on Disposition of Common Stock

A non-U.S. holder generally will not be subject to U.S. federal income tax on any gain realized on a future taxable sale or disposition of our common stock, unless (a) the gain is effectively connected with a trade or business conducted by the non-U.S. holder in the United States (and, in the case of an applicable income tax treaty, is attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the United States), in which case the non-U.S. holder will be subject to U.S. federal income tax on any gain realized upon the disposition on a net income basis, in the same manner as if the non-U.S. holder were a U.S. person (furthermore, the branch profits tax discussed above also may apply if the non-U.S. holder is a corporation), (b) the non-U.S. holder is an individual and is present in the United States for 183 days or more in the taxable year of disposition and certain other tests are met, in which case the non-U.S. holder will be subject to a flat 30% tax on any gain recognized upon the sale or other disposition (subject to reduction by U.S. source losses recognized during the taxable year), or (c) we are or have been a U.S. real property holding corporation (“USRPHC”) for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding the date of the sale or other disposition and the non-U.S. holder’s holding period.

We do not believe that we are or have been a USRPHC and we do not anticipate becoming a USRPHC. If we were a USRPHC at any time during the relevant period described above, then, provided that our common stock is considered to be “regularly traded on an established securities market,” within the meaning of Section 897 of the Code and the applicable Treasury regulations, at any time during the calendar year in which the future sale or other disposition occurs, and the non-U.S. holder does not actually or constructively own, at any time during the five-year period ending on the date of the sale or other disposition, more than 5% of our common stock, gains realized upon such a sale or disposition of shares of our common stock generally would not be subject to U.S. federal income tax pursuant to clause (c) above. If we are a USRPHC at any time during the relevant period and our common stock is not considered to be “regularly traded on an established securities market,” upon a future taxable sale or disposition of our common stock, a non-U.S. holder will be subject to U.S. federal income tax on a net income basis in the same manner as if the non-U.S. holder were a U.S. person and will be subject to withholding on the amount realized from a sale or disposition of our common stock at a 10% rate. Non-U.S. holders should consult their own tax advisors with respect to the application of the foregoing rules to their ownership and disposition of common stock.

U.S. Federal Estate Taxes

Common stock owned or treated as being owned by an individual who is not a citizen or resident (as defined for U.S. federal estate tax purposes) of the United States at the time of death will be included in such holder’s gross estate for U.S. federal estate tax purposes and may be subject to U.S. federal estate tax, unless an applicable estate tax treaty provides otherwise.

Information Reporting and Backup Withholding

Information returns will be filed with the IRS in connection with payments of dividends and the tax withheld with respect to those dividends, regardless of whether withholding was required. Copies of the information returns reporting those dividends and withholding may also be made available to the tax authorities in the country in which the non-U.S. holder resides or is established under the provisions of an applicable income tax treaty or other applicable agreements.

U.S. backup withholding tax is generally imposed (at a current rate of 28%) on dividends and certain other types of payments to persons that fail to furnish the information required under the U.S. information reporting requirements. A non-U.S. holder of shares of our common stock will be subject to this backup withholding tax on dividends we pay unless the holder certifies (usually on IRS Form W-8BEN), under penalties of perjury, among other things, its status as a non-U.S. holder (and we or our paying agent do not have actual knowledge or reason to know the holder is a U.S. person) or otherwise establishes an exemption.

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Under the Treasury regulations, the payment of proceeds from the disposition of shares of our common stock by a non-U.S. holder made to or through a U.S. office of a broker generally will be subject to information reporting and backup withholding unless the beneficial owner certifies (usually on IRS Form W-8BEN), under penalties of perjury, among other things, its status as a non-U.S. holder (and we or our paying agent do not have actual knowledge or reason to know the holder is a U.S. person) or otherwise establishes an exemption. The payment of proceeds from the disposition of shares of our common stock by a non-U.S. holder made to or through a non-U.S. office of a broker generally will not be subject to backup withholding and information reporting, except as noted below. In the case of proceeds from a disposition of shares of our common stock by a non-U.S. holder made to or through a non-U.S. office of a broker that is (i) a U.S. person, (ii) a “controlled foreign corporation” for U.S. federal income tax purposes, (iii) a foreign person 50% or more of whose gross income from certain periods is effectively connected with a U.S. trade or business, or (iv) a foreign partnership if at any time during its tax year (a) one or more of its partners are U.S. persons who, in the aggregate, hold more than 50% of the income or capital interests of the partnership or (b) the foreign partnership is engaged in a U.S. trade or business, information reporting (but not backup withholding) will apply unless the broker has documentary evidence in its files that the owner is a non-U.S. holder and certain other conditions are satisfied, or the beneficial owner otherwise establishes an exemption (and the broker has no actual knowledge or reason to know to the contrary).

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. holder can be refunded by the IRS or credited against the non-U.S. holder’s U.S. federal income tax liability, if any, provided that the required information is furnished to the IRS in a timely manner.

In addition to withholding taxes discussed above, recent legislation generally imposes a withholding tax of 30% on payments to certain foreign entities, after December 31, 2012, of dividends on and the gross proceeds of dispositions of U.S. common stock, unless various U.S. information reporting and due diligence requirements generally relating to U.S. owners of and account holders with those entities have been satisfied. These new requirements are different from, and in addition to, the beneficial owner certification requirements described above. Non-U.S. holders should consult their tax advisors regarding the possible implications of this legislation on their investment in our common stock.

THE FOREGOING DISCUSSION OF CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH PROSPECTIVE HOLDER OF SHARES OF OUR COMMON STOCK SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISOR WITH RESPECT TO THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK.

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UNDERWRITING

Under the terms and subject to the conditions contained in an underwriting agreement dated                     , 2011, we have agreed to sell to the underwriters named below, for whom Credit Suisse Securities (USA) LLC is acting as representative, the following respective numbers of shares of our common stock:

Underwriter	Number of Shares
Credit Suisse Securities (USA) LLC
FBR Capital Markets & Co.
Jefferies & Company, Inc.
KeyBanc Capital Markets Inc.
Cowen and Company, LLC
Total

The underwriting agreement provides that the underwriters are obligated to purchase all of the shares of common stock in this offering if any are purchased, other than those shares covered by the over-allotment option described below. The underwriting agreement also provides that if an underwriter defaults the purchase commitments of non-defaulting underwriters may be increased or this offering may be terminated.

The selling stockholders have granted to the underwriters a 30-day option to purchase on a pro rata basis up to             additional shares from the selling stockholders at the initial public offering price less the underwriting discounts and commissions. The option may be exercised only to cover any over-allotments of common stock.

The underwriters propose to offer the shares of our common stock initially at the public offering price on the cover page of this prospectus and to selling group members at that price less a selling concession of $             per share. After the initial public offering, the underwriters may change the public offering price and concession and discount to broker/dealers.

The following table summarizes the compensation and estimated expenses we and the selling stockholders will pay:

	Per Share		Total
	Without Over- allotment	With Over- allotment	Without Over- allotment	With Over- allotment
Underwriting Discounts and Commissions paid by us	$	$	$	$
Expenses payable by us
Underwriting Discounts and Commissions paid by selling stockholders
Expenses payable by the selling stockholders

The underwriters have informed us that they do not expect sales to accounts over which the underwriters have discretionary authority to exceed 5% of the shares of common stock being offered.

We have agreed that we will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the SEC, a registration statement under the Securities Act relating to, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, without the prior written consent of Credit Suisse Securities (USA) LLC, FBR Capital Markets & Co., Jefferies & Company, Inc. and KeyBanc Capital Markets Inc., for a period of 180 days after the date of this prospectus, subject to limited exceptions. However, in the event that either (1) during the last 17 days of the “lock-up” period, we release earnings results or material news or a material event relating to us occurs or (2) prior to the expiration of the ‘lock-up’ period, we announce that we will release earnings results during the 16-day period beginning on the last day of the “lock-up” period, then in either case the expiration of the ‘lock-up’ will be extended until the expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of the material news or event, as applicable, unless Credit Suisse Securities (USA) LLC, FBR Capital Markets & Co., Jefferies & Company, Inc. and KeyBanc Capital Markets Inc. waives, in writing, such an extension.

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Our officers, directors, the selling stockholders and certain other holders of our common stock have agreed that they will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, enter into a transaction that would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of our common stock, whether any of these transactions are to be settled by delivery of our common stock or other securities, in cash or otherwise, or publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into any transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of Credit Suisse Securities (USA) LLC, FBR Capital Markets & Co., Jefferies & Company, Inc. and KeyBanc Capital Markets Inc. for a period of 180 days after the date of this prospectus, subject to limited exceptions. However, in the event that either (1) during the last 17 days of the “lock-up” period, we release earnings results or material news or a material event relating to us occurs or (2) prior to the expiration of the “lock-up” period, we announce that we will release earnings results during the 16-day period beginning on the last day of the “lock-up” period, then in either case the expiration of the “lock-up” will be extended until the expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of the material news or event, as applicable, unless Credit Suisse Securities (USA) LLC, FBR Capital Markets & Co., Jefferies & Company, Inc. and KeyBanc Capital Markets Inc. waives, in writing, such an extension.

We and the selling stockholders have agreed to indemnify the underwriters against liabilities under the Securities Act, or contribute to payments that the underwriters may be required to make in that respect.

We will apply to have our common stock approved for listing on the NYSE under the symbol “LAT.”

Some of the underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.

Prior to the completion of this offering, there will have been no public market for our common stock. The initial public offering price will be determined by negotiations among us and the underwriters. The principal factors to be considered in determining the initial public offering price include the following:

• the information included in this prospectus and otherwise available to the underwriters;

• market conditions for initial public offerings;

• the history of and prospectus for our business and our past and present operations;

• our past and present earnings and current financial position;

• an assessment of our management;

• the market of securities of companies in business similar to ours; and

• the general condition of the securities markets.

In connection with this offering, the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act.

• Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.

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• Over-allotment involves sales by the underwriters of shares in excess of the number of shares the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of shares over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment option and/or purchasing shares in the open market.

• Syndicate covering transactions involve the purchases of our common stock in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option. If the underwriters sell more shares than could be covered by the over-allotment option, a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in this offering.

• Penalty bids permit the representative to reclaim a selling concession from a syndicate member when our common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result the price of our common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the NYSE or otherwise and, if commenced, may be discontinued at any time.

A prospectus in electronic format may be made available on the web sites maintained by one or more of the underwriters, or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuses electronically. The representative may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make internet distributions on the same basis as other allocations.

European Selling Restrictions

European Economic Area

In relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each, a relevant member state) an offer to the public of any shares of common stock which are the subject of the offering contemplated by this prospectus may not be made in that relevant member state, except that an offer to the public in that relevant member state of any shares of common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that relevant member state:

• to any legal entity which is a qualified investor as defined in the Prospectus Directive;

• to fewer than 100 or, if the relevant member state has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive; or

• in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of the common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive.

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For the purposes of this provision, the expression an “offer to the public” in relation to any shares of common stock in any relevant member state means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of common stock to be offered so as to enable an investor to decide to purchase any shares of common stock, as the same may be varied in that member state by any measure implementing the Prospectus Directive in that member state, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the relevant member state, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

United Kingdom

Each underwriter has represented and agreed that:

• it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the common stock in circumstances in which Section 21(1) of the FSMA does not apply to us; and

• it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the common stock in, from or otherwise involving the United Kingdom.

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NOTICE TO CANADIAN RESIDENTS

Resale Restrictions

The distribution of the common stock in Canada is being made only on a private placement basis exempt from the requirement that we and the selling stockholders prepare and file a prospectus with the securities regulatory authorities in each province where trades of the common stock are made. Any resale of the common stock in Canada must be made under applicable securities laws which will vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the common stock.

Representations of Purchasers

By purchasing the common stock in Canada and accepting delivery of a purchase confirmation, a purchaser is representing to us and the dealer from whom the purchase confirmation is received that:

• the purchaser is entitled under applicable provincial securities laws to purchase the common stock without the benefit of a prospectus qualified under those securities laws as it is an “accredited investor” as defined under National Instrument 45-106 – Prospectus and Registration Exemptions;

• the purchaser is a “permitted client” as defined in National Instrument 31-103—Registration Requirements and Exemptions;

• where required by law, the purchaser is purchasing as principal and not as agent;

• the purchaser has reviewed the text above under “Resale Restrictions”; and

• the purchaser acknowledges and consents to the provision of specified information concerning the purchase of the shares to the regulatory authority that by law is entitled to collect the information, including certain personal information. For purchasers in Ontario, questions about such indirect collection of personal information should be directed to Administrative Support Clerk, Suite 1903, Box 55, 20 Queen Street West, Toronto, Ontario M5H 3S8 or to (416) 593-3684.

Rights of Action—Ontario Purchasers

Under Ontario securities legislation, certain purchasers who purchase a security offered by this prospectus during the period of distribution will have a statutory right of action for damages, or while still the owner of the common stock, for rescission against us and the selling stockholders in the event that this prospectus contains a misrepresentation without regard to whether the purchaser relied on the misrepresentation. The right of action for damages is exercisable not later than the earlier of 180 days from the date the purchaser first had knowledge of the facts giving rise to the cause of action and three years from the date on which payment is made for the common stock. The right of action for rescission is exercisable not later than 180 days from the date on which payment is made for the common stock. If a purchaser elects to exercise the right of action for rescission, the purchaser will have no right of action for damages against us or the selling stockholders. In no case will the amount recoverable in any action exceed the price at which the common stock was offered to the purchaser and if the purchaser is shown to have purchased the securities with knowledge of the misrepresentation, we and the selling stockholders, will have no liability. In the case of an action for damages, we and the selling stockholders will not be liable for all or any portion of the damages that are proven to not represent the depreciation in value of the common stock as a result of the misrepresentation relied upon. These rights are in addition to, and without derogation from, any other rights or remedies available at law to an Ontario purchaser. The foregoing is a summary of the rights available to an Ontario purchaser. Ontario purchasers should refer to the complete text of the relevant statutory provisions.

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Enforcement of Legal Rights

All of our directors and officers as well as the experts named herein and the selling stockholders may be located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All or a substantial portion of our assets and the assets of those persons may be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those persons outside of Canada.

Taxation and Eligibility for Investment

Canadian purchasers of the common stock should consult their own legal and tax advisors with respect to the tax consequences of an investment in the common stock in their particular circumstances and about the eligibility of the common stock for investment by the purchaser under relevant Canadian legislation.

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LEGAL MATTERS

Weil, Gotshal & Manges LLP, New York, New York, has passed upon the validity of the common stock offered hereby on behalf of us. Latham & Watkins LLP, New York, New York will act as counsel to the underwriters.

EXPERTS

The consolidated financial statements of Latrobe Specialty Metals, Inc. as of September 30, 2010 and 2009 and for each of the three years ended September 30, 2010, 2009 and 2008 have been included herein in reliance upon the report of KPMG LLP, an independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

WHERE YOU CAN FIND INFORMATION

We have filed with the SEC, under the Securities Act, a registration statement on Form S-1 with respect to the common stock offered by this prospectus. This prospectus, which constitutes part of the registration statement, does not contain all the information set forth in the registration statement or the exhibits and schedules that are part of the registration statement, portions of which are omitted as permitted by the rules and regulations of the SEC. Statements made in this prospectus regarding the contents of any contract or other documents are summaries of the material terms of the contract or document. With respect to each contract or other document filed as an exhibit to the registration statement, reference is made to the corresponding exhibit. For further information pertaining to us and to the common stock offered by this prospectus, reference is made to the registration statement, including the exhibits and schedules thereto, copies of which may be inspected without charge at the public reference facilities of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Copies of all or any portion of the registration statement may be obtained from the SEC at prescribed rates. Information on the public reference facilities may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a web site that contains reports, proxy and information statements and other information that is filed electronically with the SEC. The web site can be accessed at www.sec.gov.

Following the declaration of effectiveness of the registration statement on Form S-1 of which this prospectus forms a part, we will be required to comply with the informational requirements of the Securities Exchange Act of 1934, as amended, and, accordingly, will file current reports on Form 8-K, quarterly reports on Form 10-Q, annual reports on Form 10-K, proxy statements and other information with the SEC. Those reports, proxy statements and other information will be available for inspection and copying at the public reference facilities and internet site of the SEC referred to above.

124

INDEX TO FINANCIAL STATEMENTS

Audited Financial Statements
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of September 30, 2010 and 2009	F-3
Consolidated Statements of Operations for the years ended September 30, 2010, 2009 and 2008	F-4
Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss) for the years ended September 30, 2010, 2009 and 2008	F-5
Consolidated Statements of Cash Flows for the years ended September 30, 2010, 2009 and 2008	F-6
Notes to Consolidated Financial Statements	F-7
Unaudited Financial Statements
Consolidated Balance Sheets as of March 31, 2011 and September 30, 2010	F-35
Consolidated Statements of Operations for the six months ended March 31, 2011 and 2010	F-36
Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss) for the six months ended March 31, 2011 and 2010	F-37
Consolidated Statements of Cash Flows for the six months ended March 31, 2011 and 2010	F-38
Notes to Unaudited Consolidated Financial Statements	F-39

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Latrobe Specialty Metals, Inc.:

We have audited the accompanying consolidated balance sheets of Latrobe Specialty Metals, Inc. and subsidiaries (formerly known as Toolrock Holding, Inc.) as of September 30, 2010 and 2009, and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss), and cash flows for each of the years in the three-year period ended September 30, 2010. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Latrobe Specialty Metals, Inc. and subsidiaries as of September 30, 2010 and 2009, and the results of their operations and their cash flows for each of the years in the three-year period ended September 30, 2010, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Pittsburgh, Pennsylvania

December 20, 2010

F-2

Latrobe Specialty Metals, Inc. and Subsidiaries

Consolidated Balance Sheets

All amounts in thousands except share amounts

	September 30,
	2010			2009
Assets:
Current assets:
Trade accounts receivable, net of allowance for doubtful accounts of $2,984 and $2,533, respectively	$	54,106		$	35,730
Inventories, net		157,492			136,054
Income tax receivable		—			8,518
Prepaid expenses and other current assets		1,766			300
Deferred income taxes		8,569			12,777
Total current assets		221,933			193,379
Property, plant and equipment, net		69,321			66,588
Intangible assets, net and goodwill		5,705			7,467
Other noncurrent assets		8,688			5,455
Deferred income taxes		32,500			26,900
Total assets		338,147			299,789
Liabilities And Stockholders’ Equity:
Current liabilities:
Revolving line of credit	$	71,140		$	102,971
Current maturities of long-term debt		2,500			1,000
Accounts payable—trade		39,366			18,611
Accrued liabilities		27,684			19,400
Income taxes payable		677			—
Total current liabilities		141,367			141,982
Long-term debt		47,500			32,449
Accrued dividends payable		820			—
Accrued postretirement benefits		57,662			47,497
Liability for pension benefits		42,558			38,404
Total liabilities		289,907			260,332
Stockholders’ equity:
Series A Preferred stock, $0.01 par value. Authorized 34,988,889 shares, 31,490,000 issued and outstanding at September 30, 2010 and 2009		315			315
Series B Preferred stock, $0.01 par value. Authorized 12,114,815 shares, 12,114,815 issued and outstanding at September 30, 2010		121			—
Common stock, $0.01 par value. Authorized 64,965,483 shares, 1,160,000 issued and outstanding at September 30, 2010 and 1,558,000 issued and outstanding at September 30, 2009		12			15
Treasury stock at cost (10,000 common shares held at September 30, 2010 and 2009)		(38	)		(38	)
Additional paid-in capital		46,928			35,049
Accumulated other comprehensive loss		(32,155	)		(22,491	)
Retained earnings		33,057			26,607
Total stockholders’ equity		48,240			39,457
Total liabilities and stockholders’ equity	$	338,147		$	299,789

See accompanying notes to these consolidated financial statements.

F-3

Latrobe Specialty Metals, Inc. and Subsidiaries

Consolidated Statements of Operations

All amounts in thousands except share and per share amounts

	September 30,
	2010			2009			2008
Net sales	$	309,229		$	289,181		$	433,104
Cost of sales		254,431			267,832			328,411
Gross profit		54,798			21,349			104,693
Selling, general and administrative expenses		26,219			28,549			37,115
Income (loss) from operations		28,579			(7,200	)		67,578
Other expense:
Interest expense, net		11,655			14,205			15,773
Loss on early extinguishment of debt		4,076			—			3,264
Loss (gain) on sale of Koncor division		—			160			(2,163	)
Other expense		1,161			505			698
		16,892			14,870			17,572
Income (loss) before income taxes		11,687			(22,070	)		50,006
Income tax expense (benefit)		4,417			(7,259	)		17,859
Net income (loss)		7,270			(14,811	)		32,147
Preferred stock dividends		(820	)		—			—
Income allocated to participating securities		(6,275	)		—			(24,398	)
Net income (loss) available to common stockholders	$	175		$	(14,811	)	$	7,749
Net income (loss) per share:
Basic	$	0.16		$	(20.88	)	$	0.98
Diluted	$	0.16		$	(20.88	)		0.98
Weighted average shares outstanding:
Basic		1,107			710			7,875
Diluted		34,122			710			31,515

See accompanying notes to these consolidated financial statements.

F-4

Latrobe Specialty Metals, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss)

All amounts in thousands except share amounts

	Series A Preferred stock					Series B Preferred stock				Common stock						Treasury stock					Additional paid-in capital			Accumulated other comprehensive income (loss)			Retained earnings			Total
	Shares			Amount		Shares		Amount		Shares			Amount			Shares		Amount
Balance as of September 30, 2007		—			—		—		—		31,500,000		$	315			—		—			31,185			1,720			9,271			42,491
Net income		—			—		—		—		—			—			—		—			—			—			32,147			32,147
Other comprehensive loss, net of tax benefit of $645 (pension/postretirement benefit plans actuarial losses)		—			—		—		—		—			—			—		—			—			(1,091	)		—			(1,091	)
Total comprehensive income																															31,056
Preferred stock issued for common stock conversion		31,500,000			315		—		—		(31,500,000	)		(315	)		—		—			—			—			—			—
Purchase of treasury stock		(10,000	)		—		—		—		—			—			10,000		(38	)		—			—			—			(38	)
Stock compensation		—			—		—		—		1,558,000			9			—		—			2,345			—			—			2,354
Balance as of September 30, 2008		31,490,000			315		—		—		1,558,000			9			10,000		(38	)		33,530			629			41,418			75,863
Net income (loss)		—			—		—		—		—			—			—		—			—			—			(14,811	)		(14,811	)
Other comprehensive loss, net of tax benefit of $14,490 (pension/postretirement benefit plans actuarial losses)		—			—		—		—		—			—			—		—			—			(23,120	)		—			(23,120	)
Total comprehensive income (loss)																															(37,931	)
Stock compensation		—			—		—		—		—			6			—		—			1,519			—			—			1,525
Balance as of September 30, 2009		31,490,000			315		—		—		1,558,000			15			10,000		(38	)		35,049			(22,491	)		26,607			39,457
Net income		—			—		—		—		—			—			—		—			—			—			7,270			7,270
Other comprehensive loss, net of tax benefit of $6,096 (pension/postretirement benefit plans actuarial losses)		—			—		—		—		—			—			—		—			—			(9,664	)		—			(9,664	)
Total comprehensive income (loss)																															(2,394	)
Series B Preferred stock issued		—			—		12,114,815		121		—			—			—		—			9,879			—			—			10,000
Dividends on Series B Preferred stock		—			—		—		—		—			—			—		—			—			—			(820	)		(820	)
Stock warrants issued		—			—		—		—		—			—			—		—			2,394			—			—			2,394
Stock compensation		—			—		—		—		(398,000	)		(3	)		—		—			(394	)		—			—			(397	)
Balance as of September 30, 2010		31,490,000		$	315		12,114,815	$	121		1,160,000		$	12			10,000	$	(38	)		46,928			(32,155	)		33,057			48,240

See accompanying notes to these consolidated financial statements.

F-5

Latrobe Specialty Metals, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

All amounts in thousands

	September 30,
	2010			2009			2008
Cash flows from operating activities:
Net income (loss)	$	7,270		$	(14,811	)	$	32,147
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		9,022			7,511			5,592
Unrealized (gain) loss on interest rate swap		—			(226	)		977
Loss on disposal of property, plant and equipment		5			10			83
(Gain) loss on sale of Koncor		—			160			(2,163	)
Noncash charge for inventory fair value adjustment		—			1,253			225
Loss on early extinguishment of debt		4,076			—			3,264
Deferred interest on note payable		—			2,837			—
Deferred income taxes		4,704			1,443			(550	)
Stock compensation—restricted stock and incentive stock options		(397	)		1,525			2,354
Changes in operating assets and liabilities, net of acquisition:
(Increase) decrease in trade accounts receivable		(18,376	)		25,104			6,586
(Increase) decrease in inventories		(21,438	)		66,723			(15,303	)
(Increase) decrease in prepaid expenses and other current assets		(1,466	)		225			(177	)
(Increase) decrease in other noncurrent assets		27			199			(139	)
Increase (decrease) in accounts payable—trade		19,330			(16,866	)		2,694
Increase (decrease) in accrued liabilities		9,533			826			(476	)
Increase (decrease) in income tax payable/receivable		9,195			(9,459	)		(613	)
Increase (decrease) in other noncurrent liabilities		(2,689	)		648			(2,208	)
Net cash provided by operating activities		18,796			67,102			32,293
Cash flows from investing activities:
Proceeds from sale of Koncor		—			575			4,514
Proceeds from sale of property, plant and equipment		25			99			—
Proceeds from Title III		1,507			13,220			—
Purchase of net assets of acquired companies, less cash acquired		—			(620	)		(13,300	)
Purchase of property, plant and equipment		(9,118	)		(20,171	)		(44,710	)
Purchase of intangible asset		—			(100	)		—
Net cash used in investing activities		(7,586	)		(6,997	)		(53,496	)
Cash flows from financing activities:
Proceeds from issuance of preferred stock		10,000			—			—
Proceeds from issuance of long-term debt		57,606			—			—
Proceeds from issuance of stock warrants		2,394			—			—
Purchase of treasury stock		—			—			(38	)
Net proceeds from (payments on) revolving credit facility		(31,831	)		(60,105	)		56,934
Payments on long-term debt		(43,449	)		—			(29,613	)
Deferred financing costs		(5,930	)		—			(6,080	)
Net cash (used in) provided by financing activities		(11,210	)		(60,105	)		21,203
Net change in cash		—			—			—
Cash as of beginning of year		—			—			—
Cash as of end of year		—			—			—
Supplemental disclosures of cash flow information:
Cash paid during period for:
Interest (net of capitalized interest)	$	13,568		$	10,119		$	12,969
Income taxes, net of refunds received		(9,482	)		757			19,078

See accompanying notes to these consolidated financial statements.

F-6

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

(1) Description of Business and Summary of Significant Accounting Policies

(a) Ownership and Nature of Business

Latrobe Specialty Metals, Inc. (“the Company”, formerly known as Toolrock Holding Inc.) is owned by Hicks Holdings (“Hicks”) (46.57%), Watermill-Toolrock Partners, LP (“Watermill”) (29.40%), Sankaty (15.54%), and RGIP, LLC (“Ropes”) (0.16%). The remaining 8.33% is owned by certain members of management and the advisory board, through options granted and shares purchased.

The Company is one of the largest global manufacturers and distributors of high quality specialty metals and alloys, based on pounds sold. The Company serves a diversified group of end markets, including the commercial aerospace, defense, oil and gas exploration and production, power generation and industrial markets.

(b) Principles of Consolidation and Presentation

The consolidated financial statements include the accounts of the Company, its wholly owned subsidiary, Latrobe Specialty Metals Company (“Latrobe”), and Latrobe’s wholly owned subsidiaries, Latrobe Specialty Metals Europe, Inc. (“Latrobe Metals Europe”), Specialty Steel Supply, Inc. (“SSS”), and Latrobe Specialty Metals Distribution Company, Inc. (“Latrobe Distribution”), as well as Latrobe Distribution’s wholly owned subsidiary Latrobe Specialty Steel Distribution, Inc. (“Canada”). All intercompany accounts and transactions have been eliminated in consolidation for all periods.

(c) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements. The more significant areas requiring the use of management estimates and assumptions relate to the accounting estimates, including trade accounts receivable-allowance for doubtful accounts, inventory obsolescence and valuation, goodwill and identifiable intangible assets and their impairment, revenue recognition, property, plant, and equipment and its impairment, accrued pension benefits, accrued postretirement benefits, share-based payment arrangements, and income taxes. Company management bases its estimates on historical experience, expectations of the future, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.

(d) Revenue Recognition

The Company recognizes revenue when title is transferred either when products are shipped from the company or received by the customer, the customer takes ownership and assumes the risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable.

Sales tax collected from customers and remitted to governmental authorities is accounted for on a net basis and therefore is excluded from revenues in the consolidated statements of operations.

(e) Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of less than 90 days to be cash equivalents.

F-7

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

Book overdrafts (outstanding checks) have been classified as accounts payable – trade on the accompanying consolidated balance sheets. Changes in book overdrafts during the period are recorded as part of the change in accounts payable – trade within the cash provided by operating activities section in the consolidated statements of cash flows.

(f) Trade Accounts Receivable—Allowance for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the allowance for doubtful accounts, Company management considers historical losses experienced by the Company, as well as trends, current receivables aging, and existing industry and national economic data. The allowance for doubtful accounts is reviewed monthly, and adjustments are made when necessary. Account balances are charged off against accounts receivable after all means of collection have been exhausted and the potential for recovery is considered remote. Bad debt expense (benefit) was $935, $235 and $(220) for the years ended September 30, 2010, 2009 and 2008, respectively. The Company does not have any off-balance sheet credit exposure related to its customers.

(g) Inventories

Inventories are stated at the lower of cost or market. Latrobe uses the first-in, first-out (FIFO) method to determine cost, while Latrobe Distribution and SSS use the average cost method. Such costs include the acquisition cost for raw materials and supplies, direct labor, and applied manufacturing overhead within the guidelines of normal plant capacity. Provisions are made for slow-moving and obsolete inventory based upon management’s expected method of disposition. Approximately 70%, 60% and 75% of the inventory is valued using FIFO, as of September 30, 2010 and 2009.

(h) Property, Plant and Equipment

Property, plant and equipment are stated at cost.

Maintenance and repairs are expensed as incurred, while replacements and betterments are capitalized if they extend the useful life of the related asset. Costs for major maintenance activities are expensed as incurred.

Depreciation of plant and equipment for financial reporting purposes is calculated on the straight-line method over the estimated remaining useful lives of the assets, as follows:

Buildings	21 – 45 years
Machinery and equipment	2 – 20 years

Total depreciation for the years ended September 30, 2010, 2009 and 2008 was $5,477, $4,468 and $2,808, respectively, of which approximately 90% was capitalized as part of the cost of producing inventory and expensed as cost of sales as inventory was sold and 10% was recorded in selling, general, and administrative expense in each year. Assets acquired in business combinations are depreciated over their remaining useful lives. The Company reviews the carrying value of its long-lived assets for impairment whenever events or circumstances indicate that the carrying amounts may not be recoverable. Should circumstances arise where the expected future undiscounted cash flows are less than asset carrying values, the Company would recognize an impairment loss for the excess of the carrying value over the fair value, if any. Fair value would be determined based upon discounted estimated future cash flows.

F-8

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

(i) Goodwill and Identifiable Intangible Assets

Goodwill is an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

Goodwill is tested for impairment annually as of the balance sheet date and whenever events or circumstances indicate that the carrying value may not be recoverable. The evaluation of impairment involves comparing the fair value of the associated reporting unit to its carrying value, including goodwill. Fair value is estimated using discounted future cash flows and, if available, comparable market values.

Identifiable intangible assets are recorded based upon estimated fair value. Intangible assets are amortized over their respective estimated useful lives and reviewed for impairment whenever events or circumstances indicate that the carrying amounts may not be recoverable. The Company’s intangible assets consist of customer relationships and patents. The customer relationship assets were determined to have lives of 12 – 15 years, and the patents were determined to have lives of 15 years.

(j) Deferred Financing Costs

Deferred financing costs represent loan fees and other related costs incurred in obtaining the debt financing currently in place, which are being amortized over the terms of the related debt.

(k) Income Taxes

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company records interest related to unrecognized tax benefits in interest expense and penalties in selling, general, and administrative expenses to the extent it is necessary to provide such amounts.

Beginning with the adoption of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (included in FASB ASC Subtopic 740-10, Income Taxes – Overall), as of October 1, 2009, the Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Prior to the adoption of Interpretation 48, the Company recognized the effect of income tax positions only if such positions were probable of being sustained. The adoption of Interpretation 48 did not have a material impact on the Company’s consolidated financial statements.

(l) Concentrations

Substantially all of Latrobe’s hourly employees are subject to a collective bargaining agreement, which expires August 1, 2013. Approximately 43%, 42% and 44% of the Company’s labor force is covered by the collective bargaining agreement as of September 30, 2010, 2009 and 2008, respectively. The Company experienced a labor stoppage during the period of May 2008 through July 2008 while the new collective

F-9

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

bargaining agreement was negotiated. The labor stoppage resulted in approximately $10,000 of additional cost of sales and approximately $5,000 of additional general and administrative expense during the year ended September 30, 2008.

(m) Insurance Claim Liabilities

The Company accrues for costs associated with self-insured retention under certain insurance policies, primarily employee medical insurance and workers’ compensation, based on estimates of such claims developed using specific history of claims and other Company information. Insurance coverage is carried for risk in excess of certain levels for workers’ compensation claims for both 2010 and 2009, and for employee medical insurance claims for 2009.

The Company’s workers compensation claims are covered under insurance policies with a self-insured retention of $250 per claim, and an annual limit of $1,800 for all claims incurred during the policy year. The Company’s employee medical insurance claims were covered under insurance policies with a stop loss rider of $300 per individual per calendar year, until the stop loss rider was discontinued as of September 30, 2009. The Company plans to reinstate the stop-loss rider as of January 1, 2011.

(n) Commitments and Contingencies

Liabilities for loss contingencies, including environmental remediation costs not within the scope of FASB ASC Subtopic 410-20, Asset Retirement Obligations and Environmental Obligations—Asset Retirement Obligations (Statement No. 143, Accounting for Asset Retirement Obligations), arising from claims, assessments, litigation, fines, and penalties and other sources, are recorded when it is probable that a liability has been incurred and the amount of the assessment and/or remediation can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. Recoveries of environmental remediation costs from third parties that are probable of realization are separately recorded as assets, and are not offset against the related environmental liability.

Accruals for estimated losses from environmental remediation obligations generally are recognized no later than completion of the remedial feasibility study. Such accruals are adjusted as further information develops or circumstances change. Costs of expected future expenditures for environment remediation obligations are not discounted to their present value.

(o) Financial Instruments

The Company’s financial instruments consist primarily of accounts receivable, prepaid expenses, income tax receivable, accounts payable, accrued liabilities, interest rate swaps, long-term debt and notes payable. The carrying value of financial instruments approximates fair value, with the exception, at times, of notes payable. See note 10 for fair value of notes payable.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, various techniques and assumptions can be used to estimate fair value. The definition of the fair value hierarchy is as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

F-10

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

• Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 inputs are unobservable inputs for the asset or liability.

Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

(p) Derivative Instruments and Hedging Activities

The Company carries derivative instruments on the balance sheet at fair value. Our use of derivative instruments is generally limited to cash flow hedges of certain interest rate risks. Changes in the fair value of derivative instruments are recorded through earnings.

(q) Research and Development Expenses

Research and development expenditures are charged to expense as incurred.

Research and development costs amounted to $247, $134 and $415 for the years ended September 30, 2010, 2009 and 2008, respectively.

(r) Capitalized Interest

The Company’s policy is to capitalize interest cost incurred on debt during the construction of major projects exceeding one year. A reconciliation of total interest cost to “Interest Expense” as reported in the consolidated statements of operations for the years ended September 30, 2010, 2009 and 2008 is as follows:

	2010		2009		2008
Interest cost capitalized	$	328		459		1,544
Interest cost charged to income		11,655		14,205		15,773
Total interest incurred	$	11,983		14,664		17,317

Interest cost charged to income includes amortization expense related to deferred financing costs (note 6), and a fair value adjustment related to the interest rate swap agreement (note 7).

(s) Share-Based Payment Arrangements

The Company accounts for its employee stock-based compensation awards in accordance with ASC Topic 718, Compensation—Stock Compensation. ASC Topic 718 requires that all employee stock-based compensation is recognized as a cost in the financial statements and that for equity-classified awards such cost is measured at the grant date fair value of the award. The Company estimates grant date fair value using the Black-Scholes-Merton option-pricing model. The Company has elected to treat awards with graded-vesting schedules as individual awards (tranches) for each separately vesting portion of the awards, as long as the vesting is solely based on a service condition.

(t) Pension and Other Postretirement Plans

Latrobe has a noncontributory defined benefit pension plan covering substantially all of its hourly employees upon their retirement. The benefits are based on age, years of service and the greater of the benefit level at time retirement or termination of employment, or level of compensation during the highest continuous five years before retirement. Latrobe also sponsors a defined benefit health care plan for substantially all retirees and full-time employees.

F-11

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

Latrobe records annual amounts relating to its pension and postretirement plans based on calculations that incorporate various actuarial and other assumptions, including discount rates, mortality, assumed rates of return, compensation increases, turnover rates and healthcare cost trend rates. Latrobe reviews its assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends when it is appropriate to do so. The effect of modifications to those assumptions is recorded in accumulated other comprehensive income and amortized to net periodic cost over future periods using the corridor method. Latrobe believes that the assumptions utilized in recording its obligations under its plans are reasonable based on its experience and market conditions.

The net periodic costs are recognized as employees render the services necessary to earn the pension or postretirement benefits.

(u) Earnings per Share

Beginning in fiscal year 2010, the Company adopted the FASB’s guidance on the determination of participating securities as it relates to nonvested restricted shares and options that are considered participating securities because the awards have the right to participate in earnings that otherwise would only have been available to common shareholders. Accordingly, the Company calculates basic earnings per share using the two class method. Under the two class method, earnings are allocated to common stock and participating securities according to their participation rights in dividends and undistributed earnings. Because the participating securities have no obligation to share in net losses, losses are not allocated to the participating securities in this calculation.

Diluted earnings per common share is computed using net income available to common stockholders and the weighted average number of common shares outstanding plus potentially dilutive common shares outstanding during the period. Potentially dilutive common shares from employee incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options, and the assumed vesting of outstanding restricted stock units. Potentially dilutive common shares are determined by applying the if-converted method for the outstanding Series A and Series B Convertible Participating Preferred Stock, and for the outstanding Voting Common Stock warrants and Series A preferred warrants.

(v) Subsequent Events

The Company evaluates subsequent events from the balance sheet date through December 20, 2010, the date at which the consolidated financial statements were available to be issued, in order to determine whether there are any other items that need to be disclosed. The company determined there are no items requiring adjustment or disclosure.

(2)    Acquisition

On September 11, 2008, the Company acquired 100% of the outstanding shares of SSS. The results of SSS’s operations have been included in the consolidated financial statements since that date. SSS is a distributor of high quality specialty steels and alloys located in Houston, Texas. The aggregate purchase price, including transaction costs, was $13,920 (which includes the $620 increase identified during 2009 as described below) and was paid in cash. For tax purposes, the Company and the seller jointly made an election under Section 338(h)(10) of the Internal Revenue Code to treat this transaction as a purchase/sale of assets, which resulted in a new tax basis for SSS’s underlying net assets acquired.

F-12

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

The following table summarizes the fair value of the assets acquired and liabilities assumed by the Company as of the date of acquisition (September 11, 2008).

Current assets:
Trade accounts receivable	$	2,746
Inventories		7,963
Prepaid expenses and other current assets		136
		10,845
Long-term assets:
Property, plant and equipment		389
Intangible assets		4,700
Goodwill		760
		5,849
Total assets acquired		16,694
Current liabilities:
Accounts payable and accrued expenses		2,774
Total liabilities assumed		2,774
Net assets acquired	$	13,920

The acquired intangible assets have a weighted average useful life of approximately twelve years. The intangible assets that make up that amount include a customer relationship asset of $4,700.

During 2009, the Company finalized valuations of certain acquired assets, and as a result, the seller was required to pay a purchase price adjustment of $324. In addition, the Company agreed to compensate the seller $501 for the adverse tax consequences incurred as a result of the election under Section 338(h)(10) of the Internal Revenue Code. The net amount of these transactions was $177, and was recorded as a purchase adjustment to goodwill.

Also during 2009, the Company paid federal taxes of $410 on behalf of the former owners of SSS. The Company agreed, as part of the acquisition, to pay any tax due on the final short period return filed by SSS. This amount was also recorded as a purchase adjustment to goodwill.

(3)    Inventories

Inventories consisted of the following as of September 30, 2010 and 2009:

	2010		2009
Raw materials	$	15,308		12,573
Work-in-process		68,670		38,896
Finished goods		71,589		82,559
Supplies		1,925		2,026
Total inventories, net	$	157,492		136,054

Included in finished goods above is $5,831 and $3,050 of inventory consigned to others as of September 30, 2010 and 2009, respectively. Inventories are net of reserves for excess and obsolete inventory of $6,905 and

F-13

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

$13,331 at September 30, 2010 and 2009, respectively. The carrying value of inventories has been reduced for a lower of cost or market (LCM) adjustment of $1,716 and $4,193 as of September 30, 2010 and 2009, respectively.

(4)    Property, Plant and Equipment

Property, plant and equipment consisted of the following as of September 30, 2010 and 2009:

	2010			2009
Land	$	685			685
Buildings		11,401			10,706
Machinery and equipment		62,271			57,817
Construction in progress		9,704			6,650
		84,061			75,858
Less accumulated depreciation		(14,740	)		(9,270	)
	$	69,321			66,588

Under Title III of the Defense Production Act, on December 10, 2008 the Department of Defense (DoD) awarded a technology investment agreement to Latrobe, the proceeds of which were used to reduce production lead times by increasing production capacity for vacuum melted or re-melted alloys. For the years ended September 30, 2010 and 2009, Latrobe received DoD awards in the amount of $1,507 and $14,516, respectively, related to this agreement. Of these proceeds, $1,507 (2010) and $13,220 (2009) related to capital expenditures, $1,174 (2009) related to test materials, and $0 (2010) and $122 (2009) related to miscellaneous expenses incurred by Latrobe. The DoD award relating to capital expenditures was recorded as a contra asset (to property, plant and equipment) and is being depreciated over an average useful life of approximately 20 years. The DoD award relating to miscellaneous expenses was offset against those expenses. During the agreement’s period of performance to reduce lead times, Latrobe has given the DoD a priority lien for up to $16,606 on the vacuum induction melting furnace.

Under the terms and conditions of the technology investment agreement, Latrobe has certain obligations (regarding the availability of production for DoD related products) to fulfill through November 1, 2013. Failure to meet these obligations, which management believes is remote, could result in refunding all of the Title III money received by Latrobe.

(5)    Goodwill and Other Intangible Assets

(a) Acquired Intangible Assets

Intangible assets consisted of the following as of September 30, 2010 and 2009:

	2010			2009
Customer relationships	$	11,207			11,207
Patent		100			100
		11,307			11,307
Less accumulated amortization		(6,362	)		(4,600	)
	$	4,945			6,707

F-14

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

Amortization expense for the years ended September 30, 2010, 2009 and 2008 was $1,762, $1,662 and $1,569, respectively. Amortization expense will approximate:

Fiscal year ending September 30:
2011	$	1,323
2012		1,102
2013		870
2014		511
2015		295
Thereafter		844
Total	$	4,945

(b) Goodwill

Goodwill is attributable to the acquisition of SSS in 2008 (note 2). The amount of goodwill as of September 30, 2010 and 2009 was $760.

(6)    Other Noncurrent Assets

Other noncurrent assets consisted of the following as of September 30, 2010 and 2009:

	2010		2009
Deferred financing costs, net of accumulated amortization of $1,995 and $2,420 respectively	$	8,346		4,881
Other		342		574
	$	8,688		5,455

The amortization of deferred financing costs for the years ended September 30, 2010, 2009 and 2008 was $1,783, $1,381 and $1,215, respectively. Amortization of these costs is included in interest expense on the Consolidated Statements of Operations. Amortization expense will approximate:

Fiscal year ending September 30:
2011	$	3,175
2012		3,083
2013		2,088
	$	8,346

Deferred financing costs of $6,930, related to the amendments of the credit facility with Wachovia Bank and the new term loan with the Bank of New York Mellon were capitalized during 2010.

(7)    Debt

The Company’s long-term debt consisted of the following as of September 30, 2010 and 2009:

	2010		2009
Revolver	$	71,140		102,971
Term loan		2,500		—
Senior subordinated notes payable		—		1,000
Current portion		73,640		103,971
Term loan		47,500		—
Senior subordinated notes payable		—		32,449
Long-term portion	$	47,500		32,449

F-15

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

The Company, on March 6, 2008, entered into a $200,000 Revolving Credit Loan and Security Agreement (Wachovia Credit Facility) with Wachovia Bank, National Association (Wachovia or Senior Agent) and certain other lenders. The Wachovia Credit Facility was composed of a five-year $200,000 Asset Based Revolving Credit Facility (Wachovia Revolver) and includes a $10,000 letter of credit sub-limit. The Wachovia Credit Facility replaced the existing credit facility, and resulted in an expense of $3,264 for early extinguishment of debt related to financing costs that had previously been deferred. On March 17, 2010 the Company and Wachovia executed Waiver and Amendment No. 2 (Amendment No. 2), which reduced the available revolving credit loans to $175,000.

The Wachovia Revolver is secured by substantially all of the assets of the Company. The outstanding borrowings drawn under the Wachovia Revolver cannot exceed the Company’s borrowing base, which includes specified percentages of eligible accounts receivable and inventories. Borrowings under the Wachovia Revolver bear interest at the Company’s option at either the greater of Wachovia’s “Prime Rate” or federal funds open rate plus 0.5%, plus up to 3.25% per annum, or the adjusted Eurodollar rate used by the lender, plus up to 4.50% per annum. As of September 30, 2010, the Wachovia Revolver had an outstanding balance of $71,140. During fiscal year 2010, it bore interest at a weighted average interest rate of 4.13%. In addition, the Company must pay monthly, in arrears, a commitment fee of 0.75% per annum on the unused amount of the Wachovia Revolver’s total commitment. As of September 30, 2010, $5,573 of standby letters of credit have been issued against the Wachovia Revolver. There is also a $10,000 general reserve required which lowers the Company’s availability. The remaining availability related to the Wachovia Revolver was $58,682 as of September 30, 2010, which is based upon the borrowing base collateral of $145,395 at that date. The Company is subject to certain covenants as to minimum EBITDA and fixed charge coverage ratios and other customary covenants, including covenants restricting the incurrence of indebtedness, the granting of liens, the sale of assets, the amount of annual capital expenditures and the declaration of dividends and other distributions on the Company’s capital stock. As of September 30, 2010, the most recent required measurement date under the Wachovia Credit Facility, the Company was in compliance with these covenants.

The balance outstanding on the Wachovia Revolver as of September 30, 2010 and 2009 has been reflected as a current liability in the consolidated balance sheet due to the presence of a lock box requirement and a subjective acceleration clause in the Wachovia Credit Facility.

The Senior Subordinated Notes, as amended, (Notes), issued on December 8, 2006, were due on June 13, 2013. The Notes bore interest at the rate of 18% per annum on the unpaid principal amount. Interest was payable on a quarterly basis and commenced in March 2007. Latrobe and the Company had pledged the equity interests of their direct subsidiaries to secure the Notes.

The holders of the Notes, were Sankaty Credit Opportunities II, L.P., Prospect Harbor Credit Partners, L.P., and Sankaty High Yield Partner III, L.P., and RGIP, LLC (collectively, the Original Note Holders).

In conjunction with Amendment No. 2, Toolrock Investment LLC, along with certain management employees of the company invested an additional $10,000 by purchasing additional shares of the Company’s stock (See note 13). Also in conjunction with Amendment No. 2, the Company and the Original Note Holders executed the Fourth Amendment Agreement (Fourth Amendment). Under the Fourth Amendment, Sankaty Credit Opportunities II, L.P., Prospect Harbor Credit Partners, L.P. and RGIP, Inc (the New Note Holders) agreed to purchase, in cash, an additional $10,000 of Senior Subordinated Notes, due June 8, 2013 and stock warrants (see note 13), in the aggregate principal amount of $10,204.

F-16

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

On July 30, 2010, the Senior Subordinated Notes along with the accrued interest were paid off through a $50,000 Senior Secured Term Loan (Term Loan) refinancing with DDJ Capital Management LLC (DDJ). This early extinguishment of debt resulted in a loss of $4,076 due to 1) financing costs incurred ($1,682) that had previously been deferred and amortized over the term of the Notes and 2) the debt discount ($2,394) that had been recognized for the value of the stock warrants upon issuance. The Term Loan facility is secured by certain fixed assets of the Company. The Term Loan is payable in quarterly installments of $625, which will commence on December 31, 2010 and increase to $1,250 starting December 31, 2011, with the remaining balance due on September 6, 2013. The Term Loan includes a prepayment requirement, commencing with the fiscal year ending September 30, 2011, in the event that “excess cash flows”, as defined in the Senior Secured Term Loan Agreement, are generated by the Company. The Term Loan bears interest at the applicable margin of 13.5% plus the adjusted Eurodollar rate in effect with a minimum floor of 1.5%. The interest rate as of September 30, 2010 was 15.0%. The Company is subject to certain covenants as to minimum excess availability and fixed charge coverage and leverage ratios and other customary covenants, including covenants restricting the incurrence of indebtedness, the granting of liens, the sale of assets, the amount of annual capital expenditures and the declaration of dividends and other distributions on the Company’s capital stock. As of September 30, 2010, the most recent required measurement date under the Term Loan Facility, the Company was in compliance with these covenants.

In conjunction with the refinancing on July 30, 2010, the Company and Wachovia executed Amendment No. 3 to the Loan and Security Agreement (Amendment No. 3) with changes to certain covenants, such as the elimination of minimum EBITDA and the addition of minimum availability. In addition, a prepayment requirement, commencing with the fiscal year ending September 30, 2011, was added in the event that “excess cash flows”, as defined in the Term Loan Agreement, are generated by the Company. As of September 30, 2010, the most recent required measurement date under Amendment No. 3 of the Wachovia Credit Facility, the Company was in compliance with these covenants.

In March 2007, the Company entered into an interest rate swap transaction with a fixed rate of 4.88% to serve as an interest rate derivative for $60,000 of its debt. The agreement expired on March 12, 2010, and the costs to settle the agreement were charged to interest expense during 2010. The adjustment to recognize the fair value of this agreement resulted in an unrealized gain (loss) of $226 and ($977) for the years ended September 30, 2009 and 2008, which was charged or credited to interest expense during the respective periods.

The interest rate swap was reflected at fair value in the consolidated financial statements as of September 30, 2009. The fair value of interest rate swaps is determined using pricing models developed based on the swap rate and other observable market data (Level 2 inputs), adjusted to reflect nonperformance risk of both the counterparty and the Company. The fair value related to this agreement was a liability of $1,248 as of September 30, 2009, and is reflected in accrued liabilities on the accompanying consolidated balance sheets.

The aggregate maturities of debt by year as of September 30, 2010 are:

Fiscal year ending September 30:
2011	$	73,640
2012		5,000
2013		42,500
	$	121,140

F-17

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

(8)    Income Taxes

Income tax expense (benefit) consisted of the following:

	Current			Deferred			Total
Year ended September 30, 2010:
Federal	$	(503	)		4,321			3,818
State and local		216			383			599
	$	(287	)		4,704			4,417
Year ended September 30, 2009:
Federal	$	(8,702	)		2,217			(6,485	)
State and local		—			(774	)		(774	)
	$	(8,702	)		1,443			(7,259	)
Year ended September 30, 2008:
Federal	$	15,342			(125	)		15,217
State and local		3,067			(425	)		2,642
	$	18,409			(550	)		17,859

The provision for (benefit from) income taxes applicable to results of operations differed from the U.S. federal statutory rate as follows:

	2010			2009			2008
Statutory federal tax rate		35	%		35	%		35	%
Tax provision for (benefits from) income taxes at the statutory rate	$	4,090			(7,724	)		17,502
Provision from (benefit from) state taxes, net of federal taxes		389			(1,022	)		1,765
Permanent non-deductible items		68			116			69
Qualified domestic production activities deduction		(236	)		540			(954	)
Tax credits		(25	)		(250	)		—
Nondeductible incentive stock options		154			—			—
Other, net		(23	)		1,081			(523	)
Provision from (benefit from) income taxes at effective rate	$	4,417			(7,259	)		17,859
Effective tax rate		37.8	%		32.9	%		35.7	%

For 2009, the income tax benefit presented differs from the amount computed by applying the U.S. federal income tax rate of 35% to pretax income primarily due to the effect of a deduction for qualifying domestic production activities taken in earlier years which was reversed as a result of the Company’s election to carryback the 2009 taxable loss to prior years.

F-18

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities as of September 30, 2010 and 2009 are as follows:

	2010			2009
Deferred tax assets:
Accrued postretirement benefits	$	23,382			20,206
Liability for pension benefits		19,307			16,002
Inventories		4,210			8,561
State net operating loss carryforwards		875			796
Accrued liabilities and other		3,274			4,143
Total gross deferred tax assets		51,048			49,708
Deferred tax liabilities:
Property, plant and equipment		(9,194	)		(9,148	)
Intangible assets		(785	)		(883	)
Total gross deferred tax liabilities		(9,979	)		(10,031	)
Net deferred tax asset	$	41,069			39,677

In assessing the realizability of deferred tax assets, Company management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Company management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon historical profitability of the Company and the extended periods in which the deferred tax assets are deductible, Company management believes it is more likely than not the Company will realize the tax benefits associated with its deferred tax assets.

The Company has state net operating losses (primarily in Pennsylvania) of approximately $12,780 that will expire, if unused, in 2029. Management believes that it is more likely than not that these state net operating losses will be realized prior to their expiration.

The Company has no unrecognized tax benefits as of September 30, 2010. Tax related interest and penalties accrued on the balance sheet as of September 30, 2010 and 2009 are not material.

Federal income tax returns filed by the Company remain open to examination from the tax year ended December 31, 2006 forward. Pennsylvania income tax returns for the tax years ended September 30, 2007 and forward are open to examination.

(9)    Employee Benefit Plans

The Company sponsors two defined contribution 401(k) plans; one plan covers the bargaining unit employees of Latrobe, and the second plan covers all eligible salaried and all other nonbargaining unit employees of the Company. Employees are generally eligible to enroll upon completion of one full calendar month of employment. The Company makes matching contributions, based on 100% of the first 1% to 3% of employee contributions and 50% on employee contributions of 4% to 6%, for the plan covering all salaried and nonbargaining unit employees of the Company. During fiscal year 2009, the Company temporarily discontinued

F-19

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

the matching contributions. The match was reinstated in August of 2010. The Company also makes additional quarterly contributions on behalf of eligible salaried and nonbargaining unit employees ranging from 1% to 4.5% of eligible quarterly compensation, based on age and years of service. The expense for such contributions was $669, $1,208 and $1,688 for the years ended September 30, 2010, 2009 and 2008, respectively. Company contributions are not made to the plan covering bargaining unit employees of Latrobe.

The Company has a noncontributory defined benefit pension plan (Pension Plan) covering bargaining unit employees at its Latrobe location. The benefits are based on age, years of service and the average earnings during the highest 60 consecutive calendar months out of the last 120 months of service. The Company makes annual contributions to the Pension Plan within the range of the minimum and maximum allowable contributions as determined by its actuary. The Company made contributions of $2,744, $0 and $0 for the years ended September 30, 2010, 2009 and 2008, respectively.

The Company also makes contributions to a multi-employer defined benefit pension plan on behalf of bargaining unit employees at one of its locations based on rates as established in the union contract. The Company made contributions of $28 for the years ended September 30, 2010, 2009, and 2008.

The Company also sponsors two defined benefit postretirement healthcare plans; one plan covers the bargaining unit employees (and retirees) of Latrobe and the second plan covers all active salaried and all other nonbargaining unit employees of the Company.

These plans provide postretirement healthcare benefits to full-time employees and retirees, as applicable (and their spouses and dependents) who meet minimum age and service requirements. The plans are contributory with respect to retiree contributions, which are adjusted annually, and contain other cost-sharing features such as deductibles and coinsurance. Further, these plans establish a limit at which the Company’s contribution is capped. The Company’s policy is to fund the cost of healthcare benefits as incurred under the plans.

The Company has received documentation from the Internal Revenue Service supporting the tax exempt status for its hourly defined benefit plan. The Company believes that its other employee benefit plans have been designed to meet the requirements of the Internal Revenue Service and therefore qualify for tax-exempt status.

The Medicare Prescription Drug Improvement and Modernization Act of 2003 provides for a federal subsidy to sponsors of retiree healthcare benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. During 2008, the Company applied for and was approved for the subsidy. Thus, the actuarial valuations as of September 30, 2010, 2009 and 2008 reflect the benefit of this subsidy.

The measurement dates for the actuarial valuations of the pension and the postretirement benefits plans are as of the respective balance sheet dates.

F-20

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

The following table sets forth the benefit obligations, fair value of plan assets, and funded status as of September 30, 2010 and 2009 for the Pension Plan:

	Pension benefits
	2010			2009
Projected benefit obligation as of beginning of year	$	108,468			88,358
Service cost		1,508			991
Interest cost		5,609			6,608
Remeasurement		207			2,590
Actuarial loss (gain), net		9,428			18,882
Prior service cost		—			923
Benefits paid		(9,642	)		(9,884	)
Projected benefit obligation as of end of year		115,578			108,468
Fair value of plan assets as of beginning of year		67,038			76,330
Actual return on plan assets		5,567			592
Employer contributions		2,744			—
Benefits paid		(9,642	)		(9,884	)
Fair value of plan assets as of end of year		65,707			67,038
Funded status	$	(49,871	)		(41,430	)
Amounts recognized in the consolidated balance sheets consist of:
Accrued liabilities	$	(7,313	)		(3,026	)
Liability for pension benefits		(42,558	)		(38,404	)
	$	(49,871	)		(41,430	)
Accumulated other comprehensive income, net of tax (net actuarial gains)	$	23,792			19,425

The accumulated pension benefit obligation was $114,015 and $107,018 as of September 30, 2010 and 2009, respectively.

The pension assets (reflected as part of the liability for pension benefits) are reflected at fair value in the consolidated financial statements. The fair value of these pension assets is measured using quoted market prices (Level 1 input) and unadjusted quoted prices available in active markets for similar asset or liabilities (Level 2 input) at the reporting date multiplied by the quantity held.

The Company’s pension plan assets are exposed to various risks such as interest rate, market and credit risks. Recent market conditions have resulted in an unusually high degree of volatility and increased the risks associated with the investments within pension plan assets. Due to the level of risk associated with certain investments, it is at least reasonably possible that changes in the values of the investments will occur in the near term and that such changes could materially affect the amounts reported in the consolidated financial statements.

F-21

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

The Company establishes the expected rate of return on plan assets by considering the historical returns for the plan’s current investment mix and its advisor’s range of expected returns for the plan’s current investment mix. The following table sets forth the benefit obligations, fair value of plan assets, and funded status for the postretirement benefit plans as of September 30, 2010 and 2009:

	Postretirement benefits
	2010			2009
Benefit obligation as of beginning of year	$	50,274			39,436
Service cost		1,032			421
Interest cost		2,879			2,872
Remeasurement		4,000			(219	)
Plan participant contributions		1,597			1,355
Actuarial losses, net		4,811			10,545
Benefits paid		(3,788	)		(4,136	)
Benefit obligation as of end of year	$	60,805			50,274
Change in plan assets:
Fair value of plan assets as of beginning of year	$	—			—
Company contributions		2,191			2,781
Plan participant contributions		1,597			1,355
Benefits paid		(3,788	)		(4,136	)
Fair value of plan assets as of end of year		—			—
Funded status	$	(60,805	)		(50,274	)
Amounts recognized in the consolidated balance sheets consist of:
Accrued liabilities	$	(3,143	)		(2,777	)
Accrued postretirement benefits		(57,662	)		(47,497	)
	$	(60,805	)		(50,274	)
Accumulated other comprehensive income, net of tax (net actuarial gains)	$	8,336			3,042
Amounts recognized in accumulated other comprehensive income/(loss) consist of:
Actuarial net gain/(loss)	$	(8,586	)		(10,627	)
Net prior service credit/(cost)		—			—
Total	$	(8,586	)		(10,627	)

The estimated amounts that will be amortized from AOCI into net periodic benefit cost over the next fiscal year for the qualified post-retirement benefit plan and pension benefit plan is as follows:

	Postretirement Benefits		Pension Benefits
Amortization of the net (gain)/loss	$	532		2,099
Amortization of prior service cost/(credit)	$	—		72

F-22

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

Weighted average assumptions used to determine the Company’s pension and postretirement benefit obligations as of September 30, 2010, 2009 and 2008 were as follows:

	2010			2009			2008
Discount rate:
Pension benefits obligation		4.56	%		5.40	%		7.60	%
Postretirement benefits obligations—hourly plan		4.54	%		5.40	%		7.60	%
Postretirement benefits obligation—salary plan		5.10	%		5.65	%		7.60	%
Pension net periodic cost		5.40	%		7.60	%		6.00	%
Postretirement net periodic cost—hourly plan		5.40	%		7.60	%		6.00	%
Postretirement net periodic cost—salary plan		5.65	%		7.60	%		6.00	%
Rate of compensation increase:
Pension benefits		3.00	%		3.00	%		3.00	%
Expected return on pension plan assets		7.50	%		7.50	%		7.50	%

Since the defined benefits plan and other benefits liabilities are measured on a discounted basis, the discount rate is a significant assumption. The discount rate was determined based on an analysis of interest rates for high-quality, long-term corporate debt at each measurement date. The discount rate used to determine the defined benefits plan and other benefits projected benefit obligation as of the balance sheet date is the rate in effect at the measurement date. The same rate is also used to determine the defined benefits plan and other benefits expense for the following fiscal year.

The following table shows the expected health care rate increase and the future rate and time at which it is expected to remain constant.

	2010		2009		2008
Assumed health care cost trend rate		7.9%		6.3%		7.2%
Rate to which the cost trend rate is assumed to decline and remain (the ultimate trend rate)		4.2%		4.0%		4.0%
Year that the rate reaches the ultimate trend rate		2083		2085		2084

Assumed health care cost trend rates have an effect on the amounts reported for other postretirement benefits. A one percentage point increase in the assumed health care cost trend rate for fiscal year 2010 would increase service and interest cost by approximately $400 and increase the postretirement benefit obligation by approximately $7,700. A one percentage point decrease in the assumed health care cost trend rate for fiscal year 2010 would decrease service and interest cost by approximately $500 and decrease the postretirement benefit obligation by approximately $5,300.

The net periodic benefit cost (benefit) recognized for the Pension Plan was as follows:

	Pension benefits
	2010			2009			2008
Components of net periodic benefit cost:
Service cost	$	1,508			991			1,199
Interest cost		5,609			6,608			5,667
Expected return on plan assets		(4,771	)		(5,356	)		(7,337	)
Amortization of net actuarial loss		1,596			—			—
Amortization of prior service cost		72			72			—
Net periodic benefit cost (benefit)	$	4,014			2,315			(471	)

F-23

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

The net periodic benefit cost (benefit) recognized for postretirement benefits is shown in the table below.

	Postretirement benefits
	2010		2009			2008
Components of net periodic benefit cost:
Service cost	$	1,032		421			764
Interest cost		2,879		2,872			2,470
Amortization of net actuarial loss (gain)		225		(301	)		—
Net periodic benefit cost	$	4,136		2,992			3,234

The Pension Plan assets by category, and weighted-average asset allocations at September 30, 2010 and 2009 are as follows:

	Pension plan assets (fair value)
	2010				2009
Equity securities	$	41,107	62.6	%		31,926	47.6	%
Debt securities		22,331	34.0	%		20,517	30.6	%
Cash		2,131	3.2	%		13,519	20.2	%
Other investments		138	0.2	%		1,076	1.6	%
Total pension plan assets	$	65,707	100.0	%		67,038	100.0	%

The Company’s policy for developing a pension plan investment strategy includes the periodic development of an asset and liability study by an independent investment consultant. Management considers this study in establishing an asset allocation that is presented to and approved by the Company’s Plan Committee.

Management determines an asset allocation that will provide the highest level of return for an acceptable level of risk. Accordingly; the Company invests in different asset classes including large-, mid- and small-cap growth and value funds, index and international equity funds, short-term and medium-term duration fixed-income funds and high yield funds. The plan’s current target allocation policy is to have approximately 55 percent U.S. and international equities, 35 percent fixed income securities and 10 percent cash equivalents. The Company may vary the actual asset mix based on the ratio of the plan assets and liabilities. Management reviews the asset allocation on a quarterly basis and makes revisions as deemed necessary.

The fair values of the Company’s pension plan assets as of September 30, 2010, by asset category and by the levels of inputs used to determine fair value were as follows:

	Fair Value
	9/30/2010						9/30/2009
	Level 1		Level 2		Total		Level 1		Level 2		Total
Short-term investments money funds		2,131				2,131		13,519				13,519
Bonds		12,956				12,956		10,966				10,966
Mutual funds		9,375				9,375		9,551				9,551
U.S. common stocks		35,801				35,801		31,382				31,382
International equity		5,306				5,306		544				544
Commingled funds		—		138		138		—		1,076		1,076
	$	65,569	$	138	$	65,707	$	65,962	$	1,076	$	67,038

F-24

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Investments in domestic and international equities are generally valued at the closing price reported on the active market on which they are traded. Commingled funds are valued based on the net asset value (“NAV”) established for the fund at each valuation date. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. Corporate and government agency bonds and other fixed income securities are valued using closing bid prices on an active market when possible, otherwise using evaluated bid prices. The measurements of these assets is made using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2).

Management establishes the expected long-term rate of return assumption by reviewing historical trends and analyzing the current and projected market conditions in relation to the plan’s asset allocation and risk management objectives. In determining the expected long-term rate of return, the Company considered historical returns for individual asset classes and the impact of active portfolio management.

Future benefit payments as of September 30, 2010 over the next ten fiscal years are expected to be as follows:

	Pension benefits		Postretirement benefits
Fiscal year ending September 30:
2011	$	9,396		3,214
2012		9,205		3,318
2013		9,008		3,446
2014		8,779		3,542
2015		8,555		3,637
2016—2020		39,236		19,846

The expected contribution to be made for the pension plan in the next fiscal year is $7,313, which is included in accrued liabilities in the accompanying consolidated balance sheet.

(10)    Fair Value of Financial Instruments

The fair value of the Term Loan and Senior Subordinated Notes Payable are estimated by discounting the future cash flows of each issuance at rates that the Company estimates that it could obtain similar debt instruments of comparable maturities (Level 3 inputs). The fair value of the Revolver approximates the carrying amount due to the interest rate being based on one-month floating Eurodollar rates.

The carrying amounts and approximate fair values as of September 30, 2010 and 2009 are as follows:

	Carrying amount				Approximate fair value
	2010		2009		2010		2009
Liabilities:
Senior subordinated notes payable	$	—		33,449		—		27,600
Term loan		50,000		—		50,000		—

F-25

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

The fair values of the financial instruments noted above as of September 30, 2010 and 2009 represent management’s best estimates of the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Company based on the best information available in the circumstances.

(11)    Related Party Transactions

During the years ended September 30, 2010, 2009 and 2008, the Company incurred management fees for services rendered by Watermill and Hicks, both related parties. Watermill was paid $788, $563 and $750 and Hicks was paid $525, $375 and $500 for the years ended September 30, 2010, 2009 and 2008, respectively. No management fees were owed as of September 30, 2010. As of September 30, 2009, the Company owed management fees of $188 to Watermill and $125 to Hicks, respectively. In addition, as of September 30, 2010 the Company owes Hicks $500 and Watermill $500 for services related to securing the Term Loan during the year (note 7), and these fees incurred related to the Term Loan have been deferred and are being amortized over the term of the related debt (note 6).

No management fees were owed at September 30, 2008. In addition, during the year ended September 30, 2008 the Company paid Hicks $1,500 and Watermill $1,500 for services related to securing the debt refinanced during the year (note 7). The fees paid for the debt financing services had been deferred and were written off in 2010 at the time of the refinancing.

On December 8, 2006, the Company acquired 100% of the outstanding shares of Latrobe from The Timken Company (Timken). At that time, the Company and Timken entered into a Transition Service Agreement (TSA) under which Timken agreed to provide certain services to the Company for a fee as set forth in the TSA. These services include technology center, transition management services, computer mainframe operation and support, and information technology user support.

For the years ended September 30, 2009, and 2008, Timken continued to provide various services to the Company as set forth in the TSA. Actual expenses incurred under the TSA for the years ended September 30, 2009 and 2008 were $554 and $396, respectively.

(12)    Commitments and Contingencies

The manufacturing of certain of the Company’s products requires a significant volume of natural gas. As of September 30, 2010 the Company entered into five contracts to purchase natural gas for the months of November 2010 through March 2011. The first contract is for 10,000 mcf per month at a fixed price of $5.00 per mcf, and the second contract is for 20,000 mcf per month at a fixed price of $4.465 per mcf. The third, fourth and fifth contracts are each for 10,000 mcf per month at fixed prices of $4.490, $4.350, and $4.145 per mcf, respectively. The Company is obligated to purchase the agreed upon amount at the agreed upon prices plus a basis cost of $0.19 per mcf, a transportation cost of $0.36 per mcf and a pool fee of $0.08 per mcf.

F-26

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

The Company is subject to federal, state, and local laws designed to protect the environment and believes that as a general matter, its policies, practices and procedures are properly designed to reasonably prevent risk of environmental damage and financial liability to the Company.

The Company is party to various litigation, claims and disputes, including labor regulation claims and Occupational Safety and Health Administration and environmental regulation violations arising in the ordinary course of business. While the ultimate effect of such actions cannot be predicted with certainty, the Company expects that the outcome of these matters will not result in a material adverse effect on its business, consolidated financial condition, results of operations or cash flows. The accrual for estimated losses from environmental remediation obligations was approximately $200 as of September 30, 2010, 2009 and 2008.

(13)    Stockholders’ Equity

Effective March 17, 2010, the Company amended and restated its Certificate of Incorporation to increase the number of authorized shares of capital stock and to create an additional class of stock. The new equity structure is as follows: $0.01 par value Voting Common Stock (63,000,000 shares authorized), $0.01 par value Non-Voting Common Stock (1,965,483 shares authorized), $0.01 par value Series A Convertible Participating Preferred Stock (Series A Preferred Stock) (34,988,889 shares authorized) and $0.01 par value Series B Convertible Participating Preferred Stock (Series B Preferred Stock) (12,114,815 shares authorized). The holders of the Series B Preferred Stock are entitled to receive dividends, which accrue at a rate of 15% per year, whether or not declared by the Board of Directors. As of September 30, 2010, accrued dividends were $820. In addition in the event of a liquidation event, the holders of the Series B Preferred Stock are entitled to a preferential payment equal to at least their original principal investment. The holders of the Series B Preferred Stock will receive the dividends and preferential payment before any dividends or other distributions are paid to any other class of securities junior to the Series B Preferred Stock, including Series A Preferred Stock and the Common Stock. Payment of the dividends and preferential payment is subject to certain provisions of the Wachovia Credit Facility and Term Loan.

Each share of Series A Preferred Stock and each share of Series B Preferred Stock carry the same voting rights as one share of Voting Common Stock, and the holders of the Series A Preferred Stock and the Series B Preferred Stock vote together with the holders of Voting Common Stock as a single class. Each share of Series A Preferred Stock and each share of Series B Preferred Stock is convertible into one share of Voting Common Stock, and is converted by the surrender of stock certificates.

Subject to the prior payment of the Series B Preferred Stock dividend, the holders of the Series A Preferred Stock are entitled to receive dividends (subject to approval under the terms of the Wachovia Credit Facility), including a one-time special dividend of $0.022635 per share and a further one-time preferential dividend of $0.90 per share, before any dividends or other distributions are paid to Common Stock or any other class of stock designated as junior to the Series A Preferred Stock.

In conjunction with the Fourth Amendment, the New Note Holders agreed to purchase in cash an additional $10,000 of Senior Subordinated Notes due June 8, 2013 and the stock warrants, as discussed below, in the aggregate principal amount of $10,204. The Company issued to the New Note Holders (1) Voting Common Stock Warrants equal to 10% of the Company’s fully diluted Common Stock equivalents, or 135,556 warrants at an exercise price of $0.01 per share and (2) Series A Preferred Warrants equal to 10% of the Company’s Series A Preferred Stock, or 3,498,889 warrants, at an exercise price of $0.01 per share. In accordance with the agreement, the company had the right to claw back the aforementioned warrants if the Senior Subordinated Notes could be refinanced within a certain time period. On July 30, 2010, in conjunction with the term debt issued by DDJ, the

F-27

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

Senior Subordinated Notes were paid in full. At such time, 2,974,056 Series A Preferred Stock Warrants were clawed back leaving issued and outstanding, 524,833 Series A Preferred Stock Warrants as of September 30, 2010. Also, at such time 115,223 Voting Common Stock Warrants were clawed back leaving issued and outstanding, 20,333 Voting Common Stock Warrants as of September 30, 2010. The Company recorded the value of the total net warrants issued as a debt discount against the value of the Notes in the amount of $2,394 and to Additional Paid-in Capital. This debt discount was later charged to loss on early extinguishment of debt as a result of the July 30, 2010 refinancing (note 7).

Subject to the aforementioned dividend preferences, the Series A Preferred Stock, the Series B Preferred Stock, the Voting Common Stock Warrants, and the Series A Preferred Stock Warrants all participate in dividends on an equivalent basis with Common Stock.

(14)    Share-Based Payment Arrangements

The Company has an Employee, Director, and Consultant Stock Plan (ED&C Plan), which provides stock awards to the participants. The ED&C Plan as amended provides for 3,542,822 shares of Non-Voting Common Stock to be available for award to the participants. Shares of restricted Non-Voting Common Stock totaling 1,558,000 have previously been granted to certain management personnel. These restricted shares are now fully vested, with 50% vesting having occurred at December 31, 2008 and 50% vesting having occurred at December 31, 2009. The vesting of these restricted shares was based solely on continued service by the recipient. During the first quarter of the fiscal year ended September 30, 2010, 398,000 restricted shares from a former Company officer were forfeited due to the termination of this officer’s employment. As of September 30, 2010, 1,160,000 restricted shares remain outstanding.

The restricted Non-Voting Common Stock has dividend rights equivalent to Common Stock, whether or not vested, and thus participate in dividends on an equivalent basis with Common Stock.

Included in stock compensation expense is $(797), $1,525 and $2,354 for the years ended September 30, 2010, 2009 and 2008, respectively, which represents management’s estimate of the amount of stock compensation expense related to the restricted stock grant and forfeited shares, based upon the elected policy as explained in note 1. Stock compensation expense in 2010 includes compensation expense of $246 and income of $1,043, related to the aforementioned forfeiture.

Furthermore, the Company has a business advisory board and in July 2008 granted nonqualified stock options for 30,000 shares of Non-Voting Common Stock to two members of the advisory board, such stock options having an exercise price which approximated fair market value at the grant date.

Under the ED&C Plan, the Company is authorized to grant stock options to certain key employees, nonemployee directors and consultants in the form of either restricted stock, nonqualified stock options (NQSOs) or incentive stock options (ISOs). On January 26, 2010, the Company granted 609,927 ISOs for the purchase of Non-Voting Common Stock at an exercise price of $2.82, the fair value of the Company’s common stock on the day of the grant as determined by an independent valuation. The ISOs granted are exercisable for a period of ten years from the date of grant and vest 25% per year over a four-year period from the grant date. Included in stock compensation expense is $400 for the year ended September 30, 2010, which represents management’s estimate of the amount of stock compensation expense related to the ISO’s which were outstanding during the year.

F-28

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

The calculated fair value of each option granted is estimated on the date of the grant using the Black-Scholes-Merton option pricing model with the following weighted average assumptions used for grants:

	2010
Expected dividend yield		0.00	%
Expected volatility of Company’s stock		67.74	%
Risk-free interest rate		3.28	%
Expected life in years		7.0
Weighted average calculated fair value of options granted per share	$	1.89

Because the Company is a privately owned, closely held corporation, there is not sufficient empirical data associated with prior transactions involving the Company’s common stock to determine the volatility of the common stock. Expected volatility was based upon comparable guideline companies whose historical volatilities provided a better indication of the future volatility of the Company’s stock. The risk free interest rate is based upon a zero coupon treasury rate.

The following table provides information about outstanding options for the year ended September 30, 2010:

	Shares (in  thousands)		Weighted average exercise price per share		Weighted Average Remaining Contractual Term (in Years)
Options outstanding at September 30, 2009		—	$	—
Granted		609,927		2.82
Exercised		—		—
Forfeited		—		—
Options outstanding at September 30, 2010		609,927	$	2.82		9.3

The following table summarizes the activity under the stock option plans:

Grant Date	Exercise Price Per Share	Remaining Contractual Years	Outstanding Number of Options	Exercisable Number of Options
January 26, 2010	$2.82	9.3	609,927	—

F-29

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

(15)    Operating Leases

The Company has noncancelable operating leases for warehouses, office facilities, and certain machinery and equipment that expire on various dates through May 2016. Certain of our operating leases for real estate contain lease renewal terms that extend through fiscal year 2020. Minimum rent payments under operating leases are recognized on a straight-line basis over the term of the lease. The future minimum lease payments under these leases as of September 30, 2010 are as follows:

Fiscal year ending September 30:
2011	$	2,858
2012		2,593
2013		2,262
2014		1,506
2015		945
Thereafter		672
	$	10,836

Rent expense for all operating leases was $2,526, $2,220 and $1,755 for the years ended September 30, 2010, 2009 and 2008, respectively.

(16)    Sale of Certain Assets of Koncor Industries Division

On August 1, 2008, Latrobe sold certain assets of the Koncor Industries Division (Koncor) to Precision Industries, Inc. for a total sales price of $5,249. Latrobe received cash proceeds of $4,514, an amount placed in escrow of $525 (which was received during 2009), and a net sales price adjustment receivable of $210. The gain on sale of assets sold of $2,163 was determined as follows:

Total purchase price	$	5,249
Assets sold:
Inventory		2,990
Net book value of machinery and equipment		96
		3,086
Gain on sale of certain Koncor assets	$	2,163

In December 2008, the Company received a payment of $407 from the escrow account as partial settlement. In April 2009, the Company received the final $118 escrow payment as well as a net sales price adjustment of $50. The $160 balance of the net sales price adjustment receivable was written off in 2009. The assets sold, the results of operations and cash flows of Koncor were not considered material to the consolidated financial statements and as such, were not classified as discontinued operations in the accompanying consolidated financial statements.

F-30

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

The following is a summary of the results of operations for the Koncor division:

	October 1, 2007 through August 1, 2008
Net sales	$	8,370
Cost of sales		6,676
Gross profit		1,694
Selling, general and administrative expenses		557
Income from operations	$	1,137

(17)    Department of Defense—Strategic Buffer Contract

The Strategic Buffer Contract was signed on September 23, 2008 with the DoD. It is designed to ensure that specific grades and quantities of metal are available to meet surge and sustainment requirements for the DoD. The DoD has paid the Company $3,900 for the production of this material. Currently the Company stores this material at its facility and retains title to it throughout the duration of the contract. Upon completion of the contract, the Company will either retain title to the material for sale in its daily operations and return the $3,900 to the DoD, or the Company will retain the $3,900 and the DoD will take ownership of the material and move it to their facilities. The contract signed in 2008 was for a one year term and included four separate one year renewal options. As of September 30, 2010, the government elected to exercise the second renewal option. The $3,900 is included as part of accrued liabilities as of September 30, 2010 and 2009, and no revenue has been recognized as a result of this buffer contract.

(18)    Segment Information, Geographic and Product Data

The Company is comprised of two business segments: Manufacturing, which includes Latrobe and Latrobe Metals Europe, and Distribution, which includes Latrobe Distribution, Canada, and SSS. The Manufacturing segment’s process involves melting, remelting, treating and hot and cold rolling of semi-finished and finished specialty metals. The Distribution segment globally sources and distributes corrosion resistant steels and powder metals for a wide range of industries. Management has chosen to report under these two segments due to the different functions of the segments and because the Company’s chief operating decision–maker reviews financial information based on these two segments, except for interest expense and deferred financing costs, which are reviewed on a consolidated basis.

The accounting policies of both reportable segments are the same as those described in Note 1: Description of Business and Significant Accounting Policies. Sales between the segments are generally made at market-related prices. On a consolidated basis, there were no significant individual customer sales that accounted for more than 10 percent of the total sales during fiscal years 2010, 2009 and 2008.

F-31

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

Segment data is as follows:

(dollars in thousands)	Years ended September 30,
	2010			2009			2008
Net sales:
Manufacturing	$	210,477			220,616			334,699
Distribution		112,908			74,805			110,386
Intersegment		(14,156	)		(6,240	)		(11,981	)
Consolidated net sales	$	309,229			289,181			433,104
Operating Income (Loss):
Manufacturing	$	24,957			(5,320	)		51,606
Distribution		5,941			(2,235	)		13,695
Intersegment		(2,319	)		355			2,277
Consolidated operating income (loss)	$	28,579			(7,200	)		67,578
Interest expense and other financing costs, including loss on early extinguishment of debt:
Manufacturing	$	15,731			14,205			19,037
Distribution		0			0			0
Total interest expense and other financing costs, including loss on early extinguishment of debt:	$	15,731			14,205			19,037
Other Expense:
Manufacturing	$	1,033			601			(1,531	)
Distribution		128			64			66
Total other expense	$	1,161			665			(1,465	)
Depreciation and amortization:
Manufacturing	$	7,572			6,340			5,045
Distribution		1,450			1,171			547
Total depreciation and amortization	$	9,022			7,511			5,592
Capital Expenditure
Manufacturing	$	8,823			19,857			44,158
Distribution		295			314			552
Total capital expenditures	$	9,118			20,171			44,710

Total assets by segment are as follows:

	September 30,
	2010		2009
Total Assets:
Manufacturing	$	248,230		228,939
Distribution		89,917		70,850
Total assets	$	338,147		299,789

F-32

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

Net sales by product line are as follows:

	2010		2009		2008
High Speed Steels	$	32,774		29,200		64,635
Die Steels		67,030		50,519		94,520
High Temp Alloys		19,697		15,883		21,205
Bearing Steels		30,029		41,019		65,019
Structural		87,864		103,471		138,950
Corrosion Resistant		26,898		18,224		17,313
Conversion		7,593		9,077		8,846
Stainless		20,395		15,250		2,259
Powder Tool Steels		14,715		4,397		7,583
Misc		2,234		2,141		12,774
	$	309,229	$	289,181	$	433,104

Geographic data is as follows:

Geographic Data

	Years Ended
	2010		2009		2008
Net Sales:
Domestic		280,529		260,534		395,304
International		28,700		28,647		37,800
Consolidated Net Sales		309,229		289,181		433,104

(20)    Valuation and Qualifying Accounts

Description	Balance at Beginning of Period		Charged to Costs & Expenses			Deductions			Balance at End of Period
Year ended September 30, 2010
Allowance for doubtful accounts receivable	$	2,533	$	935		$	(484	)(1)	$	2,984
Inventory excess and obsolete reserves	$	13,331	$	—		$	(6,426	)(2)	$	6,905
Year ended September 30, 2009
Allowance for doubtful accounts receivable	$	2,752	$	235		$	(454	)(1)	$	2,533
Inventory excess and obsolete reserves	$	10,198	$	3,133	(2)	$	—		$	13,331

(1) Uncollectible accounts written off net of recoveries.

(2) Net activity

F-33

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2010, 2009 and 2008

(Dollars in thousands)

(21)    Earnings (Loss) Per Share

The following table sets for the computation of basic and diluted net income (loss) per share for the three years ended September 30, 2010 (shares in thousands):

	For the year ended September 30,
	2010		2009		2008
Numerator (basic and diluted):
Net Income (loss)	$	7,270	$	(14,811)	$	32,147
Less: Preferred stock dividends (Series B)		(820)		—		—
Less: Income allocated to participating securities		(6,275)		—		(24,398)
Net Income (loss) available to common stockholders for basic EPS	$	175	$	(14,811)	$	7,749
Add back: income allocated to participating securities		5,213		—		23,248
Net income (loss) available to common stockholders for diluted EPS	$	5,388	$	(14,811)	$	30,997
Denominator (basic):
Weighted average common shares outstanding		1,107		710		7,875
Denominator (diluted):
Weighted average common shares		1,107		710		7,875
Dilutive stock options		60		—		15
Common shares from Series A Preferred Stock Warrants		1,400		—		—
Common shares from Non-voting Common Stock Warrants		55		—		—
Common shares from Series A Preferred Stock		31,500		—		23,625
Weighted average common shares outstanding		34,122		710		31,515

Net income (loss) per share attributable to holders of common stock:
Basic	$	0.16	$	(20.88	)	$	0.98
Diluted	$	0.16	$	(20.88	)	$	0.98

The following represents shares not included in the computation of diluted earnings per share because to do so would have been anti-dilutive (shares in thousands):

Series A Convertible Participating Preferred Stock	—	31,500	—
Series B Convertible Participating Preferred Stock	12,115	—	—
Restricted stock	—	612	—
Stock options	610	60	1,558
	12,725	32,172	1,558

F-34

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Dollars in thousands, except share and per share data)

	Unaudited			Derived from Audited Financial Statements
	March 31, 2011			September 30, 2010
Assets
Current assets:
Trade accounts receivable, net of allowance for doubtful accounts of $3,104 and $2,984, respectively	$	72,830		$	54,106
Inventories, net		211,168			157,492
Prepaid expenses and other current assets		811			1,766
Deferred income taxes		8,569			8,569
Total current assets		293,378			221,933
Property, plant, and equipment, net		70,780			69,321
Intangible assets, net and goodwill		5,044			5,705
Other noncurrent assets		7,517			8,688
Deferred income taxes		32,500			32,500
Total assets	$	409,219		$	338,147
Liabilities and Stockholders’ Equity
Current liabilities:
Revolving line of credit	$	119,709		$	71,140
Current maturities of long-term debt		3,750			2,500
Accounts payable—trade		53,146			39,366
Accrued liabilities		24,117			27,684
Income taxes payable		2,331			677
Total current liabilities		203,053			141,367
Long-term debt		45,000			47,500
Accrued dividends payable		1,647			820
Accrued postretirement benefits		58,593			57,662
Liability for pension benefits		41,919			42,558
Total liabilities		350,212			289,907
Stockholders’ equity:
Series A Preferred stock, $0.01 par value. Authorized 34,988,889 shares, 31,490,000 issued and outstanding at March 31, 2011 and September 30, 2010		315			315
Series B Preferred stock, $0.01 par value. Authorized 12,114,815 shares, 12,114,815 issued and outstanding at March 31, 2011 and September 30, 2010		121			121
Common stock, $0.01 par value. Authorized 64,965,483 shares, 1,620,993 issued and outstanding at March 31, 2011 and 1,160,000 issued and outstanding at September 30, 2010		16			12
Treasury stock at cost (10,000 common shares held at March 31, 2011 and September 30, 2010)		(38	)		(38	)
Note receivable-officer		(1,300	)		—
Additional paid-in capital		49,400			46,928
Accumulated other comprehensive loss		(32,158	)		(32,155	)
Retained earnings		42,651			33,057
Total stockholders’ equity		59,007			48,240
Total liabilities and stockholders’ equity	$	409,219		$	338,147

See accompanying notes to consolidated financial statements.

F-35

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

Unaudited

(Dollars in thousands, except per share data)

	Six months ended
	March 31, 2011			March 31, 2010
Net Sales	$	202,742		$	132,919
Cost of Sales		161,578			118,331
Gross profit		41,164			14,588
Selling, general and administrative expenses		16,412			13,285
Income from operations		24,752			1,303
Other expense:
Interest expense, net		7,278			5,469
Loss on extinguishment of debt		—			1,105
Other expense		663			490
		7,941			7,064
Income (loss) before income taxes		16,811			(5,761	)
Income tax expense (benefit)		6,391			(2,189	)
Net income (loss)		10,420			(3,572	)
Preferred stock dividends		(827	)		(54	)
Income allocated to participating securities		(9,349	)		—
Net income (loss) available to common stockholders	$	244		$	(3,626	)
Net income (loss) per share:
Basic	$	0.21		$	(3.44	)
Diluted	$	0.21		$	(3.44	)
Weighted average shares outstanding:
Basic		1,160			1,053
Diluted		33,274			1,053

See accompanying notes to consolidated financial statements.

F-36

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Consolidated Statement of Stockholders’ Equity and Comprehensive Income (Loss)

Unaudited

(Dollars in thousands)

	Series A Preferred stock				Series B Preferred stock				Common stock						Treasury stock					Note Receivable Officer			Additional paid-in capital			Accumulated other comprehensive income (loss)			Retained earnings			Total
	Shares		Amount		Shares		Amount		Shares			Amount			Shares		Amount
Balance as of September 30, 2009		31,490,000		315		—		—		1,558,000			15			10,000		(38	)		—			35,049			(22,491	)		26,607			39,457
Net loss		—		—		—		—		—			—			—		—			—			—			—			(3,572	)		(3,572	)
Other comprehensive loss, net of tax benefit (pension/postretirement benefit plans actuarial losses)		—		—		—		—		—			—			—		—			—			—			(9	)		—			(9	)
Total comprehensive income (loss)																																	(3,581	)
Series B Preferred stock issued		—		—		12,114,815		121		—			—			—		—			—			9,879			—			—			10,000
Dividends on Series B Preferred stock		—		—		—		—		—			—			—		—			—			—			—			(54	)		(54	)
Stock warrants issued		—		—		—		—		—			—			—		—			—			2,394			—			—			2,394
Stock compensation		—		—		—		—		(398,000	)		(3	)		—		—			—			(694	)		—			—			(697	)
Balance as of March 31, 2010		31,490,000	$	315		12,114,815	$	121		1,160,000		$	12			10,000	$	(38	)		—			46,628			(22,500	)		22,981			47,519
Balance as of September 30, 2010		31,490,000	$	315		12,114,815	$	121		1,160,000		$	12			10,000	$	(38	)		—			46,928			(32,155	)		33,057			48,240
Net income		—		—		—		—		—			—			—		—			—			—			—			10,420			10,420
Other comprehensive loss, net of tax benefit (pension/postretirement benefit plans actuarial losses)		—		—		—		—		—			—			—		—			—			—			(3	)		—			(3	)
Total comprehensive income (loss)																																	10,417
Dividends on Series B Preferred stock		—		—		—		—		—			—			—		—			—			—			—			(826	)		(826	)
Note Receivable - Officer		—		—		—		—		460,993			4			—		—			(1,300	)		1,296			—			—			0
Stock compensation		—		—		—		—		—			—			—		—			—			1,176			—			—			1,176
Balance as of March 31, 2011		31,490,000	$	315		12,114,815	$	121		1,620,993		$	16			10,000	$	(38	)	$	(1,300	)		49,400		$	(32,158	)	$	42,651		$	59,007

See accompanying notes to consolidated financial statements.

F-37

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Unaudited

(Dollars in thousands)

	Six months ended
	March 31, 2011			March 31, 2010
Cash flows from operating activities:
Net income (loss)	$	10,420		$	(3,572	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,062			4,163
Deferred interest on note payable		—			1,200
Stock compensation—incentive stock options		1,176			(697	)
Loss on extinguishment of debt		—			1,105
Changes in operating assets and liabilities:
(Increase) decrease in trade accounts receivable		(18,724	)		(8,062	)
(Increase) decrease in inventories		(53,676	)		9,942
(Increase) decrease in prepaid expenses and other current assets		955			(509	)
(Increase) decrease in other noncurrent assets		(454	)		330
Increase (decrease) in accounts payable—trade		13,780			17,253
Increase (decrease) in accrued liabilities		(4,718	)		(3,836	)
Increase (decrease) in income tax payable/receivable		1,654			4,912
Increase (decrease) in other noncurrent liabilities		289			2,714
Net cash (used in) provided by operating activities		(44,236	)		24,943
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment		—			25
Proceeds from Title III		1,942			758
Purchase of property, plant and equipment		(5,112	)		(2,874	)
Net cash used in investing activities		(3,170	)		(2,091	)
Cash flows from financing activities:
Proceeds from issuance of preferred stock		—			10,000
Proceeds from issuance of long-term debt		—			10,000
Net (payments) borrowings on revolving credit facility		48,569			(43,574	)
Proceeds from issuance of stock warrants		—			2,394
Payments on long-term debt		(1,250	)		—
Deferred financing costs		87			(1,672	)
Net cash (used in) provided by financing activities		47,406			(22,852	)
Net change in cash		—			—
Cash as of beginning of year		—			—
Cash as of end of year	$	—		$	—
Supplemental disclosures of cash flow information:
Cash paid (received) during period for:
Interest (net of capitalized interest)	$	5,892		$	3,748
Income taxes, net of refunds received		4,671			(7,025	)

See accompanying notes to consolidated financial statements.

F-38

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

(Unaudited)

(Dollars in thousands, except per share data)

(1)    Description of Company

(a) Nature of Business

Latrobe Specialty Metals, Inc. (“the Company”, formerly known as Toolrock Holding, Inc.) is one of the largest global manufacturers and distributors of high quality specialty metals and alloys, based on pounds sold. The Company serves a diversified group of end markets, including the commercial aerospace, defense, oil and gas exploration and production, power generation and industrial markets.

(b) Principles of Consolidation and Presentation

The consolidated financial statements include the accounts of the Company, its wholly owned subsidiary, Latrobe Specialty Metals Company (“Latrobe”), and Latrobe’s wholly owned subsidiaries, Latrobe Specialty Metals Europe, Inc. (“Latrobe Metals Europe”), Specialty Steel Supply, Inc. (“SSS”), and Latrobe Specialty Metals Distribution Company, Inc. (“Latrobe Distribution”), as well as Latrobe Distribution’s wholly owned subsidiary Latrobe Specialty Steel Distribution, Inc. (“Canada”). All intercompany accounts and transactions have been eliminated in consolidation for all periods.

(c) Business Segments

The Company is comprised of two business segments: Manufacturing, which includes Latrobe and Latrobe Metals Europe, and Distribution, which includes Latrobe Distribution, Canada, and SSS. The Manufacturing segment’s process involves melting, remelting, treating and hot and cold rolling of semi-finished and finished specialty metals. The Distribution segment globally sources and distributes corrosion resistant steels and powder metals for a wide range of industries. Management has chosen to report under these two segments due to the different functions of the segments and because the Company’s chief operating decision–maker reviews financial information based on these two segments, except for interest expense, loss on extinguishment of debt and deferred financing costs, which are reviewed on a consolidated basis.

(d) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements. The more significant areas requiring the use of management estimates and assumptions relate to the accounting estimates, including trade accounts receivable-allowance for doubtful accounts, inventory obsolescence and valuation, goodwill and identifiable intangible assets and their impairment, revenue recognition, property, plant, and equipment and its impairment, accrued pension benefits, accrued post-retirement benefits, share-based payment arrangements and income taxes. Company management bases its estimates on historical experience, expectations of the future, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.

(2) Basis of Presentation

Interim Financial Statements

The accompanying unaudited consolidated financial statements and footnotes have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the

F-39

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

(Dollars in thousands, except per share data)

“Codification” or “ASC”) for interim financial information and Article 10 of Regulation S-X issued by the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all the information and footnotes required by U.S. GAAP for annual fiscal reporting periods. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, changes in stockholders’ equity and comprehensive income (loss) and cash flows. The results of operations for the six months ended March 31, 2011 and 2010 are not necessarily indicative of results that may be expected for the year ending September 30, 2011 or any other period. The accompanying consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto included in this prospectus.

(3) Inventories

Inventories consisted of the following as of March 31, 2011 and September 30, 2010:

	March 31, 2011		September 30, 2010
Raw materials		38,336		15,308
Work-in-process		91,708		68,670
Finished goods		79,022		71,589
Supplies		2,102		1,925
Total inventories, net	$	211,168		157,492

Included in finished goods above is $7,167 and $5,831 of inventory consigned to others as of March 31, 2011 and September 30, 2010, respectively. Inventories are net of reserves for excess and obsolete inventory of $5,837 and $6,905 as of March 31, 2011 and September 30, 2010, respectively. The carrying value of inventories has been reduced for a lower of cost or market (LCM) adjustment of $274 and $1,716 as of March 31, 2011 and September 30, 2010, respectively.

(4)    Property, Plant and Equipment

Property, plant and equipment consisted of the following as of March 31, 2011 and September 30, 2010:

	March 31, 2011			September 30, 2010
Land	$	685			685
Buildings		11,647			11,401
Machinery and equipment		66,055			62,271
Construction in progress		9,994			9,704
		88,381			84,061
Less accumulated depreciation		(17,601	)		(14,740	)
	$	70,780			69,321

F-40

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

(Dollars in thousands, except per share data)

(5)    Goodwill and Other Intangible Assets

(a) Acquired Intangible Assets

Intangible assets consisted of the following as of March 31, 2011 and September 30, 2010:

	March 31, 2011			September 30, 2010
Customer relationships	$	11,207			11,207
Patent		100			100
		11,307			11,307
Less accumulated amortization		(7,023	)		(6,362	)
	$	4,284			4,945

(b) Goodwill

Goodwill is attributable to the acquisition of SSS in 2008. The amount of goodwill as of March 31, 2011 and September 30, 2010 was $760.

(6)    Other Noncurrent Assets

Other noncurrent assets consisted of the following as of March 31, 2011 and September 30, 2010:

	March 31, 2011		September 30, 2010
Deferred financing costs, net of accumulated amortization of $3,621 and $1,995, respectively	$	6,721		8,346
Other		796		342
	$	7,517		8,688

(7)    Debt

The Company’s long-term debt consisted of the following as of March 31, 2011 and September 30, 2010:

	March 31, 2011		September 30, 2010
Revolver	$	119,709		71,140
Term loan		3,750		2,500
Current portion	$	123,459		73,640
Term loan		45,000		47,500
Long-term portion	$	45,000		47,500

F-41

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

(Dollars in thousands, except per share data)

The Company has a $175,000 Revolving Credit Loan and Security Agreement (Wachovia Credit Facility) with Wachovia Bank, National Association (Wachovia or Senior Agent) and certain other lenders. The Wachovia Credit Facility is composed of a five-year $175,000 Asset Based Revolving Credit Facility (Wachovia Revolver) and includes a $10,000 letter of credit sub-limit.

As of March 31, 2011, the Wachovia Revolver had an outstanding balance of $119,709. The Company must pay monthly, in arrears, a commitment fee of 0.75% per annum on the unused amount of the Wachovia Revolver’s total commitment. As of March 31, $5,873 of standby letters of credit have been issued against the Wachovia Revolver. There is also a $10,000 general reserve required which lowers the Company’s availability. The remaining availability related to the Wachovia Revolver was $39,399 as of March 31, 2011, which is based upon the borrowing base collateral of $174,981 at that date. The Company is subject to certain covenants as to minimum EBITDA and fixed charge coverage ratios and other customary covenants, including covenants restricting the incurrence of indebtedness, the granting of liens, the sale of assets, the amount of annual capital expenditures and the declaration of dividends and other distributions on the Company’s capital stock. The Company was in compliance with all such covenants as of March 31, 2011 and believes that it will remain in compliance for the foreseeable future.

The balance outstanding on the Wachovia Revolver as of March 31, 2011 and September 30, 2010 has been reflected as a current liability in the consolidated balance sheet due to the presence of a lock box requirement and a subjective acceleration clause in the Wachovia Credit Facility.

The Company has a $50,000 Senior Secured Term Loan (Term Loan) with DDJ Capital Management LLC (DDJ). The Term Loan facility is secured by certain fixed assets of the Company. The Term Loan is payable in quarterly installments of $625, which commenced on December 31, 2010 and increase to $1,250 starting December 31, 2011, with the remaining balance due on September 6, 2013. As of March 31, 2011, the most recent required measurement date under the Term Loan Facility, the Company was in compliance with the covenants as of March 31, 2011 and believes that it will remain in compliance for the foreseeable future. The Company’s Credit Facility and Term Loan contain cross default provisions to each other.

(8)    Income Taxes

The tax rate used for interim periods is the estimated annual effective tax rate, based on the current estimate of full year results, except for taxes related to discrete events, if any, are recorded in the interim period in which they occur. The provision for income taxes is based on the estimated income tax rate for the fiscal year ended September 30, 2011 plus or minus the tax effects related to discrete items. The effective income tax rate calculated based on ordinary operating income for the six months ended March 31, 2011 and March 31, 2010 was 38.0%. For the six months ended March 31, 2011 and 2010, the income tax expense (benefit) was $6,391 and $(2,189), respectively.

For the six month periods ended March 31, 2011 and 2010, the income tax expense (benefit) presented differs from the amount computed by applying the U.S. federal income tax rate of 35% to pretax income (loss) due to the effect of state income taxes and a credit for research and development costs and a deduction for qualifying domestic production activities.

F-42

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

(Dollars in thousands, except per share data)

(9)    Employee Benefit Plans

The net periodic benefit cost recognized for the Pension Plan and Postretirement Plan were as follows:

	Six months ended March 31,
	Pension benefits						Postretirement benefits
	2011			2010			2011		2010
Components of net periodic benefit cost:
Service cost	$	918			754			606		516
Interest cost		2,528			2,804			1,388		1,440
Expected return on plan assets		(2,424	)		(2,386	)		—		—
Amortization of net actuarial loss		1,048			798			268		112
Amortization of prior service cost		36			36			—		—
Net periodic benefit cost	$	2,106			2,006			2,262		2,068

The Company contributed $2,744 and $0, respectively to the Company sponsored domestic pension plan and $2,095 and $1,911, respectively to its other post-retirement benefit plans for the six months ended March 31, 2011 and 2010. The Company presently expects future contributions of $4,569 to its domestic pension plan and $2,238 to its other post-retirement benefit plans for the remainder of fiscal 2011. The Pension Protection Act of 2006 requires funding over a seven-year period to achieve 100% funded status.

(10)    Fair Value of Financial Instruments

On October 1, 2010, The Company adopted ASU 2010-06 “Interim Disclosures about Fair Value of Financial Instruments” which defines fair value, establishes a framework for measuring fair value and expands disclosure requirements about fair value measurements. It also defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy prescribed by the standard contains three levels as follows:

Level 1—Unadjusted quoted prices available in active markets for the identical assets or liabilities at the measurement date.

Level 2—Unadjusted quoted prices available in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.

Level 3—Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgments. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

The fair value of hierarchy requires the use of observable market data when available. In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input significant to the fair value measurement in its entirety. Our assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. Financial instruments include cash, accounts receivable, other current assets, accounts payable, short-term debt and other current liabilities. The carrying amounts of these financial instruments approximated fair value at March 31, 2011 and

F-43

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

(Dollars in thousands, except per share data)

September 30, 2010 due to their short-term maturities. The fair value of the Revolver approximates the carrying amount due to the interest rate being based on one-month floating Eurodollar rates.

The fair value of long-term debt is estimated by discounting the future cash flows of each issuance at rates that the Company estimates that it could obtain similar debt instruments of comparable maturities (Level 3 inputs). The carrying amounts and approximate fair values as of March 31, 2011 and September 30, 2010 are as follows:

	Carrying amount				Approximate fair value
	March 31, 2011		September 30, 2010		March 31, 2011		September 30, 2010
Term loan		48,750		50,000		48,750		50,000

The fair values of the financial instruments noted above as of March 31,2011 and September 30, 2010 represent management’s best estimates of the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Company based on the best information available in the circumstances.

(11)    Related Party Transactions

During the six months ended March 31, 2011 and 2010, the Company incurred management fees for services rendered by Watermill and Hicks, both related parties. Watermill was paid $1,220 and $0 and Hicks was paid $980 and $0 for the six months ended March 31, 2011 and 2010, respectively, including $500 to Watermill and $500 to Hicks for services related to securing the Term Loan during fiscal year 2010 and these fees incurred related to the Term Loan have been deferred and are being amortized over the term of the related debt. As of March 31, 2011 and September 30, 2010, no management fees were payable to either Watermill or Hicks, respectively.

(12)    Commitments and Contingencies

The manufacturing of certain of the Company’s products requires a significant volume of natural gas. As of March 31, 2011, the Company entered into twenty contracts to purchase natural gas for the months of April 2011 through October 2012. The twenty contracts are each for either 10,000 mcf or 20,000 mcf per month at fixed prices ranging from $3.985 to $4.810. per mcf. The Company is obligated to purchase the agreed upon amount at the agreed upon prices plus a basis cost of $0.19 per mcf, a transportation cost of $0.36 per mcf and a pool fee of $0.08 per mcf.

The Company is subject to federal, state, and local laws designed to protect the environment and believes that as a general matter, its policies, practices and procedures are properly designed to reasonably prevent risk of environmental damage and financial liability to the Company.

The Company is party to various litigation, claims and disputes, including labor regulation claims and Occupational Safety and Health Administration and environmental regulation violations arising in the ordinary

F-44

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

(Dollars in thousands, except per share data)

course of business. While the ultimate effect of such actions cannot be predicted with certainty, the Company expects that the outcome of these matters will not result in a material adverse effect on its business, consolidated financial condition, results of operations or cash flows. The accrual for estimated losses from environmental remediation obligations was approximately $200 as of March 31, 2011 and 2010.

(13)    Share-Based Payment Arrangements

The Company has an Employee, Director, and Consultant Stock Plan (ED&C Plan), which provides stock awards to the participants. The ED&C Plan as amended provides for 3,542,822 shares of Non-Voting Common Stock to be available for award to the participants. Shares of restricted Non-Voting Common Stock totaling 1,558,000 have previously been granted to certain management personnel. On January 17, 2011, the Company granted for the purchase of 460,993 shares of restricted Non-Voting Common Stock to the chief executive officer at the price of $2.82 per share. Simultaneously, a non-interest bearing note with no expiration date was issued for the purchase price of $1.3 million.

Furthermore, the Company has a business advisory board and in July 2008 granted nonqualified stock options for 30,000 shares of Non-Voting Common Stock to each of two members of the advisory board, such stock options having an exercise price which approximated fair market value at the grant date.

Under the ED&C Plan, the Company is authorized to grant stock options to certain key employees, nonemployee directors and consultants in the form of either restricted stock, nonqualified stock options (NQSOs) or incentive stock options (ISOs). On January 26, 2010, the Company granted 609,927 ISOs for the purchase of Non-Voting Common Stock at an exercise price of $2.82, the fair value of the Company’s Common Stock on the day of the grant as determined by an independent valuation. The ISOs granted are exercisable for a period of ten years from the date of grant and vest 25% per year over a four-year period from the grant date.

On November 2, 2010, the Company granted 315,000 ISOs for the purchase of Non-Voting Common Stock at an exercise price of $2.82. The fair value was determined to be $3.90 based on an internal model using projected EBITDA and comparable company EBITDA multipliers to calculate the enterprise value of the Company. The ISOs granted are exercisable for a period of ten years from the date of grant and vest 25% per year over a four-year period from the grant date.

On January 17, 2011, the Company granted 900,000 ISOs for the purchase of Non-Voting Common Stock at an exercise price of $2.82 to the chief executive officer. The fair value was determined to be $3.90 based on an internal model using projected EBITDA and comparable company EBITDA multipliers to calculate the enterprise value of the Company. The ISOs granted are exercisable for a period of ten years from the date of grant and vest 25% per year over a four-year period from the grant date.

Because the Company is a privately owned, closely held corporation, there is not sufficient empirical data associated with prior transactions involving the Company’s common stock to determine the volatility of the common stock. Expected volatility was based upon comparable guideline companies whose historical volatilities provided a better indication of the future volatility of the Company’s stock. The risk-free interest rate is based upon a zero coupon treasury rate.

Stock compensation expense is $1,176 and $(697) for the six months ended March 31, 2011 and 2010 respectively, which represents management’s estimate of the amount of stock compensation expense related to the ISO’s ($675) which were outstanding during the first six months of fiscals year ending September 30, 2011 and 2010, and the restricted stock ($501) granted to the new chief executive officer in January 2011.

F-45

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

(Dollars in thousands, except per share data)

The calculated fair value of each option granted is estimated on the date of the grant using the Black-Scholes-Merton option pricing model with the following weighted average assumptions used for grants:

	January 17, 2011			November 2, 2010			January 26, 2010
Expected dividend yield		0	%		0	%		0	%
Expected volatility of Company’s stock		71.90	%		72.40	%		67.74	%
Risk-free interest rate		2.66	%		1.87	%		3.28	%
Expected life in years		7.0			7.0			7.0
Weighted average calculated fair value of options granted per share	$	2.89		$	2.86		$	1.89

The following table provides information about outstanding options for the six months ended March 31, 2011:

	Shares (in  thousands)		Weighted average exercise price per share
Options outstanding at September 30, 2009		—	$	—
Granted		609,927		2.82
Exercised		—		—
Forfeited		—		—
Options outstanding at September 30, 2010		609,927	$	2.82
Granted		315,000		2.82
Exercised		—		—
Forfeited		—		—
Options outstanding at December 31, 2010		924,927	$	2.82
Granted		900,000		2.82
Exercised		—		—
Forfeited		—		—
Options outstanding at March 31, 2011		1,824,927	$	2.82
Exercisable shares at March 31, 2011		152,482	$	2.82

The remaining unrecognized compensation expense at March 31, 2011 was $3,576 to be recognized over a weighted average period of 1.95 years.

F-46

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

(Dollars in thousands, except per share data)

(14)    Business Segments

The Company is comprised of two business segments: Manufacturing, which includes Latrobe and Latrobe Metals Europe, and Distribution, which includes Latrobe Distribution, Canada, and SSS. The Manufacturing segment’s process involves melting, remelting, treating and hot and cold rolling of semi-finished and finished specialty steels. The Distribution segment globally sources and distributes corrosion resistant steels and powder metals for a wide range of industries.

The segment data is as follows:

(dollars in thousands)	For the Six months ended March 31,
	2011			2010
Net sales:
Manufacturing	$	141,020		$	88,690
Distribution		70,047			49,301
Intersegment		(8,325	)		(5,072	)
Consolidated net sales	$	202,742		$	132,919
Operating Income (Loss):
Manufacturing	$	18,462		$	(27	)
Distribution		6,730			542
Intersegment		(440	)		788
Consolidated operating income (loss)	$	24,752		$	1,303
Interest expense and other financing costs, including loss on extinguishment of debt:
Manufacturing	$	7,278		$	6,574
Distribution		—			—
Total interest expense and other financing costs, including loss on extinguishment of debt	$	7,278		$	6,574
Other Expense:
Manufacturing	$	579		$	432
Distribution		84			58
Total other expense	$	663		$	490
	As of
	September 30, 2010			March 31, 2011
Total Assets:
Manufacturing	$	248,230			316,588
Distribution		89,917			92,631
Total assets	$	338,147			409,219

F-47

LATROBE SPECIALTY METALS, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements (Continued)

(Unaudited)

(Dollars in thousands, except per share data)

(15)    Net Income (Loss) Per Share

The following table sets forth the computation of basic and diluted net income (loss) per share for the six month periods ended March 31, 2011 and 2010 (shares in thousands):

	Six Months Ended 3/31/2011			Six Months Ended 3/31/2010
Numerator (basic and diluted):
Net Income (loss)	$	10,420		$	(3,572	)
Less: Preferred stock dividends (Series B)		(827	)		(54	)
Less: Income allocated to participating securities		(9,349	)		—
Net Income (loss) available to common stockholders for basic EPS	$	244		$	(3,626	)
Add back: Income allocated to participating securities		6,795			—
Net Income (loss) available to common stockholders for diluted EPS	$	7,019		$	(3,626	)
Denominator (basic):
Weighted average common shares outstanding		1,160			1,053
Denominator (diluted):
Weighted average common shares outstanding		1,160			1,053
Dilutive stock options		68			—
Common shares from Series A Preferred Stock Warrants		525			—
Common shares from Non-voting Common Stock Warrants		21			—
Common shares from Series A Preferred Stock		31,500			—
Net weighted average common shares outstanding		33,274			1,053
Net income (loss) per share attributable to holders of common stock:
Basic	$	0.21		$	(3.44	)
Diluted	$	0.21		$	(3.44	)

The following represents shares not included in the computation of diluted earnings per share because to do so would have been anti-dilutive (shares in thousands):

Series A Convertible Participating Preferred Stock	—	31,500
Series B Convertible Participating Preferred Stock	12,115	12,115
Restricted Stock	461	—
Stock Options	1,215	670
Series A Preferred Stock Warrants	—	3,499
Non-voting Common Stock Warrants	—	136
	13,791	47,920

F-48

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth the estimated expenses in connection with the issuance and distribution of the securities registered hereby, all of which will be paid by the Registrant:

SEC registration fee	$	20,318
Financial Industry Regulatory Authority, Inc. filing fee		*
Listing fee for the NYSE		*
Legal fees and expenses		*
Accounting fees and expenses		*
Printing and engraving expenses		*
Blue Sky fees and expenses		*
Transfer agent and registrar fees and expenses		*
Miscellaneous expenses		*
Total	$	*

* To be filed by amendment.

Item 14. Indemnification of Directors and Officers

We are a corporation organized under the laws of the State of Delaware. Section 145 of the Delaware General Corporate Law (the “DGCL”) permits a Delaware corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise. A corporation may indemnify against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding if the person indemnified acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation. In the case of an action or suit by or in the right of the corporation to procure a judgment in its favor, no indemnification may be made in respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware, or the court in which such action or suit was brought, shall determine upon application that, despite the adjudication of liability, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. Section 145 provides that, to the extent a present or former director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to above or in the defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith.

II-1

Our certificate of incorporation and by-laws contain provisions indemnifying our directors and officers to the fullest extent permitted by law. Among other things, these provisions generally provide indemnification for our directors and officers against liabilities for judgments in and settlements of lawsuits and other proceedings and for the advancement and payment of fees and expenses reasonably incurred by the director or officer in defense of any such lawsuit or proceeding if the director or officer acted in good faith and in a manner he or she reasonably believed to be in or not opposed to our best interests, and in certain cases only if the director or officer is not adjudged to be liable to us.

Section 102(b)(7) of the DGCL permits a Delaware corporation to include in its certificate of incorporation a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director: (i) For any breach of the director’s duty of loyalty to the corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under § 174 of this title; or (iv) for any transaction from which the director derived an improper personal benefit. Pursuant to authority conferred by Delaware law, our certificate of incorporation contains provisions providing that no director shall be liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent that such exemption from liability or limitation thereof is not permitted under Delaware law as then in effect or as it may be amended. This provision is intended to eliminate the risk that a director might incur personal liability to us or our stockholders for breach of the duty of care.

These provisions do not limit or eliminate our rights or those of any stockholder to seek non-monetary relief, such as an injunction or rescission, in the event of a breach of a director’s fiduciary duty. These provisions will not alter a director’s liability under federal securities laws.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors or officers pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

These provisions may have the practical effect in certain cases of eliminating the ability of our stockholders to collect monetary damages from our directors and officers.

Item 15. Recent Sales of Unregistered Securities

During the three years preceding the filing of this registration statement, the registrant has not sold its securities without registration under the Securities Act except as described below:

1. On January 26, 2010, we issued options to purchase 609,927 shares of common stock at an exercise price of $2.82 per share under the 2006 Equity Plan to certain members of our management.

2. On March 17, 2010, we issued 12,041,251 and 73,564 shares of Series B Preferred Stock to Toolrock and certain members of our management, respectively, for an aggregate purchase price of approximately $9.9 million and $60,000, respectively. In addition, we issued to Sankaty and RGIP, LLC warrants to purchase 135,566 shares of our common stock and warrants to purchase 3,498,889 shares of our Series A Preferred Stock as part of the issuance of $10.0 million of additional senior subordinated notes.

3. On November 2, 2010, we issued options to purchase 315,000 shares of common stock under the 2006 Equity Plan at a price of $2.82 per share to certain members of our management and other key employees.

4. On January 17, 2011, we issued 460,993 shares of common stock to B. Christopher DiSantis for an aggregate purchase price of approximately $1.3 million. From the issuance date until the first anniversary thereof, all of these shares are subject to our right to repurchase the shares at fair market value. On each subsequent anniversary date until the third anniversary date, the number of shares

II-2

subject to the repurchase right decreases by one-third. After the third anniversary date, no shares are subject to the repurchase right. In addition, we issued an option to purchase 900,000 shares of common stock at an exercise price of $2.82 to Mr. DiSantis. These options vest ratably over a four year period on the anniversary date of their grant. Mr. DiSantis is our President and Chief Executive Officer.

The sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(2) of the Securities Act or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions. All recipients had adequate access, through their relationships with Latrobe, to information about Latrobe.

Item 16. Exhibits and Financial Statement Schedules

Exhibit Number			Description
	1.1	*	Form of Underwriting Agreement.
	3.1	*	Amended and Restated Certificate of Incorporation of Latrobe Specialty Metals, Inc.
	3.2	*	Amended and Restated By-laws of Latrobe Specialty Metals, Inc.
	4.1	*	Form of Common Stock Certificate.
	5.1	*	Opinion of Weil, Gotshal & Manges LLP.
	10.1		Loan and Security Agreement, by and among Latrobe Steel Company and OH&R Special Steels Company as Borrowers and Toolrock Holding, Inc. as Guarantor dated March 6, 2008.
	10.2		Amendment No. 1 to Loan and Security Agreement and Consent, dated January 22, 2009.
	10.3		Waiver and Amendment No. 2 to Loan and Security Agreement, dated March 17, 2010.
	10.4		Amendment No. 3 to Loan and Security Agreement, dated July 30, 2010.
	10.5		Loan and Security Agreement, by and among Latrobe Steel Company, OH&R Special Steels Company and Specialty Steel Supply Inc. as Borrowers and Toolrock Holding, Inc. as Guarantor, dated July 30, 2010.
	10.6		Monitoring and Oversight Agreement, by and among Latrobe Steel Company, Toolrock Holding, Inc. and Hicks Holdings Operating LLC, dated as of December 8, 2006.
	10.7		Monitoring and Oversight Agreement, by and among Latrobe Steel Company, Toolrock Holding, Inc. and Watermill Management Company, LLC, dated as of December 8, 2006.
	10.8		Transaction Services Agreement, by and among Latrobe Steel Company, Toolrock Holding, Inc. and Hicks Holdings Operating LLC, dated as of March 6, 2008.
	10.9		Transaction Services Agreement, by and among Latrobe Steel Company, Toolrock Holding, Inc. and Watermill Management Company, LLC, dated as of March 6, 2008.
	10.10		Amended and Restated Registration Rights Agreement, by and among Toolrock Investment, LLC, Watermill-Toolrock Partners, L.P., Watermill-Toolrock Partners II, L.P., HHEP-Latrobe, L.P., Sankaty Credit Opportunities II, L.P., Prospect Harbor Credit Partners, L.P., Sankaty High Yield Partners, III, L.P. and RGIP, LLC, dated as of March 17, 2010.
	10.11	*	Bonus Plan.
	10.12		Employment Agreement, by and between Latrobe Steel Company and B. Christopher DiSantis, dated as of January 17, 2011.

II-3

Exhibit Number			Description
	10.13		Toolrock Holding, Inc. 2006 Employee, Director and Consultant Stock Plan.
	10.14		Amendment No. 1 to the Toolrock Holding, Inc. 2006 Employee, Director and Consultant Stock Plan.
	10.15		Form of Restricted Stock Agreement.
	10.16		Form of Incentive Stock Option Agreement.
	10.17		Form of Series A Preferred Stock Purchase Agreement.
	10.18		Form of Series B Preferred Stock Purchase Agreement.
	10.19		Securities Purchase Agreement, by and among Toolrock Investment, LLC, Toolrock Holding, Inc. and the purchasers named therein, dated as of March 17, 2010.
	10.20		Stock Purchase Agreement, by and among Toolrock Holding, Inc., Toolrock Investment, LLC and B. Christopher DiSantis, dated as of January 17, 2011.
	10.21		Stock Option Agreement, by and among Toolrock Holding, Inc., Toolrock Investment, LLC and B. Christopher DiSantis, dated as of January 17, 2011.
	10.22	*	Registration and Tag-Along Rights Agreement.
	21.1		List of Subsidiaries of Latrobe Specialty Metals, Inc.
	23.1		Consent of KPMG LLP.
	23.2	*	Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5.1)
	24.1		Power of Attorney (included on signature page).

* To be filed by amendment.

Item 17. Undertakings.

(a) The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(c) The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City Latrobe, State of Pennsylvania, on May 24, 2011.

LATROBE SPECIALTY METALS, INC.
By:	/S/    B. CHRISTOPHER DISANTIS
	B. Christopher DiSantis
	President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned constitutes and appoints each of B. Christopher DiSantis and Dale B. Mikus, each acting alone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for such person and in his name, place and stead, in any and all capacities, to sign this Registration Statement on Form S-1 (including all pre-effective and post-effective amendments and registration statements filed pursuant to Rule 462(b) under the Securities Act of 1933), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming that any such attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on May 24, 2011.

Signature	Title
/S/    B. CHRISTOPHER DISANTIS          B. Christopher DiSantis	President and Chief Executive Officer, and Director (Principal Executive Officer)
/S/    DALE B. MIKUS          Dale B. Mikus	Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
/S/    ROBERT W. ACKERMAN          Robert W. Ackerman	Director
/S/    THOMAS O. HICKS          Thomas O. Hicks	Director
/S/    STEVEN E. KAROL         Steven E. Karol	Director
/S/    ROBERT M. SWARTZ         Robert M. Swartz	Director

EXHIBIT LIST

Exhibit Number			Description
	1.1*		Form of Underwriting Agreement.
	3.1*		Amended and Restated Certificate of Incorporation of Latrobe Specialty Metals, Inc.
	3.2*		Amended and Restated By-laws of Latrobe Specialty Metals, Inc.
	4.1*		Form of Common Stock Certificate.
	5.1*		Opinion of Weil, Gotshal & Manges LLP.
	10.1		Loan and Security Agreement, by and among Latrobe Steel Company and OH&R Special Steels Company as Borrowers and Toolrock Holding, Inc. as Guarantor dated March 6, 2008.
	10.2		Amendment No. 1 to Loan and Security Agreement and Consent, dated January 22, 2009.
	10.3		Waiver and Amendment No. 2 to Loan and Security Agreement, dated March 17, 2010.
	10.4		Amendment No. 3 to Loan and Security Agreement, dated July 30, 2010.
	10.5		Loan and Security Agreement, by and among Latrobe Steel Company, OH&R Special Steels Company and Specialty Steel Supply Inc. as Borrowers and Toolrock Holding, Inc. as Guarantor, dated July 30, 2010.
	10.6		Monitoring and Oversight Agreement, by and among Latrobe Steel Company, Toolrock Holding, Inc. and Hicks Holdings Operating LLC, dated as of December 8, 2006.
	10.7		Monitoring and Oversight Agreement, by and among Latrobe Steel Company, Toolrock Holding, Inc. and Watermill Management Company, LLC, dated as of December 8, 2006.
	10.8		Transaction Services Agreement, by and among Latrobe Steel Company, Toolrock Holding, Inc. and Hicks Holdings Operating LLC, dated as of March 6, 2008.
	10.9		Transaction Services Agreement, by and among Latrobe Steel Company, Toolrock Holding, Inc. and Watermill Management Company, LLC, dated as of March 6, 2008.
	10.10		Amended and Restated Registration Rights Agreement, by and among Toolrock Investment, LLC, Watermill-Toolrock Partners, L.P., Watermill-Toolrock Partners II, L.P., HHEP-Latrobe, L.P., Sankaty Credit Opportunities II, L.P., Prospect Harbor Credit Partners, L.P., Sankaty High Yield Partners, III, L.P. and RGIP, LLC, dated as of March 17, 2010.
	10.11*		Bonus Plan.
	10.12		Employment Agreement, by and between Latrobe Steel Company and B. Christopher DiSantis, dated as of January 17, 2011.
	10.13		Toolrock Holding, Inc. 2006 Employee, Director and Consultant Stock Plan.
	10.14		Amendment No. 1 to the Toolrock Holding, Inc. 2006 Employee, Director and Consultant Stock Plan.
	10.15		Form of Restricted Stock Agreement.
	10.16		Form of Incentive Stock Option Agreement.
	10.17		Form of Series A Preferred Stock Purchase Agreement.
	10.18		Form of Series B Preferred Stock Purchase Agreement.
	10.19		Securities Purchase Agreement, by and among Toolrock Investment, LLC, Toolrock Holding, Inc. and the purchasers named therein, dated as of March 17, 2010.
	10.20		Stock Purchase Agreement, by and among Toolrock Holding, Inc., Toolrock Investment, LLC and B. Christopher DiSantis, dated as of January 17, 2011.
	10.21		Stock Option Agreement, by and among Toolrock Holding, Inc., Toolrock Investment, LLC and B. Christopher DiSantis, dated as of January 17, 2011.
	10.22	*	Registration and Tag-Along Rights Agreement.
	21.1		List of Subsidiaries of Latrobe Specialty Metals, Inc.
	23.1		Consent of KPMG LLP.
	23.2*		Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5.1)
	24.1		Power of Attorney (included on signature page).

* To be filed by amendment.

EX-10.1

Exhibit 10.1

[EXECUTION]

LOAN AND SECURITY AGREEMENT

by and among

LATROBE STEEL COMPANY

OH&R SPECIAL STEELS COMPANY

as Borrowers

and

TOOLROCK HOLDING, INC.

as Guarantor

THE LENDERS AND ISSUING BANK FROM TIME TO TIME PARTY HERETO

WACHOVIA BANK, NATIONAL ASSOCIATION

as Administrative Agent

WELLS FARGO FOOTHILL, LLC

as Syndication Agent

PNC BANK, NATIONAL ASSOCIATION

LASALLE BUSINESS CREDIT, LLC

RZB FINANCE LLC

as Co-Documentation Agents

WACHOVIA CAPITAL MARKETS, LLC

as Sole Lead Arranger, Manager and Bookrunner

Dated: March 6, 2008

TABLE OF CONTENTS

SECTION 1. DEFINITIONS	1
SECTION 2. CREDIT FACILITIES	38
2.1 Loans	38
2.2 Letters of Credit	40
2.3 Increase in Maximum Credit	43
2.4 Prepayments	45
2.5 Joint and Several Liability of Borrowers	46
2.6 Commitments	49
SECTION 3. INTEREST AND FEES	49
3.1 Interest	49
3.2 Fees	50
3.3 Changes in Laws and Increased Costs of Loans	52
SECTION 4. CONDITIONS PRECEDENT	54
4.1 Conditions Precedent to Initial Loans and Letters of Credit	54
4.2 Conditions Precedent to All Loans and Letters of Credit	57
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST	57
5.1 Grant of Security Interest	57
5.2 Perfection of Security Interests	59
5.3 Exclusions from Collateral	62
SECTION 6. COLLECTION AND ADMINISTRATION	63
6.1 Borrowers’ Loan Accounts	63
6.2 Statements	63
6.3 Collection of Accounts	63
6.4 Payments	64
6.5 Taxes	66
6.6 Authorization to Make Loans	69
6.7 Use of Proceeds	69
6.8 Appointment of Administrative Borrower as Agent for Requesting Loans and Receipts of Loans and Statements	70
6.9 Pro Rata Treatment	70
6.10 Sharing of Payments Etc.	70
6.11 Settlement Procedures	71
6.12 Obligations Several; Independent Nature of Lenders’ Rights	74
6.13 Bank Products	74
6.14 Promissory Notes	74

(i)

SECTION 7. COLLATERAL REPORTING AND COVENANTS	75
7.1 Collateral Reporting	75
7.2 Accounts Covenants	76
7.3 Inventory Covenants	77
7.4 Equipment and Real Property Covenants	78
7.5 Power of Attorney	79
7.6 Right to Cure	80
7.7 Access to Premises	80
SECTION 8. REPRESENTATIONS AND WARRANTIES	81
8.1 Corporate Existence, Power and Authority	81
8.2 Name; State of Organization; Chief Executive Office; Collateral Locations	81
8.3 Financial Statements; No Material Adverse Change	82
8.4 Priority of Liens; Title to Properties	82
8.5 Tax Returns	82
8.6 Litigation	83
8.7 Compliance with Other Agreements and Applicable Laws	83
8.8 Environmental Compliance	83
8.9 Employee Benefits	84
8.10 Bank Accounts	85
8.11 Intellectual Property	85
8.12 Subsidiaries; Affiliates; Capitalization; Solvency	86
8.13 Labor Disputes	86
8.14 Restrictions on Subsidiaries	87
8.15 Material Contracts	87
8.16 Payable Practices	87
8.17 No Material Adverse Change	87
8.18 Interrelated Business	87
8.19 Accuracy and Completeness of Information	87
8.20 Survival of Warranties; Cumulative	88
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS	88
9.1 Maintenance of Existence	88
9.2 New Collateral Locations	89
9.3 Compliance with Laws, Regulations, Etc.	89
9.4 Payment of Taxes and Claims	90
9.5 Insurance	90
9.6 Financial Statements and Other Information	91
9.7 Sale of Assets Consolidation, Merger, Dissolution, Etc.	93
9.8 Encumbrances	96
9.9 Indebtedness	98
9.10 Loans, Investments, Etc.	105
9.11 Dividends and Redemptions	107
9.12 Transactions with Affiliates	108
9.13 Compliance with ERISA	109

(ii)

9.14 End of Fiscal Years; Fiscal Quarters	110
9.15 Change in Business	110
9.16 Limitation of Restrictions Affecting Subsidiaries	110
9.17 Fixed Charge Coverage Ratio	110
9.18 Capital Expenditures	111
9.19 Minimum Excess Availability	112
9.20 Intentionally deleted	112
9.21 Designation of Designated Senior Debt	112
9.22 Foreign Assets Control Regulations, Etc.	112
9.23 After Acquired Real Property	112
9.24 Costs and Expenses	113
9.25 Further Assurances	113
SECTION 10. EVENTS OF DEFAULT AND REMEDIES	114
10.1 Events of Default	114
10.2 Remedies	115
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW	119
11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver	119
11.2 Waiver of Notices	120
11.3 Amendments and Waivers	120
11.4 Waiver of Counterclaims	123
11.5 Indemnification	123
11.6 Currency Indemnity	124
SECTION 12. THE AGENT	124
12.1 Appointment, Powers and Immunities	124
12.2 Reliance by Agent	125
12.3 Events of Default	125
12.4 Wachovia in its Individual Capacity	126
12.5 Indemnification	126
12.6 Non-Reliance on Agent and Other Lenders	126
12.7 Failure to Act	127
12.8 Additional Loans	127
12.9 Concerning the Collateral and the Related Financing Agreements	127
12.10 Field Audit, Examination Reports and other Information; Disclaimer by Lenders	128
12.11 Collateral Matters	128
12.12 Agency for Perfection	130
12.13 Successor Agent	130
12.14 Legal Representation of Agent	131
12.15 Other Agent Designations	131

(iii)

SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS	132
13.1 Term	132
13.2 Interpretative Provisions	133
13.3 Notices	135
13.4 Partial Invalidity	136
13.5 Confidentiality	136
13.6 Successors	137
13.7 Assignments; Participations	138
13.8 Entire Agreement	140
13.9 USA Patriot Act	140
13.10 Counterparts, Etc.	140

(iv)

INDEX

TO

EXHIBITS AND SCHEDULES

Exhibit A	Form of Assignment and Acceptance
Exhibit B	Form of Borrowing Base Certificate
Exhibit C	Information Certificate
Exhibit D	Form of Compliance Certificate
Exhibit E	Commitments
Exhibit F	Form of Revolving Note
Schedule 1.42	Equity Investors
Schedule 1.51	Existing Lenders
Schedule 1.52	Existing Letters of Credit
Schedule 1.59	Freight Forwarders
Schedule 1.106	Permitted Holders
Schedule 9.7	Assets Permitted to be Sold
Schedule 9.8(k)	Certain Equipment Subject to Liens

(v)

LOAN AND SECURITY AGREEMENT

This Loan and Security Agreement dated March 6, 2008 is entered into by and among Latrobe Steel Company, a Pennsylvania corporation (“Latrobe”), and OH&R Special Steels Company, a Delaware corporation (“OH&R”, and together with Latrobe, each individually a “Borrower” and collectively, “Borrowers” as hereinafter further defined), Toolrock Holding, Inc., a Delaware corporation (“Parent”, sometimes individually referred to herein as a “Guarantor” and collectively, “Guarantors” as hereinafter further defined), the parties hereto from time to time as lenders, whether by execution of this Agreement or an Assignment and Acceptance (each individually, a “Lender” and collectively, “Lenders” as hereinafter further defined), Wachovia Bank, National Association, a national banking association, in its capacity as agent for Lenders (in such capacity, “Agent” as hereinafter further defined), Wells Fargo Foothill, LLC, as Syndication Agent, and LaSalle Business Credit, LLC , PNC Bank, National Association, and RZB Finance LLC, each as a Co-Documentation Agent.

W I T N E S S E T H:

WHEREAS, Borrowers and Guarantors have requested that Agent and Lenders enter into financing arrangements with Borrowers pursuant to which Lenders may make loans and provide other financial accommodations to Borrowers; and

WHEREAS, each Lender is willing to agree (severally and not jointly) to make such loans and provide such financial accommodations to Borrowers on a pro rata basis according to its Commitment (as defined below) on the terms and conditions set forth herein and Agent is willing to act as agent for Lenders on the terms and conditions set forth herein and the other Financing Agreements;

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

SECTION 1. DEFINITIONS

For purposes of this Agreement, the following terms shall have the respective meanings given to them below:

1.1 “Accounts” shall mean, as to each Borrower and Guarantor, all present and future rights of such Borrower and Guarantor to payment of a monetary obligation, whether or not earned by performance, which is not evidenced by chattel paper or an instrument, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a secondary obligation incurred or to be incurred, or (d) arising out of the use of a credit or charge card or information contained on or for use with the card.

1.2 “Adjusted Eurodollar Rate” shall mean, with respect to each Interest Period for any Eurodollar Rate Loan comprising part of the same borrowing (including conversions, extensions and renewals), the rate per annum determined by dividing (a) the London Interbank Offered Rate for such Interest Period by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve

Percentage. For purposes hereof, “Reserve Percentage” shall mean for any day, that percentage (expressed as a decimal) which is in effect from time to time under Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as such regulation may be amended from time to time or any successor regulation, as the maximum reserve requirement (including, without limitation, any basic, supplemental, emergency, special, or marginal reserves) applicable with respect to Eurocurrency liabilities as that term is defined in Regulation D (or against any other category of liabilities that includes deposits by reference to which the interest rate of Eurodollar Loans is determined), whether or not any Lender has any Eurocurrency liabilities subject to such reserve requirement at that time. Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credits for proration, exceptions or offsets that may be available from time to time to a Lender. The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Percentage.

1.3 “Administrative Borrower” shall mean Latrobe, in its capacity as Administrative Borrower on behalf of itself and the other Borrowers pursuant to Section 6.8 hereof and it successors and assigns in such capacity.

1.4 “Affiliate” shall mean, with respect to a specified Person, any other Person which directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes (a) any Person which beneficially owns or holds ten (10%) percent or more of any class of Voting Stock of such Person or other equity interests in such Person, (b) any Person of which such Person beneficially owns or holds ten (10%) percent or more of any class of Voting Stock or in which such Person beneficially owns or holds ten (10%) percent or more of the equity interests and (c) any director or executive officer of such Person. For the purposes of this definition, the term “control” (including with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by agreement or otherwise.

1.5 “Agent” shall mean Wachovia Bank, National Association, in its capacity as agent on behalf of Lenders pursuant to the terms hereof and any replacement or successor agent hereunder.

1.6 “Agent Payment Account” shall mean account no. 01459670001944 of Agent at Wachovia, ABA Number: 053 000 219, Account Name: Agency Svcs Synd Clearing, Payment Details: Latrobe Steel or such other account of Agent as Agent may from time to time designate to Administrative Borrower as the Agent Payment Account for purposes of this Agreement and the other Financing Agreements.

1.7 “Applicable Margin” shall mean with respect to Base Rate Loans (other than Tranche B Loans) and Eurodollar Rate Loans (other than Tranche B Loans), the applicable percentage (on a per annum basis) set forth below based on the Quarterly Average Excess Availability for the immediately preceding calendar quarter:

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Tier	Quarterly Average Excess Availability	Applicable Margin for Eurodollar Rate Loans			Applicable Margin for Base Rate Loans
1	Greater than $100,000,000		1.50	%		.25	%
2	Less than or equal to $100,000,000 and greater than $60,000,000		1.75	%		.50	%
3	Less than or equal to $60,000,000 and greater than $20,000,000		2.00	%		.75	%
4	Less than or equal to $20,000,000		2.25	%		1.00	%

provided, that, (i) the Applicable Margin for Revolving Loans other than the Tranche B Loans shall be calculated and established once each calendar quarter and shall remain in effect until adjusted for the next calendar quarter, (ii) each adjustment of the Applicable Margin shall be effective as of the first day of a calendar quarter based on the Quarterly Average Excess Availability for the immediately preceding calendar quarter, and (iii) the Applicable Margin for Revolving Loans other than Tranche B Loans through August 31, 2008 shall be the amount for Tier 3 set forth above; provided, that, in the event that a Qualified Public Offering shall be completed on or prior to May 15, 2008, the applicable percentage shall be adjusted, on June 1, 2008 as provided in clause (ii) above. The Applicable Margin for Tranche B Loans that are Eurodollar Rate Loans shall be two and three-quarters (2.75%) percent and the Applicable Margin for Tranche B Loans that are Base Rate Loans shall be one and one-quarter (1.25%) percent. In the event that at any time after the end of a calendar quarter the Quarterly Average Excess Availability for such calendar quarter used for the determination of the Applicable Margin was less than the actual amount of the Quarterly Average Excess Availability for such calendar quarter as a result of the inaccuracy of information provided by or on behalf of Borrowers to Agent for the calculation of Excess Availability, the Applicable Margin for such prior calendar quarter shall be adjusted to the applicable percentage based on such actual Quarterly Average Excess Availability and any additional interest for the applicable period as a result of such recalculation shall be promptly paid to Agent. The foregoing shall not be construed to limit the rights of Agent and Lenders with respect to the amount of interest payable after an Event of Default whether based on such recalculated percentage or otherwise.

1.8 “Assignment and Acceptance” shall mean an Assignment and Acceptance substantially in the form of Exhibit A attached hereto (with blanks appropriately completed) delivered to Agent in connection with an assignment of a Lender’s interest hereunder in accordance with the provisions of Section 13.7 hereof.

1.9 “Bank Product Provider” shall mean (a) Agent, any Lender (other than a Sponsor Affiliated Lender) or Affiliate of Agent or Lender that provides any Bank Product to Borrowers or Guarantors; provided, that, an Affiliate of any Lender or Agent shall only be deemed a Bank Product Provider if such Person was an Affiliate of a Lender or Agent at the time the Bank Product was provided and with respect to such Bank Product, and (b) any other financial institution designated by Administrative Borrower and approved by Agent.

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1.10 “Bank Products” shall mean any one or more of the following types or services or facilities provided to a Borrower or Guarantor by Agent or a Bank Product Provider: (a) credit cards or stored value cards or the processing of payments and other administrative services with respect to credit cards or stored value cards, or (b) cash management or related services, including (i) the automated clearinghouse transfer of funds for the account of a Borrower pursuant to agreement or overdraft for any accounts of Borrowers maintained at Agent or any Bank Product Provider that are subject to the control of Agent pursuant to any Deposit Account Control Agreement to which Agent, such Affiliate of Agent, Lender or Affiliate of Lender is a party, as applicable, and (ii) controlled disbursement services, and (iii) Hedge Agreements that are in effect as of the date hereof between any Borrower or Guarantor and a Bank Product Provider, or are entered into by any Borrower or Guarantor on or after the date hereof with a counterparty that is a Bank Product Provider, in each case subject to the satisfaction of the conditions set forth in Section 1.97(b)(i) hereof.

1.11 “Base Rate” shall mean, on any date, the greater of (a) the rate from time to time publicly announced by Wachovia, or its successors, as its prime rate, whether or not such announced rate is the best rate available at such bank or (b) the Federal Funds Rate in effect on such day plus one-half (1/2%) percent.

1.12 “Base Rate Loans” shall mean any Loans or portion thereof on which interest is payable based on the Base Rate in accordance with the terms thereof. All Swing Line Loans shall be Base Rate Loans.

1.13 “Blocked Accounts” shall have the meaning set forth in Section 6.3 hereof.

1.14 “Borrowers” shall mean, collectively, the following (together with their respective successors and assigns): (a) Latrobe Steel Company, a Pennsylvania corporation; (b) OH&R Special Steels Company, a Delaware corporation; and (c) any other Person that at any time after the date hereof becomes a Borrower; each sometimes being referred to herein individually as a “Borrower”.

1.15 “Borrowing Base” shall mean, collectively, the Tranche A Borrowing Base and the Tranche B Borrowing Base.

1.16 “Borrowing Base Certificate” shall mean a certificate substantially in the form of Exhibit B hereto, as such format, subject to the terms hereof, may from time to time be modified by Agent, which is duly completed (including all schedules thereto) and executed by the chief executive officer, chief financial officer or other appropriate financial officer of Administrative Borrower reasonably acceptable to Agent.

1.17 “Business Day” shall mean any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required to close under the laws of the State of New York or the State of North Carolina or the Commonwealth of Pennsylvania, and a day on which Agent is open for the transaction of business, except that if a determination of a Business Day shall relate to any Eurodollar Rate Loans, the term Business Day shall also exclude any day on which banks are closed for dealings in dollar deposits in the London interbank market or other applicable Eurodollar Rate market.

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1.18 “Capital Expenditures” means all payments or accruals (including Capital Lease Obligations) for any fixed assets or improvements or for replacements, substitutions or additions thereto, that have a useful life of more than one year and that are required to be capitalized under GAAP.

1.19 “Capital Leases” shall mean, as applied to any Person, any lease of (or any agreement conveying the right to use) any property (whether real, personal or mixed) by such Person as lessee which in accordance with GAAP, is required to be reflected as a liability on the balance sheet of such Person.

1.20 “Capital Stock” shall mean, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of such Person’s capital stock or partnership, limited liability company or other equity interests at any time outstanding, and any and all rights, warrants or options exchangeable for or convertible into such capital stock or other interests (but excluding any debt security that is exchangeable for or convertible into such capital stock).

1.21 “Cash Dominion Event” shall mean either (a) an Event of Default shall have occurred and be continuing, or (b) Excess Availability shall at any time be less than the amount equal to ten (10%) percent of the Maximum Credit.

1.22 “Cash Equivalents” shall mean, at any time, (a) any evidence of Indebtedness with a maturity date of ninety (90) days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof; provided, that, the full faith and credit of the United States of America is pledged in support thereof; (b) certificates of deposit or bankers’ acceptances with a maturity of ninety (90) days or less of any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $1,000,000,000; (c) commercial paper (including variable rate demand notes) with a maturity of ninety (90) days or less issued by a corporation (except an Affiliate of any Borrower or Guarantor) organized under the laws of any State of the United States of America or the District of Columbia and rated at least A-I by Standard & Poor’s Ratings Service, a division of The McGraw-Hill Companies, Inc. or at least P-I by Moody’s Investors Service, Inc.; (d) repurchase obligations with a term of not more than thirty (30) days for underlying securities of the types described in clause (a) above entered into with any financial institution having combined capital and surplus and undivided profits of not less than $1,000,000,000; (e) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by any governmental agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within ninety (90) days or less from the date of acquisition; provided, that, the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985; and (f) investments in money market funds and mutual funds which invest substantially all of their assets in securities of the types described in clauses (a) through (e) above.

1.23 “Change of Control” shall mean (a) after a Qualified Public Offering, the acquisition by any Person or group (as such term is used in Section 13(d)(3) of the Exchange

5

Act), except for one or more Permitted Holders or their Affiliates, of beneficial ownership (as determined in accordance with Rules 13d-3 and 13d-5 under the Exchange Act, except that a person will be deemed to have beneficial ownership of all shares that such person has the right to acquire, whether such right is exercisable immediately or only after a passage of time), directly or indirectly, of more than thirty five (35%) percent of the voting power of the total outstanding Voting Stock (on a fully diluted basis) of Parent or the Board of Directors of Parent; (b) during any period of two (2) consecutive years, individuals who at the beginning of such period constituted the Board of Directors of Parent (together with any new directors who have been appointed by any Permitted Holder or any of their Affiliates, or whose nomination for election by the stockholders of Parent, as the case may be, was approved by a vote of at least fifty (50%) percent of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of Parent then still in office; (c) prior to a Qualified Public Offering, the failure of the Permitted Holders to own, collectively, directly or indirectly more than fifty (50%) percent of the voting power of the total outstanding Voting Stock of Parent; (d) the failure of Parent to own directly or indirectly one hundred (100%) percent of the voting power of the total outstanding Voting Stock of any Borrower or Guarantor other than Parent (exclusive of director qualifying shares and other equity interests required by law to be held by an Affiliate); or (e) the occurrence of any “change in control” (or similar term) as defined in the Mezzanine Note Documents or the Qualified Debt Offering Documents.

1.24 “Code” shall mean the Internal Revenue Code of 1986, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all applicable regulations and interpretations thereunder or related thereto.

1.25 “Collateral” shall have the meaning set forth in Section 5 hereof.

1.26 “Collateral Access Agreement” shall mean an agreement in writing, in form and substance reasonably satisfactory to Agent, from any lessor of premises to any Borrower or Guarantor, or any other person to whom any Collateral is consigned or who has custody, control or possession of any such Collateral or is otherwise the owner or operator of any premises on which any of such Collateral is located, in favor of Agent with respect to the Collateral at such premises or otherwise in the custody, control or possession of such lessor, consignee or other person.

1.27 “Commitments” shall mean, collectively, the Tranche A Commitments and the Tranche B Commitments; sometimes being individually referred to herein as a “Commitment”.

1.28 “Consolidated Net Income” shall mean, with respect to any Person, for any period, the aggregate of the net income (loss) of such Person and its Subsidiaries, on a consolidated basis, for such period, all as determined in accordance with GAAP; provided, that, (a) the net income of any Person that is not a majority-owned Subsidiary shall be included only to the extent of the amount of dividends or distributions paid or payable to such Person or a majority-owned Subsidiary of such Person; and (b) the net income (if positive) of any majority-owned Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such majority-owned Subsidiary to such Person or to any other majority-owned Subsidiary of such Person is not at the time permitted by operation of the terms of its charter or any agreement,

6

instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such majority-owned Subsidiary shall be excluded.

1.29 “Control Notice” shall mean a written notice delivered pursuant to a Deposit Account Control Agreement instructing the depository bank to comply with instructions originated by Agent with respect to the deposit account that is covered thereby without further consent of any Borrower or any Guarantor.

1.30 “Controlling Parent” shall mean Toolrock Investment, LLC, a Delaware limited liability company, and its successors or assigns or any newly formed entity (formed pursuant to and in accordance with Section 9.10(j) hereof) that owns the majority of the Capital Stock of Parent.

1.31 “Credit Facility” shall mean the Loans and Letters of Credit provided to or for the benefit of any Borrower pursuant to Sections 2.1 and 2.2 hereof.

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

1.33 “Defaulting Lender” shall have the meaning set forth in Section 6.11 hereof.

1.34 “Deposit Account Control Agreement” shall mean an agreement in writing, in form and substance reasonably satisfactory to Agent (and if applicable, Mezzanine Note Agent or the Qualified Debt Agent), by and among Agent, the Borrower or Guarantor with respect to a deposit account at any bank and the bank at which such deposit account is at any time maintained, which provides, among other things, that such bank will comply with instructions originated by Agent after delivery of a Control Notice.

1.35 “EBITDA” shall mean, as to any Person, with respect to any period, an amount equal to: (a) the Consolidated Net Income of such Person and its Subsidiaries for such period, plus (b) the sum of, in each case to the extent included in the calculation of such Consolidated Net Income, but without duplication: (i) Interest Expense (net of interest income); (ii) the provision for and payment of (without duplication) federal, state, local and foreign income tax; (iii) depreciation expense; (iv) amortization expense (including non-cash amortization of debt discount or deferred transaction and financing costs); (v) letter of credit fees payable pursuant to Section 3.2(a) hereof; (vi) to the extent covered by insurance under which the insurer has been properly notified and has not denied or contested coverage, expenses with respect to liability or casualty events or business interruption to the extent such Person and its Subsidiaries have been reimbursed in cash by such insurer during the same period; (vii) the aggregate amount of all other non-cash items including, non-cash charges related to stock compensation expense, non-cash adjustments in respect of purchase price accounting and non-cash deductions attributable to minority equity interests of such Person and its Subsidiaries (other than any non-cash charge that results in an accrual of a reserve for cash charges in any future period); (viii) non-recurring cash items incurred during such period as determined in accordance with GAAP in an aggregate amount not to exceed $3,000,000 during any consecutive twelve (12) month period, which include, (A) extraordinary non recurring one time charges in accordance with GAAP and extraordinary non-recurring one time cash expenses and (B) earn-outs and similar contingent

7

payments in connection with Permitted Acquisitions and investments permitted under Section 9.10 hereof; (ix) cash equity contributions made pursuant to Section 9.17(b) and (c) hereof, subject to the limits set forth in Section 9.17 hereof; less (c) the sum of, in each case to the extent included in the calculation of such Consolidated Net Income, but without duplication: (i) extraordinary gains and non-recurring gains; (ii) non-cash gains (excluding any such non-cash gain to the extent it represents the reversal of an accrual or reserve for potential cash item in any prior period); (iii) gains on asset sales (other than asset sales in the ordinary course of business); and (iv) any net after-tax income from the early extinguishment of debt or hedging obligations or other derivative instruments.

1.36 “Eligible Accounts” shall mean Accounts created by a Borrower that in each case satisfy the criteria set forth below:

(a) such Accounts arise from the actual and bona fide sale and delivery of goods by such Borrower or rendition of services by such Borrower in the ordinary course of its business which transactions are completed in accordance with the terms and provisions contained in any documents related thereto;

(b) such Accounts are not unpaid more than the earlier of sixty (60) days after the original due date thereof or more than ninety (90) days after the date of the original invoice for them;

(c) such Accounts comply with the terms and conditions contained in Section 7.2(b) hereof;

(d) such Accounts do not arise from sales on consignment, guaranteed sale, sale and return, sale on approval, or other terms under which payment by the account debtor may be conditional or contingent;

(e) the chief executive office of the account debtor with respect to such Accounts is located in the United States of America or Canada (or such other jurisdiction as Agent may obtain valid, enforceable and perfected security interests and liens under the laws of such other jurisdiction giving Agent such rights, remedies, priorities and benefits as Agent determines are substantially comparable to the rights, remedies, priorities and benefits as Agent would have as the holder of a first priority, valid and enforceable perfected security interest in Accounts under the laws of the State of New York and the United States, and as to which Agent has received evidence, in form and substance reasonably satisfactory to it, that it has obtained such an interest in Accounts of such Borrower owing by Account Debtors located in such jurisdiction; such Eligible Accounts being referred to herein as “Foreign Accounts”) or, at Agent’s option, if the chief executive office and principal place of business of the account debtor with respect to such Accounts is located other than in the United States of America, or Canada, then if: (i) the account debtor has delivered to such Borrower an irrevocable letter of credit issued or confirmed by a bank reasonably satisfactory to Agent and payable only in the United States of America and in U.S. dollars, sufficient to cover such Account, in form and substance reasonably satisfactory to Agent and if required by Agent, the original of such letter of credit has been delivered to Agent or Agent’s agent and the issuer thereof, and such Borrower has complied with the terms of Section 5.2(f) hereof with respect to the assignment of the proceeds of such

8

letter of credit to Agent or naming Agent as transferee beneficiary thereunder, as Agent may specify, or (ii) such Account is subject to credit insurance payable to Agent issued by an insurer and on terms and in an amount reasonably acceptable to Agent, or (iii) such Account is otherwise acceptable in all respects to Agent in its sole discretion (subject to such lending formula with respect thereto as Agent may determine);

(f) such Accounts do not consist of progress billings (such that the obligation of the account debtors with respect to such Accounts is conditioned upon such Borrower’s completion of any further performance under the agreement giving rise thereto), bill and hold invoices or retainage invoices, except as to bill and hold invoices, if Agent shall have received an agreement in writing from the account debtor, in form and substance reasonably satisfactory to Agent, confirming the unconditional obligation of the account debtor to take the goods related thereto and pay such invoice;

(g) the account debtor with respect to such Accounts has not asserted a counterclaim, defense or dispute and is not owed or does not claim to be owed any amounts that may give rise to any right of setoff or recoupment against such Accounts (but the portion of the Accounts of such account debtor in excess of the amount at any time and from time to time owed by such Borrower to such account debtor or claimed owed by such account debtor may be deemed Eligible Accounts);

(h) intentionally deleted;

(i) such Accounts are subject to the first priority, valid and perfected security interest of Agent and any goods giving rise thereto are not, and were not at the time of the sale thereof, subject to any liens except those permitted in this Agreement that are subject to an intercreditor agreement in form and substance reasonably satisfactory to Agent between the holder of such security interest or lien and Agent;

(j) neither the account debtor nor any officer or employee of the account debtor with respect to such Accounts is an officer, employee, agent or other Affiliate of any Borrower or Guarantor(except to the extent such Affiliate is a Sponsor Portfolio Company which owes such Account in the ordinary course of business and on an arms-length basis);

(k) the account debtors with respect to such Accounts are not any foreign government, the United States of America, any State, political subdivision, department, agency or instrumentality thereof, unless, if the account debtor is the United States of America, any State, political subdivision, department, agency or instrumentality thereof, upon Agent’s request, the Federal Assignment of Claims Act of 1940, as amended or any similar State or local law, if applicable, has been complied with in a manner satisfactory to Agent;

(l) there are no proceedings or actions threatened or pending against the account debtors with respect to such Accounts which could reasonably be expected to result in any material adverse change in any such account debtor’s financial condition (including, without limitation, any bankruptcy, dissolution, liquidation, reorganization or other similar proceeding);

(m) the aggregate amount of such Accounts owing by a single account debtor do not constitute more than twenty (20%) percent of the aggregate amount of all

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otherwise Eligible Accounts (but the portion of the Accounts not in excess of the applicable percentages may be deemed Eligible Accounts);

(n) such Accounts are not owed by an account debtor who has Accounts unpaid more than the earlier of sixty (60) days after the original due date thereof or more than ninety (90) days after the date of the original invoice date for them which constitute more than fifty (50%) percent of the total Accounts of such account debtor;

(o) the account debtor is not located in a state requiring the filing of a Notice of Business Activities Report or similar report in order to permit such Borrower to seek judicial enforcement in such State of payment of such Account, unless such Borrower has qualified to do business in such state or has filed a Notice of Business Activities Report or equivalent report for the then current year or such failure to file and inability to seek judicial enforcement is capable of being remedied without any material delay or material cost;

(p) such Accounts are owed by account debtors whose total indebtedness to such Borrower does not exceed the credit limit with respect to such account debtors as determined by such Borrower from time to time, to the extent such credit limit as to any account debtor is established consistent with the current practices of such Borrower as of the date hereof (but the portion of the Accounts not in excess of such credit limit may be deemed Eligible Accounts);

(q) such Accounts are owed and payable in US Dollars; and

(r) such Accounts are not Accounts that could reasonably be expected to be unpaid by reason of the account debtor’s inability to pay.

The criteria for Eligible Accounts set forth above may only be changed and any new criteria for Eligible Accounts may only be established by Agent in its Permitted Discretion based on either: (i) an event, condition or other circumstance arising after the date hereof, or (ii) an event, condition or other circumstance existing on the date hereof to the extent Agent has no written notice thereof from a Borrower prior to the date hereof, in either case under clause (i) or (ii) which adversely affects or could reasonably be expected to adversely affect the Accounts in the good faith determination of Agent, with such changes to be effective two (2) Business Days after delivery of notice thereof to the Administrative Borrower. Any Accounts that are not Eligible Accounts shall nevertheless be part of the Collateral. Agent shall consider when exercising its Permitted Discretion as set forth above, whether any collateral report or financial information delivered by any Borrower or Guarantor to Agent is incomplete, inaccurate or misleading in any material respect and/or the event, condition or other circumstance could reasonably be expected to adversely affect the value of any Eligible Accounts (including any applicable law that could reasonably be expected to inhibit collection of an Account) or the enforceability or priority of the Agent’s Liens thereon or the amount that Agent and Lenders would be reasonably likely to receive in payment of such otherwise Eligible Account.

1.37 “Eligible In-Transit Inventory” shall mean Eligible Inventory owned by Borrowers that otherwise satisfies the criteria for Eligible Inventory set forth herein but is located outside of the United States of America and which is in transit to either the premises of a Freight

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Forwarder in the United States of America or the premises of Borrowers in the United States of America which are either owned and controlled by Borrowers or leased by a Borrower (but only if Agent has received a Collateral Access Agreement duly authorized, executed and delivered by such Freight Forwarder or the owner and lessor of such leased premises, as the case may be), provided, that,

(a) Agent has a first priority perfected security interest in and lien upon such Inventory and all documents of title with respect thereto,

(b) such Inventory either (i) is the subject of a negotiable bill of lading (A) that is consigned to Agent (either directly or by means of endorsements), (B) that was issued by the carrier respecting such Inventory that is subject to such bill of lading, and (C) that is in the possession of Agent or the Freight Forwarder handling the importing, shipping and delivery of such Inventory, in all cases, acting on Agent’s behalf subject to a Collateral Access Agreement duly authorized, executed and delivered by such Freight Forwarder, or (ii) is the subject of a cargo receipt and such cargo receipt was issued by a consolidator respecting such Inventory and is either (A) consigned to Agent (either directly or by means of endorsements), or (B) is in the possession of Agent or the Freight Forwarder handling the importing, shipping and delivery of such Inventory, in all cases, acting on Agent’s behalf subject to a Collateral Access Agreement duly authorized, executed and delivered by such Freight Forwarder,

(c) Borrowers have title to such Inventory, and Agent shall have received such evidence thereof as it may from time to time require,

(d) Agent shall have received a Collateral Access Agreement, duly authorized, executed and delivered by the Freight Forwarder located in the United States of America handling the importing, shipping and delivery of such Inventory,

(e) such Inventory is insured against types of loss, damage, hazards, and risks, and in amounts, satisfactory to Agent in its discretion, and Agent shall have received a copy of the certificate of marine cargo insurance in connection therewith in which Agent for the benefit of Agent and Lenders has been named as an additional insured and loss payee in a manner acceptable to Agent,

(f) Agent shall have received (i) a certificate duly executed and delivered by an officer of Borrowers certifying to Agent that, to the best of the knowledge of Borrowers, such Inventory meets all of Borrowers’ representations and warranties contained herein concerning Eligible Inventory and that the shipment as evidenced by the documents conforms to the related order documents, and (ii) upon Agent’s request, a copy of the invoice, packing slip and manifest with respect thereto,

(g) such Inventory is not subject to a Letter of Credit,

(h) such Inventory shall not have been in transit for more than sixty (60) days,

(i) Borrowers shall cause all bills of lading or other documents of title relating to goods purchased by such Borrower which are outside the United States of America and in transit to the premises of such Borrower or the premises of a Freight Forwarder in the United States of

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America (i) to be issued in a form so as to constitute negotiable documents as such term is defined in the Uniform Commercial Code and (ii) other than those relating to goods being purchased pursuant to a Letter of Credit, to be issued either to the order of Agent or such other person as Agent may from time to time designate for such purpose as consignee or such Borrower as consignee, as Agent may specify, and

(j) there shall be no more than three (3) originals of any bills of lading and other documents of title relating to goods being purchased by any Borrower which are outside the United States of America and in transit to the premises of a Borrower or the premises of a Freight Forwarder in the United States of America, and as to any such bills of lading or other documents of title, unless and until Agent shall direct otherwise, (i) two (2) originals of each of such bill of lading or other document of title shall be delivered to such Freight Forwarder as the applicable Borrower may specify and that is party to a Collateral Access Agreement and (ii) one (1) original of each such bill of lading or other document of title shall be delivered to Agent, if Agent so requests.

1.38 “Eligible Inventory” shall mean, as to each Borrower, Inventory of such Borrower consisting of finished goods held for resale in the ordinary course of the business of such Borrower, work -in-process and raw materials for such finished goods, that in each case satisfy the criteria set forth below. Eligible Inventory shall not include: (a) components which are not part of finished goods; (b) spare parts for equipment; (c) packaging and shipping materials; (d) supplies used or consumed in such Borrower’s business; (e) Inventory at premises other than those owned by any Borrower or Guarantor; unless, (i) as to all locations leased by any Borrower, Agent shall have received a Collateral Access Agreement from the owner and lessor with respect to such location, duly authorized, executed and delivered by such owner and lessor or established a Reserve pursuant to Section 1.122(v) hereof, and (ii) as to locations owned and operated by a person other than a Borrower or Guarantor, Agent shall have received a Collateral Access Agreement from the owner and operator with respect to such location, duly authorized, executed and delivered by such owner and operator or established a Reserve pursuant to Section 1.122(v) hereof; provided, that, in addition, if requested by Agent, in order for such Inventory at locations owned and operated by a third person to be Eligible Inventory, Agent shall have received: (A) UCC financing statements between the owner and operator, as consignee or bailee and such Borrower, as consignor or bailor, in form and substance satisfactory to Agent, which are duly assigned to Agent and (B) a written notice to any lender to the owner and operator of the first priority security interest in such Inventory of Agent; provided, that, in the event that Inventory is moved from one location to another location for which Agent has not received an acceptable Collateral Access Agreement, such Inventory, having a value not in excess of $250,000, shall be considered Eligible Inventory (so long as all of the other criteria and conditions to Inventory being considered Eligible Inventory are met) unless Agent does not receive a Collateral Access Agreement acceptable to Agent with respect to such location where such Inventory has been moved within sixty (60) days from the date that such Inventory is first moved; (f) Inventory subject to a security interest or lien in favor of any Person other than Agent except those permitted in this Agreement that are subject to an intercreditor agreement in form and substance reasonably satisfactory to Agent between the holder of such security interest or lien and Agent; (g) bill and hold goods; (h) unserviceable or obsolete Inventory; (i) Inventory that is not subject to the first priority, valid and perfected security interest of Agent; (j) returned, damaged and/or defective Inventory; (k) Inventory purchased or sold on consignment unless with

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respect to Inventory sold on consignment, the conditions set forth in clause (e)(ii) are satisfied, and (1) Inventory located outside the United States of America unless such Inventory is Eligible In-Transit Inventory. The criteria for Eligible Inventory set forth above may only be changed and any new criteria for Eligible Inventory may only be established by Agent in its Permitted Discretion based on either: (i) an event, condition or other circumstance arising after the date hereof, or (ii) an event, condition or other circumstance existing on the date hereof to the extent Agent has no written notice thereof from a Borrower prior to the date hereof, in either case under clause (i) or (ii) which adversely affects or could reasonably be expected to adversely affect the Inventory in the good faith determination of Agent with such changes to be effective two (2) Business Days after delivery of notice thereof to the Administrative Borrower. Any Inventory that is not Eligible Inventory shall nevertheless be part of the Collateral. Agent shall consider when exercising its Permitted Discretion as set forth above, whether any collateral report or financial information delivered by any Borrower or Guarantor to Agent is incomplete, inaccurate or misleading in any material respect and/or the event, condition or other circumstance could reasonably be expected to adversely affect the value of such Eligible Inventory, the enforceability or priority of the Agent’s Liens thereon or any portion thereof, or the amount that Agent and Lenders would be reasonably likely to receive in the sale or other disposition of such otherwise Eligible Inventory.

1.39 “Eligible Transferee” shall mean (a) any Lender; (b) the parent company of any Lender and/or any Affiliate of such Lender which is at least fifty (50%) percent owned by such Lender or its parent company; (c) any person (whether a corporation, partnership, trust or otherwise) that is engaged in the business of making, purchasing, holding or otherwise investing in bank revolving loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or with respect to any Lender that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank revolving loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor, and in each case is approved by Agent; and (d) any other commercial bank, financial institution or “accredited investor” (as defined in Regulation D under the Securities Act of 1933) approved by Agent, provided, that, (1) so long as no Default or Event of Default shall have occurred and be continuing, Administrative Borrower shall have the right to approve assignments to Eligible Transferees described in clauses (c) and (d) above (which approval shall not be unreasonably withheld, conditioned or delayed; except if such assignment occurs upon the merger, consolidation, sale or other disposition of all or any portion of Lender’s business, loan portfolio or other assets, in which case no approval of Administrative Borrower shall be required) and provided, that, (i) neither any Borrower nor any Guarantor or any Affiliate of any Borrower or Guarantor shall qualify as an Eligible Transferee other than a Sponsor Affiliated Lender, and (ii) no Person to whom any Indebtedness which is in any way subordinated in right of payment to any other Indebtedness of any Borrower or Guarantor shall qualify as an Eligible Transferee, except as Agent may otherwise specifically agree.

1.40 “Environmental Laws” shall mean all foreign, Federal, State and local laws (including common law), legislation, rules, codes, licenses, permits (including any conditions imposed therein), authorizations, binding judicial or administrative decisions, binding injunctions or binding agreements between any Borrower or Guarantor and any Governmental Authority (including those agreements as to which the applicable Borrower is challenging the binding

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nature of any such agreement), (a) relating to pollution and the protection, preservation or restoration of the environment (including air, water vapor, surface water, ground water, drinking water, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or to human health or safety, (b) relating to the exposure to, or the use, storage, recycling, treatment, generation, manufacture, processing, distribution, transportation, handling, labeling, production, release or disposal of Hazardous Materials, or (c) relating to all laws with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials. The term “Environmental Laws” includes (i) the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, and (ii) applicable state counterparts to such laws.

1.41 “Equipment” shall mean, as to each Borrower and Guarantor, all of such Borrower’s and Guarantor’s now owned and hereafter acquired equipment, wherever located, including machinery, data processing and computer equipment (whether owned or licensed and including embedded software), vehicles, tools, furniture, fixtures, all attachments, accessions and property now or hereafter affixed thereto or used in connection therewith, and substitutions and replacements thereof, wherever located.

1.42 “Equity Investors” shall mean, collectively, the persons set forth on Schedule 1.42 and their respective Affiliates.

1.43 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, together with all applicable regulations thereunder or related thereto.

1.44 “ERISA Affiliate” shall mean any person required to be aggregated with any Borrower, any Guarantor or any of its or their respective Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.

1.45 “ERISA Event” shall mean (a) any “reportable event”, as defined in Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a Pension Plan for which the thirty (30) day notice has not been waived in regulations by the Pension Benefit Guaranty Corporation; (b) the adoption of any amendment to a Pension Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) a complete or partial withdrawal by any Borrower, Guarantor or any ERISA Affiliate from a Multiemployer Plan or a cessation of operations which is treated as such a withdrawal or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit Guaranty Corporation to terminate a Pension Plan; (e) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; and (f) the imposition of any liability under Title IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due

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but not delinquent under Section 4007 of ERISA, upon any Borrower, Guarantor or any ERISA Affiliate in excess of $1,000,000.

1.46 “Eurodollar Rate Loans” shall mean any Loans or portion thereof on which interest is payable based on the Adjusted Eurodollar Rate in accordance with the terms hereof.

1.47 “Event of Default” shall have the meaning specified in Section 10.1 hereof.

1.48 “Excess Availability” shall mean, as to Borrowers, the amount calculated at any date, equal to: (a) the lesser of: (i) the Borrowing Base and (ii) the Maximum Credit (in each case under (i) or (ii) after giving effect to any applicable Reserves other than any Reserves in respect of Letter of Credit Obligations), minus, without duplication, (b) the sum of: (i) the principal amount of all then outstanding unpaid obligations (but excluding for this purpose any Letter of Credit Obligations to the extent of any Reserves established in respect thereof and excluding for this purpose the principal amount of any Obligations of a Borrower arising pursuant to any guarantees in favor of Agent and Lenders of the Obligations of any other Borrower), plus (ii) the amount of all Reserves then established in respect of Letter of Credit Obligations, plus (iii) the aggregate amount of all then outstanding and unpaid trade payables and other obligations of Borrowers which are outstanding more than sixty (60) days past due as of the end of the immediately preceding month (other than trade payables or other obligations being contested or disputed by a Borrower in good faith). For purposes of determining the outstanding trade payables in the ordinary course, Administrative Borrower shall provide to Agent the summary reports of payables as set forth in Section 7.1 (a) hereof.

1.49 “Exchange Act” shall mean the Securities Exchange Act of 1934, together with all rules, regulations and interpretations thereunder or related thereto.

1.50 “Exchange Rate” shall mean the prevailing spot rate of exchange of Agent for the purpose of conversion of one currency to another, at or around 11:00 a.m. New York City time, on the date on which any such conversion of currency is to be made under this Agreement.

1.51 “Existing Lenders” shall mean the lenders to Borrowers listed on Schedule 1.51 hereto (and including PNC Bank, National Association in its capacity as agent acting for such lenders) and their respective predecessors, successors and assigns.

1.52 “Existing Letters of Credit” shall mean, collectively, the letters of credit issued for the account of a Borrower or Guarantor or for which such Borrower or Guarantor is otherwise liable listed on Schedule 1.52 hereto, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.53 “Fee Letter” shall mean the letter agreement, dated of even date herewith, by and among Borrowers, Guarantor and Agent, setting forth certain fees payable by Borrowers to Agent for the benefit of itself and Lenders, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.54 “Financing Agreements” shall mean, collectively, this Agreement and all notes, guarantees, security agreements, deposit account control agreements, investment property control agreements, intercreditor agreements and all other agreements, documents and instruments now

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or at any time hereafter executed and/or delivered by any Borrower or Guarantor in connection with this Agreement; provided, that, in no event shall the term Financing Agreements be deemed to include any Hedge Agreement.

1.55 “Fixed Charge Coverage Ratio” shall mean, with respect to any date of determination, the ratio of (a) the amount equal to (i) EBITDA of any Person and its Subsidiaries on a consolidated basis, as of the end of a fiscal month for the immediately preceding twelve (12) consecutive fiscal months for which Agent has received financial statements pursuant to the terms of Section 9.6 hereof, less (ii) the actual amount of Capital Expenditures of such Person and its Subsidiaries during such period and, less (iii) all taxes paid by such person and its Subsidiaries in cash during such period, less (iv) all dividends, distributions, repurchases and redemptions in respect of Capital Stock of Parent paid by such Person and its Subsidiaries during such period in cash (other than dividends, distributions, repurchases and redemptions paid after the date hereof, the payment of which is made with the initial proceeds of the Qualified Debt Offering pursuant and in accordance with Section 9.9(h) hereof or any Qualified Public Offering), less (v) management, consulting and advisory fees and related expenses paid during such period in cash, provided, that, such fees and expenses are not included in the calculation of EBITDA, plus (vi) Capital Expenditures which are funded by (A) proceeds of Indebtedness permitted under Section 9.9(b) hereof, and (B) other forms of cash reimbursement in connection with the VIM/VAR furnace projects, to (b) Fixed Charges of such Person and its Subsidiaries, on a consolidated basis, for such period.

1.56 “Fixed Charges” shall mean, as to any Person and its Subsidiaries with respect to any period, the sum of, without duplication, (a) all cash Interest Expense during such period, plus (b) all regularly scheduled (as determined at the beginning of the respective period) principal payments of Indebtedness incurred, paid or assumed for borrowed money and Indebtedness with respect to Capital Leases (and without duplicating items in (a) and (b) of this definition, the interest component with respect to Indebtedness under Capital Leases) during such period.

1.57 “Foreign Lender” shall mean any Lender that is organized under the laws of a jurisdiction other than that in which a Borrower is resident for tax purposes. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

1.58 “Foreign Subsidiary” shall mean a Subsidiary of Parent that is organized or incorporated under the laws of any jurisdiction outside of the United States of America; sometimes being referred to herein collectively as “Foreign Subsidiaries”. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

1.59 “Freight Forwarders” shall mean the persons listed on Schedule 1.59 hereto or such other person or persons as may be selected by Borrowers after the date hereof and after written notice by Administrative Borrower to Agent who are reasonably acceptable to Agent to handle the receipt of Inventory within the United States of America and/or to clear Inventory through U.S. Customs or other foreign export control authorities or otherwise perform port of entry services to process Inventory imported by any Borrower from outside the United States of America (such persons sometimes being referred to herein individually as a “Freight

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Forwarder”), provided, that, as to each such person, (a) Agent shall have received a Collateral Access Agreement by such person in favor of Agent (in form and substance reasonably satisfactory to Agent) duly authorized, executed and delivered by such person, (b) such agreement shall be in full force and effect and (c) such person shall be in compliance in all material respects with the terms thereof.

1.60 “Funding Bank” shall have the meaning given to such term in Section 3.3 hereof.

1.61 “GAAP” shall mean generally accepted accounting principles in the United States of America as in effect from time to time as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board which are applicable to the circumstances as of the date of determination consistently applied, except as otherwise agreed by Agent, and except that, for purposes of Sections 9.17 and 9.18 hereof, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the preparation of the most recent audited financial statements delivered to Agent prior to the date hereof, subject, however, in the case of determination of compliance with the financial covenants in Section 9.17 and 9.18 hereof, to the provisions of Section 13.2(h) hereof.

1.62 “Governmental Authority” shall mean any nation or government, any state, province, or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

1.63 “Guarantors” shall mean, collectively, the following (together with their respective successors and assigns): (a) Toolrock Holding, Inc., a Delaware corporation; and (b) any other Person that at any time after the date hereof becomes party to a guarantee in favor of Agent or any Lender or otherwise liable on or with respect to the Obligations or who is the owner of any property which is security for the Obligations (other than Borrowers); each sometimes being referred to herein individually as a “Guarantor”. Latrobe Specialty Steels Europe, Inc., a Delaware corporation, shall not be included as a Guarantor hereunder.

1.64 “Hazardous Materials” shall mean any hazardous or toxic substances, materials or wastes, including petroleum and petroleum by-products, flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, polychlorinated biphenyls, pesticides or herbicides and including any other substances, materials or wastes that are or become regulated under any Environmental Law (including any that are or become classified as hazardous or toxic under any Environmental Law).

1.65 “Hedge Agreement” shall mean an agreement between any Borrower or Guarantor and Agent, any Bank Product Provider or other financial institution, as a counterparty, that is a swap agreement as such term is defined in 11 U.S.C. Section 101, and including any rate swap agreement, basis swap, forward rate agreement, commodity swap, interest rate option, forward foreign exchange agreement, spot foreign exchange agreement, rate cap agreement rate, floor agreement, rate collar agreement, currency swap agreement, cross-currency rate swap agreement, currency option, any other similar agreement (including any option to enter into any of the

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foregoing or a master agreement for any the foregoing together with all supplements thereto) for the purpose of protecting against or managing exposure to fluctuations in interest or exchange rates, currency valuations or commodity prices; sometimes being collectively referred to herein as “Hedge Agreements”.

1.66 “Indebtedness” shall mean, with respect to any Person, any liability, whether or not contingent, (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof) or evidenced by bonds, notes, debentures or similar instruments; (b) representing the balance deferred and unpaid of the purchase price of any property or services (other than an account payable to a trade creditor (whether or not an Affiliate) incurred in the ordinary course of business of such Person and payable in accordance with customary trade practices); (c) all payment obligations as lessee relating to rental payments and any other regularly scheduled and periodic payments required by the terms of leases which have been, or should be, in accordance with GAAP recorded as Capital Leases; (d) any contractual obligation, contingent or otherwise, of such Person to pay or be liable for the payment of any indebtedness described in this definition of another Person, including, without limitation, any such indebtedness, directly or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise acquire such indebtedness, obligation or liability or any security therefor, or to provide funds for the payment or discharge thereof, or to maintain solvency, assets, level of income, or other financial condition; (e) all obligations with respect to redeemable stock and redemption or repurchase obligations under any Capital Stock or other equity securities issued by such Person; (f) all reimbursement obligations and other liabilities of such Person with respect to surety bonds (whether bid, performance or otherwise), letters of credit, banker’s acceptances, drafts or similar documents or instruments issued for such Person’s account; (g) all indebtedness of such Person in respect of indebtedness of another Person for borrowed money or indebtedness of another Person otherwise described in this definition which is secured by any consensual lien, security interest, collateral assignment, conditional sale, mortgage, deed of trust, or other encumbrance on any asset of such Person, whether or not such obligations, liabilities or indebtedness are assumed by or are a personal liability of such Person, all as of such time; provided, that, for the purposes hereof, to the extent such Indebtedness referred to in this clause (g) is non-recourse to such Person, the amount of such Indebtedness shall not be deemed to exceed the lesser of (i) the principal amount of such Indebtedness or (ii) the value of the asset(s) securing such Indebtedness; (h) all obligations, liabilities and indebtedness of such Person (marked to market) arising under swap agreements, cap agreements and collar agreements and other agreements or arrangements designed to protect such person against fluctuations in interest rates or currency or commodity values or other Hedge Agreement; (i) all past due obligations owed by such Person under License Agreements with respect to non-refundable, advance or minimum guarantee royalty payments; (j) indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer to the extent such Person is liable therefor as a result of such Person’s ownership interest in such entity, except to the extent that the terms of such indebtedness expressly provide that such Person is not liable therefor or such Person has no liability therefor as a matter of law; (k) under all obligations arising from sales by such Person of (i) accounts or general intangibles for money due or to become due, (ii) other receivables whether pursuant to a purchase facility or otherwise and together with any obligation of such Person to pay any discount, interest, fees, indemnities, penalties, recourse, expenses or other amounts in connection therewith, other than in connection with the disposition of the business operations of such Person relating thereto or a disposition of

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defaulted receivables for collection and not as a financing arrangement, (l) the principal portion of all rental obligations of such Person under any synthetic lease or similar off-balance sheet financing where such transaction is considered to be borrowed money for tax purposes but is classified as an operating lease in accordance with GAAP, (m) all obligations of such Person issued or assumed as the deferred purchase price of property or services purchased by such Person which are due six (6) months or more from the date after such property is acquired or such services are completed, and including, without limitation, customary indemnification, adjustment of purchase price or similar obligations, earn-outs or other similar obligations, in each case, incurred in connection with a Permitted Acquisition or sales of assets permitted pursuant to Section 9.7 hereof (but excluding trade debt and accrued expenses incurred in the ordinary course of business on normal trade terms and not overdue by more than ninety (90) days) which would appear as liabilities on a balance sheet of such Person in accordance with GAAP, and (n) all obligations of such Person under take-or-pay or similar arrangements or under commodities agreements.

1.67 “Information Certificate” shall mean, collectively, the Information Certificates of Borrowers and Guarantors constituting Exhibit C hereto.

1.68 “Intellectual Property” shall mean, as to each Borrower and Guarantor, such Borrower’s and Guarantor’s now owned and hereafter arising or acquired: patents, patent rights, patent applications, copyrights, works which are the subject matter of copyrights, copyright applications, copyright registrations, trademarks, servicemarks, trade names, trade styles, trademark and service mark applications, and licenses and rights to use any of the foregoing and all applications, registrations and recordings relating to any of the foregoing as may be filed in the United States Copyright Office, the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof, any political subdivision thereof or in any other country or jurisdiction, together with all rights and privileges arising under applicable law with respect to any Borrower’s or Guarantor’s use of any of the foregoing; all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing; all rights to sue for past, present and future infringement of any of the foregoing; inventions, trade secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys, reports, manuals, and operating standards; goodwill (including any goodwill associated with any trademark or servicemark, or the license of any trademark or servicemark); customer and other lists in whatever form maintained; trade secret rights, copyright rights, rights in works of authorship, domain names and domain name registration; software and contract rights relating to computer software programs, in whatever form created or maintained.

1.69 “Interest Expense” shall mean, for any period, as to any Person, as determined in accordance with GAAP, the total interest expense of such Person and its Subsidiaries on a consolidated basis, whether paid or accrued during such period but without duplication (including the interest component of Capital Leases for such period), including, without limitation, discounts in connection with the sale of any Accounts that are sold for purposes other than collection, but excluding interest paid in property other than cash and any other interest expense not payable in cash.

1.70 “Interest Period” shall mean for any Eurodollar Rate Loan, a period of approximately one (1), two (2), three (3) months or six (6) months, duration as any Borrower (or

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Administrative Borrower on behalf of such Borrower) may elect, the exact duration to be determined in accordance with the customary practice in the applicable Eurodollar Rate market; provided, that, such Borrower (or Administrative Borrower on behalf of such Borrower) may not elect an Interest Period which will end after the Maturity Date.

1.71 “Interest Rate” shall mean,

(a) Subject to clause (b) of this definition below:

(i) as to Base Rate Loans, a rate equal to the then Applicable Margin for Base Rate Loans on a per annum basis plus the Base Rate, and

(ii) as to Eurodollar Rate Loans, a rate equal to the then Applicable Margin for Eurodollar Rate Loans on a per annum basis plus the Adjusted Eurodollar Rate, and

(b) Notwithstanding anything to the contrary contained herein, Agent may, at its option, and Agent shall, at the direction of the Required Lenders, increase the Applicable Margin otherwise used to calculate the Interest Rate for Base Rate Loans and Eurodollar Rate Loans in each case to the highest percentage set forth in the definition of the term Applicable Margin for each category of Loans (without regard to the amount of Quarterly Average Excess Availability) plus two (2%) percent per annum, (i) either (A) for the period on and after the date of termination hereof until such time as all Obligations are indefeasibly paid and satisfied in full in immediately available funds, or (B) for the period from and after the date of the occurrence of an Event of Default, but only for so long as such Event of Default is continuing and (ii) on the Revolving Loans and Letters of Credit at any time outstanding in excess of the applicable Borrowing Base or the Tranche A Loan Limit or the Tranche B Loan Limit, as the case may be (whether or not such excess(es) arise or are made with or without Agent’s or any Lender’s knowledge or consent and whether made before or after the occurrence of an Event of Default, but only with respect to such excess).

1.72 “Inventory” shall mean, as to each Borrower and Guarantor, all of such Borrower’s and Guarantor’s now owned and hereafter existing or acquired goods, wherever located, which (a) are leased by such Borrower or Guarantor as lessor; (b) are held by such Borrower or Guarantor for sale or lease or to be furnished under a contract of service; (c) are furnished by such Borrower or Guarantor under a contract of service; or (d) consist of raw materials, work in process, finished goods or materials used or consumed in its business.

1.73 “Inventory Appraisal” shall have the meaning set forth in Section 7.3 hereof.

1.74 “Investment Property Control Agreement” shall mean an agreement in writing, in form and substance reasonably satisfactory to Agent, by and among Agent, any Borrower or Guarantor (as the case may be) and any securities intermediary, commodity intermediary or other person who has custody, control or possession of any investment property of such Borrower or Guarantor acknowledging that such securities intermediary, commodity intermediary or other person has custody, control or possession of such investment property on behalf of Agent, that it will comply with entitlement orders originated by Agent with respect to such investment property, or other instructions of Agent, and has such other terms and conditions as Agent may reasonably require.

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1.75 “Issuing Bank” shall mean Wachovia in its capacity as the issuer of Letters of Credit hereunder (and including, but not limited to, the Existing Letters of Credit that it has issued as of the date hereof), or any other Lender as the Agent and Administrative Borrower may agree in such capacity, and in the case of any other Lender only to the extent that such person is a party hereto as an Issuing Bank and has executed and delivered such agreements with respect thereto as Agent may require. For purposes hereof, PNC Bank, National Association, shall for all purposes be deemed an “Issuing Bank” as to the Existing Letters of Credit that it has issued as of the date hereof.

1.76 “Lenders” shall mean the financial institutions who are signatories hereto as Lenders (including Swing Line Lender) and other persons made a party to this Agreement as a Lender in accordance with Section 13.7 hereof, and their respective successors and assigns; each sometimes being referred to herein individually as a “Lender”.

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

1.78 “Letter of Credit Limit” shall mean $10,000,000.

1.79 “Letter of Credit Obligations” shall mean, at any time, the sum of (a) the aggregate undrawn amount of all Letters of Credit outstanding at such time, plus (b) the aggregate amount of all drawings under Letters of Credit for which Issuing Bank has not at such time been reimbursed, plus (c) without duplication, the aggregate amount of all payments made by each Lender to Issuing Bank with respect to such Lender’s participation in Letters of Credit as provided in Section 2.2 hereof, for which Borrowers have not at such time reimbursed the Lenders, whether by way of a Revolving Loan or otherwise.

1.80 “Letters of Credit” shall mean all letters of credit (whether documentary or stand-by and whether for the purchase of inventory, equipment or otherwise) issued by an Issuing Bank for the account of any Borrower pursuant to this Agreement, and all amendments, renewals, extensions or replacements thereof and including, but not limited to, the Existing Letters of Credit.

1.81 “License Agreements” shall have the meaning set forth in Section 8.11 hereof.

1.82 “Loans” shall mean, collectively, the Revolving Loans and the Swing Line Loans.

1.83 “London Interbank Offered Rate” shall mean, with respect to any Eurodollar Rate Loan for the Interest Period applicable thereto, the rate of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in U.S. Dollars at approximately 11:00 A.M. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, that, if more than one rate is specified on Telerate Successor Page 3750 for such comparable period, the applicable rate shall be the

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arithmetic mean of all such rates. If, for any reason, such rate is not available, the term “London Interbank Offered Rate” shall mean, with respect to any Eurodollar Loan for the Interest Period applicable thereto, the rate of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 A.M. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, however, if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates.

1.84 “Management Agreements” means, collectively, (i) the Monitoring and Oversight Agreement, dated as of December 8, 2006, by and among Parent, Latrobe and Hicks Holdings Operating, LLC, a Delaware limited liability company; and (ii) the Monitoring and Oversight Agreement, dated as of December 8, 2006, by and among Parent, Latrobe and Watermill Management Company, LLC, a Delaware limited partnership, in each case as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.85 “Material Adverse Effect” shall mean a material adverse effect on (a) the financial condition, business, assets, properties, performance or operations of the Borrowers, taken as a whole; (b) the legality, validity or enforceability of this Agreement or any of the other Financing Agreements; (c) the legality, validity, enforceability, perfection or priority of the security interests and liens of Agent upon the Collateral; (d) the Collateral or its value; (e) the ability of any Borrower to repay the Obligations or of the Borrowers, taken as a whole, to perform its obligations under this Agreement or any of the other Financing Agreements as and when to be performed; or (f) the ability of Agent or any Lender to enforce the Obligations or realize upon the Collateral or otherwise with respect to the rights and remedies of Agent and Lenders under this Agreement or any of the other Financing Agreements.

1.86 “Material Contract” shall mean any contract or other agreement (other than the Financing Agreements), whether written or oral, to which any Borrower or Guarantor is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto would have a Material Adverse Effect.

1.87 “Maturity Date” shall mean shall have the meaning set forth in Section 13.1 hereof.

1.88 “Maximum Credit” shall mean the amount of $200,000,000 (subject to adjustment as provided in Section 2.3 hereof).

1.89 “Mezzanine Note Agent” shall mean Sankaty Advisors, LLC, in its capacity as agent for the holders of the Mezzanine Notes, and its successors and assigns.

1.90 “Mezzanine Note Documents” shall mean, collectively, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced: (a) the Securities Purchase Agreement, dated December 8, 2006, among the issuers from time to time party thereto, the purchasers from time to time party thereto and Mezzanine Note Agent, (b) the Mezzanine Notes, and (c) all other agreements, instruments, documents and certificates executed and delivered to, or in favor of, the Mezzanine Note Agent or any purchasers or subsequent holders thereof.

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1.91 “Mezzanine Note Intercreditor Agreement” shall mean the Intercreditor and Subordination Agreement dated of even date herewith, by and among Agent, and Mezzanine Note Agent, as acknowledged and agreed to by Borrowers and Guarantors, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.92 “Mezzanine Notes” shall mean the subordinated notes issued under the terms of Securities Purchase Agreement dated December 8, 2006, by and among the issuers party thereto, the purchasers from time to time party thereto and the Mezzanine Note Agent in the form of Exhibit A thereto as in effect on the date hereof.

1.93 “Minimum Threshold Amount” shall mean the amount equal to the sum of (a) the greater of (i) $30,000,000 or (ii) fifteen (15%) percent of the Maximum Credit, plus (b) either (i) the unpaid amount with respect to the Borrowers’ and Guarantors’ VIM/VAR furnace projects (less any portion thereof reimbursement for which has been unconditionally committed to by any third party (other than an Affiliate of Borrowers or Guarantors) on terms and conditions reasonably satisfactory to Agent) as determined pursuant to the reports that are delivered to Agent pursuant to Section 7.1(a)(i)(C) hereof or (ii) such other amount as may be agreed to by the Agent and Administrative Borrower from time to time.

1.94 “Mortgages” shall mean, individually and collectively, each of the following (as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced): (a) the Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated of even date herewith, by Latrobe in favor of Agent with respect to the Real Property and related assets of such Borrower located in Venago County, Pennsylvania, (b) the Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated of even date herewith, by Latrobe in favor of Agent with respect to the Real Property and related assets of such Borrower located in Westmoreland County, Pennsylvania, (c) the Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated of even date herewith, by OH&R in favor of Agent with respect to the Real Property and related assets of such Borrower located in Worcester County, Massachusetts, (d) the Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated of even date herewith, by Latrobe in favor of Agent with respect to the Real Property and related assets of such Borrower located in Fulton County, Ohio, (e) the Open-End Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated of even date herewith, by OH&R in favor of Agent with respect to the Real Property and related assets of such Borrower located in Robertson County, Tennessee, and (f) the Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated of even date herewith, by Latrobe in favor of Agent with respect to the Real Property and related assets of such Borrower located in Westmoreland County, Pennsylvania.

1.95 “Multiemployer Plan” shall mean a “multi-employer plan” as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the immediately preceding six (6) years contributed to by any Borrower, Guarantor or any ERISA Affiliate or with respect to which any Borrower, Guarantor or any ERISA Affiliate may incur any liability.

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1.96 “Net Orderly Liquidation Value” shall mean with regard to any Inventory, the net proceeds that could be expected from an orderly liquidation sale of such Inventory, after all expenses, professionally managed, with the seller obligated to sell over a defined period not to exceed one hundred twenty (120) days from the commencement of such sale, assuming that (a) the Borrowers’ facilities are in limited operation, utilizing select current employees of the Borrowers, for the purposes of liquidating the Inventory, (b) the Inventory would be disposed of on a piecemeal basis or through appropriate groupings, under a scenario whereby the purchasers are buying “as is, where is” for cash or cash equivalent, (c) the terms are sold on a Free on Board (“FOB”) warehouse basis, and (d) taking into consideration current economic trends, condition, location and marketability.

1.97 “Net Recovery Percentage” shall mean the fraction, expressed as a percentage, (a) the numerator of which is the amount equal to the amount of the recovery in respect of the Inventory of Borrowers at such time on a “Net Orderly Liquidation Value” basis all as set forth in the most recent appraisal of such Inventory received by Agent in accordance with Section 7.3 hereof, in form and containing assumptions and appraisal methods reasonably satisfactory to Agent by an appraiser reasonably acceptable to Agent, on which Agent and Lenders are expressly permitted to rely, and (b) the denominator of which is the applicable original cost of the aggregate amount of the Inventory subject to such appraisal.

1.98 “Obligations” shall mean (a) any and all Loans, Swing Line Loans, Letter of Credit Obligations and all other obligations, liabilities and indebtedness of every kind, nature and description owing by any or all of Borrowers to Agent or any Lender or any Issuing Bank, including principal, interest, charges, fees, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under this Agreement or any of the other Financing Agreements or on account of any Letter of Credit and all other Letter of Credit Obligations, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of this Agreement or after the commencement of any case with respect to such Borrower under the United States Bankruptcy Code or any similar statute (including the payment of interest and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, or secured or unsecured and (b) for purposes only of Section 5.1 hereof and subject to the priority in right of payment set forth in Section 6.4 hereof, all obligations, liabilities and indebtedness of every kind, nature and description owing by any or all of Borrowers or Guarantors to Agent or any Bank Product Provider arising under or pursuant to any Bank Products, whether now existing or hereafter arising, provided, that, (i) as to any such obligations, liabilities and indebtedness arising under or pursuant to a Hedge Agreement, the same shall only be included within the Obligations if Agent shall have entered into an agreement, in form and substance satisfactory to Agent, with the Bank Product Provider that is a counterparty to such Hedge Agreement, as acknowledged and agreed to by Borrowers and Guarantors, providing for the delivery to Agent by such counterparty of information with respect to the amount of such obligations and providing for the other rights of Agent and such Bank Product Provider in connection with such arrangements, (ii) any Bank Product Provider, other than Wachovia and its Affiliates, shall have delivered written notice to Agent that (A) such Bank Product Provider has entered into a transaction to provide Bank Products to a Borrower and Guarantor and (B) the obligations arising pursuant to such Bank

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Products provided to Borrowers and Guarantors constitute Obligations entitled to the benefits of the security interest of Agent granted hereunder, and Agent shall have accepted such notice in writing and (iii) in no event shall any Bank Product Provider acting in such capacity to whom such obligations, liabilities or indebtedness are owing be deemed a Lender for purposes hereof to the extent of and as to such obligations, liabilities or indebtedness except that each reference to the term “Lender” in Sections 12.1, 12.2, 12.3(b), 12.6, 12.7, 12.9, 12.12 and 13.6 hereof shall be deemed to include such Bank Product Provider and in no event shall the approval of any such person in its capacity as Bank Product Provider be required in connection with the release or termination of any security interest or lien of Agent. Obligations arising pursuant to Bank Products shall (i) not be deemed to be principal owing to Lenders and Secured Parties hereunder and (ii) be deemed Obligations for purposes of the Mezzanine Note Intercreditor Agreement.

1.99 “Other Taxes” shall have the meaning given to such term in Section 6.5 hereof.

1.100 “Parent” shall mean Toolrock Holding, Inc., a Delaware corporation, and its successors and assigns.

1.101 “Participant” shall mean any financial institution that acquires and holds a participation in the interest of any Lender in any of the Loans and Letters of Credit in conformity with the provisions of Section 13.7 hereof governing participations.

1.102 “Pension Plan” shall mean a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which any Borrower or Guarantor sponsors, maintains, or to which any Borrower, Guarantor or ERISA Affiliate makes, is making, or is obligated to make contributions, other than a Multiemployer Plan.

1.103 “Permitted Acquisitions” shall mean the purchase by a Borrower or Guarantor after the date hereof of all or substantially all of the assets of any Person or a business or division of such Person (including pursuant to a merger with such Person or the formation of a wholly owned Subsidiary that is merged with such Person) or of all or a majority of the Capital Stock (such assets or Person being referred to herein as the “Acquired Business”) and in one or a series of transaction that satisfies each of the following conditions:

(a) Agent shall have received not less than ten (10) Business Days’ prior written notice of the proposed acquisition and such information with respect thereto as Agent may reasonably request, including (i) the proposed date and amount of the acquisition, (ii) a list and description of the assets or shares to be acquired, (iii) the total purchase price for the assets to be purchased (and the terms of payment of such purchase price), and (iv) a summary of the due diligence undertaken by Borrowers in connection with such acquisition,

(b) the Acquired Business shall be engaged in a line of business as permitted in and in accordance with Section 9.15 hereof and shall be organized under and have its chief executive office in the United States of America,

(c) the aggregate amount of all consideration paid for all Permitted Acquisitions shall not exceed $30,000,000 during any fiscal year,

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(d) Excess Availability shall have been not less than 15% of the Maximum Credit then in effect for the sixty (60) day period immediately prior to the date of any such acquisition and not less than 15% of the Maximum Credit then in effect after giving effect to all payments in connection with such acquisition,

(e) in the event that the consideration paid for or in connection with the assets or shares (or as merger consideration) of the Acquired Business is equal to or greater than $15,000,000, Agent shall have received: (i) all financial information (including any financial statements that have been provided to or in the possession of any Borrower or Guarantor with respect to the Acquired Business, (ii) detailed forecasts of cash flows for the Acquired Business forecasting positive future cash flows, (iii) detailed projections for Parent and its Subsidiaries through the Maturity Date giving pro forma effect to such acquisition, based on assumptions satisfactory to Agent and demonstrating pro forma compliance with all financial covenants set forth in this Agreement, prepared in good faith an in a manner and using such methodology as is consistent with the most recent financial statements delivered to Agent pursuant to Section 9.6 hereof and in form and substance reasonably satisfactory to Agent and (iv) current, updated projections of the amount of the Borrowing Base and Excess Availability for the twelve (12) month period after the date of such acquisition, in a form reasonably satisfactory to Agent, representing Borrowers’ reasonable best estimate of the future Borrowing Base and Excess Availability for the period set forth therein as of the date not more than ten (10) days prior to the date of such acquisition, which projections shall have been prepared on the basis of the assumptions set forth therein which Borrowers believe are fair and reasonable as of the date of preparation in light of current and reasonably foreseeable business conditions and which projections shall show amounts of Excess Availability of not less than 15% of the Maximum Credit then in effect for each of the twelve (12) consecutive months after the date of such acquisition,

(f) Intentionally deleted,

(g) if Agent so elects, Agent shall have completed a field examination with respect to the business and assets of the Acquired Business in accordance with Agent’s customary procedures and practices and as otherwise required by the nature and circumstances of the business of the Acquired Business, the scope and results of which shall be reasonably satisfactory to Agent and any accounts and inventory of the Acquired Business shall only be Eligible Accounts and Eligible Inventory, respectively, to the extent Agent has completed such field examination with respect thereto and the criteria for Eligible Accounts and Eligible Inventory set forth herein are satisfied with respect thereto in accordance with this Agreement (or such other or additional criteria as Agent may, at its option, establish with respect thereto in accordance with this Agreement and subject to such Reserves as Agent may establish in connection with the Acquired Business),

(h) Intentionally deleted,

(i) if the value of the Inventory of such Acquired Business that a Borrower is seeking to have included in the Borrowing Base is greater than $10,000,000, Agent may require either (i) an appraisal of the Inventory and other Collateral to be included in the Borrowing Base in form and containing assumptions and appraisal methods reasonably

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satisfactory to Agent by an appraiser reasonably acceptable to Agent, on which Agent and Lenders are expressly permitted to rely (and any Inventory and other Collateral to be included in the Borrowing Base of the Acquired Business shall only be included in the Borrowing Base to the extent that Agent has received such appraisal with respect thereto) or (ii) at Agent’s option, to the extent that an appraisal, in form and substance reasonably satisfactory to Agent, with respect to such Inventory and other Collateral has been completed within three (3) months prior to the consummation of such acquisition, Agent may rely on such appraisal,

(j) in the case of the acquisition of Capital Stock of any Person or the formation of any Subsidiary in connection with such acquisition, (i) the Borrower or Guarantor forming such Subsidiary shall, except as Agent may otherwise agree, (A) execute and deliver to Agent, a pledge and security agreement, in form and substance reasonably satisfactory to Agent, granting to Agent a pledge of and lien on all of the issued and outstanding shares of Capital Stock of any such Subsidiary (other than any Foreign Subsidiary), (B) deliver the original stock certificates evidencing such certificated shares of Capital Stock (or such other evidence as may be issued in the case of a limited liability company), together with stock powers with respect thereto duly executed in blank (or the equivalent thereof in the case of a limited liability company in which such interests are certificated, or otherwise take such actions as Agent shall require with respect to Agent’s security interests therein) and (ii) as to any such Subsidiary, except as Agent may otherwise agree, the Borrower or Guarantor forming such Subsidiary shall cause any such Subsidiary to execute and deliver to Agent, the following (each in form and substance satisfactory to Agent), (A) an absolute and unconditional guarantee of payment of the Obligations (subject to the terms of the Qualified Debt Intercreditor Agreement, if applicable), (B) a security agreement granting to Agent a security interest and lien upon all of the assets of any such Subsidiary (in each case, subject to the terms of the Qualified Debt Intercreditor Agreement, if applicable), and (C) such other agreements, documents and instruments as Agent may reasonably require in connection with the documents referred to above in order to make such Subsidiary a party to this Agreement as a “Borrower” or as a “Guarantor” as Agent may determine, including, but not limited to, supplements and amendments hereto, authorization to file UCC financing statements, Collateral Access Agreements and other consents, waivers, acknowledgments and other agreements from third persons which Agent may deem necessary or desirable in order to permit, protect and perfect its security interests in and liens upon the assets purchased, corporate resolutions and other organization and authorizing documents of such Person, and favorable opinions of counsel to such person,

(k) in the case of an acquisition of assets (other than Capital Stock), Agent shall have received, in form and substance satisfactory to Agent, (i) evidence that Agent has valid and perfected security interests in and liens upon all purchased assets to the extent such assets constitute Collateral hereunder, (ii) such other agreements, documents and instruments as Agent may reasonably require in connection with such assets, including, but not limited to, supplements and amendments hereto, authorization to file UCC financing statements, Collateral Access Agreements and other consents, waivers, acknowledgments and other agreements from third persons which Agent may deem reasonably necessary or desirable in order to permit, protect and perfect its security interests in and liens upon the assets purchased, corporate resolutions and other organization and authorizing documents of such Person, and favorable opinions of counsel to such person, and (iii) the agreement of the seller consenting to the collateral assignment by the Borrower purchasing such assets of all rights and remedies and

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claims for damages of such Borrower relating to the Collateral (including, without limitation, any bulk sales indemnification) under the agreements, documents and instruments relating to such acquisition, provided, that, the Borrower acquiring such assets shall only be required to use commercially reasonable efforts to comply with the requirements of this subsection (iii),

(l) in the case of the acquisition of the Capital Stock of another Person, the board of directors (or other comparable governing body) of such other Person shall have duly approved such acquisition and such Person shall not have announced that it will oppose such acquisition or shall not have commenced any action which alleges that such acquisition will violate applicable law,

(m) Agent shall have received a Compliance Certificate completed on a Pro Forma Basis giving effect to the acquisition and showing that Borrowers and Guarantors are in compliance with all of the covenant set forth in Section 9.17 hereof notwithstanding the amount of the Excess Availability,

(n) no Event of Default shall have occurred and be continuing as of the date of the acquisition or any payment in respect thereof and after giving effect to the acquisition or such payment, and

(o) Agent shall have received true, correct and complete copies of all agreements, documents and instruments received by or in the possession of Borrowers or Guarantors relating to such acquisition.

1.104 “Permitted Additional Capital Expenditure” shall mean a Capital Expenditure (in excess of the amount of Capital Expenditures permitted to be made pursuant to Section 9.18 hereof) in respect of which all of the following conditions have been satisfied: (a) Agent shall have received at least ten (10) Business Days’ (or such lesser period of notice as Agent may from time to time agree) but no more than thirty (30) Business Days’ prior notice of any Borrower’s or Guarantor’s intention to directly or indirectly, making or committing to make, whether through purchase, capital leases or otherwise, Capital Expenditures, monthly cash flow projections prepared in good faith based upon assumptions believed by such Borrower or Guarantor to be reasonable at the time made, for the period commencing on the first day of the month in which the first installment with respect to a particular project is to be made and ending on the later of (x) the last day of the month in which the making of the final installment with respect to such project is to be made and (y) a date that is twelve (12) months after the first day of the month in which the first installment with respect to such project is to be made, showing, on a pro forma basis after giving effect to such Capital Expenditures, among other things, that the Fixed Charge Coverage Ratio is at least 1.00 to 1.00 at all times during such period and Excess Availability (after giving effect to any of Capital Expenditure Reserve established pursuant to clause (b) below in respect of that applicable Capital Expenditure), at all times during such period is not less than 15% of the Maximum Credit, (b) a Reserve against the Borrowing Base shall have been established by Agent in amounts equal to such Capital Expenditures (the “Capital Expenditure Reserve”; which Capital Expenditure Reserve shall be reduced or released, as applicable, upon Agent’s receipt of reasonable evidence in form and substance reasonably satisfactory to Agent that such Capital Expenditure (or applicable installment thereof) has been paid) and (c) after

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giving effect to the establishment of such Capital Expenditure Reserve by Agent, on a pro forma basis, Excess Availability shall be not less than an amount equal to 15% of the Maximum Credit.

1.105 “Permitted Discretion” shall mean as used in this Agreement with reference to Agent, a determination made in good faith in the exercise of its reasonable business judgment based on how an asset based lender with similar rights providing a credit facility of the type set forth herein would act, in the circumstances then applicable to Borrowers and Guarantors at the time with the information then available to it.

1.106 “Permitted Holders” shall mean the persons listed on Schedule 1.106.

1.107 “Person” or “person” shall mean any individual, sole proprietorship, partnership, corporation (including any corporation which elects subchapter S status under the Code), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock corporation, trust, joint venture or other entity or any government or any agency or instrumentality or political subdivision thereof.

1.108 “Plan” shall mean an employee benefit plan (as defined in Section 3(3) of ERISA) which any Borrower or Guarantor sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a Multiemployer Plan has made contributions at any time during the immediately preceding six (6) plan years or with respect to which any Borrower or Guarantor may incur liability.

1.109 “Pro Forma Basis” shall mean for purposes of calculating the financial covenant set forth in Section 9.17 hereof in connection with any event or transaction, or proposed event or transactions, such event or transaction and all related events and transactions shall be deemed to have occurred as of the first day of the most recent three (3) or twelve (12) month period (as required pursuant to the terms of this Agreement) preceding the date of such event or transaction for which Agent has received financial statements pursuant to Section 9.6 hereof.

1.110 “Pro Forma Compliance Certificate” shall mean, with respect to any event or transaction, or proposed event or transaction, a certificate of the chief financial officer, vice president of finance, treasurer or controller of Administrative Borrower or Parent containing reasonably detailed calculations of the financial covenant set forth in Sections 9.17, 9.18 and 9.19 hereof as of the most recent fiscal month end for which Agent has received financial statements pursuant to Section 9.6 hereof and certifying that the other conditions hereunder to the applicable event or transaction are satisfied, after giving effect to the applicable event or transaction on a Pro Forma Basis.

1.111 “Pro Rata Share” shall mean:

(a) with respect to a Tranche A Lender’s obligation to make Tranche A Loans and to acquire interests in Special Agent Advances and Letter of Credit Obligations and receive payments of interest, fees, and principal with respect thereto, the fraction (expressed as a percentage) the numerator of which is such Tranche A Lender’s Tranche A Commitment and the denominator of which is the aggregate amount of all of the Tranche A Commitments of the Tranche A Lenders, as adjusted from time to time in accordance with the provisions of Section 13.7 hereof; provided, that, if the Tranche A Commitments have been terminated, the numerator

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shall be the unpaid amount of such Tranche A Lender’s Tranche A Loans and its interest in the Special Agent Advances and Letter of Credit Obligations and the denominator shall be the aggregate amount of all unpaid Tranche A Loans, Special Agent Advances and Letter of Credit Obligations;

(b) with respect to a Tranche B Lender’s obligation to make Tranche B Loans and to acquire interests in Special Agent Advances and Letter of Credit Obligations and receive payments of interest, fees, and principal with respect thereto, the fraction (expressed as a percentage) the numerator of which is such Tranche B Lender’s Tranche B Commitment and the denominator of which is the aggregate amount of all of the Tranche B Commitments of the Tranche B Lenders, as adjusted from time to time in accordance with the provisions of Section 13.7 hereof;

(c) with respect to all other matters (including, without limitation, the indemnification obligations arising under Section 11.5 hereof), at any time shall mean, as to any Lender, the fraction (expressed as a percentage) the numerator of which is such Lender’s aggregate Commitments and the denominator of which is the aggregate amount of all of the Commitments of the Lenders, as adjusted from time to time in accordance with the provisions hereof; provided, that, if the Commitments have been terminated, the numerator shall be the unpaid amount of such Lender’s Loans and its interest in the Swing Line Loans, Special Agent Advances and Letter of Credit Obligations and the denominator shall be the aggregate amount of all unpaid Loans, Swing Line Loans, Special Agent Advances and Letter of Credit Obligations.

(d) With respect to (a), (b), and (c) above, the Commitments of Sponsor Affiliated Lenders shall be excluded from the calculation of the numerator and the denominator except as specifically provided for in Section 11.3 (a) hereof.

1.112 “Qualified Debt Agent” shall mean the entity acting in the capacity as agent or trustee, as applicable, with respect to a Qualified Debt Offering and any successor or replacement agent or trustee, as applicable, and their respective successors and assigns.

1.113 “Qualified Debt Intercreditor Agreement” shall mean, in form and substance reasonably satisfactory to Agent, the Intercreditor Agreement entered into on the date that Borrowers incur the Indebtedness permitted to be incurred pursuant to Section 9.9(h) hereof, by and between Agent and the holders of such debt (or their agent or trustee, as applicable), as acknowledged and agreed to by Borrowers and Guarantors, pursuant to which Agent (on behalf of itself and the other Secured Parties) shall subordinate its lien on the Qualified Debt Offering Priority Collateral and the holders of such debt (or their agent or trustee, as applicable) shall subordinate their lien on all Collateral, other than the Qualified Debt Offering Priority Collateral, as the same may be amended, modified, supplemented, extended, renewed, restated or replaced.

1.114 “Qualified Debt Offering” shall mean, at the option of the Borrowers, in each case, pursuant to and in accordance with the terms of Section 9.9(h) hereof, either (i) term loans made to the Borrowers or Guarantors after the date hereof, (ii) senior notes issued by any Borrower or Guarantor after the date hereof or (iii) mezzanine debt incurred by the Borrowers or Guarantors after the date hereof.

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1.115 “Qualified Debt Offering Priority Collateral” shall mean, after the date that Borrowers have incurred Indebtedness pursuant to Section 9.9(h) hereof, collectively, that portion of the Collateral now owned or at any time hereafter acquired by any Borrower or Guarantor or in which any Borrower or Guarantor now has or at any time in the future may acquire any right, title or interest, consisting of (a) Equipment, (b) Real Property and fixtures, (c) the Capital Stock of Borrowers and Guarantors (other than Parent) and their respective Subsidiaries, and (d) instruments, documents, investment property, letters of credit, supporting obligations and chattel paper, in each case, to the extent that any amounts payable under or in connection with any of the items or types of assets described in clauses (a), (b) and (c) above are evidenced by the items described in this clause (d) and (e) all proceeds and products of any of the items or types of assets described in clauses (a) through (d) above.

1.116 “Qualified Public Offering” shall mean any bona fide, firm commitment, underwritten offering to the public by (a) Controlling Parent or (b) Parent or any of its Subsidiaries, of the Capital Stock of Controlling Parent or Parent or any of its Subsidiaries pursuant to an effective registration statement under the Securities Act of 1933, as then in effect, or any comparable statement under any similar federal statute then in force.

1.117 “Quarterly Average Excess Availability” shall mean, at any time, the daily average of the Excess Availability for the immediately preceding fiscal quarter as calculated by Agent (which calculation shall be conclusive absent manifest errors or omissions).

1.118 “Real Property” shall mean all now owned and hereafter acquired real property of each Borrower and Guarantor, together with all buildings, structures, and other improvements located thereon and all licenses, easements and appurtenances relating thereto, wherever located, including the real property and related assets more particularly described in the Mortgages.

1.119 “Receivables” shall mean all of the following now owned or hereafter arising or acquired property of each Borrower and Guarantor: (a) all Accounts; (b) all interest, fees, late charges, penalties, collection fees and other amounts due or to become due or otherwise payable in connection with any Account; (c) all payment intangibles of such Borrower or Guarantor; (d) letters of credit, indemnities, guarantees, security or other deposits and proceeds thereof issued payable to any Borrower or Guarantor or otherwise in favor of or delivered to any Borrower or Guarantor in connection with any Account; or (e) all other accounts, contract rights, chattel paper, instruments, notes, general intangibles and other forms of obligations owing to any Borrower or Guarantor, whether from the sale and lease of goods or other property, licensing of any property (including Intellectual Property or other general intangibles), rendition of services or from loans or advances by any Borrower or Guarantor or to or for the benefit of any third person (including loans or advances to any Affiliates or Subsidiaries of any Borrower or Guarantor) or otherwise associated with any Accounts, Inventory or general intangibles of any Borrower or Guarantor (including, without limitation, choses in action, causes of action, tax refunds, tax refund claims, any funds which may become payable to any Borrower or Guarantor in connection with the termination of any Plan or other employee benefit plan and any other amounts payable to any Borrower or Guarantor from any Plan or other employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, casualty or any similar types of insurance and any proceeds

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thereof and proceeds of insurance covering the lives of employees on which any Borrower or Guarantor is a beneficiary).

1.120 “Records” shall mean, as to each Borrower and Guarantor, all of such Borrower’s and Guarantor’s present and future books of account of every kind or nature, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files and other data relating to the Collateral or any account debtor, together with the tapes, disks, diskettes and other data and software storage media and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of any Borrower or Guarantor with respect to the foregoing maintained with or by any other person).

1.121 “Register” shall have the meaning set forth in Section 13.7 hereof.

1.122 “Required Lenders” shall mean, at any time, those Lenders whose Pro Rata Shares aggregate more than fifty (50%) percent of the aggregate of the Commitments of all Lenders, or if the Commitments shall have been terminated, Lenders to whom more than fifty (50%) percent of the then outstanding Obligations are owing.

1.123 “Reserves” shall mean as of any date of determination, such amounts as Agent may from time to time establish and revise in its Permitted Discretion reducing the amount of Loans and Letters of Credit that would otherwise be available to Borrowers under the lending formula(s) provided for herein: (a) to reflect events, conditions, contingencies or risks which, as determined by Agent in its Permitted Discretion, adversely affect, or would have a reasonable likelihood of adversely affecting, (i) the value of or the amount that might be received by Agent from the sale or other disposition or realization upon Eligible Accounts or Eligible Inventory or (ii) the security interests and other rights of Agent or any Lender in the Collateral (including the enforceability, perfection and priority thereof) or (b) to reflect Agent’s good faith belief that any collateral report or financial information furnished by or on behalf of any Borrower or Obligor to Agent is or may have been incomplete, inaccurate or misleading in any material respect or (c) to reflect outstanding Letter of Credit Obligations as provided in Section 2.2 hereof or (d) in respect of any Default or an Event of Default. Without limiting the generality of the foregoing, Reserves may, in Agent’s Permitted Discretion, be established to reflect: (i) dilution with respect to the Accounts (based on the ratio of the aggregate amount of non-cash reductions in Accounts for any period to the aggregate dollar amount of the gross sales of Borrowers for such period) as calculated by Agent for any period is or is reasonably anticipated to be greater than five (5%) percent; (ii) returns, discounts, claims, credits and allowances of any nature that are not paid pursuant to the reduction of Accounts; (iii) sales, excise or similar taxes included in the amount of any Accounts reported to Agent; (iv) a change in the turnover, age or mix of the categories of Inventory that adversely affects the aggregate value of all Inventory; (v) any rental payments, service charges or other amounts due or to become due to owners or lessors of real property to the extent Inventory, Equipment or Records are located in or on such property or in the possession or control of such parties or such Records are needed to monitor or otherwise deal with the Collateral (other than for those locations where Agent has received a Collateral Access Agreement executed and delivered by the owner and lessor of such real property that Agent has acknowledged in writing is in form and substance satisfactory to Agent), provided, that, the Reserves established pursuant to this clause (v) as to leased locations shall not exceed at any time

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the aggregate of amounts payable for the next three (3) months to the lessors of such locations, except that such limitation on the amount of the Reserves shall not apply at any time that an Event of Default shall have occurred and be continuing, or at any time there is any default or event of default under the lease with respect to such location or a notice thereof has been sent or received by or on behalf of any Borrower or Guarantor until such default has been waived or cured in accordance with the terms of such lease; (vi) amounts due or to become due to owners and licensors of trademarks and other Intellectual Property used by any Borrower, (vii) amounts due to processors of Inventory of Borrowers where any Eligible Inventory is located, in an amount equal to the lesser of the amount due to such processor or the value of Eligible Inventory at the location of such processor, regardless of whether Agent has received a Collateral Access Agreement that Agent has accepted in writing; (viii) the amount of any Capital Expenditure Reserve, and (ix) obligations, liabilities or indebtedness (contingent or otherwise) of Borrowers or Guarantors to Agent or any Bank Product Provider arising under or in connection with any Hedge Agreements as such Bank Product Provider may require in connection therewith (such Reserve to be as agreed to by Agent pursuant to the agreement referred to in Section 1.97(b)(i) hereof) to the extent that such obligations, liabilities or indebtedness constitute Obligations as such term is defined herein or otherwise receive the benefit of the security interest of Agent in any Collateral. To the extent that an event, condition or matter as to any Eligible Accounts or Eligible Inventory is addressed pursuant to the treatment thereof within the applicable definition of such terms, Agent shall not also establish a Reserve to address the same event, condition or matter. The amount of any Reserve established by Agent shall have a reasonable relationship to the event, condition or other matter which is the basis for such Reserve as determined by Agent in good faith and to the extent that such Reserve is in respect of amounts that may be payable to third parties Agent may, in its Permitted Discretion, deduct such Reserve from the Tranche A Loan Limit at any time that such limit is less than the amount of the Tranche A Borrowing Base. Agent shall provide Administrative Borrower with two (2) Business Days prior written notification of the establishment of any Reserves or any material change in any Reserve together with a reasonably detailed description of the reason for such establishment or change; provided that, the failure to provide any such notice shall not limit Agent’s rights to establish or change any such Reserves.

1.124 “Responsible Officer” shall have the meaning set forth in Section 7.1(a)(i)(A) hereof.

1.125 “Revolving Loans” shall mean, collectively, the Tranche A Loans and the Tranche B Loans.

1.126 “Secured Parties” shall mean, collectively, (a) Agent, (b) Lenders, (c) the Issuing Bank and (d) any Bank Product Provider; provided, that, (i) as to any Bank Product Provider, only to the extent of the Obligations owing to such Bank Product Provider and (ii) such parties are sometimes referred to herein individually as a “Secured Party”.

1.127 “Solvent” shall mean, at any time with respect to any Person, means that, as of any date of determination, (a) the amount of the “fair saleable value” of the assets of such Person will, as of such date, exceed (i) the value of all “liabilities of such person, including contingent and other liabilities,” as of such date, as such quoted terms are generally determined in accordance with applicable federal laws governing determinations of the insolvency of debtors,

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and (ii) the amount that will be required to pay the probable liabilities of such person on its existing debts (including contingent liabilities) as such debts become absolute and matured, (b) such Person will not have, as of such date, an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged following such date, and (c) such Person will be able to pay its liabilities, including contingent and other liabilities, as they mature. For purposes of this definition, “not have an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged” and “able to pay its liabilities, including contingent and other liabilities, as they mature” means that such person will be able to generate enough cash from operations, assets dispositions or refinancing, or a combination thereof, to meet its obligations as they become due.

1.128 “Special Agent Advances” shall have the meaning set forth in Section 12.11 hereof.

1.129 “Sponsor” shall mean, individually and collectively, (a) HHEP-Latrobe, L.P. or (b) Watermill-Toolrock Partners, L.P.

1.130 “Sponsor Affiliated Lender” means financial institutions (including commercial finance companies), investment funds or managed accounts with respect to which any Sponsor or an Affiliate of such Sponsor is an Affiliate or an advisor or manager in the ordinary course of business and pursuant to agreements, provided, that, such Person executes a waiver in form and substance reasonably satisfactory to the Agent that it shall have no right whatsoever so long as such Person is an Affiliate of any Borrower, Parent, or any Sponsor: (a) to consent to any amendment, modification, waiver, consent or other such action with respect to any of the terms hereof or any other Financing Agreement, except as set forth in Section 11.3(a) hereof, (b) otherwise to vote on any matter related to this Agreement or any other Financing Agreement except as set forth in Section 11.3(a) hereof, or (c) to require Agent or any Lender to undertake any action (or refrain from taking any action) with respect to this Agreement, any other Financing Agreement or the Collateral, (d) to attend any meeting with Agent or any Lender or receive any information from the Agent or any Lender or (e) to make or bring any claim, in its capacity as Lender, against the Agent with respect to the fiduciary duties of Agent and the other duties and obligations of Agent hereunder; except, that, no amendment, modification or waiver to this Agreement or the other Financing Agreements shall deprive any Sponsor Affiliated Lender of its Pro Rata Share of any payments or security interests to which such Lender is entitled to share hereunder.

1.131 “Sponsor Portfolio Company” shall mean any Person that is an Affiliate of Borrowers or Guarantors solely due to the fact that such Person is controlled, directly or indirectly, by Sponsor and which does not otherwise have any managerial control over the business of any Borrower or Guarantor in any capacity.

1.132 “Subsidiary” or “subsidiary” shall mean, with respect to any Person, any corporation, limited liability company, limited liability partnership or other limited or general partnership, trust, association or other business entity of which an aggregate of at least a majority of the outstanding Capital Stock or other interests entitled to vote in the election of the board of directors of such corporation (irrespective of whether, at the time, Capital Stock of any other class or classes of such corporation shall have or might have voting power by reason of the

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happening of any contingency), managers, trustees or other controlling persons, or an equivalent controlling interest therein, of such Person is, at the time, directly or indirectly, owned by such Person and/or one or more subsidiaries of such Person. For purposes of Sections 8.8, 9.6, 9.7, 9.8, 9.9 and 9.10, the term “Subsidiary” shall not include Latrobe Specialty Steels Europe, Inc.

1.133 “Supermajority Lenders” shall mean, at any time, those Lenders whose Pro Rata Shares aggregate more than sixty-six and two-thirds (66.67%) percent of the aggregate of the Commitments of all Lenders, or if the Commitments shall have been terminated, Lenders to whom more than sixty-six and two-thirds (66.67%) percent of the then outstanding Obligations are owing.

1.134 “Swing Line Lender” shall mean Wachovia Bank, National Association, in its capacity as the lender of Swing Line Loans, and its successors and assigns.

1.135 “Swing Line Loan Limit” shall mean $15,000,000.

1.136 “Swing Line Loans” shall have the meaning set forth in Section 2.1 hereof.

1.137 “Tranche A Borrowing Base” shall mean, at any time, the amount equal to:

(a) the amount equal to eighty-five (85%) percent multiplied by the US Dollar Equivalent of the amount of Eligible Accounts; plus

(b) the amount equal to the lesser of: (i) seventy (70%) percent multiplied by the Value of Eligible Inventory or (ii) eighty-five (85%) percent of the Net Recovery Percentage of such Eligible Inventory multiplied by the Value thereof or (iii) the Tranche A Inventory Loan Limit; minus

(c) Reserves.

1.138 “Tranche A Commitments” shall mean, at any time, as to each Lender, the principal amount set forth next to such Lender’s name on Exhibit E hereto designated as the Tranche A Commitment of such Lender or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 13.7 hereof, as the same shall be automatically increased dollar for dollar each time there is a permanent reduction in the Tranche B Loan Limit and a corresponding reduction in such Lender’s Tranche B Commitment and as may be further adjusted from time to time in accordance with the terms hereof; sometimes being collectively referred to herein as “Tranche A Commitments”.

1.139 “Tranche A Inventory Loan Limit” shall mean, on any date of determination, the amount equal to seventy-five (75%) percent of the lesser of (a) the Maximum Credit less the Tranche B Loan Limit then in effect, or (b) the sum of: (i) the amount available to be borrowed under Section 1.137(a) hereof, plus (ii) the lesser of: (A) 70% multiplied by the Value of Eligible Inventory or (B) 85% of the Net Recovery Percentage of such Eligible Inventory multiplied by the Value thereof, plus (iii) the amount available to be borrowed under Section 1.144.

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1.140 “Tranche A Lenders” shall mean, collectively, the Lenders having a Tranche A Commitment or all or a portion of the Tranche A Loans owing to it; sometimes being referred to herein individually as a “Tranche A Lender”.

1.141 “Tranche A Loan Limit” shall mean $200,000,000 minus the Tranche B Loan Limit then in effect, as such Tranche A Loan Limit may be adjusted pursuant to Section 2.3 hereof.

1.142 “Tranche A Loans” shall mean loans now or hereafter made by or on behalf of any Lender or by Agent for the account of any Lender on a revolving basis pursuant to the Credit Facility (involving advances, repayments and readvances) as set forth in Section 2.1(a)(i) hereof.

1.143 “Tranche B Advance Rate” shall mean, initially ten (10%) percent, reducing by 1% on November 1, 2008 and on the first day of each calendar month thereafter, until such time as the Tranche B Advance Rate is zero.

1.144 “Tranche B Borrowing Base” shall mean the amount at any time equal to: (a) the Tranche B Advance Rate multiplied by the US Dollar Equivalent of the amount of Eligible Accounts, plus (b) the lesser of: (A) Tranche B Advance Rate multiplied by the Value of Eligible Inventory or (B) the Tranche B Advance Rate multiplied by the Net Recovery Percentage multiplied by the Value of Eligible Inventory.

1.145 “Tranche B Commitments” shall mean, at any time, as to each Lender, the principal amount set forth next to such Lender’s name on Exhibit E hereto designated as the Tranche B Commitment of such Lender or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 13.7 hereof, as the same may be adjusted from time to time in accordance with the terms hereof; sometimes being collectively referred to herein as “Tranche B Commitments”.

1.146 “Tranche B Lenders” shall mean shall mean, collectively, the Lenders having a Tranche B Commitment or all or a portion of the Tranche B Loans owing to it; sometimes being referred to herein individually as a “Tranche B Lender”.

1.147 “Tranche B Loan Limit” shall mean $25,000,000, as the same shall be reduced from time to time in accordance with the terms of this Agreement and which shall be reduced to zero on August 1, 2009; each reduction of the Tranche B Loan Limit shall result in a ratable reduction of each Lender’s Tranche B Commitment and a ratable increase of each Lender’s Tranche A Commitment.

1.148 “Tranche B Loans” shall mean loans now or hereafter made by or on behalf of any Lender or by Agent for the account of any Lender on a revolving basis pursuant to the Credit Facility (involving advances, repayments and readvances) as set forth in Section 2.1(a)(ii) hereof.

1.149 “Transaction Services Agreements” shall mean, collectively, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced: (a) the Transaction Services Agreement, dated on or about the date hereof, by and

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among Latrobe, Parent and Hicks Holdings Operating LLC and (b) the Transaction Services Agreement, dated on or about the date hereof, by and among Latrobe, Parent and Watermill Management Company, LLC.

1.150 “UCC” shall mean the Uniform Commercial Code as in effect in the State of New York, and any successor statute, as in effect from time to time (except that terms used herein which are not otherwise defined herein and defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as Agent may otherwise determine).

1.151 “US Dollar Equivalent” shall mean at any time (a) as to any amount denominated in US Dollars, the amount thereof at such time, and (b) as to any amount denominated in any other currency, the equivalent amount in US Dollars calculated by Agent in good faith at such time using the Exchange Rate in effect on the Business Day of determination.

1.152 “US Dollars”, “US$” and “$” shall each mean lawful currency of the United States of America.

1.153 “Value” shall mean, with respect to Inventory, the lower of (a) cost computed on a first-in first-out basis in accordance with GAAP or (b) market value, provided, that, for purposes of the calculation of the Borrowing Base, (i) the Value of the Inventory shall not include: (A) the portion of the value of Inventory equal to the profit earned by any Affiliate (other than any Sponsor Portfolio Company) on the sale thereof to any Borrower or (B) write-ups or write-downs in value with respect to currency exchange rates and (ii) notwithstanding anything to the contrary contained herein, the cost of the Inventory shall be computed in the same manner and consistent with the most recent appraisal of the Inventory received and accepted by Agent prior to the date hereof, if any.

1.154 “Voting Stock” shall mean with respect to any Person, (a) one (1) or more classes of Capital Stock of such Person having general voting powers to elect at least a majority of the board of directors, managers or trustees of such Person, irrespective of whether at the time Capital Stock of any other class or classes have or might have voting power by reason of the happening of any contingency, and (b) any Capital Stock of such Person convertible or exchangeable without restriction at the option of the holder thereof into Capital Stock of such Person described in clause (a) of this definition.

1.155 “Wachovia” shall mean Wachovia Bank, National Association, in its individual capacity, and its successors and assigns.

1.156 “Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the then outstanding principal amount of such Indebtedness into (b) the total of the product obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one twelfth) that will elapse between such date and the making of such payment.

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SECTION 2. CREDIT FACILITIES

2.1 Loans.

(a) Subject to and upon the terms and conditions contained herein,

(i) each Lender severally (and not jointly) agrees to make its Pro Rata Share of Tranche A Loans to Borrowers from time to time in amounts requested by any Borrower (or Administrative Borrower on behalf of Borrowers) up to the aggregate amount outstanding equal to the Tranche A Commitment of such Lender, provided, that, after giving effect to any such Tranche A Loan, the principal amount of the Tranche A Loans, the Swing Line Loans and Letter of Credit Obligations outstanding with respect to all Borrowers shall not exceed the lesser of the Tranche A Borrowing Base at such time or the Tranche A Loan Limit as then in effect; and

(ii) each Lender severally (and not jointly) agrees to make its Pro Rata Share of Tranche B Loans to Borrowers from time to time in amounts requested by any Borrower (or Administrative Borrower on behalf of Borrowers) up to the aggregate amount outstanding equal to the Tranche B Commitment of such Lender, provided, that, after giving effect to any such Tranche B Loan, the principal amount of the Tranche B Loans outstanding with respect to all Borrowers shall not exceed the lesser of the Tranche B Borrowing Base at such time or the Tranche B Loan Limit as then in effect; and

(iii) the Swing Line Lender agrees that it will make loans (“Swing Line Loans”) to Borrowers from time to time in amounts requested by any Borrower (or Administrative Borrower on behalf of Borrowers) up to the aggregate amount outstanding equal to the Swing Line Loan Limit, provided, that, after giving effect to any such Swing Line Loan the aggregate principal amount of the Revolving Loans, Swing Line Loans and Letter of Credit Obligations outstanding with respect to all Borrowers shall not exceed the lesser of the (A) Borrowing Base at such time or (B) the Maximum Credit at such time; and

(b) On the terms and subject to the conditions hereof, each Borrower (or Administrative Borrower on behalf of Borrowers) may from time to time borrow, prepay and reborrow Revolving Loans and Swing Line Loans. No Tranche A Lender shall be required to make any Tranche A Loan, if, after giving effect thereto the aggregate outstanding principal amount of all Tranche A Loans of such Lender, together with such Lender’s Pro Rata Share of the aggregate amount of all Loans, Swing Line Loans and Letter of Credit Obligations, would exceed such Lender’s Tranche A Commitment. No Tranche B Lender shall be required to make any Tranche B Loan, if, after giving effect thereto the aggregate outstanding principal amount of all Tranche B Loans of such Lender would exceed such Lender’s Tranche B Commitment. Swing Line Lender shall not be required to make Swing Line Loans, if, after giving effect thereto, the aggregate outstanding principal amount of all Swing Line Loans would exceed the then existing Swing Line Loan Limit. Each Swing Line Loan shall be subject to all of the terms and conditions applicable to other Base Rate Loans funded by the Lenders constituting Revolving Loans, except that all payments thereon shall be payable to the Swing Line Lender solely for its own account. All Revolving Loans and Swing Line Loans shall be subject to the settlement among Lenders provided for in Section 6.11 hereof.

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(c) The initial Revolving Loans up to the amount equal to the lesser of the Tranche B Borrowing Base or the Tranche B Loan Limit shall be Tranche B Loans. Notwithstanding anything to the contrary contained herein, other than Letters of Credit, Borrowers shall not request any Tranche A Loans, and the Tranche A Lenders shall not be required to make any Tranche A Loans, unless and until the outstanding principal amount of the Tranche B Loans at such time are equal to the lesser of the Tranche B Borrowing Base or the Tranche B Loan Limit. In the event that at any time the outstanding principal amount of the Tranche B Loans shall be less than the amount equal to the lesser of the Tranche B Borrowing Base or the Tranche B Loan Limit, the first Revolving Loans requested by a Borrower (or Administrative Borrower on behalf of a Borrower) shall be deemed to be Tranche B Loans until such time as the outstanding principal amount of the Tranche B Loans are equal to the lesser of the Tranche B Borrowing Base or the Tranche B Loan Limit. Except as otherwise provided in Section 2.2 hereof, Tranche B Loans shall be solely Revolving Loans and all Letters of Credit shall be issued under the Tranche A Commitments and reserved against the Tranche A Borrowing Base as provided for in Section 2.2(c) hereof.

(d) Upon the making of a Swing Line Loan or any Tranche A Loan by Agent as provided in Section 6.11 hereof, without further action by any party hereto, each Tranche A Lender shall be deemed to have irrevocably and unconditionally purchased and received from the Swing Line Lender or Agent, without recourse or warranty, an undivided interest and participation to the extent of such Lender’s Pro Rata Share in such Swing Line Loan or Loan. Upon the making of any Tranche B Loan by Agent as provided in Section 6.10 hereof, without further action by any party hereto, each Lender shall be deemed to have irrevocably and unconditionally purchased and received from Agent, without recourse or warranty, an undivided interest and participation to the extent of such Lender’s Pro Rata Share in such Loan. To the extent that there is no settlement in accordance with Section 6.11 below, the Swing Line Lender or Agent, as the case may be, may at any time, require the Lenders to fund their participations. From and after the date, if any, on which any Lender is required to fund its participation in any Swing Line Loan, Special Agent Advance or other Loan, Agent shall promptly distribute to such Lender, such Lender’s Pro Rata Share of all payments of principal and interest received by Agent in respect of such Swing Line Loan, Special Agent Advance or Loan.

(e) Except in Agent’s discretion, with the consent of all Lenders, or as otherwise provided herein, (i) the aggregate amount of the Tranche A Loans, the Swing Line Loans and the Letter of Credit Obligations outstanding at any time shall not exceed the lesser of the Tranche A Loan Limit or the Tranche A Borrowing Base; (ii) the aggregate amount of the Tranche B Loans outstanding at any time shall not exceed the lesser of the Tranche B Loan Limit or the Tranche B Borrowing Base; (iii) the aggregate amount of the Loans and the Letter of Credit Obligations outstanding at any time shall not exceed the lesser of the Maximum Credit or the Borrowing Base, (iv) the aggregate amount of the Loans and the Letter of Credit Obligations outstanding at any time in respect of Eligible Inventory constituting work-in-process (including semi-finished inventory), shall not exceed $65,000,000, which amount shall be increased proportionately to any increase in Maximum Credit in accordance with the terms of Section 2.3 hereof, (v) the aggregate amount of the Loans and the Letter of Credit Obligations outstanding at any time in respect of Eligible Inventory constituting “slow moving” inventory shall not exceed $3,000,000, (vi) the aggregate amount of the Loans and the Letter of Credit Obligations outstanding at any time in respect of Eligible Accounts consisting of Foreign Accounts shall not

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exceed $7,000,000 or the US Dollar Equivalent thereof, and (vii) the aggregate amount of the Loans and the Letter of Credit Obligations outstanding at any time based upon Eligible In-Transit Inventory shall not exceed $5,000,000.

2.2 Letters of Credit.

(a) Subject to and upon the terms and conditions contained herein and in the Letter of Credit Documents, at the request of a Borrower (or Administrative Borrower on behalf of such Borrower), Agent agrees to cause Issuing Bank to issue, and Issuing Bank agrees to issue, for the account of such Borrower one or more Letters of Credit, for the ratable risk of each Tranche A Lender according to its Pro Rata Share (except as otherwise provided below), containing terms and conditions acceptable to Agent and such Issuing Bank, which Letters of Credit may be denominated in US Dollars, Canadian Dollars, Euros and other foreign currencies available from the Issuing Bank.

(b) The Borrower requesting such Letter of Credit (or Administrative Borrower on behalf of such Borrower) shall give Agent and Issuing Bank three (3) Business Days’ prior written notice of such Borrower’s request for the issuance of a Letter of Credit. Such notice shall be irrevocable and shall specify the original face amount of the Letter of Credit requested, the effective date (which date shall be a Business Day and in no event shall be a date less than ten (10) days prior to the end of the then current term of this Agreement) of issuance of such requested Letter of Credit, whether such Letter of Credit may be drawn in a single or in partial draws, the date on which such requested Letter of Credit is to expire (which date shall be a Business Day and shall not be more than one year from the date of issuance subject to customary “evergreen” provisions), the purpose for which such Letter of Credit is to be issued, and the beneficiary of the requested Letter of Credit. The Borrower requesting the Letter of Credit (or Administrative Borrower on behalf of such Borrower) shall attach to such notice the proposed terms of the Letter of Credit. The renewal or extension of any Letter of Credit shall, for purposes hereof be treated in all respects the same as the issuance of a new Letter of Credit hereunder.

(c) In addition to being subject to the satisfaction of the applicable conditions precedent contained in Section 4 hereof and the other terms and conditions contained herein, no Letter of Credit shall be available unless each of the following conditions precedent have been satisfied in a manner reasonably satisfactory to Agent: (i) the Borrower requesting such Letter of Credit (or Administrative Borrower on behalf of such Borrower) shall have delivered to Issuing Bank with respect thereto at such times and in such manner as such Issuing Bank may require, an application, in form and substance reasonably satisfactory to Issuing Bank and Agent, for the issuance of the Letter of Credit and such other Letter of Credit Documents as may be required pursuant to the terms thereof, and the form and terms of the proposed Letter of Credit shall be reasonably satisfactory to Issuing Bank, (ii) as of the date of issuance, no order of any court, arbitrator or other Governmental Authority shall purport by its terms to enjoin or restrain money center banks generally from issuing letters of credit of the type and in the amount of the proposed Letter of Credit, and no law, rule or regulation applicable to money center banks generally and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center banks generally shall prohibit, or request that Issuing Bank refrain from, the issuance of letters of credit generally or the issuance

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of such Letter of Credit, (iii) after giving effect to the issuance of such Letter of Credit, the Letter of Credit Obligations shall not exceed the Letter of Credit Limit, (iv) after giving effect to the issuance of such Letter of Credit, the aggregate amount of Letters of Credit denominated in foreign currencies shall not exceed the US Dollar Equivalent of $10,000,000 and (v) the Excess Availability (calculated for this purpose without regard to the amount of the past due trade payables) of the Borrower requesting such Letter of Credit, prior to giving effect to any Reserves with respect to such Letter of Credit, on the date of the proposed issuance of any Letter of Credit shall be equal to or greater than: (A) if the proposed Letter of Credit is for the purpose of purchasing Eligible Inventory and the documents of title with respect thereto are consigned to Issuing Bank, the sum of (1) the percentage equal to one hundred (100%) percent (but with respect to a Letter of Credit denominated in a foreign currency, the percentage equal to one hundred and twenty (120%) percent) of the stated amount of such Letter of Credit minus the then applicable percentage with respect to Eligible Inventory set forth in the definition of the term Tranche A Borrowing Base multiplied by the Value of such Eligible Inventory, plus (2) freight, taxes, duty and other amounts which Agent estimates must be paid in connection with such Inventory upon arrival and for delivery to one of such Borrower’s locations for Eligible Inventory within the United States of America and (B) if the proposed Letter of Credit is for any other purpose or the documents of title are not consigned to Issuing Bank in connection with a Letter of Credit for the purpose of purchasing Inventory, an amount equal to one hundred (100%) percent (but with respect to a Letter of Credit denominated in a foreign currency, an amount equal to the amount adjusted monthly based on the spot market price of the applicable currency) of the Letter of Credit Obligations with respect thereto. Effective on the issuance of each Letter of Credit, a Reserve shall be established in the applicable amount set forth in Section 2.2(c)(v)(A) or Section 2.2(c)(v)(B).

(d) Except in Agent’s discretion, with the consent of Required Lenders, the amount of all outstanding Letter of Credit Obligations shall not at any time exceed the Letter of Credit Limit.

(e) Each Borrower shall reimburse immediately the Issuing Bank for any draw under any Letter of Credit issued by such Issuing Bank for the account of such Borrower and pay Issuing Bank the amount of all other charges and fees payable to such Issuing Bank in connection with any Letter of Credit issued for the account of such Borrower immediately when due, irrespective of any claim, setoff, defense or other right which such Borrower may have at any time against Issuing Bank or any other Person. Each drawing under any Letter of Credit or other amount payable in connection therewith when due shall constitute a request by the Borrower for whose account such Letter of Credit was issued to Agent for a Base Rate Loan in the amount of such drawing or other amount then due, and shall be made by Agent on behalf of Lenders as a Revolving Loan (or Special Agent Advance, as the case may be). The date of such Loan shall be the date of the drawing or as to other amounts, the due date therefor. Any payments made by or on behalf of Agent or any Lender to Issuing Bank and/or related parties in connection with any Letter of Credit shall constitute additional Revolving Loans to such Borrower pursuant to this Section 2 (or Special Agent Advances as the case may be).

(f) Borrowers and Guarantors shall indemnify and hold Agent and Lenders harmless from and against any and all losses, claims, damages, liabilities, reasonable documented costs and expenses which Agent or any Lender may suffer or incur in connection

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with any Letter of Credit and any documents, drafts or acceptances relating thereto, including any losses, claims, damages, liabilities, costs and expenses due to any action taken by Issuing Bank or correspondent with respect to any Letter of Credit, except for such losses, claims, damages, liabilities, costs or expenses that are a result of the gross negligence or wilful misconduct of Agent or any Lender as determined pursuant to a final non-appealable order of a court of competent jurisdiction. Each Borrower and Guarantor assumes all risks with respect to the acts or omissions of the drawer under or beneficiary of any Letter of Credit and for such purposes the drawer or beneficiary shall be deemed such Borrower’s agent. Each Borrower and Guarantor assumes all risks for, and agrees to pay, all foreign, Federal, State and local taxes, duties and levies relating to any goods subject to any Letter of Credit or any documents, drafts or acceptances thereunder. Each Borrower and Guarantor hereby releases and holds Agent and Lenders harmless from and against any acts, waivers, errors, delays or omissions with respect to or relating to any Letter of Credit, except for the gross negligence or wilful misconduct of Agent or any Lender as determined pursuant to a final, non-appealable order of a court of competent jurisdiction. The provisions of this Section 2.2(f) shall survive the payment of Obligations and the termination of this Agreement.

(g) In connection with Inventory purchased pursuant to any Letter of Credit, Borrowers and Guarantors shall, at Agent’s request, instruct all suppliers, carriers, forwarders, customs brokers, warehouses or others receiving or holding cash, checks, Inventory, documents or instruments in which Agent holds a security interest that upon Agent’s prior written request, such items are to be delivered to Agent and/or subject to Agent’s order, and if they shall come into such Borrower’s or Guarantor’s possession, to deliver them, upon Agent’s prior written request, to Agent in their original form. Except as otherwise provided herein, Agent shall not exercise such right to request such items so long as no Event of Default shall have occurred and be continuing. Except as Agent may otherwise specify, Borrowers and Guarantors shall designate the Issuing Bank with respect to a Letter of Credit as the consignee on all bills of lading and other negotiable and non-negotiable documents under such Letter of Credit.

(h) Each Borrower and Guarantor hereby irrevocably authorizes and directs Issuing Bank to name such Borrower or Guarantor as the account party therein and to deliver to Agent all instruments, documents and other writings and property received by Issuing Bank pursuant to the Letter of Credit and to accept and rely upon Agent’s instructions and agreements with respect to all matters arising in connection with the Letter of Credit or the Letter of Credit Documents with respect thereto. Nothing contained herein shall be deemed or construed to grant any Borrower or Guarantor any right or authority to pledge the credit of Agent or any Lender in any manner. Borrowers and Guarantors shall be bound by any reasonable interpretation made in good faith by Agent, or an Issuing Bank under or in connection with any Letter of Credit Accommodation or any documents, drafts or acceptances thereunder, notwithstanding that such interpretation may be inconsistent with any instructions of any Borrower or Guarantor; provided, that, this sentence shall not relieve Agent or any Issuing Bank of any liability resulting from the gross negligence or willful misconduct of Agent or such Issuing Bank.

(i) Immediately upon the issuance or amendment of any Letter of Credit, each Tranche A Lender shall be deemed to have irrevocably and unconditionally purchased and

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received, without recourse or warranty, an undivided interest and participation to the extent of such Lender’s Pro Rata Share of the liability with respect to such Letter of Credit and the obligations of Borrowers with respect thereto (including all Letter of Credit Obligations with respect thereto). Each Tranche A Lender shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and be obligated to pay to the Issuing Bank therefor and discharge when due, its Pro Rata Share of all of such obligations arising under such Letter of Credit. Without limiting the scope and nature of each Tranche A Lender’s participation in any Letter of Credit, to the extent that an Issuing Bank has not been reimbursed or otherwise paid as required hereunder or under any such Letter of Credit, each such Tranche A Lender shall pay to such Issuing Bank its Pro Rata Share of such unreimbursed drawing or other amounts then due to such Issuing Bank in connection therewith. Notwithstanding anything to the contrary contained herein, upon the termination of the Commitments or the acceleration of the Obligations, to the extent that the Tranche B Loans outstanding are less than the amount equal to the lesser of the Tranche B Borrowing Base or the Tranche B Loan Limit, the Tranche A Lenders shall be deemed to have sold to each Tranche B Lender, and each Tranche B Lender shall be deemed unconditionally and irrevocably to have purchased from the Tranche A Lenders, without recourse or warranty, an undivided interest and participation, to the extent of such Tranche B Lender’s Pro Rata Share, in the Letter of Credit Obligations, up to the amount for all Tranche B Lenders equal to the difference between the then outstanding principal amount of the Tranche B Loans and the amount equal to the lesser of the Tranche B Borrowing Base or Tranche B Loan Limit.

(j) The obligations of Borrowers to pay each of the Letter of Credit Obligations and the obligations of Tranche A Lenders to make payments to Agent for the account of an Issuing Bank with respect to Letters of Credit shall be absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances, whatsoever, notwithstanding the occurrence or continuance of any Default, Event of Default, the failure to satisfy any other condition set forth in Section 4 or any other event or circumstance. If such amount is not made available by a Lender when due, Agent shall be entitled to recover such amount on demand from such Lender with interest thereon, for each day from the date such amount was due until the date such amount is paid to Agent at the interest rate then payable by any Borrower in respect of Loans that are Base Rate Loans. Any such reimbursement shall not relieve or otherwise impair the obligation of Borrowers to reimburse an Issuing Bank under any Letter of Credit or make any other payment in connection therewith.

2.3 Increase in Maximum Credit.

(a) Administrative Borrower may, at any time and from time to time (after the Tranche B Loan Limit has been reduced to zero and all Tranche B Loans have been paid in full), deliver a written request to Agent to increase the Tranche A Loan Limit, with a corresponding increase in the Maximum Credit. Any such written request shall specify the amount of the increase in the Tranche A Loan Limit that Borrowers are requesting, provided, that, (i) in no event shall the aggregate amount of any such increase cause the Maximum Credit to exceed $240,000,000, (ii) such request shall be for an increase of not less than $10,000,000, (iii) any such request shall be irrevocable, and (iv) in no event shall there be more than one such increase in any calendar quarter. In no event shall any such increase cause the Maximum Credit

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to exceed any limitation on Indebtedness that is entitled to be senior in right of payment (priority of any lien securing such Indebtedness) to any Indebtedness under the terms of any agreement related to such Indebtedness.

(b) Upon the receipt by Agent of any such written request, Agent shall notify each of the Lenders of such request and each Lender shall have the option (but not the obligation) to increase the amount of its Tranche A Commitment by an amount up to its Pro Rata Share of the amount of the increase thereof requested by Administrative Borrower as set forth in the notice from Agent to such Lender. Each Lender shall notify Agent within fifteen (15) days after the receipt of such notice from Agent whether it is willing to so increase its Commitment, and if so, the amount of such increase; provided, that, (i) the minimum increase in the Commitments of each such Lender providing the additional Commitments shall equal or exceed $1,000,000, and (ii) no Lender shall be obligated to provide such increase in its Commitment and the determination to increase the Commitment of a Lender shall be within the sole and absolute discretion of such Lender. If the aggregate amount of the increases in the Commitments received from the Lenders does not equal or exceed the amount of the increase in the Maximum Credit requested by Administrative Borrower, Agent may seek additional increases from Lenders or Commitments from such Eligible Transferees as it may determine, after consultation with Administrative Borrower and Sponsor. In the event Lenders (or Lenders and any such Eligible Transferees, as the case may be) have committed in writing to provide increases in their Commitments or new Commitments in an aggregate amount in excess of the increase in the Maximum Credit requested by Borrowers or permitted hereunder, Agent shall then have the right to allocate such commitments, first to Lenders and then to Eligible Transferees, in such amounts and manner as Agent may determine, after consultation with Administrative Borrower and Sponsor.

(c) The Tranche A Loan Limit shall be increased by the amount of the increase in the applicable Commitments from Lenders or new Commitments from Eligible Transferees, in each case selected in accordance with Section 2.3(a) above, with a corresponding increase in the Maximum Credit, for which Agent has received Assignment and Acceptances thirty (30) days after the date of the request by Administrative Borrower for the increase or such earlier date as Agent and Administrative Borrower may agree (but subject to the satisfaction of the conditions set forth below), whether or not the aggregate amount of the increase in Commitments and new Commitments, as the case may be, equal or exceed the amount of the increase in the Maximum Credit requested by Administrative Borrower in accordance with the terms hereof, effective on the date that each of the following conditions have been satisfied:

(i) Agent shall have received from each Lender or Eligible Transferee that is providing an additional Commitment as part of the applicable increase in the Maximum Credit, an Assignment and Acceptance duly executed by such Lender or Eligible Transferee and each Borrower, provided, that, the aggregate Commitments set forth in such Assignment and Acceptance(s) shall be not less than $1,000,000;

(ii) the conditions precedent to the making of Revolving Loans set forth in Section 4.2 hereof shall be satisfied as of the date of the increase in the Maximum Credit, both before and after giving effect to such increase;

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(iii) such increase in the Tranche A Loan Limit, and corresponding increase in the Maximum Credit, on the date of the effectiveness thereof shall not violate any applicable law, regulation or order or decree of any court or other Governmental Authority and shall not be enjoined, temporarily, preliminarily or permanently; and

(iv) there shall have been paid to each Lender and Eligible Transferee providing an additional Commitment in connection with such increase in the Maximum Credit all fees and expenses due and payable to such Person on or before the effectiveness of such increase.

(d) As of the effective date of any such increase in the Tranche A Loan Limit (and corresponding increase in the Maximum Credit), (A) each reference to the term Tranche A Loan Limit and Maximum Credit herein, as applicable, and in any of the other Financing Agreements shall be deemed amended to mean the amount of the Tranche A Loan Limit and Maximum Credit specified in the most recent written notice from Agent to Administrative Borrower of the increase in the Tranche A Loan Limit and Maximum Credit, as applicable, and (B) each Lender’s Pro Rata Share of the Commitments and the Loans shall be adjusted accordingly.

2.4 Prepayments.

(a) Borrowers may prepay without penalty or premium the principal of any Tranche A Loan or Swing Line Loan, in whole or in part, subject to Section 6.4 hereof.

(b) In the event that (i) the aggregate amount of the Loans, the Swing Line Loans and the Letter of Credit Obligations outstanding at any time exceed the Maximum Credit, or (ii) except as otherwise provided herein, the aggregate principal amount of the Tranche A Loans, Swing Line Loans and Letter of Credit Obligations outstanding exceed the Tranche A Borrowing Base or the Tranche A Loan Limit, or (iii) the aggregate principal amount of the Tranche B Loans outstanding exceed the Tranche B Borrowing Base or the Tranche B Loan Limit, or (iv) the aggregate amount of the Loans and the Letter of Credit Obligations outstanding at any time in respect of Eligible Inventory constituting work-in-process, exceed $65,000,000 (which amount shall be increased proportionately to any increase in Maximum Credit in accordance with the terms of Section 2.3 hereof), or (v) the aggregate amount of the Loans and the Letter of Credit Obligations outstanding at any time in respect of Eligible Inventory constituting “slow moving” inventory exceed $3,000,000, or (vi) the aggregate amount of the Loans and the Letter of Credit Obligations outstanding at any time in respect of Eligible Accounts consisting of Foreign Accounts exceed $7,000,000 or the US Dollar Equivalent thereof, or (vii) the aggregate amount of the Loans and the Letter of Credit Obligations outstanding at any time based upon Eligible In-Transit Inventory shall not exceed $5,000,000, or (viii) the outstanding principal amount of the Swing Line Loans outstanding exceeds the Swing Line Loan Limit, such event shall not limit, waive or otherwise affect any rights of Agent or Lenders in such circumstances or on any future occasions and Borrowers shall, upon demand by Agent, which may be made at any time or from time to time, immediately repay to Agent the entire amount of any such excess(es) for which payment is demanded.

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(c) Upon at least three (3) Business Days’ prior written notice to the Agent, Administrative Borrower may, at any time, in whole (but not in part) permanently terminate the Tranche B Commitments, provided, that, on the date of such termination and after giving effect to the payment of any outstanding Tranche B Loans, (i) no Event of Default shall have occurred and be continuing and (ii) Excess Availability shall be greater than $30,000,000. Such termination shall be applied ratably to the Tranche B Commitments of each Tranche B Lender and shall be irrevocable once given. At the effective time of such termination, Borrowers shall pay to the Agent for application as provided for herein all fees accrued on the amount of such Commitments so terminated through the date thereof and (ii) any amounts by which the outstanding Tranche B Loans outstanding on such date exceed zero (0), together with all accrued and unpaid interest on the amount prepaid.

(d) To the extent that Agent receives any proceeds pursuant to the terms of Section 9.7(b)(ii) hereof, such proceeds shall be used for application (i) first, to the Tranche B Loans (each such payment to result in a permanent reduction of the Tranche B Loan Limit with a corresponding reduction in the Tranche B Commitments and increase in the Tranche A Commitments) and accompanied by the payment of accrued and unpaid interest to the date of such payment on the amount prepaid, and (ii) after the termination of the Tranche B Commitments and payment in full of the Tranche B Loans, to the other Obligations in accordance with the terms of Section 6.4(b) hereof, subject to the Qualified Debt Intercreditor Agreement (if applicable).

(e) Borrowers may repay in full and terminate the Indebtedness evidenced by the Mezzanine Notes permitted under Section 9.9(g) hereof (i) with the proceeds of a Qualified Debt Offering as permitted in Section 9.9(h) hereof, or (ii) with proceeds other than from a Qualified Debt Offering as permitted in Section 9.9(h) hereof, provided, that, with respect to such prepayment pursuant to this subsection (ii) only, on the date of such payment in full and termination and after giving effect thereto, (A) all outstanding Tranche B Loans shall have been paid in full and the Tranche B Commitments have been terminated, (B) the daily average of the Excess Availability shall have been not less than $45,000,000, (1) for the immediately preceding forty-five (45) consecutive day period for which the Borrowing Base has been calculated prior to the date of such payment, (2) on the date of such payment, and (3) after giving effect to such payment, in each case on a pro forma basis using the Excess Availability as of the date of the most recent calculation of the Borrowing Base immediately prior to giving effect to such payment, (C) Agent shall have received a Pro Forma Compliance Certificate demonstrating that, upon giving effect on a Pro Forma Basis to such payment, the Fixed Charge Coverage Ratio for Parent and its Subsidiaries is equal to or greater than 1.00 to 1.00, and (D) no Event of Default shall have occurred and be continuing.

(f) In the event that any payments or proceeds are required to be delivered to Agent for application to the Obligations in connection with a disposition permitted pursuant to the terms of Section 9.7(b) hereof (other than as specified in Section 2.4(d) hereof), Agent shall apply such proceeds to the Obligations in accordance with Section 6.4(b) hereof.

2.5 Joint and Several Liability of Borrowers.

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(a) Notwithstanding anything in this Agreement or any other Financing Agreements to the contrary, each Borrower, jointly and severally, in consideration of the financial accommodations to be provided by Agent and Lenders under this Agreement and the other Financing Agreements, for the mutual benefit, directly and indirectly, of each Borrower and in consideration of the undertakings of the other Borrowers to accept joint and several liability for the Obligations, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers, with respect to the payment and performance of all of the Obligations, it being the intention of the parties hereto that all of the Obligations shall be the joint and several obligations of each Borrower without preferences or distinction among them. Borrowers shall be liable for all amounts due to Agent and Lenders under this Agreement, regardless of which Borrower actually receives the Revolving Loans, Swing Line Loans or Letter of Credit Obligations hereunder or the amount of such Revolving Loans received or the manner in which Agent or any Lender accounts for such Revolving Loans, Swing Line Loans, Letter of Credit Obligations or other extensions of credit on its books and records. The Obligations of Borrowers with respect to Revolving Loans and Swing Line Loans made to one of them, and the Obligations arising as a result of the joint and several liability of one of the Borrowers hereunder, with respect to Revolving Loans made to the other of the Borrowers hereunder, shall be separate and distinct obligations, but all such other Obligations shall be primary obligations of all Borrowers.

(b) If and to the extent that any Borrower shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event, the other Borrowers will make such payment with respect to, or perform, such Obligation.

(c) Except as otherwise expressly provided herein, to the extent permitted by law, each Borrower (in its capacity as a joint and several obligor in respect of the obligations of the other Borrower) hereby waives notice of acceptance of its joint and several liability, notice of occurrence of any Event of Default (except to the extent notice is expressly required to be given pursuant to the terms of this Agreement), or of any demand for any payment under this Agreement or the other Financing Agreements, notice of any action at any time taken or omitted by Agent or any Lender under or in respect of any of the obligations hereunder, any requirement of diligence and, generally, all demands, notices and other formalities of every kind in connection with this Agreement and the other Financing Agreements. Each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by Agent or any Lender at any time or times in respect of any default by the other Borrowers in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by Agent or any Lender in respect of any of the obligations hereunder, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of such obligations or the addition, substitution or release, in whole or in part, of the other Borrowers. Without limiting the generality of the foregoing, each Borrower (in its capacity as a joint and several obligor in respect of the obligations of the other Borrower) assents to any other action or delay in acting or any failure to act on the part of Agent or any Lender, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder which might, but for the provisions of this Section 2.5

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hereof, afford grounds for terminating, discharging or relieving such Borrower, in whole or in part, from any of its obligations under this Section 2.5, it being the intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied, the obligations of such Borrower under this Section 2.5 shall not be discharged except by performance and then only to the extent of such performance. The obligations of each Borrower under this Section 2.5 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any Borrower or a Lender. The joint and several liability of the Borrowers hereunder shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any other change whatsoever in the name, membership, constitution or place of formation of any Borrower or any of the Lenders.

(d) The provisions of this Section 2.5 hereof are made for the benefit of the Lenders and their successors and assigns, and subject to Section 12.3 hereof, may be enforced by them from time to time against any Borrower as often as occasion therefor may arise and without requirement on the part of Agent or any Lender first to marshal any of its claims or to exercise any of its rights against the other Borrowers or to exhaust any remedies available to it against the other Borrowers or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this Section 2.5 shall remain in effect until all the Obligations shall have been paid in full or otherwise fully satisfied (other than indemnities and contingent Obligations which have not yet accrued). If at any time, any payment, or any part thereof, made in respect of any of the Obligations is rescinded or must otherwise be restored or returned by Agent or any Lender upon the insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the provisions of this Section 2.5 hereof will forthwith be reinstated and in effect as though such payment had not been made.

(e) Notwithstanding any provision to the contrary contained herein or in any of the other Financing Agreements, to the extent the obligations of a Borrower shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state or federal law relating to fraudulent conveyances or transfers) then the obligations of such Borrower hereunder shall be limited to the maximum amount that is permissible under applicable law (whether federal or state and including, without limitation, the Bankruptcy Code of the United States).

(f) With respect to the Obligations arising as a result of the joint and several liability of Borrowers hereunder with respect to Loans, Letter of Credit Obligations or other extensions of credit made to the other Borrowers hereunder, each of Borrowers waives, until the Obligations shall have been paid in full (other than indemnities and contingent Obligations which have not yet accrued) and this Agreement shall have been terminated, any right to enforce any right of subrogation or any remedy which Agent or any Lender now has or may hereafter have against any Borrower, any endorser or any guarantor of all or any part of the Obligations, and any benefit of, and any right to participate in, any security or collateral given to Agent or any Lender. Any claim which any Borrower may have against any other Borrower with respect to any payments to Agent or Lenders hereunder or under any of the other Financing Agreements are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations. Upon the occurrence of any Event of Default and for so long as the same is continuing, Agent and Lenders may proceed directly and at once, without

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notice (to the extent notice is waivable under applicable law), against (i) with respect to Obligations of Borrowers, either or both of them or (ii) with respect to Obligations of any Borrower, to collect and recover the full amount, or any portion of the applicable Obligations, without first proceeding against the other applicable Borrowers or any other Person, or against any security or collateral for the Obligations. Each Borrower consents and agrees that Agent and Lenders shall be under no obligation to marshal any assets in favor of Borrower(s) or against or in payment of any or all of the Obligations.

2.6 Commitments. The aggregate amount of each Tranche A Lender’s Pro Rata Share of the Tranche A Loans, Swing Line Loans and Letter of Credit Obligations shall not exceed the amount of such Lender’s Tranche A Commitment, as the same may from time to time be amended in accordance with the provisions hereof and the aggregate amount of each Tranche B Lender’s Pro Rata Share of the Tranche B Loans shall not exceed the amount of such Lender’s Tranche B Commitment, as the same may from time to time be amended in accordance with the provisions hereof.

SECTION 3. INTEREST AND FEES

3.1 Interest.

(a) Borrowers shall pay to Agent, for the benefit of Lenders, interest on the outstanding principal amount of the Loans at the Interest Rate. All interest accruing hereunder on and after the date of any Event of Default or termination hereof shall be payable on demand.

(b) Each Borrower (or Administrative Borrower on behalf of such Borrower) may from time to time request Eurodollar Rate Loans or may request that Base Rate Loans be converted to Eurodollar Rate Loans or that any existing Eurodollar Rate Loans continue for an additional Interest Period. Such request from a Borrower (or Administrative Borrower on behalf of such Borrower) shall specify the amount of the Eurodollar Rate Loans or the amount of the Base Rate Loans to be converted to Eurodollar Rate Loans or the amount of the Eurodollar Rate Loans to be continued (subject to the limits set forth below) and the Interest Period to be applicable to such Eurodollar Rate Loans. Subject to the terms and conditions contained herein, three (3) Business Days after receipt by Agent of such a request from a Borrower (or Administrative Borrower on behalf of such Borrower), such Eurodollar Rate Loans shall be made or Base Rate Loans shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the case may be, provided, that, (i) no Event of Default shall have occurred and be continuing, (ii) no party hereto shall have sent any notice of termination of this Agreement, (iii) such Borrower (or Administrative Borrower on behalf of such Borrower) shall have complied with such customary procedures as are established by Agent and specified by Agent to Administrative Borrower from time to time for requests by Borrowers for Eurodollar Rate Loans, (iv) no more than six (6) Interest Periods may be in effect at any one time, (v) the aggregate amount of the Eurodollar Rate Loans must be in an amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof, and (vi) Agent and each Lender shall have determined that the Interest Period or Adjusted Eurodollar Rate is available to Agent and such Lender and can be readily determined as of the date of the request for such Eurodollar Rate Loan by such Borrower. Any request by or on behalf of a Borrower for

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Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything to the contrary contained herein, Agent and Lenders shall not be required to purchase United States Dollar deposits in the London interbank market or other applicable Eurodollar Rate market to fund any Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as if Agent and Lenders had purchased such deposits to fund the Eurodollar Rate Loans. All Swing Line Loan shall be Base Rate Loans and shall not be entitled to be converted to Eurodollar Rate Loans.

(c) Any Eurodollar Rate Loans shall automatically convert to Base Rate Loans upon the last day of the applicable Interest Period, unless Agent has received and approved a request to continue such Eurodollar Rate Loan at least three (3) Business Days prior to such last day in accordance with the terms hereof. Any Eurodollar Rate Loans shall, at Agent’s option, upon notice by Agent to Parent, be subsequently converted to Base Rate Loans in the event that this Agreement shall terminate or not be renewed. Borrowers shall pay to Agent, for the benefit of Lenders, upon demand by Agent (or Agent may, at its option, charge any loan account of any Borrower) any amounts required to compensate any Lender or Participant for any loss (excluding loss of anticipated profits), cost or expense incurred by such person, as a result of the conversion of Eurodollar Rate Loans to Base Rate Loans pursuant to any of the foregoing.

(d) Interest shall be payable by Borrowers to Agent, for the account of Agent and Lenders as applicable, monthly in arrears not later than the first day of each calendar month and shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed, other than for Base Rate Loans which shall be calculated on the basis of three hundred sixty five (365) or three hundred sixty six (366) day year, as applicable, and actual days elapsed. The interest rate on non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or decrease by an amount equal to each increase or decrease in the Base Rate effective on the date any change in such Base Rate is effective. In no event shall charges constituting interest payable by Borrowers to Agent and Lenders exceed the maximum amount or the rate permitted under any applicable law or regulation, and if any such part or provision of this Agreement is in contravention of any such law or regulation, such part or provision shall be deemed amended to conform thereto.

3.2 Fees.

(a) Borrowers shall pay to Agent, (i) for the account of Tranche A Lenders, monthly an unused line fee at the applicable rate determined as provided below (on a per annum basis) calculated upon the amount by which the Tranche A Loan Limit (plus the amount of any increase in the Tranche A Loan Limit pursuant to Section 2.3 hereof) exceeds the average daily principal balance of the outstanding Tranche A Loans (exclusive of Swing Line Loans), and Letters of Credit during the immediately preceding month (or part thereof) and (ii) for the account of Tranche B Lenders, monthly an unused line fee at the applicable rate determined as provided below (on a per annum basis) calculated upon the amount by which the Tranche B Loan Limit exceeds the average daily principal balance of the outstanding Tranche B Loans (exclusive of Swingline Loans) during the immediately preceding month (or part thereof) while this Agreement is in effect, and in each case under clauses (i) and (ii), for so long thereafter as any Obligations are outstanding:

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Tier	Quarterly Average Excess Availability	Applicable Percentage for Unused Line Fee
1	Greater than $100,000,000		.50	%
2	Less than or equal to $100,000,000 and greater than $60,000,000		.375	%
3	Less than or equal to $60,000,000 and greater than $20,000,000		.30	%
4	Less than or equal to $20,000,000		.25	%

provided, that, (i) the applicable percentage shall be calculated and established once each calendar quarter and shall remain in effect until adjusted thereafter after the end of the next calendar quarter, (ii) each adjustment of the Applicable Margin shall be effective as of the first day of a calendar quarter based on the Quarterly Average Excess Availability for the immediately preceding calendar quarter, and (iii) notwithstanding anything to the contrary contained herein, the applicable percentages through August 31, 2008 shall be the amounts for Tier 3 set forth above; provided, that, in the event that a Qualified Public Offering shall be completed on or prior to May 15, 2008, the applicable percentage shall be adjusted, on June 1, 2008 as provided in clause (i) above. Such fees shall be payable on the first day of each month in arrears and calculated based on a three hundred sixty (360) day year and actual days elapsed.

(b) Borrowers shall pay to Agent, for the benefit of Tranche A Lenders, monthly a letter of credit fee at a rate equal to the Applicable Margin for Eurodollar Rate Loans under the Tranche A Facility on the average daily maximum amount available to be drawn under all of Letters of Credit issued for the account or benefit of either of them for the immediately preceding month (or part thereof), payable in arrears as of the first day of each succeeding month, computed for each day from the date of issuance to the date of expiration. Such percentages shall be increased or decreased, as the case may be, to the applicable percentage (on a per annum basis) set forth below based on the Quarterly Average Excess Availability for the immediately preceding calendar quarter; provided, that, (i) the applicable percentage shall be calculated and established once each calendar quarter and shall remain in effect until adjusted thereafter after the end of the next calendar quarter, (ii) each adjustment of the Applicable Margin shall be effective as of the first day of a calendar quarter based on the Quarterly Average Excess Availability for the immediately preceding calendar quarter, (iii) notwithstanding anything to the contrary contained herein, the applicable percentages through August 31, 2008 shall be the amount for Tier 3 set forth in the definition of Applicable Margin; provided, that, in the event that a Qualified Public Offering shall be completed on or prior to May 15, 2008, the applicable percentage shall be adjusted on June 1, 2008, as provided in clause (ii) above, and (iv) Borrowers shall, at Agent’s option or at the written direction of the Required Lenders, pay such fees at a rate equal to two (2%) percent in excess of the highest percentage set forth in the definition of the term Applicable Margin for Tranche A Loans (without regard to the amount of Quarterly Average Excess Availability) (A) either (1) for the period on and after the date of termination hereof until such time as all Obligations are indefeasibly paid and satisfied in full in

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immediately available funds, or (2) for the period from and after the date of the occurrence of an Event of Default, but only for so long as such Event of Default is continuing, and (B) on the outstanding Letters of Credit, if at any time Revolving Loans and Letters of Credit are outstanding in excess of the Tranche A Borrowing Base or the Tranche A Loan Limit (whether or not such excess(es) arise or are made with or without Agent’s or any Lender’s knowledge or consent and whether made before or after an Event of Default, but only with respect to such excess). Such letter of credit fees shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed and the obligation of Borrowers to pay such fee shall survive the termination or non-renewal of this Agreement. In addition to the letter of credit fees provided above, Borrowers shall pay to each Issuing Bank for its own account (without sharing with Lenders) such Issuing Bank’s letter of credit fronting fee and the other customary charges from time to time of such Issuing Bank with respect to the issuance, amendment, transfer, administration, cancellation and conversion of, and drawings under, such Letters of Credit.

(c) Borrowers shall pay to Agent the other fees and amounts set forth in the Fee Letter in the amounts and at the times specified therein or as has otherwise been agreed by or on behalf of Borrowers. To the extent payment in full of the applicable fee is received by Agent from Borrowers on or about the date hereof, Agent shall pay to each Lender its share of such fees in accordance with the terms of the arrangements of Agent with such Lender.

3.3 Changes in Laws and Increased Costs of Loans.

(a) If after the date hereof, either (i) any change in, or in the interpretation of, any law or regulation is introduced, including, without limitation, with respect to reserve requirements, applicable to any Lender or any banking or financial institution from whom any Lender borrows funds or obtains credit (a “Funding Bank”), or (ii) a Funding Bank or any Lender complies with any future guideline or request from any central bank or other Governmental Authority or (iii) a Funding Bank, any Lender or Issuing Bank determines that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof has or would have the effect described below, or a Funding Bank, any Lender or Issuing Bank complies with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, and in the case of any event set forth in this clause (iii), such adoption, change or compliance has or would have the direct or indirect effect of reducing the rate of return on any Lender’s or Issuing Bank’s capital as a consequence of its obligations hereunder to a level below that which such Lender or Issuing Bank could have achieved but for such adoption, change or compliance (taking into consideration the Funding Bank’s or Lender’s or Issuing Bank’s policies with respect to capital adequacy) by an amount deemed by such Lender or Issuing Bank to be material, and the result of any of the foregoing events described in clauses (i), (ii) or (iii) is or results in an increase in the cost to any Lender or Issuing Bank of funding or maintaining the Loans, the Letters of Credit or its Commitment, then Borrowers and Guarantors shall from time to time upon demand by Agent pay to Agent additional amounts sufficient to indemnify such Lender or Issuing Bank, as the case may be, against such increased cost on an after-tax basis (without duplication of any amounts received by Agent or Lenders in connection with Section 6.5 hereof) (after taking into account applicable deductions and credits in respect of the amount indemnified). A certificate as to the

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amount of such increased cost shall be submitted to Administrative Borrower by Agent or the applicable Lender and shall be conclusive, absent manifest error.

(b) If prior to the first day of any Interest Period, (i) Agent shall have determined in good faith (which determination shall be conclusive and binding upon Borrowers and Guarantors) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Adjusted Eurodollar Rate for such Interest Period, (ii) Agent has received notice from any Lender that the Adjusted Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lender of making or maintaining Eurodollar Rate Loans during such Interest Period, or (iii) Dollar deposits in the principal amounts of the Eurodollar Rate Loans to which such Interest Period is to be applicable are not generally available in the London interbank market, Agent shall give telecopy or telephonic notice thereof to Administrative Borrower as soon as practicable thereafter, and will also give prompt written notice to Administrative Borrower when such conditions no longer exist. If such notice is given (A) any Eurodollar Rate Loans requested to be made by the Lender giving such notice on the first day of such Interest Period shall be made as Base Rate Loans, (B) any Loans made by the Lender giving such notice that were to have been converted on the first day of such Interest Period to or continued as Eurodollar Rate Loans shall be converted to or continued as Base Rate Loans and (C) each outstanding Eurodollar Rate Loan made by the Lender giving such notice shall be converted, on the last day of the then-current Interest Period thereof, to Base Rate Loans. Until such notice has been withdrawn by Agent, no further Eurodollar Rate Loans shall be made or continued as such, nor shall any Borrower (or Administrative Borrower on behalf of any Borrower) have the right to convert Base Rate Loans to Eurodollar Rate Loans.

(c) Notwithstanding any other provision herein, if the adoption of or any change in any law, treaty, rule or regulation or final, non-appealable determination of an arbitrator or a court or other Governmental Authority or in the interpretation or application thereof occurring after the date hereof shall make it unlawful for Agent or any Lender to make or maintain Eurodollar Rate Loans as contemplated by this Agreement, (i) Agent or such Lender shall promptly give written notice of such circumstances to Administrative Borrower (which notice shall be withdrawn whenever such circumstances no longer exist), (ii) the commitment of such Lender hereunder to make Eurodollar Rate Loans, continue Eurodollar Rate Loans as such and convert Base Rate Loans to Eurodollar Rate Loans shall forthwith be canceled and, until such time as it shall no longer be unlawful for such Lender to make or maintain Eurodollar Rate Loans, such Lender shall then have a commitment only to make a Base Rate Loan when a Eurodollar Rate Loan is requested and (iii) such Lender’s Loans then outstanding as Eurodollar Rate Loans, if any, shall be converted automatically to Base Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurodollar Rate Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, Borrowers and Guarantors shall pay to such Lender such amounts, if any, as may be required pursuant to Section 3.3(d) hereof.

(d) Borrowers and Guarantors shall indemnify Agent and each Lender and to hold Agent and each Lender harmless from any loss or expense which Agent or such Lender may sustain or incur as a consequence of (i) default by any Borrower in making a borrowing of,

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conversion into or extension of Eurodollar Rate Loans after such Borrower (or Administrative Borrower on behalf of such Borrower) has given a notice requesting the same in accordance with the provisions of this Agreement, (ii) default by any Borrower in making any prepayment of a Eurodollar Rate Loan after such Borrower has given a notice thereof in accordance with the provisions of this Agreement, and (iii) the making of a prepayment of Eurodollar Rate Loans on a day which is not the last day of an Interest Period with respect thereto. With respect to Eurodollar Rate Loans, such indemnification may include an amount equal to the excess, if any, of (A) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or extended, for the period from the date of such prepayment or of such failure to borrow, convert or extend to the last day of the applicable Interest Period (or, in the case of a failure to borrow, convert or extend, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Eurodollar Rate Loans provided for herein (excluding any loss of the Applicable Margin on the relevant Loans) over (B) the amount of interest (as determined by such Agent or such Lender) which would have accrued to Agent or such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank Eurodollar market. This covenant shall survive the termination or non-renewal of this Agreement and the payment of the Obligations.

SECTION 4. CONDITIONS PRECEDENT

4.1 Conditions Precedent to Initial Loans and Letters of Credit. The obligation of Lenders to make the initial Loans or of Issuing Bank to issue the initial Letters of Credit hereunder is subject to the satisfaction of, or waiver of, immediately prior to or concurrently with the making of such Loan or the issuance of such Letter of Credit of each of the following conditions precedent:

(a) Agent shall have received, in form and substance satisfactory to Agent, all releases, terminations and such other documents as Agent may reasonably request to evidence and effectuate the termination by the Existing Lenders of their respective financing arrangements with Borrowers and Guarantors and the termination and release by it or them, as the case may be, of any interest in and to any assets and properties of each Borrower and Guarantor, duly authorized, executed and delivered by it or each of them, including, but not limited to, (i) UCC termination statements for all UCC financing statements previously filed by it or any of them or their predecessors, as secured party and any Borrower or Guarantor, as debtor; and (ii) satisfactions and discharges of any mortgages, deeds of trust or deeds to secure debt by any Borrower or Guarantor in favor of it or any of them, in form acceptable for recording with the appropriate Governmental Authority;

(b) all requisite corporate action and proceedings in connection with this Agreement and the other Financing Agreements shall be reasonably satisfactory in form and substance to Agent, and Agent shall have received all information and copies of all documents, including records of requisite corporate action and proceedings which Agent may have reasonably requested in connection therewith, such documents where requested by Agent or its counsel to be certified by appropriate corporate officers or Governmental Authority (and including a copy of the certificate of incorporation or formation of each Borrower and Guarantor certified by the applicable Secretary of State (or equivalent Governmental Authority) which shall set forth the same complete corporate name of such Borrower or Guarantor as is set forth herein

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and such document as shall set forth the organizational identification number of each Borrower or Guarantor, if one is issued in its jurisdiction of incorporation);

(c) no material adverse change shall have occurred in the assets, business or prospects of Borrowers since the date of Agent’s latest field examination (not including for this purpose the field review referred to in clause (d) below) and no change or event shall have occurred which would impair the ability of any Borrower or Guarantor to perform its obligations hereunder or under any of the other Financing Agreements to which it is a party or of Agent or any Lender to enforce the Obligations or realize vipon the Collateral;

(d) Agent shall have completed a field review of the Records and such other information with respect to the Collateral as Agent may reasonably require in accordance with Agent’s customary practices and procedures to determine the amount of Loans available to Borrowers (including, without limitation, current perpetual inventory records and/or roll- forwards of Accounts and Inventory through the date of closing and test counts of the Inventory in a manner satisfactory to Agent, together with such supporting documentation as may be reasonably necessary or appropriate, and other documents and information that will enable Agent to accurately identify and verify the Collateral), the results of which in each case shall be satisfactory to Agent, not more than five (5) Business Days prior to the date hereof or such earlier date as Agent may agree;

(e) Agent shall have received, in form and substance reasonably satisfactory to Agent, all consents, waivers, acknowledgments and other agreements from third persons which Agent may deem reasonably necessary or desirable in order to permit, protect and perfect its security interests in and liens upon the Collateral or to effectuate the provisions or purposes of this Agreement and the other Financing Agreements, including, without limitation, Collateral Access Agreements; provided, that, the failure to deliver Collateral Access Agreements as to specific locations shall not be a condition of closing, so long as all other conditions are met after giving effect to any Reserves established by Agent in respect of amounts due or to become due to the owner, lessor or operator thereof as provided for in the definition of Reserves;

(f) the Excess Availability as determined by Agent, as of the date hereof, shall be not less than $45,000,000 after giving effect to the initial Loans made or to be made and Letters of Credit issued or to be issued in connection with the initial transactions hereunder;

(g) Agent shall have received, in form and substance reasonably satisfactory to Agent, Deposit Account Control Agreements by and among Agent, each Borrower and Guarantor, as the case may be and each bank where such Borrower (or Guarantor) has a deposit account, in each case, duly authorized, executed and delivered by such bank and Borrower or Guarantor, as the case may be;

(h) Agent shall have received evidence, in form and substance reasonably satisfactory to Agent, that Agent has a valid perfected first priority security interest in all of the Collateral (except as to priority, subject to the liens permitted under Sections 9.8(b) hereof, Section 9.8(c) and 9.8(r) hereof, to the extent that such liens have priority over the liens of Agent under applicable law and except for such items of Collateral as Agent may determine not to

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perfect its security interest in based on the de minimus value thereof relative to the cost of such perfection or the perfection;

(i) Agent shall have received, in form and substance reasonably satisfactory to Agent, the Mezzanine Note Intercreditor Agreement, duly authorized, executed and delivered by Mezzanine Note Agent, Borrowers and Guarantors;

(j) Agent shall have received and reviewed lien and judgment search results for the location of each Borrower and Guarantor (determined in accordance with the Uniform Commercial Code of the applicable jurisdiction and any other applicable law) and all counties in which assets of Borrowers and Guarantors are located where the value of such assets exceed $100,000 for distribution locations and $400,000 for manufacturing locations, which search results shall be in form and substance reasonably satisfactory to Agent;

(k) Agent shall have received a Borrowing Base Certificate setting forth the Loans and Letters of Credit available to Borrowers as of the date hereof as completed in a manner reasonably satisfactory to Agent

(l) Agent shall have received environmental audits of the Real Property to be subject to the Mortgages conducted by an independent environmental engineering firm acceptable to Agent, and in form, scope and methodology satisfactory to Agent, the results of which shall be reasonably satisfactory to Agent;

(m) Agent shall have received, in form and substance reasonably satisfactory to Agent, a valid and effective title insurance policy (or binding proforma mortgage policy or commitment to issue title insurance policies marked to evidence the form of such policies to be delivered with respect to the Mortgage) issued by a company and agent reasonably acceptable to Agent: (i) insuring the priority, amount and sufficiency of the Mortgages, (ii) insuring against matters that would be disclosed by surveys and (iii) containing any legally available endorsements, assurances or affirmative coverage reasonably requested by Agent for protection of its interests;

(n) Agent shall have received originals of the shares of the stock certificates representing all of the issued and outstanding certificated shares of the Capital Stock of each Borrower and Guarantor (other than Parent) and owned by any Borrower or Guarantor, in each case together with stock powers duly executed in blank with respect thereto;

(o) Agent shall have received evidence of insurance and loss payee endorsements required hereunder and under the other Financing Agreements, in form and substance reasonably satisfactory to Agent, and certificates of insurance policies and/or endorsements naming Agent as loss payee;

(p) Agent shall have received, in form and substance reasonably satisfactory to Agent, audited consolidated financial statements for Parent and its Subsidiaries, for the fiscal years 2005, 2006, and 2007 and interim unaudited consolidated financial statements of Parent and its Subsidiaries for each monthly period ended since the last audited financial statements available;

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(q) Agent shall have received, in form and substance reasonably satisfactory to Agent, such opinion letters of counsel to Borrowers and Guarantors with respect to the Financing Agreements and such other matters as Agent may reasonably request; and

(r) the other Financing Agreements and all instruments and documents hereunder and thereunder shall have been duly executed and delivered to Agent, in form and substance reasonably satisfactory to Agent.

4.2 Conditions Precedent to All Loans and Letters of Credit. The obligation of each Lender to make the Loans, including the initial Loans, or of Issuing Bank to issue any Letter of Credit, including the initial Letters of Credit, is subject to the further satisfaction of, or waiver of, immediately prior to or concurrently with the making of each such Loan or the issuance of such Letter of Credit of each of the following conditions precedent:

(a) all representations and warranties contained herein and in the other Financing Agreements that are qualified as to materiality or Material Adverse Effect shall be true and correct and the representations and warranties that are not so qualified shall be true and correct in all material respects, in each case with the same effect as though such representations and warranties had been made on and as of the date of the making of each such Loan or providing each such Letter of Credit and after giving effect thereto, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and correct to the extent required hereunder or under the other Financing Agreements on and as of such earlier date);

(b) no law, regulation, order, judgment or decree of any Governmental Authority shall exist, and no action, suit, investigation, litigation or proceeding shall be pending or threatened in any court or before any arbitrator or Governmental Authority, which (i) purports to enjoin, prohibit, restrain or otherwise affect (A) the making of the Loans or providing the Letters of Credit, or (B) the consummation of the transactions contemplated pursuant to the terms hereof or the other Financing Agreements or (ii) has or has a reasonable likelihood of having a Material Adverse Effect; and

(c) no Default or Event of Default shall have occurred and be continuing on and as of the date of the making of such Loan or providing each such Letter of Credit and after giving effect thereto.

SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST

5.1 Grant of Security Interest. To secure payment and performance of all Obligations, each Borrower and Guarantor hereby grants to Agent, for itself and the benefit of Secured Parties, a continuing security interest in, a lien upon, and a right of set off against, and hereby assigns to Agent, for itself and the benefit of Secured Parties, as security, all personal and real property and fixtures, and interests in property and fixtures, of each Borrower and Guarantor, whether now owned or hereafter acquired or existing, and wherever located (together with all other collateral security for the Obligations at any time granted to or held or acquired by Agent or any Lender, collectively, the “Collateral”), including all of each Borrower’s and Guarantor’s right, title and interest in and to the following:

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(a) all Accounts;

(b) all general intangibles, including, without limitation, all Intellectual Property;

(c) all goods, including, without limitation, Inventory and Equipment;

(d) all owned Real Property and fixtures;

(e) all chattel paper, including, without limitation, all tangible and electronic chattel paper;

(f) all instruments, including, without limitation, all promissory notes;

(g) all documents;

(h) all deposit accounts;

(i) all letters of credit, banker’s acceptances and similar instruments and including all letter-of-credit rights;

(j) all supporting obligations and all present and future liens, security interests, rights, remedies, title and interest in, to and in respect of Receivables and other Collateral, including (i) rights and remedies under or relating to guaranties, contracts of suretyship, letters of credit and credit and other insurance related to the Collateral, (ii) rights of stoppage in transit, replevin, repossession, reclamation and other rights and remedies of an unpaid vendor, lienor or secured party, (iii) goods described in invoices, documents, contracts or instruments with respect to, or otherwise representing or evidencing, Receivables or other Collateral, including returned, repossessed and reclaimed goods, and (iv) deposits by and property of account debtors or other persons securing the obligations of account debtors;

(k) all (i) investment property (including securities, whether certificated or uncertificated, securities accounts, security entitlements, commodity contracts or commodity accounts) and (ii) monies, credit balances, deposits and other property of any Borrower or Guarantor now or hereafter held or received by or in transit to Agent, any Lender or its Affiliates or at any other depository or other institution from or for the account of any Borrower or Guarantor, whether for safekeeping, pledge, custody, transmission, collection or otherwise;

(l) all commercial tort claims, including, without limitation, those identified in the Information Certificate;

(m) to the extent not otherwise described above, all Receivables;

(n) all Records; and

(o) all products and proceeds of the foregoing, in any form, including insurance proceeds and all claims against third parties for loss or damage to or destruction of or other involuntary conversion of any kind or nature of any or all of the other Collateral.

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5.2 Perfection of Security Interests.

(a) Each Borrower and Guarantor irrevocably and unconditionally authorizes Agent (or its agent) to file at any time and from time to time such financing statements with respect to the Collateral naming Agent or its designee as the secured party and such Borrower or Guarantor as debtor, as Agent may reasonably require, and including any other information with respect to such Borrower or Guarantor or otherwise required by part 5 of Article 9 of the Uniform Commercial Code of such jurisdiction as Agent may reasonably determine, together with any amendment and continuations with respect thereto, which authorization shall apply to all financing statements filed on or after the date hereof. Each Borrower and Guarantor hereby authorizes Agent to adopt on behalf of such Borrower and Guarantor any symbol required for authenticating any electronic filing. In the event that the description of the collateral in any financing statement naming Agent or its designee as the secured party and any Borrower or Guarantor as debtor includes assets and properties of such Borrower or Guarantor that do not at any time constitute Collateral, whether hereunder, under any of the other Financing Agreements or otherwise, the filing of such financing statement shall nonetheless be deemed authorized by such Borrower or Guarantor to the extent of the Collateral included in such description and it shall not render the financing statement ineffective as to any of the Collateral or otherwise affect the financing statement as it applies to any of the Collateral. So long as any Obligations are outstanding and the Commitments have not been terminated, without Agent’s prior consent, in no event shall any Borrower or Guarantor at any time file, or permit or cause to be filed, any correction statement or termination statement with respect to any financing statement (or amendment or continuation with respect thereto) naming Agent or its designee as secured party and such Borrower or Guarantor as debtor.

(b) Each Borrower and Guarantor does not have any chattel paper (whether tangible or electronic) or instruments as of the date hereof, except as set forth in the Information Certificate. In the event that any Borrower or Guarantor shall be entitled to or shall receive any chattel paper or instrument for obligations in excess of $2,000,000 in any one case or $2,000,000 in the aggregate that constitutes Collateral after the date hereof, the applicable Borrower or Guarantor shall promptly notify Agent thereof in writing. Promptly upon the receipt thereof by or on behalf of any Borrower or Guarantor (including by any agent or representative), such Borrower or Guarantor shall deliver, or cause to be delivered to Agent, all tangible chattel paper and instruments that such Borrower or Guarantor has or may at any time acquire, accompanied by such instruments of transfer or assignment duly executed in blank as Agent may from time to time reasonably specify, in each case except as Agent may otherwise agree. At Agent’s option, each Borrower and Guarantor shall, or Agent may at any time an Event of Default exists on behalf of any Borrower or Guarantor, cause the original of any such instrument or chattel paper to be conspicuously marked in a form and manner reasonably acceptable to Agent with the following legend referring to chattel paper or instruments as applicable: “This [chattel paper] [instrument] is subject to the security interest of Wachovia Bank, National Association and any sale, transfer, assignment or encumbrance of this [chattel paper] [instrument] violates the rights of such secured party.”

(c) In the event that any Borrower or Guarantor shall at any time hold or acquire an interest in any electronic chattel paper or any “transferable record” (as such term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce

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Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction), such Borrower or Guarantor shall promptly notify Agent thereof in writing. Promptly upon Agent’s request, such Borrower or Guarantor shall take, or cause to be taken, such actions as Agent may reasonably request to give Agent control of such electronic chattel paper under Section 9-105 of the UCC and control of such transferable record under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such jurisdiction.

(d) Each Borrower and Guarantor does not have any deposit accounts as of the date hereof, except as set forth in the Information Certificate. Borrowers and Guarantors shall not, directly or indirectly, after the date hereof open, establish or maintain any deposit account unless each of the following conditions is satisfied: (i) Agent shall have received not less than five (5) Business Days prior written notice of the intention of any Borrower or Guarantor to open or establish such account which notice shall specify in reasonable detail and specificity reasonably acceptable to Agent the name of the account, the owner of the account, the name and address of the bank at which such account is to be opened or established, the individual at such bank with whom such Borrower or Guarantor is dealing and the purpose of the account, (ii) the bank where such account is opened or maintained shall be reasonably acceptable to Agent, and (iii) on or before the opening of such deposit account, such Borrower or Guarantor shall deliver to Agent a Deposit Account Control Agreement with respect to such deposit account duly authorized, executed and delivered by such Borrower or Guarantor and the bank at which such deposit account is opened and maintained. The terms of this subsection (d) shall not apply to deposit accounts specifically and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Borrower’s or Guarantor’s salaried employees.

(e) No Borrower or Guarantor owns or holds, directly or indirectly, beneficially or as record owner or both, any investment property, as of the date hereof, or has any investment account, securities account, commodity account or other similar account with any bank or other financial institution or other securities intermediary or commodity intermediary as of the date hereof, in each case except as set forth in the Information Certificate.

(i) In the event that any Borrower or Guarantor shall be entitled to or shall at any time after the date hereof hold or acquire any certificated securities constituting Collateral, such Borrower or Guarantor shall promptly endorse, assign and deliver the same to Agent, accompanied by such instruments of transfer or assignment duly executed in blank as Agent may from time to time reasonably specify. If any securities, now or hereafter acquired by any Borrower or Guarantor are uncertificated and are issued to such Borrower or Guarantor or its nominee directly by the issuer thereof, such Borrower or Guarantor shall immediately notify Agent thereof and shall as Agent may reasonably specify, either (A) cause the issuer to agree to comply with instructions from Agent as to such securities, without further consent of any Borrower or Guarantor or such nominee, or (B) arrange for Agent to become the registered owner of such securities.

(ii) Borrowers and Guarantors shall not, directly or indirectly, after the date hereof open, establish or maintain any investment account, securities account, commodity account or any other similar account (other than a deposit account) with any

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securities intermediary or commodity intermediary unless each of the following conditions is satisfied: (A) Agent shall have received not less than five (5) Business Days prior written notice of the intention of such Borrower or Guarantor to open or establish such account which notice shall specify in reasonable detail and specificity reasonably acceptable to Agent the name of the account, the owner of the account, the name and address of the securities intermediary or commodity intermediary at which such account is to be opened or established, the individual at such intermediary with whom such Borrower or Guarantor is dealing and the purpose of the account, (B) the securities intermediary or commodity intermediary (as the case may be) where such account is opened or maintained shall be acceptable to Agent, and (C) on or before the opening of such investment account, securities account or other similar account with a securities intermediary or commodity intermediary, such Borrower or Guarantor shall as Agent may specify either (i) execute and deliver, and cause to be executed and delivered to Agent, an Investment Property Control Agreement with respect thereto duly authorized, executed and delivered by such Borrower or Guarantor and such securities intermediary or commodity intermediary or (ii) arrange for Agent to become the entitlement holder with respect to such investment property on terms and conditions reasonably acceptable to Agent.

(f) Borrowers and Guarantors are not the beneficiary or otherwise entitled to any right to payment under any letter of credit, banker’s acceptance or similar instrument as of the date hereof, except as set forth in the Information Certificate. In the event that any Borrower or Guarantor shall be entitled to or shall receive any right to payment under any letter of credit, banker’s acceptance or any similar instrument, whether as beneficiary thereof or otherwise after the date hereof (except with respect to any letter of credit, banker’s acceptance or similar instrument in support of a financed Capital Expenditure permitted under Section 9.18 hereof) involving an amount in excess of $1,000,000 in any one case or $2,000,000 in the aggregate that constitute Collateral, such Borrower or Guarantor shall promptly notify Agent thereof in writing. Such Borrower or Guarantor shall immediately, as Agent may specify, either, in each case unless otherwise agreed to by Agent, (i) deliver, or cause to be delivered to Agent, with respect to any such letter of credit, banker’s acceptance or similar instrument, the written agreement of the issuer and any other nominated person obligated to make any payment in respect thereof (including any confirming or negotiating bank), in form and substance reasonably satisfactory to Agent, consenting to the assignment of the proceeds of the letter of credit to Agent by such Borrower or Guarantor and agreeing to make all payments thereon directly to Agent or as Agent may otherwise direct or (ii) cause Agent to become, at Borrowers’ expense, the transferee beneficiary of the letter of credit, banker’s acceptance or similar instrument (as the case may be).

(g) Borrowers and Guarantors do not have any commercial tort claims as of the date hereof, except as set forth in the Information Certificate. In the event that any Borrower or Guarantor shall at any time after the date hereof have any commercial tort claims involving a claim in excess of $2,000,000 (or commercial tort claims in the aggregate in excess of $5,000,000), that arise in connection with or are related to any other Collateral, such Borrower or Guarantor shall promptly notify Agent thereof in writing, which notice shall (i) set forth in reasonable detail the basis for and nature of such commercial tort claim and (ii) include the express grant by such Borrower or Guarantor to Agent of a security interest in such commercial tort claim (and the proceeds thereof). In the event that such notice does not include such grant of a security interest, the sending thereof by such Borrower or Guarantor to Agent shall be deemed to constitute such grant to Agent. Upon the sending of such notice, any commercial tort claim

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described therein shall constitute part of the Collateral and shall be deemed included therein. Without limiting the authorization of Agent provided in Section 5.2(a) hereof or otherwise arising by the execution by such Borrower or Guarantor of this Agreement or any of the other Financing Agreements, Agent is hereby irrevocably authorized from time to time and at any time to file such financing statements naming Agent or its designee as secured party and such Borrower or Guarantor as debtor, or any amendments to any financing statements, covering any such commercial tort claim as Collateral. In addition, each Borrower and Guarantor shall promptly upon Agent’s request, execute and deliver, or cause to be executed and delivered, to Agent such other agreements, documents and instruments as Agent may reasonably require in connection with such commercial tort claim.

(h) Borrowers and Guarantors do not have any goods, documents of title or other Collateral having an aggregate value in excess of $1,000,000 (which as to documents of title for this purpose shall be deemed to refer to the value of the goods covered by such document of title) in the custody, control or possession of a third party as of or after the date hereof, except as set forth in the Information Certificate and except for goods located in the United States in transit to a location of a Borrower or Guarantor permitted herein in the ordinary course of business of such Borrower or Guarantor in the possession of the carrier transporting such goods. In the event that any goods, documents of title or other Collateral are at any time after the date hereof having a value in excess of $250,000 in any one case in the custody, control or possession of any other person not referred to in the Information Certificate or such carriers, Borrowers and Guarantors shall promptly notify Agent thereof in writing.

(i) Borrowers and Guarantors shall take any other actions reasonably requested by Agent from time to time to cause the attachment, perfection and first priority of, and the ability of Agent to enforce, the security interest of Agent in any and all of the Collateral, including, without limitation, (i) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the UCC or other applicable law, to the extent, if any, that any Borrower’s or Guarantor’s signature thereon is required therefor, (ii) causing Agent’s name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of Agent to enforce, the security interest of Agent in such Collateral, (iii) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of Agent to enforce, the security interest of Agent in such Collateral, (iv) obtaining the consents and approvals of any Governmental Authority or third party, including, without limitation, any consent of any licensor, lessor or other person obligated on Collateral, and taking all actions required by any earlier versions of the UCC or by other law, as applicable in any relevant jurisdiction.

5.3 Exclusions from Collateral. Notwithstanding anything to the contrary contained in Section 5.1 above, the types or items of Collateral described in such Section shall not include the Capital Stock of any existing or hereafter organized or acquired direct or indirect Foreign Subsidiary that is a “controlled foreign corporation” (as such term is defined in Section 957(a) of the Code or a successor provision thereof) in excess of sixty five (65%) percent of all of the issued and outstanding shares of Capital Stock of such Subsidiary entitled to vote (within the meaning of Treasury Regulation Section 1.956-2).

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SECTION 6. COLLECTION AND ADMINISTRATION

6.1 Borrowers’ Loan Accounts. Agent shall maintain one or more loan account(s) on its books in which shall be recorded (a) all Loans, Letters of Credit and other Obligations and the Collateral, (b) all payments made by or on behalf of any Borrower or Guarantor and (c) all other appropriate debits and credits as provided in this Agreement, including fees, charges, costs, expenses and interest. All entries in the loan account(s) shall be made in accordance with Agent’s customary practices as in effect from time to time.

6.2 Statements. Agent shall render to Administrative Borrower each month a statement setting forth the balance in the Borrowers’ loan account(s) maintained by Agent for Borrowers pursuant to the provisions of this Agreement, including principal, interest, fees, costs and expenses. Each such statement shall be subject to subsequent adjustment by Agent but such statement shall, absent manifest errors or omissions, be considered correct and deemed accepted by Borrowers and Guarantors and conclusively binding upon Borrowers and Guarantors as an account stated except to the extent that Agent receives a written notice from Administrative Borrower of any specific exceptions of Administrative Borrower thereto within sixty (60) days after the date such statement has been received by Parent. Until such time as Agent shall have rendered to Administrative Borrower a written statement as provided above, the balance in any Borrower’s loan account(s) shall be presumptive evidence of the amounts due and owing to Agent and Lenders by Borrowers and Guarantors.

6.3 Collection of Accounts.

(a) Borrowers and Guarantors shall establish and maintain, at their expense, blocked accounts or lockboxes and related blocked accounts (in either case, “Blocked Accounts”), as Agent may reasonably specify, with such banks as are reasonably acceptable to Agent into which Borrowers and Guarantors shall promptly deposit and direct their respective account debtors to directly remit all payments on Receivables and all payments constituting proceeds of Inventory in the identical form in which such payments are made, whether by cash, check or other manner, or (ii) Borrowers and Guarantors shall promptly deposit all payments on all Collateral (other than Receivables) in the identical form in which such payments are made, whether by cash, check or other manner. Borrowers and Guarantors shall each deliver, or cause to be delivered to Agent, a Deposit Account Control Agreement duly authorized, executed and delivered by each bank where a Blocked Account is maintained as provided in Section 5.2 hereof. Upon the occurrence and during the continuance of a Cash Dominion Event, Agent may deliver a Control Notice to the depository bank at which the Blocked Account is maintained and Agent shall, at the request of Administrative Borrower, rescind such Control Notice at such time that a Cash Dominion Event does not exist for a period of not less than one hundred twenty (120) consecutive days, provided, that, a Cash Dominion Event shall not be terminated following the third (3rd) such termination during the term of this Agreement unless a Cash Dominion Event does not exist for a period of not less than one hundred eighty (180) consecutive days thereafter. Each Borrower and Guarantor agrees that after the occurrence and during the continuance of a Cash Dominion Event all payments made to such Blocked Accounts or other funds received and collected by Agent or any Lender, whether in respect of the Receivables, as proceeds of Inventory or other Collateral or otherwise shall be treated as payments to Agent and Lenders in

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respect of the Obligations and therefore shall constitute the property of Agent and Lenders to the extent of the then outstanding Obligations.

(b) For purposes of calculating the amount of the Loans available to each Borrower, such payments will be applied (conditional upon final collection) to the Obligations on the Business Day of receipt by Agent of immediately available funds in the Agent Payment Account provided such payments and notice thereof are received in accordance with Agent’s usual and customary practices as in effect from time to time and within sufficient time to credit such Borrower’s loan account on such day, and if not, then on the next Business Day.

(c) Each Borrower and Guarantor and their respective employees, agents and Subsidiaries shall, acting as trustee for Agent, receive, as the property of Agent, any monies, checks, notes, drafts or any other payment relating to and/or proceeds of Accounts or other Collateral which come into their possession or under their control and immediately upon receipt thereof, shall deposit or cause the same to be deposited in the Blocked Accounts, or remit the same or cause the same to be remitted, in kind, to Agent. Borrowers agree to reimburse Agent on demand for any amounts owed or paid to any bank or other financial institution at which a Blocked Account or any other deposit account or investment account is established or any other bank, financial institution or other person involved in the transfer of funds to or from the Blocked Accounts arising out of Agent’s payments to or indemnification of such bank, financial institution or other person other than resulting from the gross negligence or willful misconduct of Agent. The obligations of Borrowers to reimburse Agent for such amounts pursuant to this Section 6.3 hereof shall survive the termination of this Agreement.

6.4 Payments.

(a) All Obligations shall be payable to the Agent Payment Account as provided in Section 6.6 hereof or such other place as Agent may designate in writing to Administrative Borrower from time to time.

(b) Subject to the other terms and conditions contained herein, so long as no Event of Default shall have occurred and be continuing and the Commitments have not been terminated or the payment of all Obligations accelerated, Agent shall apply payments received or collected from any Borrower or Guarantor or for the account of any Borrower or Guarantor (including the monetary proceeds of collections or of realization upon any Collateral) as follows: first, to the payment in full of any fees, indemnities or expense reimbursements then due to Agent from any Borrower or Guarantor; second, ratably, to the payment in full of any fees, indemnities, or expense reimbursements then due to Lenders and Issuing Bank from any Borrower or Guarantor; third, ratably, to the payment in full of interest due in respect of any Loans (and including any Special Agent Advances) and Letter of Credit Obligations; fourth, to the payment in full of principal in respect of Special Agent Advances; fifth, to the payment in full of principal in respect of the Swing Line Loans; sixth, ratably, to the payment in full of principal in respect of the outstanding Tranche A Loans and to pay Obligations then due arising under or pursuant to any Bank Products of a Borrower or Guarantor with a Bank Product Provider (up to the amount of any then effective Reserve established in respect of such Obligations), except in the case of a payment required under Section 2.4 hereof, upon payment of principal in respect of Tranche A Loans in the amount required to be paid under Section 2.4

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hereof, then payments shall next be applied to the payment of principal in respect of Tranche B Loans required to be paid under Section 2.4 hereof, before any additional payments are then applied to the payment in full of principal in respect of the remaining balance of Tranche A Loans or to payment Obligations arising under or pursuant to any Bank Products as provided above; seventh, to the payment in full of principal in respect of the outstanding Tranche B Loans; eighth, to pay or prepay any other Obligations whether or not then due, in such order and manner as Administrative Borrower requests; and ninth, to the extent any proceeds remain, to the Administrative Borrower or such other Person that may be legally entitled thereto.

(c) Subject to the other terms and conditions contained herein, at any time an Event of Default shall have occurred and be continuing and the Commitments have been terminated or the payment of all Obligations accelerated, Agent shall apply payments received or collected from any Borrower or Guarantor or for the account of any Borrower or Guarantor (including the monetary proceeds of collections or of realization upon any Collateral) as follows: first, to the payment in full of any fees, indemnities or expense reimbursements then due to Agent from any Borrower or Guarantor; second, ratably, to the payment in full of any fees, indemnities, or expense reimbursements then due to Lenders and Issuing Bank from any Borrower or Guarantor; third, ratably, to the payment in full of interest due in respect of any Tranche A Loans, Special Agent Advances and Letter of Credit Obligations; fourth, to the payment in full of principal in respect of Special Agent Advances; fifth, ratably, to the payment in full of principal in respect of the Tranche A Loans and to pay or prepay Obligations then due arising under or pursuant to any Bank Products of a Borrower or Guarantor with a Bank Product Provider (up to the amount of any then effective Reserve established in respect of such Obligations); sixth, to the payment in full of cash collateral in respect of the Letter of Credit Obligations until the aggregate amount thereof equals one hundred five (105%) percent of the aggregate undrawn amount of all then outstanding Letters of Credit through the end of the latest expiration date of such Letters of Credit plus the amount of any other contingent Obligations (but not including for this purpose any Obligations arising under or pursuant to any Bank Products); seventh, to the payment in full of interest in respect of the Tranche B Loans; eighth, to the payment in full of principal in respect of the Tranche B Loans; ninth, to pay or prepay any other Obligations whether or not then due, in such order and manner as Agent determines; and tenth, to the extent any proceeds remain, to the Administrative Borrower or such other Person that may be legally entitled thereto.

(d) Notwithstanding anything to the contrary contained in this Agreement, (1) unless so directed by Agent, or unless an Event of Default shall have occurred and be continuing, Agent shall not apply any payments which it receives to any Eurodollar Rate Loans, except (A) on the expiration date of the Interest Period applicable to any such Eurodollar Rate Loans or (B) in the event that there are no outstanding Base Rate Loans, and (2) to the extent any Borrower uses any proceeds of the Loans or Letters of Credit to acquire rights in or the use of any Collateral or to repay any Indebtedness used to acquire rights in or the use of any Collateral, payments in respect of the Obligations shall be deemed applied first to the Obligations arising from Loans and Letter of Credit Obligations that were not used for such purposes and second to the Obligations arising from Loans and Letter of Credit Obligations the proceeds of which were used to acquire rights in or the use of any Collateral in the chronological order in which such Borrower acquired such rights in or the use of such Collateral. All references to the term “payment in full” as used herein as to any type or category of Obligations shall mean the

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payment of all of such type or category of Obligations in cash or other immediately available funds and shall include any amount within such category, whether principal, interest (including interest at the applicable rate after an Event of Default and interest on interest), fees, costs or expense or reimbursement for costs or expenses, charges or indemnities, in each case that would accrue but for the commencement of any case under the U.S. Bankruptcy Code and whether or not allowed or allowable in any such case under the U.S. Bankruptcy Code. All references to the term “ratably” as used in Sections 6.4(b) and 6.4(c) above shall mean pro rata on the basis of the amount owing to any one Person in relationship to the amounts owing to all Persons of the same category of Obligations within the same level of priority.

(e) At Agent’s option, all principal, interest, fees, costs, expenses and other charges provided for in this Agreement or the other Financing Agreements may be charged directly to the loan account(s) of any Borrower maintained by Agent. If after receipt of any payment of, or proceeds of Collateral applied to the payment of, any of the Obligations, Agent, any Lender or Issuing Bank is required to surrender or return such payment or proceeds to any Person for any reason, then the Obligations intended to be satisfied by such payment or proceeds shall be reinstated and continue and this Agreement shall continue in full force and effect as if such payment or proceeds had not been received by Agent or such Lender. Borrowers and Guarantors shall be liable to pay to Agent, and do hereby indemnify and hold Agent and Lenders harmless for the amount of any payments or proceeds surrendered or returned. This Section 6.4(b) shall remain effective notwithstanding any contrary action which may be taken by Agent or any Lender in reliance upon such payment or proceeds. This Section 6.4 hereof shall survive the payment of the Obligations and the termination of this Agreement.

6.5 Taxes.

(a) Any and all payments by or on account of any of the Obligations shall be made free and clear of and without deduction or withholding for or on account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees, deductions, charges, withholdings, liabilities, restrictions or conditions of any kind, excluding (i) in the case of each Lender, Issuing Bank and Agent (A) taxes measured by its income, and franchise taxes (or similar taxes) imposed on it, by the jurisdiction (or any political subdivision thereof) under the laws of which such Lender, Issuing Bank or Agent (as the case may be) is organized or in which its principal lending office is located or, in the case of each Lender, in which its applicable lending office is located, (B) any branch profits tax imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrowers are located , and (C) any United States withholding taxes payable with respect to payments under the Financing Agreements under laws (including any statute, treaty or regulation) in effect on the date hereof (or, in the case of an Eligible Transferee, the date of the Assignment and Acceptance) applicable to such Lender, Issuing Bank or Agent, as the case may be, or is attributable to such Lender’s, Issuing Bank’s or Agent’s failure or inability to comply with Section 6.5(h) hereof but not excluding any United States withholding taxes payable as a result of any change in such laws occurring after the date hereof (or the date of such Assignment and Acceptance), (ii) in the case of each Lender, taxes measured by its income, and franchise taxes (or other similar taxes) imposed on it as a result of a present or former connection between such Lender and the jurisdiction of the Governmental Authority imposing such tax or any taxing authority thereof or therein, and (iii) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 13.6

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hereof) any withholding tax that would be imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto or designates a new lending office or is attributable to such Foreign Lender’s failure or inability (other than as a result of a change in law subsequent to the date of it becomes a Lender) to comply with Section 6.5(g) hereof, except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or Assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 6.5(b) below, and (iv) any interest, additions to taxes or penalties with respect to any of the foregoing excluded taxes in (i) through (iii) (all such non-excluded taxes, levies, imposts, fees, deductions, charges, withholdings and liabilities being hereinafter referred to as “Taxes”).

(b) If any Taxes shall be required by law to be deducted from or in respect of any sum payable in respect of the Obligations to any Lender, Issuing Bank or Agent (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 6.5), such Lender, Issuing Bank or Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the relevant Borrower or Guarantor shall make such deductions, (iii) the relevant Borrower or Guarantor shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable law and (iv) the relevant Borrower or Guarantor shall deliver to Agent evidence of such payment.

(c) In addition, each Borrower and Guarantor agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies of the United States or any political subdivision thereof or any applicable foreign jurisdiction, and all liabilities with respect thereto, in each case arising from any payment made hereunder or under any of the other Financing Agreements or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any of the other Financing Agreements (collectively, “Other Taxes”).

(d) Each Borrower and Guarantor shall indemnify each Lender, Issuing Bank and Agent for the full amount of Taxes and Other Taxes (including any Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this Section 6.5) paid by such Lender, Issuing Bank or Agent (as the case may be) and any liability (including for penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within thirty (30) days from the date such Lender, Issuing Bank or Agent (as the case may be) makes written demand therefor. A certificate as to the amount of such payment or liability delivered to Administrative Borrower by a Lender, Issuing Bank (with a copy to Agent) or by Agent on its own behalf or on behalf of a Lender or Issuing Bank, shall be conclusive absent manifest error.

(e) As soon as practicable after any payment of Taxes or Other Taxes by any Borrower or Guarantor, such Borrower or Guarantor shall furnish to Agent, at its address referred to herein, the original or a certified copy of a receipt evidencing payment thereof.

(f) Without prejudice to the survival of any other agreements of any Borrower or Guarantor hereunder or under any of the other Financing Agreements, the

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agreements and obligations of such Borrower or Guarantor contained in this Section 6.5 shall survive the termination of this Agreement and the payment in full of the Obligations.

(g) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the applicable Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any of the other Financing Agreements shall deliver to Administrative Borrower (with a copy to Agent), at the time or times prescribed by applicable law or as reasonably requested by Administrative Borrower or Agent (in such number of copies as is reasonably requested by the recipient), whichever of the following is applicable (but only if such Foreign Lender is legally entitled to do so): (i) duly completed copies of Internal Revenue Service Form W-8BEN claiming exemption from, or a reduction to, withholding tax under an income tax treaty, or any successor form, (ii) duly completed copies of Internal Revenue Service Form W-8ECI claiming exemption from withholding because the income is effectively connection with a U.S. trade or business or any successor form, (iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Sections 871(h) or 881(c) of the Code, (A) a certificate of the Lender to the effect that such Lender is not a (1) “bank” within the meaning of Section 881(c)(3)(A) of the Code, (2) “10 percent shareholder” of a Borrower within the meaning of Section 881(c)(3)(B) of the Code or (3) “controlled foreign corporation” described and Section 881(c)(3)(C) of the Code and (B) duly completed copies of Internal Revenue Service Form W-8BEN claiming exemption from withholding under the portfolio interest exemption or any successor form or (iv) any other applicable form, certificate or document prescribed by applicable law as a basis for claiming exemption from or a reduction in United States withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit a Borrower to determine the withholding or deduction required to be made. Unless Administrative Borrower and Agent have received forms or other documents satisfactory to them indicating that payments hereunder or under any of the other Financing Agreements to or for a Foreign Lender are not subject to United States withholding tax or are subject to such tax at a rate reduced by an applicable tax treaty, Borrowers or Agent shall withhold amounts required to be withheld by applicable requirements of law from such payments at the applicable statutory rate.

(h) Any Lender that is a “United States person,” as defined in Section 7701(a)(30) of the Code shall deliver to Administrative Borrower (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrower) duly completed copies of IRS Form W-9, or any successor form that such Lender is entitled to provide at such time in order to comply with United States backup withholding requirements.

(i) Any Lender claiming any additional amounts payable pursuant to this Section 6.5 hereof shall use its reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its applicable lending office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that would be payable or may thereafter accrue and would not, in the sole determination of such Lender, be otherwise disadvantageous to such Lender.

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(j) If the Agent, any Lender or Issuing Bank determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrowers or with respect to which the Borrowers have paid additional amounts pursuant to this Section 6.5 hereof, it shall pay to the Administrative Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 6.5 hereof with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the Agent, such Lender or Issuing Bank, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrowers, upon the request of the Agent, such Lender or Issuing Bank, agree to repay the amount paid over to the Borrowers (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Agent, such Lender or Issuing Bank in the event the Agent, such Lender or Issuing Bank is required to repay such refund to such Governmental Authority. This subsection shall not be construed to require the Agent, any Lender or Issuing Bank to make available its tax returns (or any other information relating to its taxes) to the Borrowers or any other Person.

6.6 Authorization to Make Loans. Agent and Lenders are authorized to make the Loans based upon telephonic or other instructions received from anyone purporting to be an officer of Administrative Borrower or any Borrower or other authorized person or, at the discretion of Agent, if such Loans are necessary to satisfy any Obligations. All requests for Loans or Letters of Credit hereunder shall specify the date on which the requested advance is to be made (which day shall be a Business Day) and the amount of the requested Loan. Requests received after 11:00 a.m. New York time on any day shall be deemed to have been made as of the opening of business on the immediately following Business Day. Subject to the terms of this Agreement, requests for Swing Line Loans and Revolving Loans that are Base Rate Loans shall be honored on the same Business Day to the extent such request is received prior to 11:00 a.m. New York time on any such Business Day and the conditions precedent to such Loan have been satisfied. All Loans and Letters of Credit under this Agreement shall be conclusively presumed to have been made to, and at the request of and for the benefit of, any Borrower or Guarantor when deposited to the credit of any Borrower or Guarantor or otherwise disbursed or established in accordance with the instructions of any Borrower or Guarantor or in accordance with the terms and conditions of this Agreement.

6.7 Use of Proceeds. Borrowers shall use the initial proceeds of the Loans and Letters of Credit hereunder only for: (a) payments to each of the persons listed in the disbursement direction letter furnished by Borrowers to Agent on or about the date hereof and (b) costs, expenses and fees in connection with the preparation, negotiation, execution and delivery of this Agreement and the other Financing Agreements. All other Loans made or Letters of Credit provided to or for the benefit of any Borrower pursuant to the provisions hereof shall be used by such Borrower only for general operating, working capital and other proper corporate purposes of such Borrower not otherwise prohibited by the terms hereof (including permitted investments, payment of dividends and repayment of certain Indebtedness, in each case, to the extent expressly permitted in this Agreement). None of the proceeds will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security or for the purposes of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause any of the Loans to be considered a “purpose credit”

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within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, as amended.

6.8 Appointment of Administrative Borrower as Agent for Requesting Loans and Receipts of Loans and Statements.

(a) Each Borrower hereby irrevocably appoints and constitutes Administrative Borrower as its agent and attorney-in-fact to request and receive Loans and Letters of Credit pursuant to this Agreement and the other Financing Agreements from Agent or any Lender in the name or on behalf of such Borrower. Agent and Lenders may disburse the Loans to such bank account of Administrative Borrower or a Borrower or otherwise make such Loans to a Borrower and provide such Letters of Credit to a Borrower as Administrative Borrower may designate or direct, without notice to any other Borrower or Guarantor. Notwithstanding anything to the contrary contained herein, Agent may at any time and from time to time require that Loans to or for the account of any Borrower be disbursed directly to an operating account of such Borrower.

(b) Administrative Borrower hereby accepts the appointment by Borrowers to act as the agent and attorney-in-fact of Borrowers pursuant to this Section 6.8 hereof. Administrative Borrower shall ensure that the disbursement of any Loans to each Borrower requested by or paid to or for the account of Parent, or the issuance of any Letter of Credit for a Borrower hereunder, shall be paid to or for the account of such Borrower.

(c) Each Borrower and other Guarantor hereby irrevocably appoints and constitutes Administrative Borrower as its agent to receive statements on account and all other notices from Agent and Lenders with respect to the Obligations or otherwise under or in connection with this Agreement and the other Financing Agreements.

(d) Any notice, election, representation, warranty, agreement or undertaking by or on behalf of any other Borrower or any Guarantor by Administrative Borrower shall be deemed for all purposes to have been made by such Borrower or Guarantor, as the case may be, and shall be binding upon and enforceable against such Borrower or Guarantor to the same extent as if made directly by such Borrower or Guarantor.

(e) No purported termination of the appointment of Administrative Borrower as agent as aforesaid shall be effective, except after ten (10) days’ prior written notice to Agent.

6.9 Pro Rata Treatment. Except to the extent otherwise provided in this Agreement or as otherwise agreed by the applicable Lenders: (a) the making and conversion of Loans shall be made among the Lenders based on their respective Pro Rata Shares as to the Loans and (b) each payment on account of any Obligations to or for the account of one or more of Lenders in respect of any Obligations due on a particular day shall be allocated among the Lenders entitled to such payments based on their respective Pro Rata Shares and shall be distributed accordingly.

6.10 Sharing; of Payments, Etc.

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(a) Each Borrower and Guarantor agrees that, in addition to (and without limitation of) any right of setoff, banker’s lien or counterclaim Agent or any Lender may otherwise have, each Lender shall be entitled, at its option (but subject, as among Agent and Lenders, to the provisions of Section 12.3(b) hereof), to offset balances held by it for the account of such Borrower or Guarantor at any of its offices, in dollars or in any other currency, against any principal of or interest on any Loans owed to such Lender or any other amount payable to such Lender hereunder, that is not paid when due (regardless of whether such balances are then due to such Borrower or Guarantor), in which case it shall promptly notify Administrative Borrower and Agent thereof; provided, that, such Lender’s failure to give such notice shall not affect the validity thereof.

(b) If any Lender (including Agent) shall obtain from any Borrower or Guarantor payment of any principal of or interest on any Loan owing to it or payment of any other amount under this Agreement or any of the other Financing Agreements through the exercise of any right of setoff, banker’s lien or counterclaim or similar right or otherwise (other than from Agent as provided herein), and, as a result of such payment, such Lender shall have received more than its Pro Rata Share of the principal of the Loans or more than its share of such other amounts then due hereunder or thereunder by any Borrower or Guarantor to such Lender than the percentage thereof received by any other Lender, it shall promptly pay to Agent, for the benefit of Lenders, the amount of such excess and simultaneously purchase from such other Lenders a participation in the Loans or such other amounts, respectively, owing to such other Lenders (or such interest due thereon, as the case may be) in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all Lenders shall share the benefit of such excess payment (net of any expenses that may be incurred by such Lender in obtaining or preserving such excess payment) in accordance with their respective Pro Rata Shares or as otherwise agreed by Lenders. To such end all Lenders shall make appropriate adjustments among themselves (by the resale of participation sold or otherwise) if such payment is rescinded or must otherwise be restored.

(c) Each Borrower and Guarantor agrees that any Lender purchasing a participation (or direct interest) as provided in this Section may exercise, in a manner consistent with this Section, all rights of setoff, banker’s lien, counterclaim or similar rights with respect to such participation as fully as if such Lender were a direct holder of Loans or other amounts (as the case may be) owing to such Lender in the amount of such participation.

(d) Nothing contained herein shall require any Lender to exercise any right of setoff, banker’s lien, counterclaims or similar rights or shall affect the right of any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other Indebtedness or obligation of any Borrower or Guarantor. If, under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section applies, such Lender shall, to the extent practicable, assign such rights to Agent for the benefit of Lenders and, in any event, exercise its rights in respect of such secured claim in a manner consistent with the rights of Lenders entitled under this Section to share in the benefits of any recovery on such secured claim.

6.11 Settlement Procedures.

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(a) In order to administer the Credit Facility in an efficient manner and to minimize the transfer of funds between Agent and Lenders, Agent may, at its option, subject to the terms of this Section, make available, on behalf of Lenders, including the Swing Line Lender, the full amount of the Loans or Swing Line Loans requested or charged to any Borrower’s loan account(s) or otherwise to be advanced by Lenders pursuant to the terms hereof, without requirement of prior notice to Lenders of the proposed Loans.

(b) With respect to all Loans made by Agent on behalf of Lenders, or any Swing Line Loans made by Swing Line Lender or Agent on behalf of Swing Line Lender, as provided in this Section, the amount of each Lender’s Pro Rata Share of the outstanding Loans shall be computed weekly, and shall be adjusted upward or downward on the basis of the amount of the outstanding Loans as of 5:00 p.m. on the Business Day immediately preceding the date of each settlement computation; provided, that, Agent retains the absolute right at any time or from time to time to make the above described adjustments at intervals more frequent than weekly, but in no event more than twice in any week. Agent shall deliver to each of the Lenders after the end of each week, or at such lesser period or periods as Agent shall determine, a summary statement of the amount of outstanding Loans for such period (such week or lesser period or periods being hereinafter referred to as a “Settlement Period”). If the summary statement is sent by Agent and received by a Lender prior to 12:00 p.m., then such Lender shall make the settlement transfer described in this Section by no later than 3:00 p.m. on the same Business Day and if received by a Lender after 12:00 p.m., then such Lender shall make the settlement transfer by not later than 3:00 p.m. on the next Business Day following the date of receipt. If, as of the end of any Settlement Period, the amount of a Lender’s Pro Rata Share of the outstanding Loans is more than such Lender’s Pro Rata Share of the outstanding Loans as of the end of the previous Settlement Period, then such Lender shall forthwith (but in no event later than the time set forth in the preceding sentence) transfer to Agent by wire transfer in immediately available funds the amount of the increase. Alternatively, if the amount of a Lender’s Pro Rata Share of the outstanding Loans in any Settlement Period is less than the amount of such Lender’s Pro Rata Share of the outstanding Loans for the previous Settlement Period, Agent shall forthwith transfer to such Lender by wire transfer in immediately available funds the amount of the decrease. The obligation of each of the Lenders to transfer such funds and effect such settlement shall be irrevocable and unconditional and without recourse to or warranty by Agent. Agent and each Lender agrees to mark its books and records at the end of each Settlement Period to show at all times the dollar amount of its Pro Rata Share of the outstanding Loans and Letters of Credit. Each Lender shall only be entitled to receive interest on its Pro Rata Share of the Loans to the extent such Loans have been funded by such Lender. Because the Agent on behalf of Lenders may be advancing and/or may be repaid Loans prior to the time when Lenders will actually advance and/or be repaid such Loans, interest with respect to Loans shall be allocated by Agent in accordance with the amount of Loans actually advanced by and repaid to each Lender and the Agent and shall accrue from and including the date such Loans are so advanced to but excluding the date such Loans are either repaid by Borrowers or actually settled with the applicable Lender as described in this Section.

(c) To the extent that Agent has made any such amounts available and the settlement described above shall not yet have occurred, upon repayment of any Loans by a Borrower, Agent may apply such amounts repaid directly to any amounts made available by Agent pursuant to this Section. In lieu of weekly or more frequent settlements, Agent may, at its

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option, at any time require each Lender to provide Agent with immediately available funds representing its Pro Rata Share of each Loan, prior to Agent’s disbursement of such Loan to Borrower. In such event, all Loans under this Agreement shall be made by the Lenders simultaneously and proportionately to their Pro Rata Shares. No Lender shall be responsible for any default by any other Lender in the other Lender’s obligation to make a Loan requested hereunder nor shall the Commitment of any Lender be increased or decreased as a result of the default by any other Lender in the other Lender’s obligation to make a Loan hereunder.

(d) If Agent is not funding a particular Loan to a Borrower (or Administrative Borrower for the benefit of such Borrower) pursuant to Sections 6.11(a) and 6.11(b) above on any day, but is requiring each Lender to provide Agent with immediately available funds on the date of such Loan as provided in Section 6.11(c) above, Agent may assume that each Lender will make available to Agent such Lender’s Pro Rata Share of the Loan requested or otherwise made on such day and Agent may, in its discretion, but shall not be obligated to, cause a corresponding amount to be made available to or for the benefit of such Borrower on such day. If Agent makes such corresponding amount available to a Borrower and such corresponding amount is not in fact made available to Agent by such Lender, Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon for each day from the date such payment was due until the date such amount is paid to Agent at the Federal Funds Rate for each day during such period (as published by the Federal Reserve Bank of New York or at Agent’s option based on the arithmetic mean determined by Agent of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. on that day by each of the three leading brokers of Federal funds transactions in New York City selected by Agent) and if such amounts are not paid within three (3) days of Agent’s demand, at the highest Interest Rate provided for in Section 3.1 hereof applicable to Base Rate Loans. During the period in which such Lender has not paid such corresponding amount to Agent, notwithstanding anything to the contrary contained in this Agreement or any of the other Financing Agreements, the amount so advanced by Agent to or for the benefit of any Borrower shall, for all purposes hereof, be a Loan made by Agent for its own account. Upon any such failure by a Lender to pay Agent, Agent shall promptly thereafter notify Administrative Borrower of such failure and Borrowers shall pay such corresponding amount to Agent for its own account within five (5) Business Days of Administrative Borrower’s receipt of such notice. A Lender who fails to pay Agent its Pro Rata Share of any Loans made available by the Agent on such Lender’s behalf, or any Lender who fails to pay any other amount owing by it to Agent, Swing Line Lender or Issuing Bank, is a “Defaulting Lender”. Agent shall not be obligated to transfer to a Defaulting Lender any payments received by Agent for the Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder (including any principal, interest or fees). Amounts payable to a Defaulting Lender shall instead be paid to or retained by Agent. Agent may hold and, in its discretion, relend to a Borrower the amount of all such payments received or retained by it for the account of such Defaulting Lender. For purposes of voting or consenting to matters with respect to this Agreement and the other Financing Agreements and determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be zero (0). This Section shall remain effective with respect to a Defaulting Lender until such default is cured. The operation of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, or relieve or excuse the performance by any Borrower or Guarantor of their duties and obligations hereunder.

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(e) Wachovia or Administrative Borrower shall have the right, but not the obligation, at any time, and upon the exercise by Wachovia or Administrative Borrower of such right, any Defaulting Lender shall have the obligation, to immediately sell, assign and transfer to Wachovia or such Eligible Transferee as Wachovia may specify, the Commitment of such Defaulting Lender and all rights and interests of such Defaulting Lender pursuant thereto. Wachovia shall provide the Defaulting Lender with prior written notice of its intent to exercise its right under this Section (or if Wachovia does not exercise such right, Administrative Borrower shall provide Agent and the Defaulting Lender with prior written notice of its intent to exercise its right under this Section), which notice shall specify the date on which such purchase and sale shall occur. Such purchase and sale shall be pursuant to the terms of an Assignment and Acceptance (whether or not executed by the Defaulting Lender).

(f) Nothing in this Section or elsewhere in this Agreement or the other Financing Agreements shall be deemed to require Agent to advance funds on behalf of any Lender or to relieve any Lender from its obligation to fulfill its Commitment hereunder or to prejudice any rights that any Borrower may have against any Lender as a result of any default by any Lender hereunder in fulfilling its Commitment.

6.12 Obligations Several; Independent Nature of Lenders’ Rights. The obligation of each Lender hereunder is several, and no Lender shall be responsible for the obligation or commitment of any other Lender hereunder. Nothing contained in this Agreement or any of the other Financing Agreements and no action taken by the Lenders pursuant hereto or thereto shall be deemed to constitute the Lenders to be a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and subject to Section 12.3 hereof, each Lender shall be entitled to protect and enforce its rights arising out of this Agreement and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose.

6.13 Bank Products. Borrowers and Guarantors, or any of their Subsidiaries, may (but no such Person is required to) request that the Bank Product Providers provide or arrange for such Person to obtain Bank Products from Bank Product Providers, and each Bank Product Provider may, in its sole discretion, provide or arrange for such Person to obtain the requested Bank Products. Borrowers and Guarantors or any of their Subsidiaries that obtains Bank Products shall indemnify and hold Agent, each Lender and their respective Affiliates harmless from any and all obligations now or hereafter owing to any other Person by any Bank Product Provider in connection with any Bank Products other than for gross negligence or willful misconduct on the part of any such indemnified Person. This Section 6.13 shall survive the payment of the Obligations and the termination of this Agreement. Borrower and its Subsidiaries acknowledge and agree that the obtaining of Bank Products from Bank Product Providers (a) is in the sole discretion of such Bank Product Provider, and (b) is subject to all rules and regulations of such Bank Product Provider.

6.14 Promissory Notes. Each Lender may at any time request that the Loans made by it be evidenced by a promissory note. In such event, Borrowers shall execute and deliver to such Lender a promissory note, substantially in the form of Exhibit F hereto, payable to the order of such Lender. Thereafter, the Loans evidenced by such promissory note and interest thereon shall

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at all times (including after assignment pursuant to Section 13.7) be represented by one or more promissory notes in such form payable to the order of the payee named therein.

SECTION 7. COLLATERAL REPORTING AND COVENANTS

7.1 Collateral Reporting.

(a) Borrowers shall provide Agent with the following documents in a form reasonably satisfactory to Agent:

(i) as soon as possible after the end of each calendar month (but in any event within twenty (20) Business Days after the end thereof) so long as no Event of Default exists or has occurred and is continuing and Excess Availability shall be greater than the amount equal to or greater than twenty (20%) percent of the Maximum Credit (so long as Revolving Loans in respect of the Tranche B Borrowing Base are outstanding or the Tranche B Commitments have not been terminated, and thereafter, an amount equal to or greater than fifteen (15%) percent of the Maximum Credit) as of the date of the most recent calculation of the Borrowing Base prior to the applicable month end (and more frequently as Agent may require at any time a Default or Event of Default exists or has occurred and is continuing or Excess Availability is less than the amount equal to twenty (20%) percent of the Maximum Credit (so long as Revolving Loans in respect of the Tranche B Borrowing Base are outstanding or the Tranche B Commitments have not been terminated, and thereafter, an amount equal to fifteen (15%) percent of the Maximum Credit),

(A) a Borrowing Base Certificate setting forth the calculation of the Borrowing Base as of the last Business Day of the immediately preceding period, duly completed and executed by the president, chief executive officer, chief financial officer, vice president of finance, treasurer or controller of Administrative Borrower or Parent (each, a “Responsible Officer”), together with all schedules required pursuant to the terms of the Borrowing Base Certificate duly completed; provided, that, Borrowers may at any time elect but shall not be required to provide a Borrowing Base Certificate more frequently but in the event Borrowers elect to provide such Borrowing Base Certificate on any one or more occasion it shall not be required to continue to do so (subject to the rights of Agent hereunder to require more frequent delivery in accordance with the terms hereof),

(B) (1) summary inventory reports by location and category (and including the amounts of consigned Inventory accepted on consignment by Borrowers and amounts of inventory consigned to third parties by Borrowers, and the value of Inventory held by processors), (2) summary agings of accounts receivable together with schedules of sales made, credits issued and cash received, and (3) summary agings of accounts payable (and including information indicating the amounts owing to owners and lessors of leased premises, warehouses, processors and other third parties from time to time in possession of any Collateral), and

(C) a report with respect to the VIM/VAR furnace projects, which shall include information relating to the estimated total cost of the projects to date, the actual cash expenditure by Borrowers and Guarantors related to the projects for such month, the amount of reimbursements committed to by any third party for such month in connection with

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the projects and the total cash expenditure by Borrowers and Guarantors related to the projects to date; and

(ii) such other reports as to the Collateral as Agent shall reasonably request from time to time with respect to such information not otherwise specified above (and if such request is for a report to be on a periodic basis after the initial request therefor, such frequency to be agreed to by Administrative Borrower and Agent).

(b) Nothing contained in any Borrowing Base Certificate shall be deemed to limit, impair or otherwise affect the rights of Agent contained herein and in the event of any conflict or inconsistency between the calculation of the Borrowing Base as set forth in any Borrowing Base Certificate and as determined by Agent in good faith, the determination of Agent shall govern and, absent manifest error, be conclusive and binding upon Borrowers and Guarantors. Without limiting the foregoing, Borrowers (or Administrative Borrower on behalf of Borrowers) shall furnish to Agent any information which Agent may reasonably request regarding the determination and calculation of any of the amounts set forth in any Borrowing Base Certificate. Subject to the limitations set forth herein, the Borrowing Base may be adjusted based on the information received by Agent pursuant to this Agreement. If any Borrower’s or Guarantor’s records or reports of the Collateral are prepared or maintained by an accounting service, contractor, shipper or other agent, such Borrower and Guarantor hereby irrevocably authorizes such service, contractor, shipper or agent to deliver such records, reports, and related documents to Agent and to follow Agent’s reasonable instructions with respect to further services, in each case, at any time an Event of Default has occurred and is continuing.

(c) All of the documents, reports and schedules provided by or on behalf of any Borrower to Agent hereunder for Accounts payable in any currency other than US Dollars shall set forth the US Dollar Equivalent for the amount of the Eligible Account included in any such documents, reports or schedules. For purposes hereof, Agent may, at its option, provide to Administrative Borrower, at least five (5) Business Day prior to the date any such documents, reports or schedules are required to be provided by Borrowers to Agent hereunder, the Exchange Rates required to set forth the US Dollar Equivalent in such documents, reports and schedules and in the event Agent does not do so, Borrowers shall use such rates of exchange with respect to the applicable currencies as Borrowers use for such purpose in the ordinary course of business consistent with current practices as of the date hereof and shall identify such rates of exchange in any such documents, reports and schedules.

7.2 Accounts Covenants.

(a) Borrowers shall notify Agent as soon as practicable of (to the extent not otherwise reflected in the most recent Borrowing Base Certificate provided to Agent): (i) any material delay in any Borrower’s performance of any of its material obligations to any account debtor or the assertion of any material claims, offsets, defenses or counterclaims by any account debtor, or any material disputes with account debtors, in each case, known to any Responsible Officer, or any settlement, adjustment or compromise thereof, (ii) all material adverse information actually known to any Responsible Officer relating to the financial condition of any account debtor with respect to the Accounts of any Borrower or Guarantor and (iii) any event or circumstance which, to the best of any Responsible Officer’s knowledge, would cause Agent to

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consider any then existing Accounts as no longer constituting Eligible Accounts. So long as no Event of Default exists or has occurred and is continuing, Borrowers and Guarantors shall settle, adjust or compromise any claim, offset, counterclaim or dispute with any account debtor. At any time that an Event of Default exists or has occurred and is continuing, Agent shall, at its option, have the exclusive right to settle, adjust or compromise any claim, offset, counterclaim or dispute with account debtors or grant any credits, discounts or allowances.

(b) With respect to each Account: (i) the amounts shown on any invoice delivered to Agent or schedule thereof delivered to Agent shall be true and complete in all material respects, (ii) no payments shall be made thereon except to a Blocked Account, (iii) no credit, discount, allowance or extension or agreement for any of the foregoing shall be granted to any account debtor except as reported to Agent in accordance with this Agreement and except for credits, discounts, allowances or extensions made or given in the ordinary course of the applicable Borrower’s business in accordance with practices and policies previously or hereafter disclosed to Agent, (iv) there shall be no setoffs, deductions, contras, defenses, counterclaims or disputes existing or asserted with respect to Accounts of any Borrower except as reported to Agent in a Borrowing Base Certificate, (v) none of the transactions giving rise thereto will violate any applicable foreign, Federal, State or local laws or regulations, all documentation relating thereto will be legally sufficient under such laws and regulations and all such documentation will be legally enforceable in accordance with its terms.

(c) Agent shall have the right at any time or times that Agent determines in good faith that it is necessary or desirable, (i) prior to the occurrence and during the continuance of a Cash Dominion Event, in the name of a nominee of Agent or in coordination with Administrative Borrower, in the name of Agent, and (ii) upon the occurrence and during the continuation of a Cash Dominion Event, in Agent’s name or in the name of a nominee of Agent, to verify the validity, amount or any other matter relating to any Receivables or other Collateral, by mail, telephone, facsimile transmission or otherwise. Prior to the occurrence of a Cash Dominion Event, Agent shall use its best efforts to coordinate verifications of Accounts with Administrative Borrower.

7.3 Inventory Covenants. With respect to the Inventory: (a) consistent with its current practices, each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to Agent, keeping correct and accurate records itemizing and describing the kind, type, quality and quantity of Inventory, such Borrower’s or Guarantor’s cost therefor and withdrawals therefrom and additions thereto; (b) Borrowers and Guarantors shall conduct a physical count of the Inventory at least once each year but at any time or times as Agent may request after an Event of Default has occurred and is continuing, and promptly following such physical inventory shall supply Agent with a report in the form and with such specificity as may be reasonably satisfactory to Agent concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of Agent, except for sales of Inventory in the ordinary course of its business or as otherwise expressly permitted herein and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) upon Agent’s request, Borrowers shall deliver or cause to be delivered, at their expense, not more than (i) one (1) written appraisal as to the Inventory in

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form, scope and methodology reasonably acceptable to Agent and by an appraiser reasonably acceptable to Agent, addressed to Agent and Lenders and upon which Agent and Lenders are expressly permitted to rely (each such appraisal being referred to as an “Inventory Appraisal”), in any twelve (12) month period so long as no Event of Default shall have occurred and be continuing and Excess Availability shall be greater than or equal to the amount equal to thirty-five (35%) percent of the Maximum Credit, (ii) two (2) such Inventory Appraisals in any twelve (12) month-period, so long as no Event of Default shall have occurred and be continuing and Excess Availability shall be greater than or equal to the amount equal to twenty (20%) percent of the Maximum Credit but less than thirty-five (35%) percent of the Maximum Credit, and (iii) three (3) such Inventory Appraisals in any twelve (12) month-period, in the event that either Excess Availability shall be less than the amount equal to twenty (20%) percent of the Maximum Credit or an Event of Default shall have occurred and be continuing; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with applicable laws (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) none of the Inventory or other Collateral constitutes farm products or the proceeds thereof; (g) as between Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory; (h) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory except for the right of return given to customers of such Borrower or Guarantor in the ordinary course of the business of such Borrower or Guarantor in accordance with the then current policies of such Borrower or Guarantor; (i) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (j) Borrowers and Guarantors may acquire or accept any Inventory on consignment or approval so long as such Inventory is specifically identified on a report provided or to be provided by Administrative Borrower to Agent pursuant to Section 7.1(a)(i)(B) hereof.

7.4 Equipment and Real Property Covenants. With respect to the Equipment and Real Property: (a) upon Agent’s reasonable request, Borrowers and Guarantors shall, at their expense, at any time or times as Agent may reasonably request after an Event of Default has occurred and is continuing, deliver or cause to be delivered to Agent written appraisals as to the Real Property in form, scope and methodology acceptable to Agent and by an appraiser acceptable to Agent, addressed to Agent and Lenders and upon which Agent and Lenders are expressly permitted to rely; (b) Borrowers and Guarantors shall keep the Equipment in good order, repair, running and marketable condition (ordinary wear and tear excepted); (c) Borrowers and Guarantors shall use the Equipment and Real Property with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with all applicable laws; (d) the Equipment is and shall be used in the business of Borrowers and Guarantors and not for personal, family, household or farming use; (e) Borrowers and Guarantors shall not remove any Equipment from the locations set forth or permitted herein, except to the extent necessary to have any Equipment repaired or maintained in the ordinary course of its business or to move Equipment directly from one location set forth or permitted herein to another such location and except for the movement of motor vehicles used by or for the benefit of such Borrower or Guarantor in the ordinary course of business; (f) the Equipment is now and shall remain personal property and Borrowers and Guarantors shall not permit any of the Equipment to be or become a

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part of or affixed to real property; and (g) each Borrower and Guarantor assumes all responsibility and liability arising from the use of the Equipment and Real Property.

7.5 Power of Attorney. Each Borrower and Guarantor hereby irrevocably designates and appoints Agent (and all persons designated by Agent) as such Borrower’s and Guarantor’s true and lawful attorney-in-fact, and authorizes Agent, in such Borrower’s, Guarantor’s or Agent’s name, to: (a) at any time an Event of Default has occurred and is continuing (i) demand payment on Receivables or other Collateral, (ii) enforce payment of Receivables by legal proceedings or otherwise, (iii) exercise all of such Borrower’s or Guarantor’s rights and remedies to collect any Receivable or other Collateral, (iv) sell or assign any Receivable upon such terms, for such amount and at such time or times as the Agent deems advisable, (v) settle, adjust, compromise, extend or renew an Account, (vi) discharge and release any Receivable, (vii) prepare, file and sign such Borrower’s or Guarantor’s name on any proof of claim in bankruptcy or other similar document against an account debtor or other obligor in respect of any Receivables or other Collateral, (viii) notify the post office authorities to change the address for delivery of remittances from account debtors or other obligors in respect of Receivables or other proceeds of Collateral to an address designated by Agent, and open and dispose of all mail addressed to such Borrower or Guarantor and handle and store all mail relating to the Collateral; and (ix) do all acts and things which are necessary, in Agent’s good faith determination, to fulfill such Borrower’s or Guarantor’s obligations under this Agreement and the other Financing Agreements and (b) at any time after a Cash Dominion Event has occurred and is continuing to (i) take control in any manner of any item of payment in respect of Receivables or constituting Collateral or otherwise received in or for deposit in the Blocked Accounts or otherwise received by Agent or any Lender as Collateral, (ii) have access to any lockbox or postal box into which remittances from account debtors or other obligors in respect of Receivables or other proceeds of Collateral are sent or received of a Cash Dominion Event exists or has occurred and is continuing, (iii) take control of any item of payment constituting Collateral that is received by Agent or any Lender in accordance with the terms hereof, (iv) endorse such Borrower’s or Guarantor’s name upon any items of payment in respect of Receivables or constituting Collateral or otherwise received by Agent and any Lender and deposit the same in Agent’s account for application to the Obligations, (v) endorse such Borrower’s or Guarantor’s name upon any chattel paper, document, instrument, invoice, or similar document or agreement relating to any Receivable or any goods pertaining thereto or any other Collateral, including any warehouse or other receipts, or bills of lading and other negotiable or non-negotiable documents, (vi) clear Inventory the purchase of which was financed with a Letter of Credit through U.S. Customs or foreign export control authorities in such Borrower’s or Guarantor’s name, Agent’s name or the name of Agent’s designee, and to sign and deliver to customs officials powers of attorney in such Borrower’s or Guarantor’s name for such purpose, and to complete in such Borrower’s or Guarantor’s or Agent’s name, any order, sale or transaction, obtain the necessary documents in connection therewith and collect the proceeds thereof, and (vii) sign such Borrower’s or Guarantor’s name on any verification of Receivables and notices thereof to account debtors or any secondary obligors or other obligors in respect thereof. Each Borrower and Guarantor hereby releases Agent and Lenders and their respective officers, employees and designees from any liabilities arising from any act or acts under this power of attorney and in furtherance thereof, whether of omission or commission, except as a result of Agent’s or any Lender’s own gross negligence or wilful misconduct as determined pursuant to a final non-appealable order of a court of competent jurisdiction.

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7.6 Right to Cure. Agent may at any time after an Event of Default has occurred and is continuing, at its option, upon reasonable prior notice to Administrative Borrower: (a) cure any default by any Borrower or Guarantor under any material agreement with a third party if (i) such Borrower or Guarantor is not disputing such default or are not proceeding to cure the same and (ii) the failure to cure could reasonably be expected to materially and adversely affect the Collateral, its value or the ability of Agent to collect, sell or otherwise dispose of the Collateral or the rights and remedies of Agent or any Lender therein or the ability of any Borrower or Guarantor to perform its obligations hereunder or under any of the other Financing Agreements, (b) pay or bond on appeal any final judgment entered against any Borrower or Guarantor if (i) such Borrower is not appealing the same and (ii) the failure to pay or bond such judgment could reasonably be expected to materially and adversely affect the Collateral, (c) discharge taxes, liens, security interests or other encumbrances at any time levied on or existing with respect to the Collateral and pay any amount, incur any expense or perform any act which, in Agent’s reasonable judgment, is necessary or appropriate to preserve, protect, insure or maintain the Collateral and the rights of Agent and Lenders with respect thereto. Agent may add any amounts so expended to the Obligations and charge any Borrower’s account therefor, such amounts to be repayable by Borrowers on demand. Agent and Lenders shall be under no obligation to effect such cure, payment or bonding and shall not, by doing so, be deemed to have assumed any obligation or liability of any Borrower or Guarantor. Any payment made or other action taken by Agent or any Lender under this Section shall be without prejudice to any right to assert an Event of Default hereunder and to proceed accordingly.

7.7 Access to Premises. From time to time as requested by Agent, at the cost and expense of Borrowers, (a) Agent or its designee shall have complete access to all of each Borrower’s and Guarantor’s premises during normal business hours and after one (1) day’s prior notice to Administrative Borrower, or at any time and without notice to Administrative Borrower if an Event of Default exists or has occurred and is continuing, for the purposes of inspecting, verifying and auditing the Collateral and all of each Borrower’s and Guarantor’s books and records, including the Records, and (b) each Borrower and Guarantor shall promptly furnish to Agent such copies of such books and records or extracts therefrom as Agent may reasonably request, and Agent or any Lender or Agent’s designee may use during normal business hours such of any Borrower’s and Guarantor’s personnel, equipment, supplies and premises as may be reasonably necessary for the foregoing and if an Event of Default exists or has occurred and is continuing for the collection of Receivables and realization of other Collateral. Agent shall not conduct more than (i) one (1) field examination with respect to the Collateral in any twelve (12) month period at the expense of Borrowers so long as no Event of Default shall have occurred and be continuing and Excess Availability shall be greater than or equal to the amount equal to thirty-five (35%) percent of the Maximum Credit, (ii) two (2) field examinations with respect to the Collateral in any twelve (12) month period at the expense of Borrowers, so long as no Event of Default shall have occurred and be continuing and Excess Availability shall be greater than or equal to the amount equal to twenty (20%) percent of the Maximum Credit but less than thirty-five (35%) percent of the Maximum Credit, and (iii) three (3) field examinations with respect to the Collateral in any twelve (12) month period at the expense of Borrowers, in the event that either Excess Availability shall be less than the amount equal to twenty (20%) percent of the Maximum Credit or an Event of Default has occurred and is continuing.

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SECTION 8. REPRESENTATIONS AND WARRANTIES

Each Borrower and Guarantor hereby represents and warrants to Agent, Lenders and Issuing Bank the following (which shall survive the execution and delivery of this Agreement):

8.1 Corporate Existence, Power and Authority. Each Borrower and Guarantor is a corporation, limited liability company, limited partnership or trust duly organized and in good standing under the laws of its jurisdiction of organization and is duly qualified as a foreign corporation, limited partnership or trust and in good standing in all states or other jurisdictions where the nature and extent of the business transacted by it or the ownership of assets makes such qualification necessary, except for those jurisdictions in which the failure to so qualify has or would reasonably be expected to have a Material Adverse Effect. The execution, delivery and performance of this Agreement, the other Financing Agreements and the transactions contemplated hereunder and thereunder (a) are all within each Borrower’s and Guarantor’s corporate or limited liability company or limited partnership powers, (b) have been duly authorized, (c) are not in contravention of applicable laws in any material respect or the terms of any Borrower’s or Guarantor’s certificate of incorporation, certificate of formation, bylaws, operating agreement, limited partnership agreement by laws, or other organizational documentation, or any indenture, agreement or undertaking to which any Borrower or Guarantor is a party or by which any Borrower or Guarantor or its property are bound and (d) will not result in the creation or imposition of, or require or give rise to any obligation to grant, any lien, security interest, charge or other encumbrance upon any property of any Borrower or Guarantor except as permitted thereunder or hereunder. This Agreement and the other Financing Agreements to which any Borrower or Guarantor is a party constitute legal, valid and binding obligations of such Borrower and Guarantor enforceable in accordance with their respective terms.

8.2 Name; State of Organization; Chief Executive Office; Collateral Locations.

(a) The exact legal name of each Borrower and Guarantor is as set forth on the signature page of this Agreement and in the Information Certificate. No Borrower or Guarantor has, during the five years prior to the date of this Agreement, been known by or used any other corporate or fictitious name or been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person, or acquired any of its property or assets out of the ordinary course of business, except as set forth in the Information Certificate.

(b) Each Borrower and Guarantor is an organization of the type and organized in the jurisdiction set forth in the Information Certificate. The Information Certificate accurately sets forth the organizational identification number of each Borrower and Guarantor or accurately states that such Borrower or Guarantor has none and accurately sets forth the federal employer identification number of each Borrower and Guarantor.

(c) The chief executive office and mailing address of each Borrower and Guarantor and each Borrower’s and Guarantor’s Records concerning Accounts are located only at the address identified as such in Schedule 8.2 to the Information Certificate and its only other places of business and the only other locations of Collateral, if any, are the addresses set forth in Schedule 8.2 to the Information Certificate, subject to the rights of any Borrower or Guarantor to

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establish new locations in accordance with Section 9.2 below. The Information Certificate correctly identifies any of such locations which are not owned by a Borrower or Guarantor and sets forth the owners and/or operators thereof.

8.3 Financial Statements; No Material Adverse Change. All financial statements relating to any Borrower or Guarantor which have been or may hereafter be delivered by any Borrower or Guarantor to Agent and Lenders have been prepared in accordance with GAAP (except as to any interim financial statements, to the extent such statements are subject to normal year-end adjustments and do not include any notes) and fairly present in all material respects the financial condition and the results of operation of such Borrower and Guarantor as at the dates and for the periods set forth therein. Except as disclosed in any interim financial statements furnished by Borrowers and Guarantors to Agent prior to the date of this Agreement, there has been no act, condition or event which has had or is reasonably likely to have a Material Adverse Effect since the date of the most recent audited financial statements of any Borrower or Guarantor furnished by any Borrower or Guarantor to Agent prior to the date of this Agreement. The projections dated February 2, 2008 for the fiscal years ending 2008 through 2012 that have been delivered to Agent or any projections hereafter delivered to Agent have been prepared in light of the past operations of the businesses of Borrowers and Guarantors and are based upon estimates and assumptions stated therein, all of which Borrowers and Guarantors have determined to be reasonable and fair in light of the then current conditions and current facts and reflect the good faith and reasonable estimates of Borrowers and Guarantors of the future financial performance of Parent and its Subsidiaries and of the other information projected therein for the periods set forth therein, it being understood that actual results may vary from such forecasts and that such variations may be material.

8.4 Priority of Liens; Title to Properties. The security interests and liens granted to Agent under this Agreement and the other Financing Agreements constitute valid and perfected first priority liens and security interests in and upon the Collateral subject only to the liens indicated on Schedule 8.4 to the Information Certificate and the other liens permitted under Section 9.8 hereof. Each Borrower and Guarantor has good and marketable fee simple title to or valid leasehold interests in all of its Real Property and good, valid and merchantable title to all of its other properties and assets subject to no liens, mortgages, pledges, security interests, encumbrances or charges of any kind, except those granted to Agent and such others as are specifically listed on Schedule 8.4 to the Information Certificate or permitted under Section 9.8 hereof.

8.5 Tax Returns. Each Borrower and Guarantor has filed, or caused to be filed, in a timely manner all income and other material tax returns, reports and declarations which are required to be filed by it. All information in such tax returns, reports and declarations is complete and accurate in all material respects. Each Borrower and Guarantor has paid or caused to be paid all federal and other material taxes due and payable or claimed due and payable in any assessment received by it, except taxes the validity of which are being contested in good faith by appropriate proceedings reasonably diligently pursued and available to such Borrower or Guarantor and with respect to which adequate reserves have been set aside on its books. Adequate provision has been made for the payment of all accrued and unpaid Federal, State, county, local, foreign and other taxes whether or not yet due and payable and whether or not disputed.

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8.6 Litigation. Except as set forth on Schedule 8.6 to the Information Certificate, (a) there is no investigation by any Governmental Authority pending, or to the best of any Borrower’s or Guarantor’s knowledge threatened, against or affecting any Borrower or Guarantor, its or their assets or business and (b) there is no action, suit, proceeding or claim by any Person pending, or to the best of any Borrower’s or Guarantor’s knowledge threatened, against any Borrower or Guarantor or its or their assets or goodwill, or against or affecting any transactions contemplated by this Agreement, in each case under clauses (a) and (b), which if adversely determined against such Borrower or Guarantor has or could reasonably be expected to have a Material Adverse Effect.

8.7 Compliance with Other Agreements and Applicable Laws.

(a) Borrowers and Guarantors are not in default in any respect under, or in violation in any respect of the terms of, any agreement, contract, instrument, lease or other commitment to which it is a party or by which it or any of its assets are bound, except where such default or violation could not be reasonably expected to have a Material Adverse Effect. Borrowers and Guarantors are in compliance with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority relating to their respective businesses, including, without limitation, those set forth in or promulgated pursuant to the Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, ERISA, and the Code, in each case except where the failure to comply has not or could not be reasonably expected to have a Material Adverse Effect.

(b) Borrowers and Guarantors have obtained all permits, licenses, approvals, consents, certificates, orders or authorizations of any Governmental Authority required for the lawful conduct of its business (the “Permits”) except where the failure to obtain could not be reasonably expected to have a Material Adverse Effect. All of the Permits are valid and subsisting and in full force and effect. There are no actions, claims or proceedings pending or to the best of any Borrower’s or Guarantor’s knowledge, threatened that seek the revocation, cancellation, suspension or modification of any of the Permits where any of the same would have a Material Adverse Effect.

8.8 Environmental Compliance.

(a) Except as set forth on Schedule 8.8 to the Information Certificate, Borrowers, Guarantors and any Subsidiary of any Borrower or Guarantor have not generated, used, stored, treated, transported, manufactured, handled, produced or disposed of any Hazardous Materials, on or to the best of such Borrower’s or Guarantor’s knowledge, off its premises (whether or not owned by it) in any manner which at any time violates any applicable Environmental Law or Permit where such violation has or could reasonably be expected to have a Material Adverse Effect, and the operations of Borrowers, Guarantors and any Subsidiary of any Borrower or Guarantor complies with all Environmental Laws and all Permits where the failure to so comply has or could reasonably be expected to have a Material Adverse Effect.

(b) Except as set forth on Schedule 8.8 to the Information Certificate, there has been no investigation by any Governmental Authority or any proceeding, written complaint, order, directive, claim, citation or notice by any Governmental Authority or any other

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person nor is any pending or to the best of any Borrower’s or Guarantor’s knowledge threatened, with respect to any non compliance with or violation of the requirements of any Environmental Law by any Borrower or Guarantor and any Subsidiary of any Borrower or Guarantor or the release, spill or discharge, of any Hazardous Material or the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous Materials which adversely affects or could reasonably be expected to have a Material Adverse Effect.

(c) Except as set forth on Schedule 8.8 to the Information Certificate, to the best of Borrowers’ and Guarantors’ knowledge, there has been no release, spill or discharge of any Hazardous Materials or the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous Materials which could reasonably be expected to give rise to liability under any Environmental Law, and such that either individually or in the aggregate, has or could reasonably be expected to have a Material Adverse Effect.

(d) Except as set forth on Schedule 8.8 to the Information Certificate, Borrowers, Guarantors and their Subsidiaries have all Permits required to be obtained or filed in connection with the operations of Borrowers and Guarantors under any Environmental Law and all of such licenses, certificates, approvals or similar authorizations and other Permits are valid and in full force and effect where the failure to do so has or could reasonably be expected to have a Material Adverse Effect.

8.9 Employee Benefits.

(a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or State law, except for non-compliance which has or could reasonably be expected to have a Material Adverse Effect. Each Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service and to the best of any Borrower’s or Guarantor’s knowledge, nothing has occurred which would cause the loss of such qualification, which could reasonably be expected to have a Material Adverse Effect. Each Borrower and its ERISA Affiliates have made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

(b) There are no pending, or to the best of any Borrower’s or Guarantor’s knowledge, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan, which if adversely determined against such Borrower or Guarantor has or could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan which has or could reasonably be expected to have a Material Adverse Effect.

(c) (i) No ERISA Event has occurred or is reasonably expected to occur that has or could reasonably be expected to result in liability for any Borrower in an aggregate amount in excess of $5,000,000; (ii) based on the latest valuation of each Pension Plan and on the actuarial methods and assumptions employed for such valuation (determined in accordance with the assumptions used for funding such Pension Plan pursuant to Section 412 of the Code), the aggregate current value of accumulated benefit liabilities of such Pension Plan under Section

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4001(a)(16) of ERISA does not exceed the aggregate current value of the assets of such Pension Plan in a manner that has or could reasonably be expected to have a Material Adverse Effect; (iii) each Borrower and Guarantor, and their ERISA Affiliates, have not incurred and do not reasonably expect to incur, any liability that has or could reasonably be expected to have a Material Adverse Effect under Title IV of ERISA with respect to any Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) each Borrower and Guarantor, and their ERISA Affiliates, have not incurred and do not reasonably expect to incur, any liability that has or could reasonably be expected to have a Material Adverse Effect (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) each Borrower and Guarantor, and their ERISA Affiliates, have not engaged in a transaction that would be subject to Section 4069 or 4212(c) of ERISA except as could not reasonably be expected to result in a Material Adverse Effect.

8.10 Bank Accounts. All of the deposit accounts, investment accounts or other accounts in the name of or used by any Borrower or Guarantor maintained at any bank or other financial institution are set forth on Schedule 8.10 to the Information Certificate, subject to the right of each Borrower and Guarantor to establish new accounts in accordance with Section 5.2 hereof.

8.11 Intellectual Property. Each Borrower and Guarantor owns or licenses or otherwise has the right to use all material Intellectual Property necessary for the operation of its business as presently conducted or proposed to be conducted. As of the date hereof, Borrowers and Guarantors do not have any material Intellectual Property registered, or subject to pending applications, in the United States Patent and Trademark Office or any similar office or agency in the United States, any State thereof, any political subdivision thereof or in any other country, other than those described in Schedule 8.11 to the Information Certificate and has not granted any licenses with respect thereto other than as set forth in Schedule 8.11 to the Information Certificate. To the knowledge of each Borrower or Guarantor, no event has occurred which permits or would permit after notice or passage of time or both, the revocation, suspension or termination of such rights to the extent that the revocation, suspension or termination of such rights would reasonably be expected to have a Material Adverse Effect. To the knowledge of each Borrower or Guarantor, no slogan or other advertising device, product, process, method, substance or other Intellectual Property or goods bearing or using any Intellectual Property presently contemplated to be sold by or employed by any Borrower or Guarantor infringes any patent, trademark, servicemark, tradename, copyright, license or other Intellectual Property owned by any other Person presently and no claim or litigation is pending or threatened against or affecting any Borrower or Guarantor contesting its right to sell or use any such Intellectual Property. Schedule 8.11 to the Information Certificate set forth all of the material agreements or other arrangements of any Borrower or Guarantor pursuant to which such Borrower or Guarantor has a license or other right to use any trademarks, logos, designs, representations or other Intellectual Property owned by another person as in effect on the date hereof and Schedule 8.11 to the Information Certificate sets forth the dates of the expiration of such agreements or other arrangements of such Borrower or Guarantor as in effect on the date hereof (collectively, together with such agreements or other arrangements as may be entered into by any Borrower or Guarantor after the date hereof, collectively, the “License Agreements” and individually, a “License Agreement”). To the knowledge of each Borrower and Guarantor, no Intellectual Property now used by any Borrower or Guarantor which is owned by another person, or owned

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by such Borrower or Guarantor subject to any security interest, lien, collateral assignment, pledge or other encumbrance in favor of any person other than Agent, is or shall be affixed to any Eligible Inventory, except (a) to the extent permitted under the terms of any license agreement listed on Schedule 8.11 to the Information Certificate or (b) to the extent the sale of any such Eligible Inventory to which such Intellectual Property is affixed is permitted to be sold by such Borrower or Guarantor under applicable law (including the United States Copyright Act of 1976).

8.12 Subsidiaries; Affiliates; Capitalization; Solvency.

(a) As of the date hereof, each Borrower and Guarantor does not have any direct or indirect Subsidiaries or Affiliates and is not engaged in any joint venture or partnership except as set forth in Schedule 8.12 to the Information Certificate and Sponsor Portfolio Companies.

(b) Each Borrower and Guarantor is the record and beneficial owner of all of the issued and outstanding shares of Capital Stock of each of the Subsidiaries listed on Schedule 8.12 to the Information Certificate as being owned by such Borrower or Guarantor and there are no proxies, irrevocable or otherwise, with respect to such shares and no equity securities of any of the Subsidiaries are or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any kind or nature and there are no contracts, commitments, understandings or arrangements by which any Subsidiary is or may become bound to issue additional shares of it Capital Stock or securities convertible into or exchangeable for such shares.

(c) The issued and outstanding shares of Capital Stock of each Borrower and Guarantor as of the date hereof are directly and beneficially owned and held by the persons indicated in the Information Certificate (except with respect to those shareholders of Parent which own less than ten (10%) percent of the Capital Stock of Parent), and in each case all of such shares have been duly authorized and are fully paid and non-assessable, free and clear of all claims, liens, pledges and encumbrances of any kind, except as disclosed in writing to Agent prior to the date hereof.

(d) Borrowers, taken as a whole, are Solvent and will continue to be Solvent after the creation of the Obligations, the security interests of Agent and the other transactions contemplated hereunder.

8.13 Labor Disputes.

(a) Set forth on Schedule 8.13 to the Information Certificate is a list (including dates of termination) of all collective bargaining or similar agreements between or applicable to each Borrower and Guarantor and any union, labor organization or other bargaining agent in respect of the employees of any Borrower or Guarantor on the date hereof.

(b) Except as could not be reasonably expected to have a Material Adverse Effect there is (i) no significant unfair labor practice complaint pending against any Borrower or Guarantor or, to the best of any Borrower’s or Guarantor’s knowledge, threatened against it, before the National Labor Relations Board, and no significant grievance or significant

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arbitration proceeding arising out of or under any collective bargaining agreement is pending on the date hereof against any Borrower or Guarantor or, to best of any Borrower’s or Guarantor’s knowledge, threatened against it, and (ii) no significant strike, labor dispute, slowdown or stoppage is pending against any Borrower or Guarantor or, to the best of any Borrower’s or Guarantor’s knowledge, threatened against any Borrower or Guarantor.

8.14 Restrictions on Subsidiaries. Except for restrictions (a) contained in this Agreement or any other agreement with respect to Indebtedness of any Borrower or Guarantor permitted hereunder as in effect on the date hereof or (b) permitted pursuant to Section 9.16 hereof, there are no contractual or consensual restrictions on any Borrower or Guarantor or any of its Subsidiaries which prohibit or otherwise restrict (i) the transfer of cash or other assets (A) between any Borrower or Guarantor and any of its or their Subsidiaries or (B) between any Subsidiaries of any Borrower or Guarantor or (ii) the ability of any Borrower or Guarantor or any of its or their Subsidiaries to incur Indebtedness or grant security interests to Agent or any Lender in the Collateral.

8.15 Material Contracts. As of the date hereof, Borrowers and Guarantors are not parties to any Material Contracts.

8.16 Payable Practices. Each Borrower and Guarantor have not made any material change in the historical accounts payable practices from those in effect immediately prior to the date hereof.

8.17 No Material Adverse Change. There has been no material adverse change in the business, assets, financial condition or results of operations of Parent and its Subsidiaries (taken as a whole) since the date of the most recent financial statements with respect thereto submitted to Agent prior to the date hereof.

8.18 Interrelated Business. The Borrowers and Guarantors make up a related organization of various entities constituting a single economic and business enterprise such that all Borrowers and Guarantors share an identity of certain interests with any benefit received by any one of benefiting all others. Each Borrower purchases or sells certain goods to or from the other, and provides administrative, marketing, human resources, and management services to or for the benefit of the other. The Borrowers and Guarantors have certain common officers and directors, and generally, do not provide consolidating financial statements to creditors.

8.19 Accuracy and Completeness of Information. All information furnished by or on behalf of any Borrower or Guarantor in writing to Agent or any Lender in connection with this Agreement or any of the other Financing Agreements or any transaction contemplated hereby or thereby, including all information on the Information Certificate is true and correct in all material respects on the date as of which such information is dated or certified and does not omit any material fact necessary in order to make such information not misleading. No event or circumstance has occurred which has had or could reasonably be expected to have a Material Adverse Affect, which has not been fully and accurately disclosed to Agent in writing prior to the date hereof.

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8.20 Survival of Warranties; Cumulative. All representations and warranties contained in this Agreement or any of the other Financing Agreements shall survive the execution and delivery of this Agreement and shall be deemed to have been made again to Agent and Lenders on the date of each additional borrowing or other credit accommodation hereunder and shall be conclusively presumed to have been relied on by Agent and Lenders regardless of any investigation made or information possessed by Agent or any Lender. The representations and warranties set forth herein shall be cumulative and in addition to any other representations or warranties which any Borrower or Guarantor shall now or hereafter give, or cause to be given, to Agent or any Lender in any other Financing Agreement.

SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS

9.1 Maintenance of Existence.

(a) Each Borrower and Guarantor shall at all times preserve, renew and keep in full force and effect (i) its corporate or limited liability, company or limited partnership existence (ii) its rights and franchises with respect thereto and (iii) maintain in full force and effect all licenses, trademarks, tradenames, approvals, authorizations, leases, contracts and Permits necessary to carry on the business as presently conducted, except in each such (A) as to any Guarantor other than Parent as permitted in Section 9.7 hereto or otherwise permitted hereunder or under any of the other Financing Agreements and (B) in the cases of clauses (i) and (ii) where the failure to so maintain could reasonably be expected to have a Material Adverse Effect.

(b) No Borrower or Guarantor shall change its name unless each of the following conditions is satisfied: (i) Agent shall have received not less than ten (10) days (or at such later time as Agent may agree) prior written notice from Administrative Borrower of such proposed change in its corporate name, which notice shall accurately set forth the new name; and (ii) Agent shall have received a copy of the amendment to the Certificate of Incorporation of such Borrower or Guarantor providing for the name change certified by the Secretary of State of the jurisdiction of incorporation or organization of such Borrower or Guarantor as soon as it is available.

(c) No Borrower or Guarantor shall change its chief executive office or its mailing address or organizational identification number (or if it does not have one, shall not acquire one) unless Agent shall have received not less than fifteen (15) days’ prior written notice from Administrative Borrower of such proposed change, which notice shall set forth such information with respect thereto as Agent may require and Agent shall have received such agreements as Agent may reasonably require in connection therewith. No Borrower or Guarantor shall change its type of organization, jurisdiction of organization or other legal structure, except that a Borrower, Guarantor or Subsidiary may convert (either directly or by way of merger) into a corporation, limited liability company or limited partnership or other form of legal entity acceptable to Agent, provided, that, each of the following conditions is satisfied: (i) Agent shall have received not less than fifteen (15) days (or such shorter time as Agent may agree) prior written notice from Administrative Borrower of such proposed change, which notice shall accurately set forth a description of the new form, (ii) Agent shall have received such agreements, documents, and instruments as Agent may deem reasonably necessary or desirable

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in connection therewith, (iii) such change shall not adversely affect the security interests and liens of Agent in the assets of such Borrower or Guarantor or the ability of Agent to enforce any of its rights or remedies with respect to such Borrower or Guarantor, and (iv) as of the date of such conversion, and after giving effect thereto, no Event of Default shall have occurred and is continuing.

9.2 New Collateral Locations. Each Borrower and Guarantor may only open any new location where Collateral is located within the continental United States provided such Borrower or Guarantor (a) gives Agent fifteen (15) days prior written notice of the intended opening of any such new location and (b) upon Agent’s request, such Borrower or Guarantor executes and delivers, or causes to be executed and delivered, to Agent such agreements, documents, and instruments required by Section 5 hereof; provided, that, upon Agent’s request, Borrowers and Guarantors shall only be required to use their commercially reasonable efforts to obtain a Collateral Access Agreement and to the extent provided herein, it may establish a Reserve with respect to such location.

9.3 Compliance with Laws, Regulations, Etc.

(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary to, at all times, comply in all respects with all laws, rules, regulations, licenses, approvals, orders and other Permits applicable to it and duly observe all requirements of any foreign, Federal, State or local Governmental Authority where the failure to do so has or could reasonably be expected to have a Material Adverse Effect.

(b) Borrowers and Guarantors shall give written notice to Agent as soon as practicable upon any Borrower’s or Guarantor’s receipt of any written notice of, or any Borrower’s or Guarantor’s otherwise obtaining knowledge of, (i) the occurrence of any event involving the material release, spill or discharge, of any Hazardous Material or (ii) any investigation, proceeding, written complaint, order, directive, claims, citation or notice with respect to: (A) any material non-compliance with or violation of any Environmental Law by any Borrower or Guarantor or (B) the release, spill or discharge, of any Hazardous Material except as to clauses (i) and (ii) above other than in the ordinary course of business and other than as permitted under any applicable Environmental Law or Permit, and which would require notification to a Governmental Authority under any Environmental Law. Copies of all final environmental surveys, audits, assessments, feasibility studies and results of remedial investigations conducted by Borrower or Guarantor or at the direction of any Borrower or Guarantor with respect to such occurrence, investigation, proceedings, written complaint, order, directive, claims, citations or notice shall be furnished, or caused to be furnished, as soon as practicable, by such Borrower or Guarantor to Agent. Each Borrower and Guarantor shall take action as soon as practicable, to respond to any material non-compliance with any of the Environmental Laws and shall regularly report to Agent on such response.

(c) Without limiting the generality of the foregoing, whenever Agent reasonably determines that there is material non-compliance, or any condition which requires any action by or on behalf of any Borrower or Guarantor in order to avoid any non compliance, with any Environmental Law except with respect to such non-compliance that could not reasonably be expected to have a Material Adverse Effect, Borrowers shall, at Agent’s reasonable

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request and Borrowers’ expense: (i) cause an independent environmental consultant reasonably acceptable to Agent to conduct such tests of the site where non-compliance or alleged non compliance with such Environmental Laws (including sampling and analysis, if necessary) has occurred as to such non-compliance and prepare and deliver to Agent a report as to such non-compliance setting forth the results of such tests, a proposed plan for responding to any environmental problems described therein, and an estimate of the costs thereof and (ii) provide to Agent a supplemental report of such consultant whenever the scope of such non-compliance, or such Borrower’s or Guarantor’s response thereto or the estimated costs thereof, shall change in any material respect. In any event, any report or investigation of any material non-compliance proposed and acceptable to an appropriate Governmental Authority that is charged to oversee the clean-up of such non-compliance shall be acceptable to the Agent and Lenders.

(d) Each Borrower and Guarantor shall indemnify and hold harmless Agent and Lenders and their respective directors, officers, employees, agents, invitees, representatives, successors and assigns, from and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys’ fees and expenses) directly or indirectly arising out of or attributable to the use, generation, manufacture, reproduction, storage, release, threatened release, spill, discharge, disposal or presence of a Hazardous Material on any premises of Borrower (whether or not owned by Borrower) or resulting from Borrower’s conduct, including the costs of any required or necessary repair, cleanup or other remedial work with respect to any property of any Borrower or Guarantor and the preparation and implementation of any closure, remedial or other required plans, except to the extent such losses, claims, damages, liabilities, costs and expenses are caused by the gross negligence or willful misconduct of Agent or any Lender as determined pursuant to a final non-appealable order of a court of competent jurisdiction. All representations, warranties, covenants and indemnifications in this Section 9.3 shall survive the payment of the Obligations and the termination of this Agreement.

9.4 Payment of Taxes and Claims. Each Borrower and Guarantor shall, and shall cause any Subsidiary to, duly pay and discharge all material taxes, assessments, contributions and governmental charges upon or against it or its properties or assets, except for taxes the validity of which are being contested in good faith by appropriate proceedings reasonably diligently pursued and available to such Borrower, Guarantor or Subsidiary, as the case may be, and with respect to which adequate reserves have been set aside on its books to the extent required by GAAP.

9.5 Insurance.

(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary to, at all times, maintain with financially sound and reputable insurers insurance with respect to the Collateral against loss or damage and all other insurance of the kinds and in the amounts customarily insured against or carried by corporations of established reputation engaged in the same or similar businesses and similarly situated. Any insurance policies obtained by Borrowers and Guarantors after the date hereof shall be substantially similar in all material respects as to form, amount and insurer to the insurance policies maintained by each Borrower and Guarantor on the date hereof, and to the extent not, shall be reasonably satisfactory to Agent as to form, amount and insurer. Borrowers and Guarantors shall furnish certificates, policies or endorsements to Agent as Agent shall reasonably require as proof of such insurance, and, if any

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Borrower or Guarantor fails to do so within five (5) Business Days of Agent’s request, Agent is authorized, but not required, to obtain such insurance at the expense of Borrowers. All policies shall provide for at least thirty (30) days prior written notice to Agent of any cancellation or reduction of coverage and that Agent may act as attorney for each Borrower and Guarantor in obtaining, and at any time an Event of Default exists or has occurred and is continuing, adjusting, settling, amending and canceling such insurance. Borrowers and Guarantors shall cause Agent to be named as a loss payee and an additional insured (but without any liability for any premiums) under such insurance policies and Borrowers and Guarantors shall obtain non-contributory lender’s loss payable endorsements to all insurance policies in form and substance reasonably satisfactory to Agent. Such lender’s loss payable endorsements shall specify that the proceeds of such insurance shall be payable to Agent as its interests may appear and further specify that Agent and Lenders shall be paid regardless of any act or omission by any Borrower, Guarantor or any of its or their Affiliates.

(b) Without limiting any other rights of Agent or Lenders, any insurance proceeds received by Agent at any time (other than (x) insurance proceeds of Equipment which is subject to purchase money security interests or liens permitted by Section 9.8 hereof, in which case Agent shall, to the extent it receives such insurance proceeds, remit same to the applicable Borrower and (y) after the incurrence of Indebtedness referred to in Section 9.9(h) hereof, insurance proceeds of Qualified Debt Offering Collateral, in which case Agent shall, to the extent it receives such insurance proceeds, remit same to Qualified Debt Agent, as applicable, subject to the terms of the Qualified Debt Intercreditor Agreement), may be applied to payment of the Obligations in accordance with the terms of Section 6.4(b) hereof and except, that, so long as no Cash Dominion Event exists, such proceeds of insurance as to any one event of less than $500,000 may be paid to Administrative Borrower.

9.6 Financial Statements and Other Information.

(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary to, keep proper books and records in which true and complete entries shall be made of all dealings or transactions of or in relation to the Collateral and the business of such Borrower, Guarantor and its Subsidiaries in accordance with GAAP. Borrowers and Guarantors shall promptly furnish to Agent and Lenders all such financial and other information as Agent shall reasonably request relating to the Collateral and the assets, business and operations of Borrowers and Guarantors. Without limiting the foregoing, Borrowers shall furnish or cause to be furnished to Agent, the following:

(i) within thirty (30) days after the end of each fiscal month, monthly unaudited consolidated financial statements (including in each case balance sheets, statements of income and loss, and statements of cash flow), all in reasonable detail, fairly presenting in all material respects the financial position and the results of the operations of Parent and its Subsidiaries as of the end of and through such fiscal month, certified to be correct in all material respects by the chief financial officer of Parent, subject to normal year-end adjustments and accompanied by a compliance certificate substantially in the form of Exhibit D hereto, along with a schedule in form reasonably satisfactory to Agent of the calculations used in determining, as of the end of such month, whether Borrowers and Guarantors were in

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compliance with the covenants set forth in Sections 9.17, 9.18, and 9.19 hereof for such month, and

(ii) in the event that Parent and its Subsidiaries are for any reason required by the Securities and Exchange Commission to file quarterly financial statements, within forty-five (45) days after the end of each fiscal quarter, unaudited consolidated financial statements of Parent and its Subsidiaries (including in each case balance sheets, statements of income and loss, and statements of cash flow), and the accompanying notes thereto, all in reasonable detail, fairly presenting in all material respects the financial position and the results of the operations of Parent and its Subsidiaries as of the end of and for such fiscal quarter, and

(iii) within one hundred twenty (120) days after the end of each fiscal year, audited consolidated financial statements of Parent and its Subsidiaries (including in each case balance sheets, statements of income and loss, and statements of cash flow), and the accompanying notes thereto, all in reasonable detail, fairly presenting in all material respects the financial position and the results of the operations of Parent and its Subsidiaries as of the end of and for such fiscal year, together with the unqualified opinion of independent certified public accountants with respect to the audited consolidated financial statements, which accountants shall be an independent accounting firm of national stature selected by Administrative Borrower and otherwise acceptable to Agent if such accountant is not of national stature, that such audited consolidated financial statements have been prepared in accordance with GAAP, and present fairly in all material respects the results of operations and financial condition of Parent and its Subsidiaries as of the end of and for the fiscal year then ended, and

(iv) at such time as available, but in no event later than thirty (30) days after the end of each fiscal year (commencing with the fiscal year of Borrowers ending September 30, 2009), projected consolidated financial statements and consolidating financial statements (including in each case, forecasted balance sheets and statements of income and loss, and statements of cash flow) of Parent and its Subsidiaries for the next fiscal year, all in reasonable detail, and in a format consistent with the projections delivered by Borrowers to Agent prior to the date hereof (or otherwise in form reasonably acceptable to Agent), together with such supporting information as Agent may reasonably request. Such projected financial statements shall be prepared on a monthly basis for the next succeeding year. Such projections shall represent the reasonable best estimate by Borrowers and Guarantors of the future financial performance of Parent and its Subsidiaries for the periods set forth therein and shall have been prepared on the basis of the assumptions set forth therein which Borrowers and Guarantors believe are fair and reasonable as of the date of preparation in light of current and reasonably foreseeable business conditions (it being understood that actual results may differ from those set forth in such projected financial statements). Borrowers (or Administrative Borrower on behalf of Borrowers) shall provide to Agent, as Agent may require, updates with respect to such projections at any time a Default or Event of Default exists or has occurred and is continuing.

(b) Borrowers and Guarantors shall promptly notify Agent in writing of the details of (i) any loss, damage, investigation, action, suit, proceeding or claim relating to Collateral having a value of more than $1,000,000 or which if adversely determined would result in a Material Adverse Effect, (ii) any Material Contract being terminated or amended in such a manner that is adverse to the Borrowers, Agent or Lenders or any new Material Contract entered

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into (in which event Borrowers and Guarantors shall provide Agent with a copy of such Material Contract), (iii) any order, judgment or decree equal to or in excess of $1,000,000 shall have been entered against any Borrower or Guarantor any of its or their properties or assets, (iv) any notification of a material violation of laws or regulations received by any Borrower or Guarantor, (v) any ERISA Event, and (vi) the occurrence of any Default or Event of Default.

(c) Promptly after the sending or filing thereof, Borrowers shall send to Agent copies of (i) all reports which Parent or any of its Subsidiaries sends to its security holders generally, (ii) all material reports and registration statements which Parent or any of its Subsidiaries files with the Securities Exchange Commission, any national or foreign securities exchange or the National Association of Securities Dealers, Inc. and (iii) all other statements concerning material changes or developments in the business of a Borrower or Guarantor made available by any Borrower or Guarantor to the public that are not otherwise required to be delivered to Agent pursuant to this Agreement.

(d) Borrowers and Guarantors shall furnish or cause to be furnished to Agent such budgets, forecasts, projections and other information respecting the Collateral and the business of Borrowers and Guarantors, as Agent may, from time to time, reasonably request. Agent is hereby authorized to deliver a copy of any financial statement or any other information relating to the business of Borrowers and Guarantors to any court or other Governmental Authority or to any Lender or Participant or prospective Lender or Participant or any Affiliate of any Lender or Participant subject to Section 13.5 hereof. Any documents, schedules, invoices or other papers delivered to Agent or any Lender may be destroyed or otherwise disposed of by Agent or such Lender one (1) year after the same are delivered to Agent or such Lender, except as otherwise designated by Administrative Borrower to Agent or such Lender in writing.

9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each Borrower and Guarantor shall not, and shall not permit any Subsidiary to, directly or indirectly,

(a) merge into or with or consolidate with any other Person or permit any other Person to merge into or with or consolidate with it except that (i) any Borrower may merge or consolidate with any other Borrower, provided, that, each of the following conditions is satisfied: (A) Agent shall have received prompt written notice of any such merger or consolidation and (B) as of the effective date of the merger or consolidation and after giving effect thereto, no Event of Default shall have occurred and be continuing, and (ii) any subsidiary of Parent (other than a Borrower) may consolidate with any other wholly-owned Subsidiary of Parent (other than any Borrower), provided, that, each of the following conditions is satisfied: (A) Agent shall have received not less than ten (10) Business Days’ prior written notice of the intention of such Subsidiaries to so merge or consolidate, which notice shall set forth in reasonable detail satisfactory to Agent, the persons that are merging or consolidating, which person will be the surviving entity, the locations of the assets of the persons that are merging or consolidating, and the material agreements and documents relating to such merger or consolidation, (B) Agent shall have received such other information with respect to such merger or consolidation as Agent may reasonably request, (C) as of the effective date of the merger or consolidation and after giving effect thereto, no Event of Default shall have occurred and be continuing, (D) Agent shall have received, true, correct and complete copies of all agreements, documents and instruments relating to such merger or consolidation, including, but not limited

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to, the certificate or certificates of merger to be filed with each appropriate Secretary of State (with a copy as filed promptly after such filing), (E) the surviving corporation shall expressly confirm, ratify and assume the Obligations and the Financing Agreements to which it is a party in writing, in form and substance satisfactory to Agent, and Borrowers and Guarantors shall execute and deliver such other agreements, documents and instruments as Agent may request in connection therewith;

(b) sell, issue, assign, lease, license, transfer, abandon or otherwise dispose of any Capital Stock or Indebtedness to any other Person or any of its assets to any other Person, except for

(i) sales of Inventory in the ordinary course of business,

(ii) the sale or other disposition of Equipment (including worn-out or obsolete Equipment or Equipment no longer used or useful in the business of any Borrower or Guarantor), provided, that, at all times prior to the termination of the Tranche B Commitments and the payment in full of the Tranche B Loans, such sales or other dispositions do not involve Equipment having an aggregate fair market value in excess of $5,000,000 for all such Equipment disposed of in any fiscal year of Borrowers or such larger amount as Agent may otherwise agree; provided, that, subject to the Qualified Debt Intercreditor Agreement (if applicable), at any time a Cash Dominion Event exists, all of the proceeds of any such sale or other disposition shall be paid to Agent for application to the Obligations in accordance with Section 2.4(d) hereof,

(iii) the issuance and sale by Controlling Parent, any Borrower or Guarantor of Capital Stock of such Borrower or Guarantor after the date hereof, including a pursuant to a Qualified Public Offering; provided, that, (A) Agent shall have received not less than ten (10) Business Days’ prior written notice of such issuance and sale by such Borrower or Guarantor, which notice shall specify the parties to whom such shares are to be sold, the terms of such sale, the total amount which it is anticipated will be realized from the issuance and sale of such stock and the net cash proceeds which it is anticipated will be received by such Borrower or Guarantor from such sale, (B) such Borrower or Guarantor shall not be required to pay any cash dividends or repurchase or redeem such Capital Stock or make any other payments in respect thereof prior to the date that is 60 days after the Maturity Date if the Obligations have paid and satisfied in full by such date, except as otherwise permitted in Section 9.11 hereof, (C) the terms of such Capital Stock issued by a Borrower or Guarantor (other than Parent or Controlling Parent), and the terms and conditions of the purchase and sale thereof, shall not include any terms that include any limitation on the right of any Borrower to request or receive Loans or Letters of Credit or the right of any Borrower and Guarantor to amend or modify any of the terms and conditions of this Agreement or any of the other Financing Agreements or otherwise in any way relate to or adversely affect the arrangements of Borrowers and Guarantors with Agent and Lenders or are more restrictive or burdensome to any Borrower or Guarantor than the terms of any Capital Stock in effect on the date hereof, and (D) except as Agent may otherwise agree in writing, at any time a Cash Dominion Event exists, all of the proceeds of the sale and issuance of such Capital Stock shall be paid to Agent for application to the Obligations in accordance with the terms of this Agreement,

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(iv) the issuance of Capital Stock of any Borrower or Guarantor consisting of common stock pursuant to an employee stock option or grant or similar equity plan or 401(k) plans of such Borrower or Guarantor for the benefit of its employees, directors and consultants, provided, that, in no event shall such Borrower or Guarantor be required to issue, or shall such Borrower or Guarantor issue, Capital Stock pursuant to such stock plans or 401(k) plans which would result in a Change of Control or other Event of Default,

(v) the assets set forth on Schedule 9.7,

(vi) the abandonment of Intellectual Property that is, in the reasonable judgment of Parent, no longer valuable in any material respect or economically practicable to maintain or useful in the conduct of the business of Borrowers and Guarantors, taken as a whole,

(vii) at all times upon and after the termination of the Tranche B Commitments and the payment in full of the Tranche B Loans, the sale or other disposition of assets of any Borrower or Guarantor (including Equipment (including worn-out or obsolete Equipment or Equipment no longer used or useful in the business of any Borrower or Guarantor) other than Accounts, Inventory, Capital Stock of any Subsidiary of Parent, and Intellectual Property, so long as such sales or dispositions are for fair market value and after giving effect to such disposition no Default or Event of Default shall have occurred and be continuing; provided, that, in the event such sales or other dispositions involve assets having an aggregate fair market value in excess of $5,000,000 (or in such larger amount as Agent may agree) for all such assets disposed of in any fiscal year of Borrowers, on the date of such disposition and after giving effect thereto, (A) (1) Agent shall have received no less than five (5) Business Days notice of any such sale, (2) no Event of Default shall have occurred and be continuing, (3) the consideration received by such Borrower or Guarantor shall not be for less than fair market value and (4), subject to the Qualified Debt Intercreditor Agreement, if applicable, at any time a Cash Dominion Event exists, all of the proceeds of any such sale or other disposition shall be paid to Agent for application to the Obligations in accordance with terms hereof, or (B) on such terms as Agent may otherwise agree, and

(c) wind up, liquidate or dissolve except that any Guarantor (other than Parent) may wind up, liquidate and dissolve, provided, that, each of the following conditions is satisfied, (i) the winding up, liquidation and dissolution of such Guarantor shall not violate any law or any order or decree of any court or other Governmental Authority in any material respect and shall not conflict with or result in the breach of, or constitute a default under, any indenture, mortgage, deed of trust, or any other agreement or instrument to which any Borrower or Guarantor is a party or may be bound, (ii) such winding up, liquidation or dissolution shall be done in accordance with the requirements of all applicable laws and regulations, (iii) effective upon such winding up, liquidation or dissolution, all of the assets and properties of such Guarantor shall be duly and validly transferred and assigned to a Borrower or Guarantor, free and clear of any liens, restrictions or encumbrances other than the security interest and liens of Agent (and Agent shall have received such evidence thereof as Agent may reasonably require) and Liens permitted hereunder and Agent shall have received such deeds, assignments or other agreements as Agent may reasonably request to evidence and confirm the transfer of such assets of such Guarantor to a Borrower, (iv) Agent shall have received all documents and agreements

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that any Borrower or Guarantor has filed with any Governmental Authority or as are otherwise required to effectuate such winding up, liquidation or dissolution, (v) no Borrower or Guarantor shall assume any Indebtedness, obligations or liabilities as a result of such winding up, liquidation or dissolution, or otherwise become liable in respect of any obligations or liabilities of the entity that is winding up, liquidating or dissolving, unless such Indebtedness is otherwise expressly permitted hereunder, (vi) Agent shall have received not less than ten (10) Business Days prior written notice of the intention of such Guarantor to wind up, liquidate or dissolve, and (vii) as of the date of such winding up, liquidation or dissolution and after giving effect thereto, no Event of Default shall have occurred and be continuing; or

(d) enter into a binding agreement to do any of the foregoing.

9.8 Encumbrances. Each Borrower and Guarantor shall not, and shall not permit any Subsidiary to, create, incur, assume or suffer to exist any security interest, mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on any of its assets or properties, including the Collateral, or file or permit the filing of, or (upon actual notice thereof) permit to remain in effect, any financing statement or other similar notice of any security interest or lien with respect to any such assets or properties, except:

(a) the security interests and liens of Agent for itself and the benefit of Secured Parties and the rights of setoff of Secured Parties provided for herein under the other Financing Agreements or under applicable law;

(b) liens securing the payment of taxes, assessments or other governmental charges or levies either not yet overdue or the validity of which are being contested in good faith by appropriate proceedings reasonably diligently pursued and available to such Borrower, or Guarantor or Subsidiary, as the case may be and with respect to which adequate reserves have been set aside on its books;

(c) non-consensual statutory liens (other than liens securing the payment of taxes) arising in the ordinary course of such Borrower’s, Guarantor’s or Subsidiary’s business to the extent: (i) such liens secure Indebtedness which is not overdue or (ii) such liens secure Indebtedness relating to claims or liabilities which are fully insured and being defended at the sole cost and expense and at the sole risk of the insurer or being contested in good faith by appropriate proceedings diligently pursued and available to such Borrower, Guarantor or such Subsidiary, in each case prior to the commencement of foreclosure or other similar proceedings and with respect to which adequate reserves have been set aside on its books;

(d) zoning restrictions, easements, licenses, covenants and other restrictions affecting the use of Real Property which do not interfere in any material respect with the use of such Real Property or ordinary conduct of the business of such Borrower, Guarantor or such Subsidiary as presently conducted thereon or materially impair the value of the Real Property which may be subject thereto;

(e) purchase money security interests in Equipment (including Capital Leases) and purchase money mortgages on Real Property to secure Indebtedness permitted under Section 9.9(b) hereof;

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(f) pledges and deposits of cash by any Borrower or Guarantor after the date hereof in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security benefits consistent with the current practices of such Borrower or Guarantor as of the date hereof;

(g) pledges and deposits of cash by any Borrower or Guarantor after the date hereof to secure the performance of tenders, bids, leases, trade contracts (other than for the repayment of Indebtedness), statutory obligations and other similar obligations in each case in the ordinary course of business consistent with the current practices of such Borrower or Guarantor as of the date hereof; provided, that, in connection with any performance bonds issued by a surety or other person, the issuer of such bond shall have waived in writing any rights in or to, or other interest in, any of the Collateral in an agreement, in form and substance reasonably satisfactory to Agent;

(h) liens arising from (i) operating leases and the precautionary UCC financing statement filings in respect thereof and (ii) equipment or other materials which are not owned by any Borrower or Guarantor located on the premises of such Borrower or Guarantor (but not in connection with, or as part of, the financing thereof) from time to time in the ordinary course of business and consistent with current practices of such Borrower or Guarantor and the precautionary UCC financing statement filings in respect thereof;

(i) the security interests in and liens upon the Collateral securing the Indebtedness or obligations owing by Borrowers and Guarantors to holders of the Mezzanine Notes arising under the Mezzanine Note Documents, as permitted under Section 9.9(g) below, which security interests and liens are junior and subordinate to the security interests and liens on the Collateral in favor of Agent as set forth in the Mezzanine Note Intercreditor Agreement, in form and substance satisfactory to Agent;

(j) the security interests and liens in favor of the Qualified Debt Agent, in and on the assets and properties of Borrowers and Guarantors to secure the Indebtedness permitted under Section 9.9(h) hereof; provided, that, such security interests and liens in favor of the Qualified Debt Agent are junior and subordinate to the security interests and liens on the Collateral (other than with respect to the Qualified Debt Offering Priority Collateral) granted by Borrowers and Guarantors in favor of Agent as set forth in the Qualified Debt Intercreditor Agreement;

(k) liens on the Equipment listed on Schedule 9.8(k) attached hereto in favor of the Director of Development of the State of Ohio;

(l) leases or subleases of Real Property granted by any Borrower or Guarantor or Subsidiary in the ordinary course of business and consistent with past practice to any Person so long as any such leases or subleases are subordinate in all respects to the security interests and liens granted to Agent and do not interfere in any material respect with the ordinary conduct of the business of such Borrower or Guarantor or materially impair the value or marketability of the Real Property subject thereto;

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(m) liens to secure Indebtedness of Borrowers and Guarantors permitted under Section 9.9(i) hereof to finance their insurance premiums on the insurance policies maintained by Borrowers and Guarantors, provided, that, (i) such liens shall only encumber the cash surrender value of such insurance and (ii) such liens shall not in any manner affect the ability of Agent to obtain or receive payment of proceeds of insurance with respect to any of the Collateral;

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

(o) judgments and other similar liens arising in connection with court proceedings that do not constitute an Event of Default, provided, that, (i) such liens are being contested in good faith and by appropriate proceedings diligently pursued, (ii) adequate reserves or other appropriate provision, if any, as are required by GAAP have been made therefor, (iii) a stay of enforcement of any such liens is in effect and (iv) Agent may establish a Reserve with respect thereto;

(p) pledges and deposits of cash by any Borrower, Guarantor or Subsidiary to secure the performance of tenders, bids, leases, trade contracts (other than for the repayment of Indebtedness), statutory obligations , surety, stay, customs and appeal bonds, and liability for premiums to insurance carriers, in each case in the ordinary course of business of such Borrower, Guarantor or Subsidiary as of the date hereof;

(q) statutory and contractual liens of landlords or any interest or title of a lessor or sublessor under any lease of real property not prohibited hereby;

(r) the security interests and liens set forth on Schedule 8.4 to the Information Certificate; and

(s) liens incurred in the ordinary course of business of Borrowers and Guarantors securing liabilities that do not exceed $500,000 in the aggregate; provided, that, as of the date of incurring such liens and after giving effect thereto, no Event of Default shall have occurred and be continuing.

9.9 Indebtedness. Each Borrower and Guarantor shall not, and shall not permit any Subsidiary to, incur, create, assume, become or be liable in any manner with respect to, or permit to exist, any Indebtedness, or guarantee, assume, endorse, or otherwise become responsible for (directly or indirectly), the Indebtedness of any other Person, except:

(a) the Obligations;

(b) purchase money Indebtedness (including Capital Leases) arising after the date hereof to the extent secured by purchase money security interests in Equipment (including Capital Leases) and purchase money mortgages on Real Property not to exceed $4,000,000 in the aggregate at any time outstanding so long as such security interests and mortgages do not apply to any property of such Borrower, Guarantor or Subsidiary other than the Equipment or Real Property so acquired, and the Indebtedness secured thereby does not exceed the cost of the Equipment or Real Property so acquired, as the case may be;

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(c) guarantees by any Borrower or Guarantor of the Obligations of the other Borrowers or Guarantors in favor of Agent for the benefit of Lenders and the other Secured Parties;

(d) the Indebtedness of any Borrower or Guarantor to any other Borrower or Guarantor arising after the date hereof pursuant to loans by any Borrower or Guarantor permitted under Section 9.10(g) hereof;

(e) Indebtedness of any Borrower or Guarantor entered into in the ordinary course of business pursuant to a Hedge Agreement; provided, that, (i) such arrangements are not for speculative purposes, and (ii) such Indebtedness shall be unsecured, except to the extent such Indebtedness constitutes either (A) part of the Obligations arising under or pursuant to Hedge Agreements with a Bank Product Provider that are secured under the terms hereof, or (b) part of the obligations arising under or pursuant to Hedge Agreements that are secured under the terms of the documents evidencing the Qualified Debt Offering as permitted pursuant to the terms of the Qualified Debt Intercreditor Agreement;

(f) unsecured Indebtedness of any Borrower or Guarantor arising after the date hereof to any third person (but not to any other Borrower or Guarantor), provided, that, each of the following conditions is satisfied: (i) such Indebtedness shall not include terms and conditions with respect to any Borrower or Guarantor which are more burdensome or restrictive in any material respect than those contained in this Agreement, taken as a whole, and shall be subject and subordinate in right of payment to the right of Agent and Lenders to receive the prior indefeasible payment and satisfaction in full payment of all of the Obligations pursuant to the terms of an intercreditor agreement between Agent and such third party, in form and substance reasonably satisfactory to Agent, (ii) Agent shall have received not less than five (5) days prior written notice (or such lesser period of notice as Agent may from time to time agree) of the intention of such Borrower or Guarantor to incur such Indebtedness, which notice shall set forth in reasonable detail reasonably satisfactory to Agent the amount of such Indebtedness, the person or persons to whom such Indebtedness will be owed, the interest rate, the schedule of repayments and maturity date with respect thereto and such other information as Agent may reasonably request with respect thereto within three (3) Business Days of receiving such notice, (iii) Agent shall have received true, correct and complete copies of all agreements, documents and instruments evidencing or otherwise related to such Indebtedness, (iv) except as Agent may otherwise agree in writing, at any time that a Cash Dominion Event exists, all of the proceeds of the loans or other accommodations giving rise to such Indebtedness shall be paid to Agent for application to the Obligations in accordance with Section 6.4 hereof, (v) in no event shall the aggregate principal amount of such Indebtedness incurred during the term of this Agreement exceed $15,000,000, (vi) as of the date of incurring such Indebtedness and after giving effect thereto, no Default or Event of Default shall have occurred, (vii) such Borrower and Guarantor shall not, directly or indirectly, (A) without Agent’s consent, amend, modify, alter or change the terms of such Indebtedness or any agreement, document or instrument related thereto in a manner that adversely affects Borrowers, Guarantors, Agent or Lenders in any material respect, or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness (except pursuant to regularly scheduled payments permitted herein), or set aside or otherwise deposit or invest any sums for such purpose, and (viii) Borrowers and Guarantors shall furnish to Agent all notices or demands in connection with such Indebtedness either received by any Borrower or Guarantor or

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on its behalf promptly after the receipt thereof, or sent by any Borrower or Guarantor or on its behalf concurrently with the sending thereof, as the case may be;

(g) Indebtedness of Parent evidenced by the Mezzanine Notes outstanding on the date hereof, provided, that, each of the following conditions is satisfied, as determined by Agent,

(i) the aggregate principal amount of such Indebtedness shall not exceed $31,000,000, except as may be otherwise agreed to by Agent, plus fees and interest thereon at the rate provided for in such agreement or instrument as in effect on the date hereof,

(ii) such Indebtedness is and shall at all times continue to be subject and subordinate in right of payment to the right of Agent and Lenders to receive the prior indefeasible payment and satisfaction in full payment of all of the Obligations (other than indemnities and contingent Obligations which have not yet accrued) in accordance with the terms of the Mezzanine Note Intercreditor Agreement;

(iii) Borrowers and Guarantors shall not, directly or indirectly, make any payments in respect of such Indebtedness, except, that, Borrowers and Guarantors may make payments of principal, interest, fees, expenses and other amounts owing under the Mezzanine Note Documents as in effect on the date hereof in respect of such Indebtedness after the date hereof, provided, that,

(A) as to payments of interest (i) such interest is paid in accordance with the terms of the Mezzanine Note Documents (as in effect on the date hereof) and (ii) on the date of such payment and after giving effect thereto no Event of Default shall have occurred and be continuing, and

(B) as to payments of principal (and if applicable, any related prepayment or termination fees or premiums): Agent shall have received no less than five (5) days notice (or such lesser period of notice as Agent may from to time agree) of any such proposed payment, and as to any such payment, as of the date of such payment and after giving effect thereto, each of the following conditions shall have been satisfied:

(1) (aa) Borrowers have issued debt securities or similar instruments as provided in the Section 9.9(h) below and all conditions to the incurrence of such Indebtedness shall have been satisfied, or (bb) all outstanding Tranche B Loans hereunder shall have been paid in full and the Tranche B Commitments have been terminated;

(2) no Event of Default shall have occurred and be continuing as of the date of such payment and after giving effect thereto, and

(3) the daily average of the Excess Availability (calculated without regard to the Tranche B Availability for this purpose) shall have been not less than the Minimum Threshold Amount, (i) for the immediately preceding 30 consecutive day period for which the Borrowing Base has been calculated (or from the date hereof to the date of such payment if 30 days from the date hereof have not yet elapsed) prior to the date of such payment, (ii) on the date of such payment, and (iii) after giving effect to the such payment, in

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each case on a pro forma basis using the Excess Availability as of the date of the most recent calculation of the Borrowing Base immediately prior to giving effect to any such payment,

(iv) Agent shall have received true, correct and complete copies of all agreements, documents and instruments evidencing or otherwise related to such Indebtedness issued prior to and contemporaneously on the date hereof,

(v) Borrowers and Guarantors shall not, directly or indirectly, (A) without Agent’s consent, amend, modify, alter or change the terms of such Indebtedness or any agreement, document or instrument related thereto in a manner that adversely affects Borrowers, Guarantors, Agent or Lenders in any material respect, or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness or set aside or otherwise deposit or invest any sums for such purpose except as permitted in Section 9.9(g)(iii) hereof, and

(vi) Administrative Borrower shall furnish to Agent all notices or demands in connection with such Indebtedness either received by any Borrower or Guarantor or on its behalf promptly after the receipt thereof, or sent by any Borrower or Guarantor on its behalf concurrently with the sending thereof, as the case may be;

(h) Indebtedness arising after the date hereof to the Qualified Debt Agent or other holders thereof (but not to any other Borrower or Guarantor or other Subsidiary of Parent) pursuant to the Qualified Debt Offering, provided, that, each of the following conditions is satisfied:

(i) Agent shall have received not less than fifteen (15) Business Days prior written notice of the intention of such Borrower or Guarantor to incur such Indebtedness, which notice shall set forth in reasonable detail reasonably satisfactory to Agent the amount of such Indebtedness, the person or persons to whom such Indebtedness will be owed, the interest rate, the schedule of repayments and maturity date with respect thereto and such other information as Agent may reasonably request with respect thereto,

(ii) the initial proceeds of such Indebtedness shall be utilized to repay (A) all outstanding Tranche B Loans in full and the Tranche B Commitments shall be terminated contemporaneously therewith and (B) all outstanding Indebtedness set forth in Section 9.9(g) hereof in full and the Indebtedness evidenced by the Mezzanine Notes permitted under Section 9.9(g) herein shall have been terminated,

(iii) such Indebtedness shall be on commercially reasonable terms and conditions with market rate pricing and scheduled principal payments due no earlier than six (6) months after the Maturity Date and shall not include terms and conditions with respect to any Borrower or Guarantor which are more burdensome or restrictive in any material respect than those contained in this Agreement, taken as a whole, except with respect to financial covenants and call protection provisions (and other payments permitted pursuant to clause (x) below), provided, that, prior to incurring such Indebtedness, Borrowers shall have delivered to Agent projections, in form and substance satisfactory to Agent, which show that Borrowers will be in compliance with such financial covenants and call protection provisions (and other payments permitted pursuant to clause (x) below) through the end of the term of such Indebtedness,

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(iv) the Indebtedness incurred pursuant to this Section 9.9(h) together with any Hedge Agreement provided by the Qualified Debt Agent or any holder of any such Indebtedness in connection with the Qualified Debt Offering may be secured by a lien on the Collateral provided, that. Agent shall have received the Qualified Debt Intercreditor Agreement applicable to such Indebtedness, duly authorized, executed and delivered by the holders of such Indebtedness or the Qualified Debt Agent (on behalf of the holders of such Indebtedness), which shall provide among other things for the subordination of Qualified Debt Agent’s and such holders’ lien on the Collateral (other than the Qualified Debt Offering Priority Collateral) and the subordination of the Secured Parties lien on the Qualified Debt Offering Priority Collateral as provided in Section 9.8(j) hereof,

(v) Agent shall have received the Qualified Debt Intercreditor Agreement, duly authorized, executed and delivered by the Qualified Debt Agent, Borrowers and Guarantors, and true, correct and complete copies of all agreements, documents or instruments evidencing or otherwise related to such Indebtedness, in each case in form and substance reasonably satisfactory to Agent,

(vi) the proceeds of such Qualified Debt Offering (after payment of the obligations and Indebtedness set forth in subsection (ii) above and any dividend or other distribution as permitted in Section 9.1 l(e) hereof) shall be paid to Agent for application to the Obligations in accordance with Section 6.4 hereof,

(vii) as of the date of incurring such Indebtedness, Agent shall have received a Pro Forma Compliance Certificate demonstrating that, upon giving effect on a Pro Forma Basis to such transactions (including the application of any proceeds of such Indebtedness), (A) the Fixed Charge Coverage Ratio for Parent and its Subsidiaries is equal to or greater than 1.00 to 1.00 and (B) Excess Availability shall be greater than the amount equal to fifteen (15%) percent of the Maximum Credit, for the first twelve (12) months after giving effect to the incurrence of such indebtedness and on an annual basis thereafter for the term of the Credit Facility,

(viii) the daily average of the Excess Availability (calculated without regard to the Tranche B Availability for this purpose) shall have been not less than the Minimum Threshold Amount on the date any such Indebtedness is incurred, and after giving effect thereto (including the application of any proceeds of Indebtedness), in each case on a Pro Forma Basis using the Excess Availability as of the date of the most recent calculation of the Borrowing Base immediately prior to giving effect to any such incurrence of Indebtedness,

(ix) as of the date of incurring such Indebtedness and after giving effect thereto, no Event of Default shall have occurred and be continuing,

(x) Borrowers and Guarantors may make regularly scheduled payments of principal and interest and mandatory prepayments in respect of such Indebtedness, in each case to the extent permitted under the Qualified Debt Intercreditor Agreement,

(xi) Borrowers and Guarantors shall not, directly or indirectly, (A) amend, modify or otherwise change (or permit the amendment, modification or other change in

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any manner of) any of the provisions of any agreements, documents or instruments in respect of any such Indebtedness (except to the extent permitted under the Qualified Debt Intercreditor Agreement), and except, that, Borrowers and Guarantors, and any Subsidiary, may, after prior written notice to Agent, amend, modify, alter or change the terms thereof to forgive, or cancel any portion of such Indebtedness (other than pursuant to payments thereof), or to reduce the interest rate or any fees in connection therewith, or to make the terms thereof less restrictive or burdensome to Borrowers, Guarantors or such Subsidiary or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness or set aside or otherwise deposit or invest any sums for such purpose except as permitted in this Section 9.9(h), and

(xii) only one Qualified Debt Offering can be incurred.

(i) unsecured Indebtedness of Borrowers and Guarantors to an insurance company arising pursuant to loans used for the payment of insurance premiums payable on insurance policies maintained by Borrowers and Guarantors; provided, that, (i) upon Agent’s request, Agent shall have received true, correct and complete copies of all material agreements, documents and instruments evidencing or otherwise related to such Indebtedness, and (ii) Administrative Borrower shall furnish to Agent all material notices or demands in connection with such Indebtedness either received by any Borrower or Guarantor on its behalf after the receipt thereof, or sent by any Borrower or Guarantor or on its behalf, concurrently with the sending thereof, as the case may be;

(j) Indebtedness of a Borrower or Guarantor arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, that, such Indebtedness is extinguished within five (5) Business Days of incurrence;

(k) contingent Indebtedness of a Borrower or Guarantor arising pursuant to a performance, bid or surety bond in the ordinary course of business provided, that, (i) upon Agent’s request, Agent shall have received true, correct and complete copies of all material agreements, documents or instruments evidencing or otherwise related to such Indebtedness, as duly authorized, executed and delivered by the parties thereto, (ii) if the face amount of such bond exceeds $250,000, Agent shall have received not less than five (5) days prior written notice of the intention of such Borrower or Guarantor to incur such Indebtedness and (iii) such Indebtedness does not exceed $500,000 in the aggregate at any time outstanding, provided, that, such Indebtedness may exceed $500,000 to the extent that such excess amount is collateralized in full with cash collateral or a letter of credit;

(l) unsecured Indebtedness in respect of workers’ compensation claims and self insurance obligations, and other similar obligations in the ordinary course of business;

(m) unsecured Indebtedness resulting from agreements to provide for working capital adjustments of purchase price, earnouts or other similar obligations incurred in connection with Permitted Acquisitions, provided, that, such Indebtedness shall be on terms and conditions reasonably acceptable to Agent and shall be subject and subordinate in right of payment to the right of Agent and Lenders to receive the prior payment and satisfaction in full

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payment of all of the Obligations pursuant to the terms of a subordination agreement between Agent and such third party, in form and substance reasonably satisfactory to Agent;

(n) unsecured guaranties in the ordinary course of business of the obligations of suppliers, of the Borrowers or the Guarantors;

(o) the Indebtedness set forth on Schedule 9.9 to the Information Certificate,

(p) Indebtedness of any Borrower or Guarantor arising after the date hereof issued in exchange for, or the proceeds of which are used to extend, refinance, replace or substitute for Indebtedness permitted under Section 9.9(b), (f), (g), (h) or (o) hereof (the “Refinancing Indebtedness”); provided, that, as to any such Refinancing Indebtedness, each of the following conditions is satisfied: (i) Agent shall have received not less than ten (10) Business Days’ prior written notice of the intention to incur such Indebtedness, which notice shall set forth in reasonable detail reasonably satisfactory to Agent, the amount of such Indebtedness, the schedule of repayments and maturity date with respect thereto and such other information with respect thereto as Agent may reasonably request, (ii) promptly upon Agent’s request, Agent shall have received true, correct and complete copies of all material agreements, documents and instruments evidencing or otherwise related to such Indebtedness, as duly authorized, executed and delivered by the parties thereto, (iii) the Refinancing Indebtedness shall have a Weighted Average Life to Maturity and a final maturity equal to or greater than the Weighted Average Life to Maturity and the final maturity, respectively, of the Indebtedness being extended, refinanced, replaced, or substituted for, (iv) the Refinancing Indebtedness shall rank in right of payment no more senior than, and be at least subordinated (if subordinated) to, the Obligations as the Indebtedness being extended, refinanced, replaced or substituted for (other than with respect to Refinancing Indebtedness of an Indebtedness incurred pursuant to Section 9.9(h) hereof, which Refinancing Indebtedness may be of a type permitted in Section 9.9(h) hereof), (v) the Refinancing Indebtedness shall (A) not include terms and conditions with respect to any Borrower or Guarantor which are more burdensome or restrictive in any material respect than those contained in this Agreement, taken as a whole, and (B) in the case of Refinancing Indebtedness in respect of Indebtedness permitted in Section 9.9(g) hereof, satisfy all of the criteria set forth in such subsection, and (C) in the case of Refinancing Indebtedness in respect of Indebtedness permitted in Section 9.9(h) hereof, satisfy all of the criteria set forth in such subsection, and (vi) such Indebtedness incurred by any Borrower or Guarantor shall be at rates and with fees or other charges that are commercially reasonable and otherwise consistent with the Indebtedness being refinanced as specifically permitted in this Section 9.9, (vii) as of the date of incurring such Indebtedness and after giving effect thereto, no Event of Default shall have occurred and be continuing, (viii) the principal amount of such Refinancing Indebtedness shall not exceed the principal amount of the Indebtedness so extended, refinanced, replaced or substituted for (plus the amount of reasonable refinancing fees and expenses, prepayment fees and accrued interest incurred in connection therewith outstanding on the date of such event), (ix) if secured, the Refinancing Indebtedness shall be secured by substantially the same assets as the Indebtedness to be refinanced (other than with respect to Refinancing Indebtedness of an Indebtedness incurred pursuant to Section 9.9(h) hereof, which may be secured by the same Collateral as permitted in Section 9.9(h) hereof and subject to a Qualified Debt Intercreditor Agreement), provided, that, such security interests (if any) with respect to the Refinancing

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Indebtedness shall have a priority no more senior than, and be at least as subordinated, if subordinated (on terms and conditions substantially similar to the subordination provisions applicable to the Indebtedness so extended, refinanced, replaced or substituted for or as is otherwise reasonably acceptable to Agent) as the security interest with respect to the Indebtedness so extended, refinanced, replaced or substituted for, and (x) Borrowers and Guarantors may only make payments of principal, interest and fees, if any, in respect of such Indebtedness to the extent such payments would have been permitted hereunder in respect of the Indebtedness so extended, refinanced, replaced or substituted for;

(q) guarantees with respect to Indebtedness permitted under this Section 9.9;

(r) obligations of any Borrower or Guarantor under License Agreements with respect to non-refundable, advance or minimum guarantee royalty payments in an aggregate amount in any fiscal year not to exceed $1,000,000; and

(s) in addition to Indebtedness otherwise permitted under this Section 9.9, unsecured Indebtedness in an aggregate principal amount at any time outstanding not to exceed $2,000,000.

9.10 Loans, Investments, Etc. Each Borrower and Guarantor shall not, and shall not permit any Subsidiary to, directly or indirectly, make any loans or advance money or property to any person, or invest in (by capital contribution, dividend or otherwise) or purchase or repurchase the Capital Stock or Indebtedness or all or a substantial part of the assets or property of any person, or acquire any Subsidiaries, or enter into a binding agreement to do any of the foregoing, except:

(a) the endorsement of instruments for collection or deposit in the ordinary course of business;

(b) Permitted Acquisitions;

(c) investments in cash or Cash Equivalents; provided, that, (i) at any time on and after a Cash Dominion Event and for so long as the same is continuing, no Loans are then outstanding; except that notwithstanding that any Loans are outstanding at any time a Cash Dominion Event exists, Parent and its Subsidiaries may from time to time in the ordinary course of business consistent with their current practices as of the date hereof make deposits of cash or other immediately available funds in operating demand deposit accounts used for disbursements to the extent required to provide funds for amounts drawn or anticipated to be drawn shortly on such accounts and such funds may be held in Cash Equivalents consisting of overnight investments until so drawn (so long as such funds and Cash Equivalents are not held more than three (3) Business Days from the date of the initial deposit thereof) and (ii) the terms and conditions of Section 5.2 hereof shall have been satisfied with respect to the deposit account, investment account or other account in which such cash or Cash Equivalents are held;

(d) the existing equity investments of each Borrower and Guarantor as of the date hereof in its Subsidiaries, provided, that, no Borrower or Guarantor shall have any

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further obligations or liabilities to make any capital contributions or other additional investments or other payments to or in or for the benefit of any of such Subsidiaries;

(e) loans and advances by any Borrower or Guarantor to employees of such Borrower or Guarantor not to exceed the principal amount of $1,000,000 in the aggregate at any time outstanding for: (i) reasonable and bona fide work-related travel or other ordinary business expenses to be incurred by such employees in connection with their work for such Borrower or Guarantor and (ii) reasonable and bona fide relocation expenses of such employees (including home mortgage financing for relocated employees);

(f) stock or obligations issued to any Borrower or Guarantor by any Person (or the representative of such Person) in respect of Indebtedness of such Person owing to such Borrower or Guarantor in connection with the insolvency, bankruptcy, receivership or reorganization of such Person or a composition or readjustment of the debts of such Person; provided, that, the original of any such stock or instrument evidencing such obligations shall be promptly delivered to Agent, upon Agent’s request, together with such stock power, assignment or endorsement by such Borrower or Guarantor as Agent may request;

(g) obligations of account debtors to any Borrower or Guarantor arising from Accounts which are past due evidenced by a promissory note made by such account debtor payable to such Borrower or Guarantor; provided, that, promptly upon the receipt of the original of any such promissory note by such Borrower or Guarantor, such promissory note shall be endorsed to the order of Agent by such Borrower or Guarantor and promptly delivered to Agent as so endorsed;

(i) loans, advances or other investments by a Borrower or Guarantor to or in a Borrower or Guarantor, or by a Subsidiary that is not a Borrower or Guarantor in any other Subsidiary that is not a Borrower or Guarantor, after the date hereof; provided, that, as to any such loans, advances or other investments, each of the following conditions is satisfied: (1) such Indebtedness is permitted hereunder, and (2) as of the date of any such loan, advance or other investment and after giving effect thereto, no Event of Default shall have occurred and be continuing;

(h) loans, advances or other investments by any Borrower or Guarantor to any Subsidiary that is not a Borrower or Guarantor; provided, that, as to any such loans or advances, each of the following conditions is satisfied: (1) the principal amount of all such loans, advances and other investments shall not exceed $3,000,000 in the aggregate in any fiscal year, (2) as of the date of any such loan, advance or other investment and after giving effect thereto, Excess Availability shall be not less than an amount equal to 15% of the Maximum Credit then in effect, and (3) as of the date of any such loan, advance or other investment and after giving effect thereto, no Event of Default shall have occurred and be continuing;

(i) the loans and advances set forth on Schedule 9.10 to the Information Certificate;

(j) the formation of Controlling Parent (other than Toolrock Investment, LLC) in connection with the consummation of a Qualified Public Offering so long as each of the

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following conditions is satisfied: (i) Agent shall have received not less than ten (10) Business Days prior written notice of such formation, (ii) such Controlling Parent shall have no operating assets and (iii) as of the date of any such formation and after giving effect thereto, no Event of Default shall have occurred and be continuing;

(k) all Capital Expenditures permitted under Section 9.18 hereof; and

(l) investments not otherwise permitted herein; provided, that, (i) the aggregate outstanding amount of all such investments shall not exceed $2,000,000 at any time and (ii) as of the date of any such investment and after giving effect thereto, no Event of Default shall have occurred and be continuing.

9.11 Dividends and Redemptions. Each Borrower and Guarantor shall not, directly or indirectly, declare or pay any dividends on account of any shares of class of any Capital Stock of such Borrower or Guarantor now or hereafter outstanding, or set aside or otherwise deposit or invest any sums for such purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of any class of Capital Stock (or set aside or otherwise deposit or invest any sums for such purpose) for any consideration or apply or set apart any sum, or make any other distribution (by reduction of capital or otherwise) in respect of any such shares or enter into a binding agreement to do any of the foregoing, except, that,:

(a) any Borrower or Guarantor may declare and pay such dividends or redeem, retire, defease, purchase or otherwise acquire any shares of any class of Capital Stock for consideration in the form of shares of common stock (so long as after giving effect thereto no Change of Control or other Event of Default shall exist or occur);

(b) Borrowers and Guarantors may pay dividends to the extent permitted in Section 9.12 below;

(c) any Subsidiary of a Borrower or Guarantor may pay dividends to a Borrower or a Guarantor;

(d) Borrowers and Guarantors may repurchase Capital Stock held by employees, officers or directors pursuant to any employee stock ownership plan thereof upon the termination, retirement or death of any such employee in accordance with the provisions of such plan as in effect on the date hereof (as such plan may be amended in a manner that does not adversely affect Borrowers, Guarantors, Agent or Lenders in any material respect), provided, that, as to any such repurchase, each of the following conditions is satisfied: (i) as of the date of the payment for such repurchase and after giving effect thereto, no Event of Default shall have occurred and be continuing, (ii) such repurchase shall be paid with funds legally available therefor, (iii) such repurchase shall not violate any law or regulation or the terms of any indenture, agreement or undertaking to which such Borrower or Guarantor is a party or by which such Borrower or Guarantor or its or their property are bound, and (iv) the aggregate amount of all payments for such repurchases in any calendar year shall not exceed $2,500,000 (or such other larger amount as Agent may agree); and

(e) Parent may pay cash dividends and other distributions in respect of its Capital Stock or repurchase of its Capital Stock and the Borrowers and Guarantors (other than

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Parent) may pay cash dividends to Parent to pay such dividends or so repurchase; provided, that, each of the following conditions is satisfied, (i) Agent shall have received from Administrative Borrower not less than five (5) Business Days’ written notice (or such lesser period of notice as Agent may from to time agree) prior to the date of the payment of any dividends or other distributions or any other repurchases (specifying the amount to be paid by Borrowers or Guarantors), (ii) such dividends, distributions or repurchases shall paid with funds legally available therefor, (iii) such dividends, distributions or repurchases shall not violate any law or regulation or the terms of any indenture, agreement or undertaking to which such Borrower or Guarantor is a party or by which such Borrower or Guarantor or its or their property are bound, (iv) Borrowers have either (A) issued debt securities or similar instruments as provided in the Section 9.9(h) above and all conditions to the incurrence of such Indebtedness as set forth therein shall have been satisfied, or (B) all outstanding Tranche B Loans shall have been paid in full and the Tranche B Commitments shall have been terminated contemporaneously therewith, (v) as to dividends, distributions or repurchases in any fiscal year of Parent, the daily average of the Excess Availability (calculated without regard to the Tranche B Availability for this purpose) shall have been not less than the Minimum Threshold Amount, (A) for the immediately preceding 30 consecutive day period for which the Borrowing Base has been calculated (or from the date hereof to the date of such payment if 30 days from the date hereof have not yet elapsed) prior to the date of such payment, (B) on the date of such payment, and (C) after giving effect to the such payment, in the case of (B) and (C) on a pro forma basis using the Excess Availability as of the date of the most recent calculation of the Borrowing Base immediately prior to giving effect to any such payment, (vi) the aggregate amount of all such dividends, distributions or repurchases shall not exceed $75,000,000 during the term of this Agreement, and (vii) as of the date of any such payment and after giving effect thereto, no Event of Default shall have occurred and is continuing.

9.12 Transactions with Affiliates. Each Borrower and Guarantor shall not, directly or indirectly (in each case, other than transactions between any Borrower or Guarantor and any other Borrower or Guarantor which is not prohibited by the terms of this Agreement and the making of payments pursuant to Section 9.11 hereof):

(a) purchase, acquire or lease any property from, or sell, transfer or lease any property to, any officer, director or other Affiliate of such Borrower or Guarantor, except pursuant to the reasonable requirements of such Borrower’s or Guarantor’s business (as the case may be) and upon fair and reasonable terms no less favorable to such Borrower or Guarantor than such Borrower or Guarantor could obtain in a comparable arm’s length transaction with an unaffiliated person; or

(b) make any payments (whether by dividend, loan or otherwise) of management, consulting or other fees for management or similar services, or of any Indebtedness owing to any officer, employee, shareholder, director or any other Affiliate of such Borrower or Guarantor, except

(i) reasonable compensation to officers, employees and directors for services rendered to such Borrower or Guarantor in the ordinary course of business,

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(ii) Borrowers and Guarantors may pay (a) a yearly management fee and other fees (such “other fees” do not include the fees referred to in clauses (iii) and (vi) below) to the Sponsors or any Affiliate thereof in the aggregate annual amount not to exceed $5,000,000, and (b) to the extent that any management fee referred to in clause (a) above accrued but was unpaid in any calendar year, the amount of such accrued and unpaid management fee may be paid to Sponsors or any Affiliate thereof in the following calendar year (or in any other calendar year in which Sponsors or any Affiliate thereof are permitted to receive such payment), in the case of this clause (b), so long as of the date of the payment of such accrued and unpaid management fee and after giving effect thereto, Excess Availability shall be not less than an amount equal to 15% of the Maximum Credit then in effect;

(iii) Borrowers and Guarantors may pay the fees payable to the Sponsors or any Affiliate thereof pursuant to the terms of the Transaction Services Agreements in an amount not to exceed (A) one and one-half (1.50%) percent of the Maximum Credit as in effect on the date hereof and (B) in connection with a Qualified Debt Offering permitted pursuant to Section 9.9(h) hereof, two (2%) percent of the principal amount of such Qualified Debt Offering;

(iv) payments by any such Borrower or Guarantor to Parent for actual and necessary reasonable out-of-pocket legal and accounting, insurance, marketing, payroll and similar types of services paid for by Parent on behalf of such Borrower or Guarantor, in the ordinary course of their respective businesses or as the same may be directly attributable to such Borrower or Guarantor and for the payment of taxes by or on behalf of Parent;

(v) amounts payable to any Sponsor Affiliated Lender pursuant to this Agreement; and

(vi) payments to Affiliates in connection with consulting services provided in connection with Permitted Acquisitions and the Qualified Public Offering pursuant to the reasonable requirements of such Borrower’s or Guarantor’s business (as the case may be), so long as such services are provided upon fair and reasonable terms no less favorable to such Borrower or Guarantor than such Borrower or Guarantor could obtain in a comparable arm’s length transaction with an unaffiliated person.

9.13 Compliance with ERISA. Each Borrower and Guarantor shall, and shall cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal and State law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; (c) not terminate any Pension Plan so as to incur any material liability to the Pension Benefit Guaranty Corporation; (d) not allow or suffer to exist any prohibited transaction involving any Plan or any trust created thereunder which would subject such Borrower, Guarantor or such ERISA Affiliate to a material tax or other liability on prohibited transactions imposed under Section 4975 of the Code or ERISA; (e) make all required contributions to any Plan which it is obligated to pay under Section 302 of ERISA, Section 412 of the Code or the terms of such Plan; (f) not allow or suffer to exist any accumulated funding deficiency, whether or not waived, with respect to any such Pension Plan; (g) not engage in a transaction that could be subject to Section 4069 or 4212(c) of ERISA; or (h) not allow or suffer to exist any occurrence of a reportable event or any

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other event or condition which presents a material risk of termination by the Pension Benefit Guaranty Corporation of any Plan that is a single employer plan, which termination could result in any material liability to the Pension Benefit Guaranty Corporation, except to the extent that any of the above could not, either individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect.

9.14 End of Fiscal Years; Fiscal Quarters. Each Borrower and Guarantor shall, for financial reporting purposes, cause its, and each of its Subsidiaries’ (a) fiscal years to end on September 30^th of each year and (b) fiscal quarters to end on December 31^st, March 30^th, June 30^th, and September 30^th of each year.

9.15 Change in Business. Each Borrower and Guarantor shall not engage in any business other than the business of such Borrower or Guarantor on the date hereof and any business reasonably related, ancillary or complimentary to the business in which such Borrower or Guarantor is engaged on the date hereof.

9.16 Limitation of Restrictions Affecting Subsidiaries. Each Borrower and Guarantor shall not, directly, or indirectly, create or otherwise cause or suffer to exist any encumbrance or restriction which prohibits or limits the ability of any Subsidiary of such Borrower or Guarantor to (a) pay dividends or make other distributions or pay any Indebtedness owed to such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor; (b) make loans or advances to such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor, (c) transfer any of its properties or assets to such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor; or (d) create, incur, assume or suffer to exist any lien upon any of its Collateral, other than encumbrances and restrictions arising under (i) applicable law, (ii) this Agreement and the other Financing Agreements, the Mezzanine Note Documents, the documents governing the Qualified Debt Offering (if applicable) or any agreement governing any other Indebtedness permitted hereby provided that, with respect to any agreement governing such other Indebtedness, the provisions relating to such encumbrance or restriction are no less favorable to the Parent and its Subsidiaries in any material respect, taken as a whole, than the provisions contained in this Agreement as in effect on the date hereof, (iii) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor, (iv) the documents relating to Indebtedness permitted by Sections 9.9(g) and (h) hereof and the documents relating to the Refinancing Indebtedness, (v) customary restrictions on dispositions of real property interests found in reciprocal easement agreements of such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor, (vi) any agreement relating to permitted Indebtedness incurred by a Subsidiary of such Borrower or Guarantor prior to the date on which such Subsidiary was acquired by such Borrower or such Guarantor and outstanding on such acquisition date, and (vii) the extension or continuation of contractual obligations in existence on the date hereof; provided, that, any such encumbrances or restrictions contained in such extension or continuation are no less favorable to Agent and Lenders than those encumbrances and restrictions under or pursuant to the contractual obligations so extended or continued.

9.17 Fixed Charge Coverage Ratio.

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(a) At any time that the Excess Availability is less than the amount equal to twenty (20%) percent of the Maximum Credit (so long as Revolving Loans in respect of the Tranche B Borrowing Base are outstanding or the Tranche B Commitments have not been terminated, and thereafter, an amount equal to fifteen (15%) percent of the Maximum Credit) for a period of three (3) consecutive days, the Fixed Charge Coverage Ratio of Parent and its Subsidiaries (on a consolidated basis) determined as of the end of the fiscal month most recently ended for which Agent has received financial statements shall be not less than 1.00 to 1.00 for the period of the immediately preceding twelve (12) consecutive fiscal months; provided, that, prior to the end of the twelfth (12th) consecutive month after the date hereof, for purposes of testing compliance with the Fixed Charge Coverage Ratio, such covenant shall be tested on a cumulative basis as follows: at the end of the first month after the closing date, the period measured shall be the three fiscal months then ended, at the end of the second month after the date hereof, the period measured shall be the three (3) fiscal months then ended, and at the end of the third fiscal month after the date hereof through the twelfth fiscal month after the date hereof, on a cumulative basis from the month during which the date hereof occurred through the month then ended.

(b) Upon an Event of Default as a result of the failure of Borrowers to comply with the terms of Section 9.17(a), such Event of Default shall, subject to the limitations set forth in Section 9.17(c) below, be deemed cured and cease to exist in the event that one or more Equity Investors or one or more of their Affiliates, within ten (10) Business Days after the date that the financial statements reflecting such failure are required to have been delivered to Agent, makes a cash equity capital contribution to Parent (a “Cure Action”) in exchange for Capital Stock consisting of common stock (i) so that after giving effect thereto, on a pro forma basis, with such contribution deemed to be added to the EBITD A of Parent and its Subsidiaries as of the last day of the twelve (12) immediately preceding month period for which Agent has received financial statements, Parent and its Subsidiaries are in compliance with such covenant, or (ii) so that after giving effect thereto, to the extent that the proceeds of such cash equity capital contribution are applied to the Revolving Loans, the calculation of the Borrowing Base results in Excess Availability of more than the amount required in Section 9.17(a) above so that compliance with the Fixed Charge Coverage Ratio shall be deemed to have not been required as of the date of such Event of Default.

(c) No more than two (2) Cure Actions may be taken in any twelve (12) consecutive month period, and the aggregate amount all Cure Actions during any fiscal year shall not exceed $10,000,000.

9.18 Capital Expenditures. Parent and its Subsidiaries shall not, directly or indirectly, make or commit to make, whether through purchase, capital leases or otherwise, Capital Expenditures (a) in fiscal year 2008, in an aggregate amount in excess of $55,000,000, (b) in fiscal year 2009, in an aggregate amount in excess of $30,000,000, and (c) in each fiscal year thereafter, in an aggregate amount in excess of $20,000,000; provided, that, the maximum amount of Capital Expenditures which may be made by Parent and its Subsidiaries in a particular fiscal year shall be increased by (i) the difference (if any) between the amount of all Capital Expenditures made in the previous fiscal year and the maximum permitted amount for such year, up to a maximum carry-over amount of $5,000,000 (except for fiscal year 2008, during which no

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carry-forward shall be permitted from 2007), plus (ii) the amount of any Permitted Additional Capital Expenditure(s).

9.19 Minimum Excess Availability. Borrowers shall not permit Excess Availability to be less than $20,000,000 at any time commencing the date hereof and ending on the last day of Borrower’s fiscal year 2009.

9.20 Intentionally deleted.

9.21 Designation of Designated Senior Debt. Borrowers and Guarantors shall not, and shall not permit any Subsidiary to, designate any Indebtedness, other than the Obligations and any Qualified Debt Offering, as “Designated Senior Debt”, or any similar term under and as defined in the agreements relating to any Indebtedness of Borrowers or Guarantors, including Indebtedness of any Borrower or Guarantor evidenced by any of the documents governing the Qualified Debt Offering, which contains such designation. Borrowers and Guarantors shall, and shall cause any Subsidiary to, designate the Obligations as “Designated Senior Debt” or any similar term under and as defined in the agreements relating to any Indebtedness (including any Indebtedness otherwise permitted under Section 9.9 hereof) of any Borrower or Guarantor which contains such designation.

9.22 Foreign Assets Control Regulations, Etc. None of the requesting or borrowing of the Loans or the requesting or issuance, extension or renewal of any Letter of Credit or the use of the proceeds of any thereof will violate the Trading With the Enemy Act (50 USC §1 et seq., as amended) (the “Trading With the Enemy Act”) or any of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) (the “Foreign Assets Control Regulations”) or any enabling legislation or executive order relating thereto (including, but not limited to (a) Executive order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive Order”) and (b) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56). None of Borrowers or any of their Subsidiaries or other Affiliates is or will become a “blocked person” as described in the Executive Order, the Trading with the Enemy Act or the Foreign Assets Control Regulations or engages or will engage in any dealings or transactions, or be otherwise associated, with any such “blocked person”.

9.23 After Acquired Real Property. So long as the Tranche B Commitments have not been terminated, and for so long thereafter as any Tranche B Loans remain outstanding, if any Borrower or Guarantor hereafter acquires any Real Property, fixtures or any other property that is of the kind or nature described in the Mortgages and such Real Property, fixtures or other property is adjacent to, contiguous with or necessary or related to or used in connection with any Real Property then subject to a Mortgage, or if such Real Property is not adjacent to, contiguous with or related to or used in connection with such Real Property, then if such Real Property, fixtures or other property at any location (or series of adjacent, contiguous or related locations, and regardless of the number of parcels) has a fair market value in an amount equal to or greater than $2,000,000 (or if an Event of Default exists, then regardless of the fair market value of such assets), without limiting any other rights of Agent or any Lender, or duties or obligations of any

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Borrower or Guarantor, promptly upon Agent’s request, and, if applicable, in the event that the Qualified Debt Agent requires such Borrower or Guarantor to execute and deliver a mortgage, deed of trust or deed to secure debt with respect to any such Real Property, such Borrower or Guarantor shall execute and deliver to Agent a mortgage, deed of trust or deed to secure debt, as Agent may determine, in form and substance substantially similar to the Mortgages and as to any provisions relating to specific state laws satisfactory to Agent and in form appropriate for recording in the real estate records of the jurisdiction in which such Real Property or other property is located granting to Agent a first and only lien and mortgage on and security interest in such Real Property, fixtures or other property (except as such Borrower or Guarantor would otherwise be permitted to incur hereunder or under the Mortgages or as otherwise consented to in writing by Agent) and such other agreements, documents and instruments as Agent may require in connection therewith.

9.24 Costs and Expenses. Borrowers and Guarantors shall pay to Agent on demand all reasonable documented costs, expenses, filing fees and taxes paid or payable in connection with the preparation, negotiation, execution, delivery, recording, syndication, administration, collection, liquidation, enforcement and defense of the Obligations, Agent’s rights in the Collateral, this Agreement, the other Financing Agreements and all other documents related hereto or thereto, including any amendments, supplements or consents which may hereafter be contemplated (whether or not executed) or entered into in respect hereof and thereof, including: (a) all costs and expenses of filing or recording (including Uniform Commercial Code financing statement filing taxes and fees, documentary taxes, intangibles taxes and mortgage recording taxes and fees, if applicable); (b) costs and expenses and fees for insurance premiums, environmental audits, title insurance premiums, surveys, assessments, engineering reports and inspections, appraisal fees and search fees, background checks, costs and expenses of remitting loan proceeds, collecting checks and other items of payment, and establishing and maintaining the Blocked Accounts, together with Agent’s customary charges and fees with respect thereto; (c) charges, fees or expenses charged by any Issuing Bank in connection with any Letter of Credit; (d) costs and expenses of preserving and protecting the Collateral; (e) costs and expenses paid or incurred in connection with obtaining payment of the Obligations, enforcing the security interests and liens of Agent, selling or otherwise realizing upon the Collateral, and otherwise enforcing the provisions of this Agreement and the other Financing Agreements or defending any claims made or threatened against Agent or any Lender arising out of the transactions contemplated hereby and thereby (including preparations for and consultations concerning any such matters); (f) all out-of-pocket expenses and costs heretofore and from time to time hereafter incurred by Agent during the course of periodic field examinations of the Collateral and such Borrower’s or Guarantor’s operations, plus a per diem charge at Agent’s then standard rate for Agent’s examiners in the field and office (which rate as of the date hereof is $1,000 per person per day); and (g) the reasonable documented fees and disbursements of one primary counsel and one local counsel in each applicable jurisdiction (including legal assistants) to Agent in connection with any of the foregoing and in addition, at any time an Event of Default exists or has occurred and is continuing, the reasonable documented fees and disbursements of one counsel (including legal assistants) to Lenders in connection with matters described in clauses (d) or (e) above.

9.25 Further Assurances. At the reasonable request of Agent at any time and from time to time, Borrowers and Guarantors shall, at their expense, duly execute and deliver, or cause to

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be duly executed and delivered, such further agreements, documents and instruments, and do or cause to be done such further acts as may be reasonably necessary or proper to evidence, perfect, maintain and enforce the security interests and the priority thereof in the Collateral and to otherwise effectuate the provisions or purposes of this Agreement or any of the other Financing Agreements.

SECTION 10. EVENTS OF DEFAULT AND REMEDIES

10.1 Events of Default. The occurrence or existence of any one or more of the following events are referred to herein individually as an “Event of Default”, and collectively as “Events of Default”:

(a) (i) any Borrower fails to make any principal payment hereunder when due or fails to pay interest, fees or any of the other Obligations within three (3) Business Days after the due date thereof, or (ii) any Borrower or Guarantor fails to perform any of the covenants contained in Sections 9.1(b), 9.1(c), 9.2, 9.3, 9.4, 9.13, 9.14, and 9.16 of this Agreement and such failure shall continue for thirty (30) days; provided, that, such thirty (30) day period shall not apply in the case of any failure to observe any such covenant which is not capable of being cured or (iii) any Borrower or Guarantor fails to perform any of the terms, covenants, conditions or provisions contained in this Agreement or any of the other Financing Agreements other than those described in Sections 10.1(a)(i) and 10.1(a)(ii) above;

(b) any representation, warranty or statement of fact made by any Borrower or Guarantor to Agent in this Agreement, the other Financing Agreements or any other written agreement, schedule, confirmatory assignment or otherwise shall when made or deemed made be false or misleading in any material respect;

(c) any Guarantor revokes or terminates or purports to revoke or terminate or fails to perform any of the terms, covenants, conditions or provisions of any guarantee, endorsement or other agreement of such party in favor of Agent or any Lender;

(d) any judgment for the payment of money is rendered against any Borrower or Guarantor in excess of $2,000,000 in any one case or in excess of $2,000,000 in the aggregate (to the extent not covered by independent third party insurance where the insurer has not declined or disputed coverage) and shall remain undischarged or unvacated for a period in excess of sixty (60) days or execution shall at any time not be effectively stayed, or any judgment other than for the payment of money, or injunction, attachment, garnishment or execution is rendered against any Borrower or Guarantor or any of the Collateral having a value in excess of $2,000,000;

(e) any Borrower or Guarantor, dissolves or suspends or discontinues doing business other than as permitted in Section 9.7 hereof;

(f) any Borrower or Guarantor makes an assignment for the benefit of creditors;

(g) a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership,

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readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at law or in equity) is filed against any Borrower or Guarantor or all or any part of its properties and such petition or application is not dismissed within sixty (60) days after the date of its filing or any Borrower or Guarantor shall file any answer admitting or not contesting such petition or application or indicates its consent to, acquiescence in or approval of, any such action or proceeding or the relief requested is granted sooner;

(h) a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at a law or equity) is filed by any Borrower or Guarantor or for all or any part of its property;

(i) (A) any default in respect of any Indebtedness of any Borrower or Guarantor, (including the Indebtedness evidenced by the Mezzanine Notes permitted under Section 9.9(g) herein, any Indebtedness evidenced by or arising under any Qualified Debt Offering, as the case may be but excluding Indebtedness owing to Agent and Lenders hereunder), in any case in an amount in excess of $2,000,000, which default continues for more than the applicable cure period, if any, with respect thereto or (B) any default by any Borrower or Guarantor under any Material Contract, which default could reasonably be expected to have a Material Adverse Effect; in and/or, in each case, is not waived in writing by the other parties thereto;

(j) any material provision hereof or of any of the other Financing Agreements shall for any reason cease to be valid, binding and enforceable with respect to any Borrower or Guarantor in accordance with its terms, or any Borrower or Guarantor shall challenge the enforceability hereof or thereof, or shall assert in writing, or take any action or fail to take any action based on the assertion that any provision hereof or of any of the other Financing Agreements has ceased to be or is otherwise not valid, binding or enforceable in accordance with its terms, or any security interest provided for herein or in any of the other Financing Agreements shall cease to be a valid and perfected first priority security interest in any of the Collateral purported to be subject thereto having a value in excess of $500,000 in the aggregate (except as otherwise permitted herein or therein);

(k) an ERISA Event shall occur which results in or could reasonably be expected to result in a Material Adverse Effect;

(l) any Change of Control; or

(m) there shall be an event of default under any of the other Financing Agreements.

10.2 Remedies.

(a) At any time an Event of Default exists or has occurred and is continuing, Agent and Lenders shall have all rights and remedies provided in this Agreement, the other Financing Agreements, the UCC and other applicable law, all of which rights and remedies may be exercised without notice to or consent by any Borrower or Guarantor, except as such

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notice or consent is expressly provided for hereunder or required by applicable law. All rights, remedies and powers granted to Agent and Lenders hereunder, under any of the other Financing Agreements, the UCC or other applicable law, are cumulative, not exclusive and enforceable, in Agent’s discretion, alternatively, successively, or concurrently on any one or more occasions, and shall include, without limitation, the right to apply to a court of equity for an injunction to restrain a breach or threatened breach by any Borrower or Guarantor of this Agreement or any of the other Financing Agreements. Subject to Section 12 hereof, Agent may, and at the direction of the Required Lenders shall, at any time or times, proceed directly against any Borrower or Guarantor to collect the Obligations without prior recourse to the Collateral.

(b) Without limiting the generality of the foregoing, at any time an Event of Default exists or has occurred and is continuing, Agent may, at its option and shall upon the direction of the Required Lenders, (i) upon notice to Administrative Borrower, accelerate the payment of all Obligations and demand immediate payment thereof to Agent for itself and the benefit of Lenders (provided, that, upon the occurrence of any Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations shall automatically become immediately due and payable), and (ii) terminate the Commitments whereupon the obligation of each Lender to make any Loan and Issuing Bank to issue any Letter of Credit shall immediately terminate (provided, that, upon the occurrence of any Event of Default described in Sections 10.1(g) and 10.1(h), the Commitments and any other obligation of the Agent or a Lender hereunder shall automatically terminate).

(c) Without limiting the foregoing, at any time an Event of Default exists or has occurred and is continuing, Agent may, in its discretion (i) with or without judicial process or the aid or assistance of others, enter upon any premises on or in which any of the Collateral may be located and take possession of the Collateral or complete processing, manufacturing and repair of all or any portion of the Collateral, (ii) require any Borrower or Guarantor, at Borrowers’ expense, to assemble and make available to Agent any part or all of the Collateral at any place and time designated by Agent, (iii) collect, foreclose, receive, appropriate, setoff and realize upon any and all Collateral, (iv) remove any or all of the Collateral from any premises on or in which the same may be located for the purpose of effecting the sale, foreclosure or other disposition thereof or for any other purpose, (v) sell, lease, transfer, assign, deliver or otherwise dispose of any and all Collateral (including entering into contracts with respect thereto, public or private sales at any exchange, broker’s board, at any office of Agent or elsewhere) at such prices or terms as Agent may deem reasonable, for cash, upon credit or for future delivery, with the Agent having the right to purchase the whole or any part of the Collateral at any such public sale, all of the foregoing being free from any right or equity of redemption of any Borrower or Guarantor, which right or equity of redemption is hereby expressly waived and released by Borrowers and Guarantors and/or (vi) terminate this Agreement. If any of the Collateral is sold or leased by Agent upon credit terms or for future delivery, the Obligations shall not be reduced as a result thereof until payment therefor is finally collected by Agent. If notice of disposition of Collateral is required by law, ten (10) days prior notice by Agent to Administrative Borrower designating the time and place of any public sale or the time after which any private sale or other intended disposition of Collateral is to be made, shall be deemed to be reasonable notice thereof and to the extent permitted by applicable law, Borrowers and Guarantors waive any other notice. In the event Agent institutes an action to recover any Collateral or seeks recovery of any Collateral by way of prejudgment remedy, each Borrower and Guarantor waives the posting of

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any bond which might otherwise be required. At any time an Event of Default exists or has occurred and is continuing, upon Agent’s request, Borrowers will either, as Agent shall specify, furnish cash collateral to Issuing Bank to be used to secure and fund the reimbursement obligations to Issuing Bank in connection with any Letter of Credit Obligations or furnish cash collateral to Agent for the Letter of Credit Obligations. Such cash collateral shall be in the amount equal to one hundred five (105%) percent of the amount of the Letter of Credit Obligations plus the amount of any fees and expenses payable in connection therewith through the end of the latest expiration date of the Letters of Credit giving rise to such Letter of Credit Obligations.

(d) At any time or times that an Event of Default exists or has occurred and is continuing, Agent may, in its discretion, enforce the rights of any Borrower or Guarantor against any account debtor, secondary obligor or other obligor in respect of any of the Accounts or other Receivables. Without limiting the generality of the foregoing, Agent may, in its good faith discretion, at such time or times (i) notify any or all account debtors, secondary obligors or other obligors in respect thereof that the Receivables have been assigned to Agent and that Agent has a security interest therein and Agent may direct any or all account debtors, secondary obligors and other obligors to make payment of Receivables directly to Agent, (ii) extend the time of payment of, compromise, settle or adjust for cash, credit, return of merchandise or otherwise, and upon any terms or conditions, any and all Receivables or other obligations included in the Collateral and thereby discharge or release the account debtor or any secondary obligors or other obligors in respect thereof without affecting any of the Obligations, (iii) demand, collect or enforce payment of any Receivables or such other obligations, but without any duty to do so, and Agent and Lenders shall not be liable for any failure to collect or enforce the payment thereof nor for the negligence of its agents or attorneys with respect thereto and (iv) take whatever other action Agent may deem necessary or desirable for the protection of its interests and the interests of Lenders. At any time that an Event of Default exists or has occurred and is continuing, at Agent’s request, all invoices and statements sent to any account debtor shall state that the Accounts and such other obligations have been assigned to Agent and are payable directly and only to Agent and Borrowers and Guarantors shall deliver to Agent such originals of documents evidencing the sale and delivery of goods or the performance of services giving rise to any Accounts as Agent may require. In the event any account debtor returns Inventory when an Event of Default exists or has occurred and is continuing, Borrowers shall, upon Agent’s request, hold the returned Inventory in trust for Agent, segregate all returned Inventory from all of its other property, dispose of the returned Inventory solely according to Agent’s instructions, and not issue any credits, discounts or allowances with respect thereto without Agent’s prior written consent.

(e) To the extent that applicable law imposes duties on Agent or any Lender to exercise remedies in a commercially reasonable manner (which duties cannot be waived under such law), each Borrower and Guarantor acknowledges and agrees that it is not commercially unreasonable for Agent or any Lender (i) to fail to incur expenses reasonably deemed significant by Agent or any Lender to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain consents of any Governmental Authority or other third party for the collection or disposition of Collateral to be collected or

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disposed of, (iii) to fail to exercise collection remedies against account debtors, secondary obligors or other persons obligated on Collateral or to remove liens or encumbrances on or any adverse claims against Collateral, (iv) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other persons, whether or not in the same business as any Borrower or Guarantor, for expressions of interest in acquiring all or any portion of the Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, (xi) to purchase insurance or credit enhancements to insure Agent or Lenders against risks of loss, collection or disposition of Collateral or to provide to Agent or Lenders a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Agent in the collection or disposition of any of the Collateral. Each Borrower and Guarantor acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by Agent or any Lender would not be commercially unreasonable in the exercise by Agent or any Lender of remedies against the Collateral and that other actions or omissions by Agent or any Lender shall not be deemed commercially unreasonable solely on account of not being indicated in this Section. Without limitation of the foregoing, nothing contained in this Section shall be construed to grant any rights to any Borrower or Guarantor or to impose any duties on Agent or Lenders that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section.

(f) For the purpose of enabling Agent to exercise the rights and remedies hereunder, each Borrower and Guarantor hereby grants to Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable at any time an Event of Default shall have occurred and for so long as the same is continuing) without payment of royalty or other compensation to any Borrower or Guarantor, to use, assign, license or sublicense any of the trademarks, service-marks, trade names, business names, trade styles, designs, logos and other source of business identifiers and other Intellectual Property and general intangibles now owned or hereafter acquired by any Borrower or Guarantor, wherever the same maybe located, including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof.

(g) At any time an Event of Default exists or has occurred and is continuing, Agent may apply the cash proceeds of Collateral actually received by Agent from any sale, lease, foreclosure or other disposition of the Collateral to payment of the Obligations, in whole or in part and in accordance with the terms hereof, whether or not then due or may hold such proceeds as cash collateral for the Obligations. Borrowers and Guarantors shall remain liable to Agent and Lenders for the payment of any deficiency with interest at the highest rate provided for herein and all costs and expenses of collection or enforcement, including attorneys’ fees and expenses.

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(h) Without limiting the foregoing, upon the occurrence of a Default or an Event of Default, and during the continuance thereof (i) Agent and Lenders may, at Agent’s option, and upon the occurrence of an Event of Default and during the continuance thereof at the direction of the Required Lenders, Agent and Lenders shall, without notice, (A) cease making Loans or arranging for Letters of Credit or reduce the lending formulas or amounts of Loans and Letters of Credit available to Borrowers and/or (B) terminate any provision of this Agreement providing for any future Loans to be made by Agent and Lenders or Letters of Credit to be issued by Issuing Bank and (ii) Agent may, at its option, establish such Reserves as Agent in good faith determines, without limitation or restriction, notwithstanding anything to the contrary contained herein.

SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW

11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.

(a) The validity, interpretation and enforcement of this Agreement and the other Financing Agreements (except as otherwise provided therein) and any dispute arising out of the relationship between the parties hereto, whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

(b) Borrowers, Guarantors, Agent, Lenders and each Issuing Bank irrevocably consent and submit to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County and the United States District Court for the Southern District of New York, whichever Agent may elect, and waive any objection based on venue or forum non conveniens with respect to any action instituted therein arising under this Agreement or any of the other Financing Agreements or in any way connected with or related or incidental to the dealings of the parties hereto in respect of this Agreement or any of the other Financing Agreements or the transactions related hereto or thereto, in each case whether now existing or hereafter arising, and whether in contract, tort, equity or otherwise, and agree that any dispute with respect to any such matters shall be heard only in the courts described above (except that Agent and Lenders shall have the right to bring any action or proceeding against any Borrower or Guarantor or its or their property in the courts of any other jurisdiction which Agent deems necessary or appropriate in order to realize on the Collateral or to otherwise enforce its rights against any Borrower or Guarantor or its or their property).

(c) Each Borrower and Guarantor hereby waives personal service of any and all process upon it and consents that all such service of process may be made by certified mail (return receipt requested) directed to its address set forth herein and service so made shall be deemed to be completed five (5) days after the same shall have been so deposited in the U.S. mails, or, at Agent’s option, by service upon any Borrower or Guarantor (or Administrative Borrower on behalf of such Borrower or Guarantor) in any other manner provided under the rules of any such courts. Within thirty (30) days after such service, such Borrower or Guarantor shall appear in answer to such process, failing which such Borrower or Guarantor shall be

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deemed in default and judgment may be entered by Agent against such Borrower or Guarantor for the amount of the claim and other relief requested.

(d) BORROWERS, GUARANTORS, AGENT, LENDERS AND ISSUING BANK EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWERS, GUARANTORS, AGENT, LENDERS AND ISSUING BANK EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY BORROWER, ANY GUARANTOR, AGENT, ANY LENDER OR ISSUING BANK MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

(e) Agent and Secured Parties shall not have any liability to any Borrower or Guarantor (whether in tort, contract, equity or otherwise) for losses suffered by such Borrower or Guarantor in connection with, arising out of, or in any way related to the transactions or relationships contemplated by this Agreement, or any act, omission or event occurring in connection herewith, unless it is determined by a final and non-appealable judgment or court order binding on Agent, such Lender and Issuing Bank, that the losses were the result of acts or omissions constituting gross negligence or willful misconduct. Each Borrower and Guarantor: (i) certifies that neither Agent, any Lender, Issuing Bank nor any representative, agent or attorney acting for or on behalf of Agent, any Lender or Issuing Bank has represented, expressly or otherwise, that Agent, Lenders and Issuing Bank would not, in the event of litigation, seek to enforce any of the waivers provided for in this Agreement or any of the other Financing Agreements and (ii) acknowledges that in entering into this Agreement and the other Financing Agreements, Agent, Lenders and Issuing Bank are relying upon, among other things, the waivers and certifications set forth in this Section 11.1 and elsewhere herein and therein.

11.2 Waiver of Notices. Each Borrower and Guarantor hereby expressly waives demand, presentment, protest and notice of protest and notice of dishonor with respect to any and all instruments and chattel paper, included in or evidencing any of the Obligations or the Collateral, and any and all other demands and notices of any kind or nature whatsoever with respect to the Obligations, the Collateral and this Agreement, except such as are expressly provided for herein. No notice to or demand on any Borrower or Guarantor which Agent or any Lender may elect to give shall entitle such Borrower or Guarantor to any other or further notice or demand in the same, similar or other circumstances.

11.3 Amendments and Waivers.

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(a) Neither this Agreement nor any other Financing Agreement nor any terms hereof or thereof may be amended, waived, discharged or terminated unless such amendment, waiver, discharge or termination is in writing signed by Agent and the Required Lenders or, at Agent’s option, by Agent with the authorization or consent of the Required Lenders, and as to amendments, waivers, discharges or terminations to any of the Financing Agreements (other than with respect to any provision of Section 12 hereof), by any Borrower and such amendment, waiver, discharger or termination shall be effective and binding as to all Lenders and each Issuing Bank only in the specific instance and for the specific purpose for which given; except, that, no such amendment, waiver, discharge or termination shall:

(i) reduce the interest rate or any fees or extend the time of payment of principal, interest or any fees or reduce the principal amount of any Loan or Letters of Credit, in each case without the consent of each Lender directly affected thereby (other than the Sponsor Affiliated Lender),

(ii) increase the Tranche A Commitment or Tranche B Commitment of any Lender over the amount thereof then in effect or provided hereunder, in each case without the consent of the Lender directly affected thereby,

(iii) increase the amount of the Tranche A Loan Limit, the Tranche B Loan Limit or the Maximum Credit without the consent of all Lenders (provided, that, the increase provided for in Section 2.3 hereof shall not be deemed an increase requiring the consent of any Lender) or the Letter of Credit Limit without the consent of Agent and all of Lenders (other than any Sponsor Affiliated Lenders),

(iv) release all or substantially all Collateral (except as expressly required hereunder or under any of the other Financing Agreements or applicable law and except as permitted under Section 12.11(b) hereof), or alter the order of application of proceeds set forth in Section 6.4 without the consent of Agent and all of Lenders (other than Sponsor Affiliated Lenders),

(v) reduce any percentage specified in the definition of Required Lenders or Supermajority Lenders, without the consent of Agent and all of Lenders (other than Sponsor Affiliated Lenders),

(vi) increase the advance rates constituting part of the Tranche A Borrowing Base or Tranche B Borrowing Base (in each case other than as provided for in the definition of such terms), or increase the Tranche A Inventory Loan Limit, or amend, modify or waive any provisions of the definition of the term Tranche A Borrowing Base or Tranche B Borrowing Base or any of the defined terms referred to in the definition of the term Borrowing Base, in each case as to any of the foregoing if the effect thereof increases the amount of the Tranche A Borrowing Base or Tranche B Borrowing Base, without the consent of Agent and the Supermajority Lenders (other than Sponsor Affiliated Lenders).

(vii) consent to the assignment or transfer by any Borrower or Guarantor of any of their rights and obligations under this Agreement, without the consent of Agent and all of Lenders (other than Sponsor Affiliated Lenders),

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(viii) amend, modify or waive any terms of this Section 11.3 hereof, without the consent of Agent and all of Lenders (other than Sponsor Affiliated Lenders), or

(ix) agree to the subordination of (i) any of the Obligations or (ii) other than liens in and on the Qualified Debt Priority Collateral (as provided for in the Qualified Debt Intercreditor Agreement), any lien or security interest in favor of Agent for the benefit of Secured Parties, without the consent of Agent and the Supermajority Lenders (other than Sponsor Affiliated Lenders).

(b) Agent, Lenders and each Issuing Bank shall not, by any act, delay, omission or otherwise be deemed to have expressly or impliedly waived any of its or their rights, powers and/or remedies unless such waiver shall be in writing and signed as provided herein. Any such waiver shall be enforceable only to the extent specifically set forth therein. A waiver by Agent, any Lender or Issuing Bank of any right, power and/or remedy on any one occasion shall not be construed as a bar to or waiver of any such right, power and/or remedy which Agent, any Lender or Issuing Bank would otherwise have on any future occasion, whether similar in kind or otherwise.

(c) Notwithstanding anything to the contrary contained in Section 11.3(a) above, in connection with any amendment, waiver, discharge or termination, in the event that any Lender whose consent thereto is required shall fail to consent or fail to consent in a timely manner (such Lender being referred to herein as a “Non-Consenting Lender”), but the consent of any other Lenders to such amendment, waiver, discharge or termination that is required are obtained, if any, then Wachovia shall have the right, but not the obligation, at any time thereafter, and upon the exercise by Wachovia of such right, such Non-Consenting Lender shall have the obligation, to sell, assign and transfer to Wachovia or such Eligible Transferee as Wachovia may specify, the Commitment of such Non-Consenting Lender and all rights and interests of such Non-Consenting Lender pursuant thereto. Wachovia shall provide the Non-Consenting Lender with prior written notice of its intent to exercise its right under this Section, which notice shall specify on date on which such purchase and sale shall occur. Such purchase and sale shall be pursuant to the terms of an Assignment and Acceptance (whether or not executed by the Non-Consenting Lender), except that on the date of such purchase and sale, Wachovia, or such Eligible Transferee specified by Wachovia, shall pay to the Non-Consenting Lender (except as Wachovia and such Non-Consenting Lender may otherwise agree) the amount equal to: (i) the principal balance of the Loans held by the Non-Consenting Lender outstanding as of the close of business on the business day immediately preceding the effective date of such purchase and sale, plus (ii) amounts accrued and unpaid in respect of interest and fees payable to the Non-Consenting Lender to the effective date of the purchase (but in no event shall the Non-Consenting Lender be deemed entitled to any early termination fee). Such purchase and sale shall be effective on the date of the payment of such amount to the Non-Consenting Lender and the Commitment of the Non-Consenting Lender shall terminate on such date.

(d) The consent of Agent shall be required for any amendment, waiver or consent affecting the rights or duties of Agent hereunder or under any of the other Financing Agreements, in addition to the consent of the Lenders otherwise required by this Section and the exercise by Agent of any of its rights hereunder with respect to Reserves or Eligible Accounts or Eligible Inventory shall not be deemed an amendment to the advance rates provided for in this

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Section 11.3. The consent of Issuing Bank shall be required for any amendment, waiver or consent affecting the rights or duties of Issuing Bank hereunder or under any of the other Financing Agreements, in addition to the consent of the Lenders otherwise required by this Section, provided, that, the consent of Issuing Bank shall not be required for any other amendments, waivers or consents. The consent of Swing Line Lender shall be required for any amendment, waiver or consent affecting the rights or duties of Swing Line Lender hereunder or under any of the other Financing Agreements, in addition to the consent of the Lenders otherwise required by this Section. Notwithstanding anything to the contrary contained in Section 11.3(a) above, (i) in the event that Agent shall agree that any items otherwise required to be delivered to Agent as a condition of the initial Loans and Letters of Credit hereunder may be delivered after the date hereof, Agent may, in its discretion, agree to extend the date for delivery of such items or take such other action as Agent may deem appropriate as a result of the failure to receive such items as Agent may determine or may waive any Event of Default as a result of the failure to receive such items, in each case without the consent of any Lender and (ii) Agent may consent to any change in the type of organization, jurisdiction of organization or other legal structure of any Borrower, Guarantor or any of their Subsidiaries and amend the terms hereof or of any of the other Financing Agreements as may be necessary or desirable to reflect any such change, in each case without the approval of any Lender.

11.4 Waiver of Counterclaims. Each Borrower and Guarantor waives all rights to interpose any claims, deductions, setoffs or counterclaims of any nature (other then compulsory counterclaims) in any action or proceeding with respect to this Agreement, the Obligations, the Collateral or any matter arising therefrom or relating hereto or thereto.

11.5 Indemnification. Each Borrower and Guarantor shall, jointly and severally, indemnify and hold Agent, each Lender and Issuing Bank, and their respective officers, directors, agents, employees, advisors and counsel and their respective Affiliates (each such person being an “Indemnitee”), harmless from and against any and all losses, claims, damages, liabilities, costs or expenses (including reasonable attorneys’ fees and expenses) imposed on, incurred by or asserted against any of them in connection with any litigation, investigation, claim or proceeding commenced or threatened related to the negotiation, preparation, execution, delivery, enforcement, performance or administration of this Agreement, any other Financing Agreements, or any undertaking or proceeding related to any of the transactions contemplated hereby or any act, omission, event or transaction related or attendant thereto (but without duplication to any indemnification obligations pursuant to Section 6.5 herein), including amounts paid in settlement, court costs, and the reasonable documented fees and expenses of one primary counsel and one local counsel in each applicable jurisdiction except that Borrowers and Guarantors shall not have any obligation under this Section 11.5 to indemnify an Indemnitee with respect to a matter covered hereby resulting from the gross negligence or wilful misconduct of such Indemnitee as determined pursuant to a final, non-appealable order of a court of competent jurisdiction (but without limiting the obligations of Borrowers or Guarantors as to any other Indemnitee). To the extent that the undertaking to indemnify, pay and hold harmless set forth in this Section may be unenforceable because it violates any law or public policy, Borrowers and Guarantors shall pay the maximum portion which it is permitted to pay under applicable law to Agent and Lenders in satisfaction of indemnified matters under this Section. To the extent permitted by applicable law, no Borrower or Guarantor shall assert, and each Borrower and Guarantor hereby waives, any claim against any Indemnitee, on any theory of

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liability for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any of the other Financing Agreements or any undertaking or transaction contemplated hereby. No Indemnitee referred to above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or any of the other Financing Agreements or the transaction contemplated hereby or thereby. All amounts due under this Section shall be payable upon demand. The foregoing indemnity shall survive the payment of the Obligations and the termination or non-renewal of this Agreement.

11.6 Currency Indemnity. If, for the purposes of obtaining judgment in any court in any jurisdiction with respect to this Agreement or any of the other Financing Agreements, it becomes necessary to convert into the currency of such jurisdiction (the “Judgment Currency”) any amount due under this Agreement or under any of the other Financing Agreements in any currency other than the Judgment Currency (the “Currency Due”), then conversion shall be made at the Exchange Rate at which such Agent is able, on the relevant date, to purchase the Currency Due with the Judgment Currency prevailing on the Business Day before the day on which judgment is given. In the event that there is a change in the rate of Exchange Rate prevailing between the Business Day before the day on which the judgment is given and the date of receipt by such Agent of the amount due, Borrowers will, on the date of receipt by such Agent, pay such additional amounts, if any, or be entitled to receive reimbursement of such amount, if any, as may be necessary to ensure that the amount received by such Agent on such date is the amount in the Judgment Currency which when converted at the rate of exchange prevailing on the date of receipt by such Agent is the amount then due under this Agreement or such other of the Financing Agreements in the Currency Due. If the amount of the Currency Due which such Agent is able to purchase is less than the amount of the Currency Due originally due to it, Borrowers and Guarantors shall, indemnify and save Agent and each Lender harmless from and against loss or damage arising as a result of such deficiency. The indemnity contained herein shall constitute an obligation separate and independent from the other obligations contained in this Agreement and the other Financing Agreements, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by any Agent from time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due under this Agreement or any of the other Financing Agreements or under any judgment or order.

SECTION 12. THE AGENT

12.1 Appointment, Powers and Immunities. Each Secured Party irrevocably designates, appoints and authorizes Wachovia to act as Agent hereunder and under the other Financing Agreements with such powers as are specifically delegated to Agent by the terms of this Agreement and of the other Financing Agreements, together with such other powers as are reasonably incidental thereto. Agent (a) shall have no duties or responsibilities except those expressly set forth in this Agreement and in the other Financing Agreements, and shall not by reason of this Agreement or any other Financing Agreement be a trustee or fiduciary for any Secured Party; (b) shall not be responsible to Secured Parties for any recitals, statements, representations or warranties contained in this Agreement or in any of the other Financing Agreements, or in any certificate or other document referred to or provided for in, or received by

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any of them under, this Agreement or any other Financing Agreement, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Financing Agreement or any other document referred to or provided for herein or therein or for any failure by any Borrower or any Guarantor or any other Person to perform any of its obligations hereunder or thereunder; and (c) shall not be responsible to Secured Parties for any action taken or omitted to be taken by it hereunder or under any other Financing Agreement or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction. Agent may employ agents and attorneys in fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys in fact selected by it in good faith. Agent may deem and treat the payee of any note as the holder thereof for all purposes hereof unless and until the assignment thereof pursuant to an agreement (if and to the extent permitted herein) in form and substance satisfactory to Agent shall have been delivered to and acknowledged by Agent.

12.2 Reliance by Agent. Agent shall be entitled to rely upon any certification, notice or other communication (including any thereof by telephone, telecopy, telex, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by Agent. As to any matters not expressly provided for by this Agreement or any other Financing Agreement, Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions given by the Required Lenders or all of Lenders as is required in such circumstance, and such instructions of such Agents and any action taken or failure to act pursuant thereto shall be binding on all Lenders.

12.3 Events of Default.

(a) Agent shall not be deemed to have knowledge or notice of the occurrence of a Default or an Event of Default or other failure of a condition precedent to the Loans and Letters of Credit hereunder, unless and until Agent has received written notice from a Lender, or Borrower specifying such Event of Default or any unfulfilled condition precedent, and stating that such notice is a “Notice of Default or Failure of Condition”. In the event that Agent receives such a Notice of Default or Failure of Condition, Agent shall give prompt notice thereof to the Lenders. Agent shall (subject to Section 12.7) take such action with respect to any such Event of Default or failure of condition precedent as shall be directed by the Required Lenders to the extent provided for herein; provided, that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to or by reason of such Event of Default or failure of condition precedent, as it shall deem advisable in the best interest of Lenders. Without limiting the foregoing, and notwithstanding the existence or occurrence and continuance of an Event of Default or any other failure to satisfy any of the conditions precedent set forth in Section 4 hereof o the contrary, unless and until otherwise directed by the Required Lenders, Agent may, but shall have no obligation to, continue to make Loans and Issuing Bank may, but shall have no obligation to, issue or cause to be issued any Letter of Credit for the ratable account and risk of Lenders from time to time if Agent believes making such Loans or issuing or causing to be issued such Letter of Credit is in the best interests of Lenders.

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(b) Except with the prior written consent of Agent, no Secured Party may assert or exercise any enforcement right or remedy in respect of the Loans, Letter of Credit Obligations or other Obligations, as against any Borrower or Guarantor or any of the Collateral or other property of any Borrower or Guarantor or otherwise under any of the Financing Agreements.

12.4 Wachovia in its Individual Capacity. With respect to its Commitment and the Loans made and Letters of Credit issued or caused to be issued by it (and any successor acting as Agent), so long as Wachovia shall be a Lender hereunder, it shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not acting as Agent, and the term “Lender” or “Lenders” shall, unless the context otherwise indicates, include Wachovia in its individual capacity as Lender hereunder. Wachovia (and any successor acting as Agent) and its Affiliates may (without having to account therefor to any Lender) lend money to, make investments in and generally engage in any kind of business with Borrowers (and any of its Subsidiaries or Affiliates) as if it were not acting as Agent, and Wachovia and its Affiliates may accept fees and other consideration from any Borrower or Guarantor and any of its Subsidiaries and Affiliates for services in connection with this Agreement or otherwise without having to account for the same to Lenders.

12.5 Indemnification. Lenders agree to indemnify Agent and Issuing Bank (to the extent not reimbursed by Borrowers hereunder and without limiting any obligations of Borrowers hereunder) ratably, in accordance with their Pro Rata Shares, for any and all claims of any kind and nature whatsoever that may be imposed on, incurred by or asserted against Agent (including by any Lender) arising out of or by reason of any investigation in or in any way relating to or arising out of this Agreement or any other Financing Agreement or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby (including the costs and expenses that Agent is obligated to pay hereunder) or the enforcement of any of the terms hereof or thereof or of any such other documents, provided, that, no Lender shall be liable for any of the foregoing to the extent it arises from the gross negligence or willful misconduct of the party to be indemnified as determined by a final non-appealable judgment of a court of competent jurisdiction. The foregoing indemnity shall survive the payment of the Obligations and the termination or non-renewal of this Agreement.

12.6 Non-Reliance on Agent and Other Lenders. Each Secured Party agrees that it has, independently and without reliance on Agent or any other Secured Party, and based on such documents and information as it has deemed appropriate, made its own credit analysis of Borrowers and Guarantors and has made its own decision to enter into this Agreement and that it will, independently and without reliance upon Agent or any other Secured Party, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement or any of the other Financing Agreements. Agent shall not be required to keep itself informed as to the performance or observance by any Borrower or Guarantor of any term or provision of this Agreement or any of the other Financing Agreements or any other document referred to or provided for herein or therein or to inspect the properties or books of any Borrower or Guarantor. Agent will use reasonable efforts to provide Lenders with any information received by Agent from any Borrower or Guarantor which is required to be provided to Lenders or deemed to be requested by Lenders hereunder and with a copy of any Notice of Default or Failure of Condition

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received by Agent from any Borrower or any Lender; provided, that, Agent shall not be liable to any Lender for any failure to do so, except to the extent that such failure is attributable to Agent’s own gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction. Except for notices, reports and other documents expressly required to be furnished to Lenders by Agent or deemed requested by Lenders hereunder, Agent shall not have any duty or responsibility to provide any Lender with any other credit or other information concerning the affairs, financial condition or business of any Borrower or Guarantor that may come into the possession of Agent.

12.7 Failure to Act. Except for action expressly required of Agent hereunder and under the other Financing Agreements, Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from Lenders of their indemnification obligations under Section 12.5 hereof against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.

12.8 Additional Loans. Agent and Swing Line Lender (or Agent on behalf of Swing Line Lender) shall not make any Loans or an Issuing Bank provide any Letter of Credit to any Borrower on behalf of Lenders intentionally and with actual knowledge that such Loans or Letter of Credit would cause the aggregate amount of the total outstanding Loans and Letters of Credit to exceed the Borrowing Base, without the prior consent of all Lenders, except, that, Agent may make such additional Tranche A Loans or an Issuing Bank may provide such additional Letter of Credit on behalf of Lenders, intentionally and with actual knowledge that such Tranche A Loans, Swing Line Loan or Letter of Credit will cause the total outstanding Tranche A Loans and Letters of Credit to exceed the Tranche A Borrowing Base, as Agent may deem necessary or advisable in its discretion; provided, that: (a) the total principal amount of the additional Tranche A Loans or additional Letters of Credit to any Borrower which Agent may make or provide after obtaining such actual knowledge that the aggregate principal amount of the Loans equal or exceed the Borrowing Base, plus the amount of Special Agent Advances made pursuant to Section 12.11(a)(i) and (ii) hereof then outstanding, shall not exceed the aggregate amount equal to ten (10%) percent of the Tranche A Borrowing Base and shall not cause the total principal amount of the Loans and Letters of Credit to exceed the Maximum Credit and (b) no such additional Tranche A Loan or Letter of Credit shall be outstanding more than ninety (90) days after the date such additional Tranche A Loan or Letter of Credit is made or issued (as the case may be), except as the Required Lenders may otherwise agree. Each Tranche A Lender shall be obligated to pay Agent the amount of its Pro Rata Share of any such additional Tranche A Loans or Letters of Credit.

12.9 Concerning the Collateral and the Related Financing Agreements. Each Secured Party authorizes and directs Agent to enter into this Agreement and the other Financing Agreements. Each Secured Party agrees that any action taken by Agent or Required Lenders (or such greater percentage as may be required hereunder) in accordance with the terms of this Agreement or the other Financing Agreements and the exercise by Agent or Required Lenders of their respective powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all Secured Parties.

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(b) Without limiting the generality of the foregoing, each Lender (i) consents to the subordination of Agent’s liens in and on Qualified Debt Priority Collateral as provided for in the Qualified Debt Intercreditor Agreement, (ii) authorizes and directs Agent to enter into on behalf of such Lender and such Lender will be bound (as a Lender) by the terms and conditions of the Mezzanine Note Intercreditor Agreement and the Qualified Debt Intercreditor Agreement (if applicable), whether or not such Lender executes such intercreditor agreements, (iii) agrees that it will be bound by and take no actions contrary to the provisions of the Mezzanine Note Intercreditor Agreement and the Qualified Debt Intercreditor Agreement, as the case may be.

12.10 Field Audit, Examination Reports and other Information; Disclaimer by Lenders. By signing this Agreement, each Lender:

(a) is deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report and report with respect to the Borrowing Base prepared or received by Agent (each field audit or examination report and report with respect to the Borrowing Base being referred to herein as a “Report” and collectively, “Reports”), appraisals with respect to the Collateral and financial statements with respect to Parent and its Subsidiaries received by Agent;

(b) expressly agrees and acknowledges that Agent (i) does not make any representation or warranty as to the accuracy of any Report, appraisal or financial statement or (ii) shall not be liable for any information contained in any Report, appraisal or financial statement;

(c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or any other party performing any audit or examination will inspect only specific information regarding Borrowers and Guarantors and will rely significantly upon Borrowers’ and Guarantors’ books and records, as well as on representations of Borrowers’ and Guarantors’ personnel; and

(d) agrees to keep all Reports confidential and strictly for its internal use in accordance with the terms of Section 13.5 hereof, and not to distribute or use any Report in any other manner.

12.11 Collateral Matters.

(a) Agent may, at its option, from time to time, at any time on or after an Event of Default and for so long as the same is continuing or upon any other failure of a condition precedent to the Loans and Letters of Credit hereunder, make such disbursements and advances (“Special Agent Advances”) which Agent, in its sole discretion, (i) deems necessary or desirable either to preserve or protect the Collateral or any portion thereof or (ii) to enhance the likelihood or maximize the amount of repayment by Borrowers and Guarantors of the Loans and other Obligations, provided, that, (A) the aggregate principal amount of the Special Agent Advances pursuant to clause (i) above and this clause (ii) outstanding at any time, plus the then outstanding principal amount of the additional Loans and Letters of Credit which Agent may make or provide as set forth in Section 12.8 hereof, shall not exceed the amount equal to ten

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(10%) percent of the Tranche A Borrowing Base and (B) the aggregate principal amount of the Special Agent Advances pursuant to clause (i) above and this clause (ii) outstanding at any time, plus the then outstanding principal amount of the Loans, shall not exceed the Maximum Credit, except at Agent’s option, provided, that, to the extent that the aggregate principal amount of Special Agent Advances plus the then outstanding principal amount of the Loans exceed the Maximum Credit the Special Agent Advances that are in excess of the Maximum Credit shall be for the sole account and risk of Agent and notwithstanding anything to the contrary set forth below, no Lender shall have any obligation to provide its share of such Special Agent Advances in excess of the Maximum Credit, or (iii) to pay any other amount chargeable to any Borrower or Guarantor pursuant to the terms of this Agreement or any of the other Financing Agreements consisting of (A) costs, fees and expenses and (B) payments to Issuing Bank in respect of any Letter of Credit Obligations. The Special Agent Advances shall be repayable on demand and together with all interest thereon shall constitute Obligations secured by the Collateral. Special Agent Advances shall not constitute Loans but shall otherwise constitute Obligations hereunder. Interest on Special Agent Advances shall be payable at the Interest Rate then applicable to Base Rate Loans and shall be payable on demand. Without limitation of its obligations pursuant to Section 6.11 hereof, each Lender agrees that it shall make available to Agent, upon Agent’s demand, in immediately available funds, the amount equal to such Lender’s Pro Rata Share of each such Special Agent Advance. If such funds are not made available to Agent by such Lender, such Lender shall be deemed a Defaulting Lender and Agent shall be entitled to recover such funds, on demand from such Lender together with interest thereon for each day from the date such payment was due until the date such amount is paid to Agent at the Federal Funds Rate for each day during such period (as published by the Federal Reserve Bank of New York or at Agent’s option based on the arithmetic mean determined by Agent of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. on that day by each of the three leading brokers of Federal funds transactions in New York City selected by Agent) and if such amounts are not paid within three (3) days of Agent’s demand, at the highest Interest Rate provided for in Section 3.1 hereof applicable to Base Rate Loans.

(b) Lenders hereby irrevocably authorize Agent, at its option and in its discretion to release any security interest in, mortgage or lien upon, any of the Collateral (i) upon termination of the Commitments and payment and satisfaction of all of the Obligations (other than indemnities and contingent Obligations which have not yet accrued) and delivery of cash collateral to the extent required under Section 13.1 below, or (ii) constituting property being sold or disposed of if Administrative Borrower or any Borrower or Guarantor certifies to Agent that the sale or disposition is made in compliance with Section 9.7 hereof (and Agent may rely conclusively on any such certificate, without further inquiry), or (iii) constituting property in which any Borrower or Guarantor did not own an interest at the time the security interest, mortgage or lien was granted or at any time thereafter, or (iv) having a value in the aggregate in any twelve (12) month period of less than $10,000,000, and to the extent Agent may release its security interest in and lien upon any such Collateral pursuant to the sale or other disposition thereof, such sale or other disposition shall be deemed consented to by Lenders (including all Sponsor Affiliated Lenders), or (v) if required or permitted under the terms of any of the other Financing Agreements, including any intercreditor agreements, or (vi) subject to Section 11.3(a)(iv), approved, authorized or ratified in writing by Required Lenders. Except as provided above, Agent will not release any security interest in, mortgage or lien upon, any of the Collateral without the prior written authorization of all of Lenders (other than Sponsor Affiliated

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Lenders). Upon request by Agent at any time, Lenders will promptly confirm in writing Agent’s authority to release particular types or items of Collateral pursuant to this Section. Nothing contained herein shall be construed to require the consent or approval of any Bank Product Provider or Issuing Banks to any release of any Collateral or termination of security interests in any Collateral.

(c) Without any manner limiting Agent’s authority to act without any specific or further authorization or consent by the Required Lenders, each Lender agrees to confirm in writing, upon request by Agent, the authority to release Collateral conferred upon Agent under this Section. Agent shall (and is hereby irrevocably authorized by Lenders to) execute such documents as may be necessary to evidence the release of the security interest, mortgage or liens granted to Agent upon any Collateral to the extent set forth above; provided, that, (i) Agent shall not be required to execute any such document on terms which, in Agent’s opinion, would expose Agent to liability or create any obligations or entail any consequence other than the release of such security interest, mortgage or liens without recourse or warranty and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any security interest, mortgage or lien upon (or obligations of any Borrower or Guarantor in respect of) the Collateral retained by such Borrower or Guarantor.

(d) Agent shall have no obligation whatsoever to any Secured Party or any other Person to investigate, confirm or assure that the Collateral exists or is owned by any Borrower or Guarantor or is cared for, protected or insured or has been encumbered, or that any particular items of Collateral meet the eligibility criteria applicable in respect of the Loans or Letters of Credit hereunder, or whether any particular reserves are appropriate, or that the liens and security interests granted to Agent pursuant hereto or any of the Financing Agreements or otherwise have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent in this Agreement or in any of the other Financing Agreements, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, subject to the other terms and conditions contained herein, Agent may act in any manner it may deem appropriate, in its discretion, given Agent’s own interest in the Collateral as a Lender and that Agent shall have no duty or liability whatsoever to any other Lender or Issuing Bank.

12.12 Agency for Perfection. Each Secured Party hereby appoints Agent and each other Secured Party as agent and bailee for the purpose of perfecting the security interests in and liens upon the Collateral of Agent in assets which, in accordance with Article 9 of the UCC can be perfected only by possession (or where the security interest of a secured party with possession has priority over the security interest of another secured party) and Agent and each Secured Party hereby acknowledges that it holds possession of any such Collateral for the benefit of Agent as secured party. Should any Secured Party obtain possession of any such Collateral, such Secured Party shall notify Agent thereof, and, promptly upon Agent’s request therefor shall deliver such Collateral to Agent or in accordance with Agent’s instructions.

12.13 Successor Agent. Agent may resign as Agent upon thirty (30) days’ notice to Lenders and Parent. If Agent resigns under this Agreement, the Required Lenders shall appoint

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from among the Lenders a successor agent for Lenders which successor agent shall be subject to the approval of Administrative Borrower if no Default or Event of Default shall have occurred and be continuing, provided, that, (a) such approval shall not be unreasonably withheld, conditioned or delayed and (b) unless Agent shall have received written notice from Administrative Borrower that Administrative Borrower does not approve such successor agent within three (3) Business Days after receipt by Administrative Borrower of the notice from Agent that it is resigning, Administrative Borrower shall be deemed to have given such approval. If no successor agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with Lenders and Parent, a successor agent from among Lenders. Upon the acceptance by the Lender so selected of its appointment as successor agent hereunder, such successor agent shall succeed to all of the rights, powers and duties of the retiring Agent and the term “Agent” as used herein and in the other Financing Agreements shall mean such successor agent and the retiring Agent’s appointment, powers and duties as Agent shall be terminated. After any retiring Agent’s resignation hereunder as Agent, the provisions of this Section 12 shall inure to its benefit as to any actions taken or omitted by it while it was Agent under this Agreement. If no successor agent has accepted appointment as Agent by the date which is thirty (30) days after the date of a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nonetheless thereupon become effective and Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. Any resignation of Agent pursuant to this Section shall also constitute the resignation of Wachovia or its successor as Swing Line Lender, and any successor agent that is appointed pursuant to this Section shall, upon its acceptance of such appointment, become the successor Swing Line Lender and Issuing Bank for all purposes thereunder.

12.14 Legal Representation of Agent. In connection with the negotiation, drafting, and execution of this Agreement and the other Financing Agreements, or in connection with future legal representation relating to loan administration, amendments, modifications, waivers, or enforcement of remedies, Otterbourg, Steindler, Houston & Rosen, P.C. has only represented and shall only represent Wachovia in its capacities as Agent, Issuing Bank and Lender. Each other Lender hereby acknowledges that such firm does not represent it in connection with any such matters.

12.15 Other Agent Designations. Agent may at any time and from time to time determine that a Lender may, in addition, be a “Co-Agent”, “Syndication Agent”, “Documentation Agent” or similar designation hereunder and enter into an agreement with such Lender to have it so identified for purposes of this Agreement. Any such designation shall be effective upon written notice by Agent to Administrative Borrower of any such designation. Any Lender that is so designated as a Co-Agent, Syndication Agent, Documentation Agent or such similar designation by Agent shall have no right, power, obligation, liability, responsibility or duty under this Agreement or any of the other Financing Agreements other than those applicable to all Lenders as such. Without limiting the foregoing, the Lenders so identified shall not have or be deemed to have any fiduciary relationship with any Lender and no Lender shall be deemed to have relied, nor shall any Lender rely, on a Lender so identified as a Co-Agent, Syndication Agent, Documentation Agent or such similar designation in deciding to enter into this Agreement or in taking or not taking action hereunder.

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SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS

13.1 Term.

(a) This Agreement and the other Financing Agreements shall become effective as of the date set forth on the first page hereof and shall continue in full force and effect for a term ending on March 6, 2013 (the “Maturity Date”), unless sooner terminated pursuant to the terms hereof. In addition, Borrowers may terminate this Agreement at any time upon five (5) days prior written notice to Agent (which notice shall be irrevocable) and Agent may, at its option, and shall at the direction of Required Lenders, terminate this Agreement at any time an Event of Default exists or has occurred and is continuing. Upon the Maturity Date or any other effective date of termination of the Financing Agreements, Borrowers shall pay to Agent all outstanding and unpaid Obligations and shall furnish cash collateral to Agent (or at Agent’s option, a letter of credit issued for the account of Borrowers and at Borrowers’ expense, in form and substance satisfactory to Agent, by an issuer acceptable to Agent and payable to Agent as beneficiary) in such amounts as Agent determines are reasonably necessary to secure Agent and Lenders from loss, cost, damage or expense, including reasonable documented attorneys’ fees and expenses, in connection with any contingent Obligations, including issued and outstanding Letter of Credit Obligations and checks or other payments provisionally credited to the Obligations and/or as to which Agent or any Lender has not yet received final and indefeasible payment (and including any contingent liability of Agent to any bank at which deposit accounts of Borrowers and Guarantors are maintained under any Deposit Account Control Agreement) and for any of the Obligations arising under or in connection with any Bank Products in such amounts as the party providing such Bank Products may require (unless such Obligations arising under or in connection with any Bank Products are paid in full in cash and terminated in a manner satisfactory to such other party). The amount of such cash collateral (or letter of credit, as Agent may determine) as to any Letter of Credit Obligations shall be in the amount equal to one hundred five (105%) percent of the amount of the Letter of Credit Obligations plus the amount of any fees and expenses payable in connection therewith through the end of the latest expiration date of the then outstanding Letters of Credit. Such payments in respect of the Obligations and cash collateral shall be remitted by wire transfer in Federal funds to the Agent Payment Account or such other bank account of Agent, as Agent may, in its discretion, designate in writing to Administrative Borrower for such purpose. Interest shall be due until and including the next Business Day, if the amounts so paid by Borrowers to the Agent Payment Account or other bank account designated by Agent are received in such bank account later than 2:00 p.m. The cash collateral in respect of Letter of Credit Obligations received by Agent as provided above then in possession of Agent (and not applied or to be applied to any of the Letter of Credit Obligations) shall be returned to Administrative Borrower, upon its written request, within ten (10) Business Days after the end of the latest expiration date of the Letters of Credit giving rise to such Letter of Credit Obligations (so long as Agent has received evidence satisfactory to it and the Issuing Bank that no unpaid draw has been made under the Letters of Credit prior to its expiration).

(b) No termination of the Commitments, this Agreement or any of the other Financing Agreements shall relieve or discharge any Borrower or Guarantor of its respective duties, obligations and covenants under this Agreement or any of the other Financing Agreements until all Obligations (other than indemnities and contingent Obligations which have

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not yet accrued) have been fully and finally discharged and paid, and Agent’s continuing security interest in the Collateral and the rights and remedies of Agent and Lenders hereunder, under the other Financing Agreements and applicable law, shall remain in effect until all such Obligations have been fully and finally discharged and paid, other than the contingent Obligations for which Agent has received cash collateral, or at its option, a letter of credit, in accordance with Section 13.1 (a) above. Accordingly, each Borrower and Guarantor waives any rights it may have under the UCC to demand the filing of termination statements with respect to the Collateral and Agent shall not be required to send such termination statements to Borrowers or Guarantors, or to file them with any filing office, unless and until this Agreement shall have been terminated in accordance with its terms and all Obligations paid and satisfied in full in immediately available funds.

13.2 Interpretative Provisions.

(a) All terms used herein which are defined in Article 1, Article 8 or Article 9 of the UCC shall have the meanings given therein unless otherwise defined in this Agreement.

(b) All references to the plural herein shall also mean the singular and to the singular shall also mean the plural unless the context otherwise requires.

(c) All references to any Borrower, Guarantor, Agent and Lenders pursuant to the definitions set forth in the recitals hereto, or to Issuing Bank, Bank Product Provider any other person herein, shall include their respective successors and assigns.

(d) The words “hereof, “herein”, “hereunder”, “this Agreement” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not any particular provision of this Agreement and as this Agreement now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(e) The word “including” when used in this Agreement shall mean “including, without limitation” and the word “will” when used in this Agreement shall be construed to have the same meaning and effect as the word “shall”.

(f) An Event of Default shall exist or continue or be continuing until such Event of Default is waived in accordance with Section 11.3 or is cured. Reference herein to a Default or Event of Default that “exists” shall only include a Default or Event of Default, as the case may be, that has not been cured or waived in accordance with the terms hereof, so that such Default or Event of Default, as the case may be, shall cease to exist and shall not be deemed to be continuing if it has been so cured or waived.

(g) All references to the term “good faith” used herein when applicable to Agent or any Lender shall mean, notwithstanding anything to the contrary contained herein or in the UCC, honesty in fact in the conduct or transaction concerned and observance of reasonable commercial standards of fair dealing based on how an asset-based lender with similar rights providing a credit facility of the type set forth herein would act in similar circumstances at the time with the information then available to it. All references to the term “reasonably” or “reasonable” as applied to any conduct or determination by Agent shall be based on how an

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asset-based lender with similar rights providing a credit facility of the type set forth herein would act in similar circumstances.

(h) Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP applied on a basis consistent with the most recent audited consolidated financial statements of Parent delivered to the Lenders; provided, that, in the event of any change in GAAP after the date hereof that affects the covenants in Section 9 hereof, Administrative Borrower may by notice to Agent, or Agent may, and at the request of Required Lenders shall, by notice to Administrative Borrower require that such covenants be calculated in accordance with GAAP as in effect, and as applied by Parent and its Subsidiaries, immediately before the applicable change in GAAP became effective, until either the notice from the applicable party is withdrawn or such covenant is amended in a manner satisfactory to Administrative Borrower, Agent and the Required Lenders. Administrative Borrower shall deliver to Agent and upon Agent’s request, to each Lender at the same time as the delivery of any financial statements given in accordance with the provisions of Section 9.6 hereof (i) a description in reasonable detail of any material change in the application of accounting principles employed in the preparation of such financial statements from those applied in the most recently preceding monthly, quarterly or annual financial statements and (ii) a reasonable estimate of the effect on the financial statements on account of such changes in application. Notwithstanding the above, all calculations of the financial covenants in Section 9 shall be made on a Pro Forma Basis. Notwithstanding anything to the contrary contained in GAAP or any interpretations or other pronouncements by the Financial Accounting Standards Board or otherwise, the term “unqualified opinion” as used herein to refer to opinions or reports provided by accountants shall mean an opinion or report that is unqualified and also does not include any explanation, supplemental comment or other comment concerning the ability of the applicable person to continue as a going concern or the scope of the audit.

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

(j) Unless otherwise expressly provided herein, (i) references herein to any agreement, document or instrument shall be deemed to include all subsequent amendments, modifications, supplements, extensions, renewals, restatements or replacements with respect thereto, but only to the extent the same are not prohibited by the terms hereof or of any other Financing Agreement, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, recodifying, supplementing or interpreting the statute or regulation.

(k) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

(l) Unless otherwise indicated herein, all references to time of day refer to Eastern Standard Time or Eastern daylight saving time, as in effect in New York City on such day. For purposes of the computation of a period of time from a specified date to a later

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specified date, the word “from” means “from and including” and the words “to” and “until” each means “to and including”; provided, that, with respect to a computation of fees or interest payable to Agent or any Lender, such period shall in any event consist of at least one full day.

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

(n) This Agreement and the other Financing Agreements are the result of negotiations among and have been reviewed by counsel to Agent and the other parties, and are the products of all parties. Accordingly, this Agreement and the other Financing Agreements shall not be construed against Agent or Lenders merely because of Agent’s or any Lender’s involvement in their preparation.

13.3 Notices.

(a) All notices, requests and demands hereunder shall be in writing and deemed to have been given or made: if delivered in person, immediately upon delivery; if by facsimile transmission, immediately upon sending and upon confirmation of receipt; if by nationally recognized overnight courier service with instructions to deliver the next Business Day, one (1) Business Day after sending; and if by certified mail, return receipt requested, five (5) days after mailing. Notices delivered through electronic communications shall be effective to the extent set forth in Section 13.3(b) below. All notices, requests and demands upon the parties are to be given to the following addresses (or to such other address as any party may designate by notice in accordance with this Section):

If to any Borrower or Guarantor:	Latrobe Steel Company 2626 Ligonier Street P.O. Box 31 Latrobe, Pennsylvania 15650 Attention: Dale B. Mikus Telephone No.: (724) 532-6392 Telecopy No.: (724) 532-6362 Email: Dale.Mikus@latrobesteel.com
with a copy to:	Watermill Management Company, LLC One Cranberry Hill 750 Marrett Road, Suite 401 Lexington, Massachusetts 02421 Attention: Stephen J. Kotler Telephone No.: (781) 398-9489 Telecopy No.: (781) 891-9712 Email: skotler@watermill.com

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with a copy to:	Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, PC One Financial Center Boston, Massachusetts 02111 Attention: Meryl J. Epstein Telephone No.: (617) 542-6000 Telecopy No.: (617) 542-2241 Email: mjepstein@mintz.com
If to Agent or Issuing Bank:	Wachovia Bank, National Association 301 South College Street, NC 0479 Charlotte, North Carolina 28202 Attention: Portfolio Manager-Latrobe Telephone No.: (704) 383-1893 Telecopy No.: (704) 383-8067

(b) Notices and other communications to Lenders and Issuing Bank hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by Agent or as otherwise determined by Agent, provided, that, the foregoing shall not apply to notices to any Lender or Issuing Bank pursuant to Section 2 hereof if such Lender or Issuing Bank, as applicable, has notified Agent that it is incapable of receiving notices under such Section by electronic communication. Unless Agent otherwise requires, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided, that, if such notice or other communication is not given during the normal business hours of the recipient, such notice shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communications is available and identifying the website address therefor.

13.4 Partial Invalidity. If any provision of this Agreement is held to be invalid or unenforceable, such invalidity or unenforceability shall not invalidate this Agreement as a whole, but this Agreement shall be construed as though it did not contain the particular provision held to be invalid or unenforceable and the rights and obligations of the parties shall be construed and enforced only to such extent as shall be permitted by applicable law.

13.5 Confidentiality.

(a) Agent, each Lender and Issuing Bank shall use all reasonable efforts to keep confidential, in accordance with its customary procedures for handling confidential information and safe and sound lending practices, any non-public information supplied to it by any Borrower pursuant to this Agreement which is clearly and conspicuously marked as confidential at the time such information is furnished by such Borrower to Agent, such Lender or Issuing Bank, provided, that, nothing contained herein shall limit the disclosure of any such information: (i) to the extent required by statute, rule, regulation, subpoena or court order, (ii) to

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bank examiners and other regulators, auditors and/or accountants, in connection with any litigation to which Agent, such Lender or Issuing Bank is a party, (iii) to any Lender or Participant (or prospective Lender or Participant) or Issuing Bank or to any Affiliate of any Lender so long as such Lender, Participant (or prospective Lender or Participant), Issuing Bank or Affiliate shall have been instructed to treat such information as confidential in accordance with this Section 13.5, or (iv) to counsel for Agent, any Lender, Participant (or prospective Lender or Participant) or Issuing Bank.

(b) In the event that Agent, any Lender or Issuing Bank receives a request or demand to disclose any confidential information pursuant to any subpoena or court order, Agent or such Lender or Issuing Bank, as the case may be, agrees (i) to the extent permitted by applicable law or if permitted by applicable law, to the extent Agent or such Lender or Issuing Bank determines in good faith that it will not create any risk of liability to Agent or such Lender or Issuing Bank, Agent or such Lender or Issuing Bank will promptly notify Administrative Borrower of such request so that Administrative Borrower may seek a protective order or other appropriate relief or remedy and (ii) if disclosure of such information is required, disclose such information and, subject to reimbursement by Borrowers of Agent’s or such Lender’s or Issuing Bank’s expenses, cooperate with Administrative Borrower in the reasonable efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to such portion of the disclosed information which Administrative Borrower so designates, to the extent permitted by applicable law or if permitted by applicable law, to the extent Agent or such Lender or Issuing Bank determines in good faith that it will not create any risk of liability to Agent or such Lender or Issuing Bank.

(c) In no event shall this Section 13.5 or any other provision of this Agreement, any of the other Financing Agreements or applicable law be deemed: (i) to apply to or restrict disclosure of information that has been or is made public by any Borrower, Guarantor or any third party or otherwise becomes generally available to the public other than as a result of a disclosure in violation hereof, (ii) to apply to or restrict disclosure of information that was or becomes available to Agent, any Lender (or any Affiliate of any Lender) or Issuing Bank on a non-confidential basis from a person other than a Borrower or Guarantor, (iii) to require Agent, any Lender or Issuing Bank to return any materials furnished by a Borrower or Guarantor to Agent, a Lender or Issuing Bank or prevent Agent, a Lender or Issuing Bank from responding to routine informational requests in accordance with the Code of Ethics for the Exchange of Credit Information promulgated by The Robert Morris Associates or other applicable industry standards relating to the exchange of credit information. The obligations of Agent, Lenders and Issuing Bank under this Section 13.5 shall supersede and replace the obligations of Agent, Lenders and Issuing Bank under any confidentiality letter signed prior to the date hereof or any other arrangements concerning the confidentiality of information provided by any Borrower or Guarantor to Agent or any Lender. In addition, Agent and Lenders may disclose information relating to the Credit Facility to Gold Sheets and other publications, with such information to consist of deal terms and other information customarily found in such publications and that Wachovia may otherwise use the corporate name and logo of Borrowers and Guarantors or deal terms in “tombstones” or other advertisements, public statements or marketing materials.

13.6 Successors. This Agreement, the other Financing Agreements and any other document referred to herein or therein shall be binding upon and inure to the benefit of and be

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enforceable by Agent, Secured Parties, Borrowers, Guarantors and their respective successors and assigns, except that Borrower may not assign its rights under this Agreement, the other Financing Agreements and any other document referred to herein or therein without the prior written consent of Agent and Lenders. Any such purported assignment without such express prior written consent shall be void. No Secured Party may assign its rights and obligations under this Agreement without the prior written consent of Agent, except as provided in Section 13.7 below. The terms and provisions of this Agreement and the other Financing Agreements are for the purpose of defining the relative rights and obligations of Borrowers, Guarantors, Agent and Secured Parties with respect to the transactions contemplated hereby and there shall be no third party beneficiaries of any of the terms and provisions of this Agreement or any of the other Financing Agreements.

13.7 Assignments; Participations.

(a) Each Lender may, with the prior written consent of Agent, assign all or, if less than all, a portion equal to at least $5,000,000 in the aggregate for the assigning Lender, of such rights and obligations under this Agreement to one or more Eligible Transferees (but not including for this purpose any assignments in the form of a participation), each of which assignees shall become a party to this Agreement as a Lender by execution of an Assignment and Acceptance; provided, that, (i) such transfer or assignment will not be effective until recorded by Agent on the Register, (ii) Agent shall have received for its sole account payment of a processing fee from the assigning Lender or the assignee in the amount of $5,000, and (iii) any such transfer or assignment shall be for the equivalent Pro Rata Share of such Lender’s Tranche A Commitment and Tranche B Commitment hereunder.

(b) Agent shall maintain a register of the names and addresses of Lenders, their Commitments and the principal amount of their Loans (the “Register”). Agent shall also maintain a copy of each Assignment and Acceptance delivered to and accepted by it and shall modify the Register to give effect to each Assignment and Acceptance. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and any Borrowers, Guarantors, Agent and Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by Administrative Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice.

(c) Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party hereto and to the other Financing Agreements and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations (including, without limitation, the obligation to participate in Letter of Credit Obligations) of a Lender hereunder and thereunder and the assigning Lender shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement.

(d) By execution and delivery of an Assignment and Acceptance, the assignor and assignee thereunder confirm to and agree with each other and the other parties

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hereto as follows: (i) other than as provided in such Assignment and Acceptance, the assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any of the other Financing Agreements or the execution, legality, enforceability, genuineness, sufficiency or value of this Agreement or any of the other Financing Agreements furnished pursuant hereto, (ii) the assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower, Guarantor or any of their Subsidiaries or the performance or observance by any Borrower or Guarantor of any of the Obligations; (iii) such assignee confirms that it has received a copy of this Agreement and the other Financing Agreements, together with such other documents and information it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such assignee will, independently and without reliance upon the assigning Lender, Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Financing Agreements, (v) such assignee appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the other Financing Agreements as are delegated to Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto, and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement and the other Financing Agreements are required to be performed by it as a Lender. Agent and Lenders may furnish any information concerning any Borrower or Guarantor in the possession of Agent or any Lender from time to time to assignees and Participants.

(e) Each Lender may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement and the other Financing Agreements (including, without limitation, all or a portion of its Commitments and the Loans owing to it and its participation in the Letter of Credit Obligations, without the consent of Agent or the other Lenders); provided, that, (i) such Lender’s obligations under this Agreement (including, without limitation, its Commitment hereunder) and the other Financing Agreements shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and Borrowers, Guarantors, the other Lenders and Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and the other Financing Agreements, and (iii) the Participant shall not have any rights under this Agreement or any of the other Financing Agreements (the Participant’s rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the Participant relating thereto) and all amounts payable by any Borrower or Guarantor hereunder shall be determined as if such Lender had not sold such participation.

(f) Nothing in this Agreement shall prevent or prohibit any Lender from pledging its Loans hereunder to a Federal Reserve Bank in support of borrowings made by such Lenders from such Federal Reserve Bank; provided, that, no such pledge shall release such Lender from any of its obligations hereunder or substitute any such pledgee for such Lender as a party hereto.

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(g) Borrowers and Guarantors shall assist Agent or any Lender permitted to sell assignments or participations under this Section 13.7 in whatever manner reasonably necessary in order to enable or effect any such assignment or participation, including (but not limited to) the execution and delivery of any and all agreements, notes and other documents and instruments as shall be requested and the delivery of informational materials, appraisals or other documents for, and the participation of relevant management in meetings and conference calls with, potential Lenders or Participants. Borrowers shall certify the correctness, completeness and accuracy, in all material respects, of all descriptions of Borrowers and Guarantors and their affairs provided, prepared or reviewed by any Borrower or Guarantor that are contained in any selling materials and all other information provided by it and included in such materials.

(h) Any Lender that is an Issuing Bank may at any time assign all of its Commitments pursuant to this Section 13.7. If such Issuing Bank ceases to be Lender, it may, at its option, resign as Issuing Bank and such Issuing Bank’s obligations to issue Letters of Credit shall terminate but it shall retain all of the rights and obligations of Issuing Bank hereunder with respect to Letters of Credit outstanding as of the effective date of its resignation and all Letter of Credit Obligations with respect thereto (including the right to require Lenders to make Revolving Loans or fund risk participations in outstanding Letter of Credit Obligations), shall continue.

13.8 Entire Agreement. This Agreement, the other Financing Agreements, any supplements hereto or thereto, and any instruments or documents delivered or to be delivered in connection herewith or therewith represents the entire agreement and understanding concerning the subject matter hereof and thereof between the parties hereto, and supersede all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written. In the event of any inconsistency between the terms of this Agreement and any schedule or exhibit hereto, the terms of this Agreement shall govern.

13.9 USA Patriot Act. Each Lender subject to the USA PATRIOT Act (Title III of Pub.L. 107-56 (signed into law October 26, 2001) (the “Act”) hereby notifies Borrowers and Guarantors that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies each person or corporation who opens an account and/or enters into a business relationship with it, which information includes the name and address of Borrowers and Guarantors and other information that will allow such Lender to identify such person in accordance with the Act and any other applicable law. Borrowers and Guarantors are hereby advised that any Loans or Letters of Credit hereunder are subject to satisfactory results of such verification.

13.10 Counterparts, Etc. This Agreement or any of the other Financing Agreements may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Agreement or any of the other Financing Agreements by telefacsimile or other electronic method of transmission shall have the same force and effect as the delivery of an original executed counterpart of this Agreement or any of such other Financing Agreements. Any party delivering an executed counterpart of any such agreement by telefacsimile or other electronic method of transmission shall also deliver an original executed counterpart, but the failure to do so shall not affect the validity, enforceability or binding effect of such agreement.

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[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, Agent, Lenders, Borrowers and Guarantors have caused these presents to be duly executed as of the day and year first above written.

AGENT		BORROWERS
WACHOVIA BANK, NATIONAL ASSOCIATION, as Agent and Issuing Bank		LATROBE STEEL COMPANY
By:	/s/ Cecil Noble	By:	/s/ Dale B. Mikus
	Cecil Noble	Title:	VP. Chief Financial Officer
Title:	Vice President
		OH&R SPECIAL STEELS COMPANY
		By:	/s/ Dale B. Mikus
		Title:	VP. Chief Financial Officer
		GUARANTORS
		TOOLROCK HOLDING, INC.
		By:	/s/ Dale B. Mikus
		Title:	VP. Chief Financial Officer

Signature Page to Loan and Security Agreement

LENDER
WACHOVIA BANK, NATIONAL ASSOCIATION
By:	/s/ Cecil Noble
	Cecil Noble
Title:	Vice President

Signature to Loan and Security Agreement

LENDER
WELLS FARGO FOOTHILL, LLC
By:	[Illegible]
Title:	Vice President

Signature to Loan and Security Agreement

LENDER
PNC BANK, NATIONAL ASSOCIATION, as a Lender and as an Issuing Bank
By:	/s/ A. Roger Craig, Jr.
	A. Roger Craig, Jr.
Title:	VP

Signature to Loan and Security Agreement

LENDER
LASALLE BUSINESS CREDIT, LLC
By:	[Illegible]
Title:	First Vice President

Signature to Loan and Security Agreement

LENDER
RZB FINANCE LLC
By:	/s/ John A. Valiska
	JOHN A. VALISKA
Title:	First Vice President
By:	/s/ Shirley Ritch
	SHIRLEY RITCH
Title:	Assistant Vice President

Signature to Loan and Security Agreement

LENDER
U.S. BANK NATIONAL ASSOCIATION
By:	[Illegible]
Title:	AVP

Signature to Loan and Security Agreement

LENDER
NATIONAL CITY BUSINESS CREDIT, INC.
By:	[Illegible]
Title:	Vice President

Signature to Loan and Security Agreement

LENDER
SOVEREIGN BANK
By:	[Illegible]
Title:	Vice President

Signature to Loan and Security Agreement

EXHIBIT A

to

LOAN AND SECURITY AGREEMENT

ASSIGNMENT AND ACCEPTANCE AGREEMENT

This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this “Assignment and Acceptance”) dated as of             , 200     is made between                      (the “Assignor”) and                      (the “Assignee”).

W I T N E S S E T H:

WHEREAS, Wachovia Bank, National Association, in its capacity as agent pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf of the financial institutions which are parties thereto as lenders (in such capacity, “Agent”), and the financial institutions which are parties to the Loan Agreement as lenders (individually, each a “Lender” and collectively, “Lenders”) have entered or are about to enter into financing arrangements pursuant to which Agent and Lenders may make loans and advances and provide other financial accommodations to Latrobe Steel Company, a Pennsylvania corporation (“Latrobe”), and OH&R Special Steels Company, a Delaware corporation (“OH&R”, and together with Latrobe, each individually a “Borrower” and collectively, “Borrowers”) as set forth in the Loan and Security Agreement, dated March     , 2008, by and among Borrowers, certain of their affiliates, Agent and Lenders (as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the “Loan Agreement”), and the other agreements, documents and instruments referred to therein or at any time executed and/or delivered in connection therewith or related thereto (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the “Financing Agreements”);

WHEREAS, as provided under the Loan Agreement, Assignor committed to making Loans (the “Committed Loans”) to Borrowers in an aggregate amount not to exceed $             (the “Commitment”);

WHEREAS, Assignor wishes to assign to Assignee [part of the] [all] rights and obligations of Assignor under the Loan Agreement in respect of its Commitment in an amount equal to $             (the “Assigned Commitment Amount”) on the terms and subject to the conditions set forth herein and Assignee wishes to accept assignment of such rights and to assume such obligations from Assignor on such terms and subject to such conditions;

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows:

1. Assignment and Acceptance.

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(a) Subject to the terms and conditions of this Assignment and Acceptance, Assignor hereby sells, transfers and assigns to Assignee, and Assignee hereby purchases, assumes and undertakes from Assignor, without recourse and without representation or warranty (except as provided in this Assignment and Acceptance) an interest in (i) the Commitment and each of the Committed Loans of Assignor and (ii) all related rights, benefits, obligations, liabilities and indemnities of the Assignor under and in connection with the Loan Agreement and the other Financing Agreements, so that after giving effect thereto, the Commitment of Assignee shall be as set forth below and the Pro Rata Share of Assignee shall be              (    %) percent.

(b) With effect on and after the Effective Date (as defined in Section 5 hereof), Assignee shall be a party to the Loan Agreement and succeed to all of the rights and be obligated to perform all of the obligations of a Lender under the Loan Agreement, including the requirements concerning confidentiality and the payment of indemnification, with a Commitment in an amount equal to the Assigned Commitment Amount. Assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Agreement are required to be performed by it as a Lender. It is the intent of the parties hereto that the Commitment of Assignor shall, as of the Effective Date, be reduced by an amount equal to the Assigned Commitment Amount and Assignor shall relinquish its rights and be released from its obligations under the Loan Agreement to the extent such obligations have been assumed by Assignee; provided, that, Assignor shall not relinquish its rights under Sections 2.2, 6.4, 6.9, 11.5 and 12.5 of the Loan Agreement to the extent such rights relate to the time prior to the Effective Date.

(c) After giving effect to the assignment and assumption set forth herein, on the Effective Date (i) Assignee’s Tranche A Commitment will be $             and (ii) Assignee’s Tranche B Commitment will be $            .

(d) After giving effect to the assignment and assumption set forth herein, on the Effective Date (i) Assignor’s Tranche A Commitment will be $             (as such amount may be further reduced by any other assignments by Assignor on or after the date hereof) and (ii) Assignor’s Tranche B Commitment will be $             (as such amount may be further reduced by any other assignments by Assignor on or after the date hereof).

2. Payments.

(a) As consideration for the sale, assignment and transfer contemplated in Section 1 hereof, Assignee shall pay to Assignor on the Effective Date in immediately available funds an amount equal to $            , representing Assignee’s Pro Rata Share of the principal amount of all Committed Loans.

(b) Assignee shall pay to Agent the processing fee in the amount specified in Section 13.7(a) of the Loan Agreement.

3. Reallocation of Payments. Any interest, fees and other payments accrued to the Effective Date with respect to the Commitment, Committed Loans and outstanding Letters of Credit shall be for the account of Assignor. Any interest, fees and other payments accrued on and after the Effective Date with respect to the Assigned Commitment Amount shall be for the

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account of Assignee. Each of Assignor and Assignee agrees that it will hold in trust for the other party any interest, fees and other amounts which it may receive to which the other party is entitled pursuant to the preceding sentence and pay to the other party any such amounts which it may receive promptly upon receipt.

4. Independent Credit Decision. Assignee acknowledges that it has received a copy of the Loan Agreement and the Schedules and Exhibits thereto, together with copies of the most recent financial statements of Toolrock Holding, Inc., a Delaware corporation, and its Subsidiaries, and such other documents and information as it has deemed appropriate to make its own credit and legal analysis and decision to enter into this Assignment and Acceptance and agrees that it will, independently and without reliance upon Assignor, Agent or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit and legal decisions in taking or not taking action under the Loan Agreement.

5. Effective Date; Notices.

(a) As between Assignor and Assignee, the effective date for this Assignment and Acceptance shall be             , 200_ (the “Effective Date”); provided, that, the following conditions precedent have been satisfied on or before the Effective Date:

(i) this Assignment and Acceptance shall be executed and delivered by Assignor and Assignee;

(ii) the consent of Agent as required for an effective assignment of the Assigned Commitment Amount by Assignor to Assignee shall have been duly obtained and shall be in full force and effect as of the Effective Date;

(iii) written notice of such assignment, together with payment instructions, addresses and related information with respect to Assignee, shall have been given to Administrative Borrower and Agent;

(iv) Assignee shall pay to Assignor all amounts due to Assignor under this Assignment and Acceptance; and

(v) the processing fee referred to in Section 2(b) hereof shall have been paid to Agent.

(b) Promptly following the execution of this Assignment and Acceptance, Assignor shall deliver to Administrative Borrower and Agent for acknowledgment by Agent, a Notice of Assignment in the form attached hereto as Schedule 1.

6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AN AGENT]

(a) Assignee hereby appoints and authorizes Assignor in its capacity as Agent to take such action as agent on its behalf to exercise such powers under the Loan Agreement as are delegated to Agent by Lenders pursuant to the terms of the Loan Agreement.

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(b) Assignee shall assume no duties or obligations held by Assignor in its capacity as Agent under the Loan Agreement.]

7. Withholding Tax. Assignee (a) represents and warrants to Assignor, Agent and Borrowers that under applicable law and treaties no tax will be required to be withheld by Assignee, Agent or Borrowers with respect to any payments to be made to Assignee hereunder or under any of the Financing Agreements, (b) agrees to furnish (if it is organized under the laws of any jurisdiction other than the United States or any State thereof) to Agent and Borrowers prior to the time that Agent or Borrowers are required to make any payment of principal, interest or fees hereunder, duplicate executed originals of either U.S. Internal Revenue Service Form W-8BEN or W-8ECI, as applicable (wherein Assignee claims entitlement to the benefits of a tax treaty that provides for a complete exemption from U.S. federal income withholding tax on all payments hereunder) and agrees to provide new such forms upon the expiration of any previously delivered form or comparable statements in accordance with applicable U.S. law and regulations and amendments thereto, duly executed and completed by Assignee, and (c) agrees to comply with all applicable U.S. laws and regulations with regard to such withholding tax exemption.

8. Representations and Warranties.

(a) Assignor represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any security interest, lien, encumbrance or other adverse claim, (ii) it is duly organized and existing and it has the full power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and Acceptance and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Acceptance and to fulfill its obligations hereunder, (iii) no notices to, or consents, authorizations or approvals of, any Person are required (other than any already given or obtained) for its due execution, delivery and performance of this Assignment and Acceptance, and apart from any agreements or undertakings or filings required by the Loan Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution, delivery or performance, and (iv) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of Assignor, enforceable against Assignor in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors’ rights and to general equitable principles.

(b) Assignor makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Agreement or any of the other Financing Agreements or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Agreement or any other instrument or document furnished pursuant thereto. Assignor makes no representation or warranty in connection with, and assumes no responsibility with respect to, the solvency, financial condition or statements of Borrowers, Guarantors or any of their respective Affiliates, or the performance or observance by Borrowers, Guarantors or any other Person, of any of its

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respective obligations under the Loan Agreement or any other instrument or document furnished in connection therewith.

(c) Assignee represents and warrants that (i) it is duly organized and existing and it has full power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and Acceptance and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Acceptance, and to fulfill its obligations hereunder, (ii) no notices to, or consents, authorizations or approvals of, any Person are required (other than any already given or obtained) for its due execution, delivery and performance of this Assignment and Acceptance, and apart from any agreements or undertakings or filings required by the Loan Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution, delivery or performance; and (iii) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of Assignee, enforceable against Assignee in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors’ rights to general equitable principles.

9. Further Assurances. Assignor and Assignee each hereby agree to execute and deliver such other instruments, and take such other action, as either party may reasonably request in connection with the transactions contemplated by this Assignment and Acceptance, including the delivery of any notices or other documents or instruments to Borrowers or Agent, which may be required in connection with the assignment arid assumption contemplated hereby.

10. Miscellaneous.

(a) Any amendment or waiver of any provision of this Assignment and Acceptance shall be in writing and signed by the parties hereto. No failure or delay by either party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof and any waiver of any breach of the provisions of this Assignment and Acceptance shall be without prejudice to any rights with respect to any other for further breach thereof.

(b) All payments made hereunder shall be made without any set-off or counterclaim.

(c) Assignor and Assignee shall each pay its own costs and expenses incurred in connection with the negotiation, preparation, execution and performance of this Assignment and Acceptance.

(d) This Assignment and Acceptance may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Assignor and Assignee each irrevocably submits to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County and the United States District Court for the Southern District of New York, over any suit, action or proceeding arising out of or

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relating to this Assignment and Acceptance and irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State or Federal court. Each party to this Assignment and Acceptance hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding.

(f) ASSIGNOR AND ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE LOAN AGREEMENT, ANY OF THE OTHER FINANCING AGREEMENTS OR ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).

IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and Acceptance to be executed and delivered by their duly authorized officers as of the date first above written.

[ASSIGNOR]

By:

Title:

[ASSIGNEE]

By:

Title:

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SCHEDULE 1

NOTICE OF ASSIGNMENT AND ACCEPTANCE

        , 20    

Wachovia Bank, National Association,

as Agent

301 South College Street

Charlotte, North Carolina 28202

Attention: Portfolio Manager-Latrobe

Re: Latrobe Steel

Ladies and Gentlemen:

Wachovia Bank, National Association, in its capacity as agent pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf of the financial institutions which are parties thereto as lenders (in such capacity, “Agent”), and the financial institutions which are parties to the Loan Agreement as lenders (individually, each a “Lender” and collectively, “Lenders”) have entered or are about to enter into financing arrangements pursuant to which Agent and Lenders may make loans and advances and provide other financial accommodations to Latrobe Steel Company, a Pennsylvania corporation, and OH&R Special Steels Company, a Delaware corporation (collectively, “Borrowers”) as set forth in the Loan and Security Agreement, dated March         , 2008, by and among Borrowers, certain of their affiliates, Agent and Lenders (as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the “Loan Agreement”), and the other agreements, documents and instruments referred to therein or at any time executed and/or delivered in connection therewith or related thereto (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the “Financing Agreements”). Capitalized terms not otherwise defined herein shall have the respective meanings ascribed thereto in the Loan Agreement.

1. We hereby give you notice of, and request your consent to, the assignment by                                                   (the “Assignor”) to                                                   (the “Assignee”) such that after giving effect to the assignment Assignee shall have an interest equal to                      (    %) percent of the total Commitments pursuant to the Assignment and Acceptance Agreement attached hereto (the “Assignment and Acceptance”). We understand that the Assignor’s Commitment shall be reduced by $            , as the same may be further reduced by other assignments on or after the date hereof.

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2. Assignee agrees that, upon receiving the consent of Agent to such assignment, Assignee will be bound by the terms of the Loan Agreement as fully and to the same extent as if the Assignee were the Lender originally holding such interest under the Loan Agreement.

3. The following administrative details apply to Assignee:

(A)   Notice address:

         Assignee name:

         Address:

         Attention:

         Telephone:

         Telecopier:

(B)   Payment instructions:

         Account No.:

         At:

         Reference:

         Attention:

4. You are entitled to rely upon the representations, warranties and covenants of each of Assignor and Assignee contained in the Assignment and Acceptance.

A-8

IN WITNESS WHEREOF, Assignor and Assignee have caused this Notice of Assignment and Acceptance to be executed by their respective duly authorized officials, officers or agents as of the date first above mentioned.

Very truly yours,

[NAME OF ASSIGNOR]

By:

Title:

[NAME OF ASSIGNEE]

By:

Title:

ACKNOWLEDGED AND ASSIGNMENT CONSENTED TO:

WACHOVIA BANK, NATIONAL ASSOCIATION, as Agent

By:

Title:

ACKNOWLEDGED:

LATROBE STEEL COMPANY

By:

Title:

A-9

EXHIBIT B

to

LOAN AND SECURITY AGREEMENT

Form of Borrowing Base Certificate

See attached.

B-1

Wachovia Bank, National Association		Date:
AVAILABILITY REPORT		BBC As of Date:
		Number:

BORROWER	Latrobe Specialty Steel
ADDRESS	2626 Ligonier Street, P.O. Box 31, Latrobe, PA 15650-0031

						Manufacturing		Distribution		Consolidated
Accounts Receivable Outstanding Assigned To Wachovia Capital Finance (Previous Report)						$	—	$	—	$	—
Additions To Accounts Receivable:						$	—	$	—
New Billings
Miscellaneous Debits						$	—	$	—
Less Credit Memos						$	—	$	—
Net Additions To A/R:						$	—	$	—	$	—
Deductions To Accounts Receviable:
Collections						$	—	$	—
Discounts Allowed						$	—	$	—
Returns and Allowances						$	—	$	—
Other						$	—	$	—
Net Deductions To A/R:						$	—	$	—	$	—
Accounts Receivable Outstanding Assigned To Wachovia Capital Finance						$	—	$	—	$	—
Less: Ineligible A/R (see attached schedules for detail)						$	—	$	—	$	—
Eligible Accounts Receivable						$	—	$	—	$	—
		Advance Rate
Availability From Accounts Receivable	@	85.00	%			$	—	$	—	$	—	(+)
		Total lnv Limit
Availability From Inventory - see attached schedules for detail		75.00	%			$	—	$	—	$	—	(+)
					Foreign A/R Limit
Excess Eligible Foreign AIR Calculation	$	—		$	7,000					$	—	(-)
					Slow Move Inv limit
Excess Eligible Slow Move lnventory Calculation	$	—		$	3,000					$	—	(-)
					In-Transit Inv limit
Excess Eligible In-Transit Inventory Calculation	$	—		$	5,000					$	—	(-)
Tranche A Borrowing Base (excluding FILO) Before Loans and Reserves										$	—
		Advance Rate					FILO Limit
Tranche B Borrowing Base (FILO Availability)		@ 10.00	%	$	—	$	25,000			$	—
Total Availability (Tranche A + Tranche B) Before Loans and Reserves										$	—
Total Rent Reserves - see attached schedules for detail						$	—	$	—	$	—	(-)
Total Availability Before Loans and After Reserves										$	—
Total Line of Credit Limit	$	200,000
Lesser of Line of Credit limit or Total Availability Before Loans and L/Cs										$	—
					LC Sub limit
Standby L/Cs	$	—		$	10,000					$	—
Availability Before Loans and After L/Cs										$	—
Loan Balance Previous Report	$
Less: Cash Remitted Today	$	—
Additional Borrowing This Report	$	—
Loan Balance Today										$	—
Net Availability After Loans, L/Cs, and Reserves										$	—
Less: Transaction Fees										$	—
Net Availability After Transaction Fees										$	—

Pursuant to the provisions of the Credit Agreement dated as of [February 29,2008] (the “Credit Agreement”) among                              (the “Borrower”), Wachovia Bank, National Association (“Wachovia”), as the Administrative Agent, the Collateral Agent and an LC Issuer, and                                          the Borrower hereby delivers this Borrowing Base and Loan Report to Wachovia, as the Administrative Agent. Capitalized terms used in this Borrowing Base and Loan Report and not otherwise defined herein have the meanings specified in the Credit Agreement

WACHOVIA BANK, NATIONAL ASSOCIATION	CLIENT:	Latrobe Specialty Steel
301 S College Street - NC0479	BY:
Charlotte, NC 28202	Name/Title:

EXHIBIT C

to

LOAN AND SECURITY AGREEMENT

Information Certificate

See attached.

C-1

INFORMATION CERTIFICATE

OF

LATROBE STEEL COMPANY

March 6, 2008

Wachovia Bank, National Association,

        as Agent

301 South College Street

Charlotte, North Carolina 28202

In connection with the Loan and Security Agreement (the “Credit Agreement”) dated as of March 6, 2008, among Wachovia Bank, National Association (“Wachovia”) and certain other lenders (together with Wachovia in its individual capacity, collectively, “Lenders”) and for whom Wachovia is acting as agent (in such capacity, “Agent”), Toolrock Holding, Inc. (“Toolrock”), Latrobe Steel Company (“Latrobe”) and OH&R Special Steels Company (“OH&R” and together with Toolrock and Latrobe, each, individually, a “Company” and, collectively, the “Companies”), each of the Companies represents and warrants to Agent and Lenders the following information with respect to itself and in each case as of the Closing Date. Unless otherwise defined herein, capitalized terms used in this Information Certificate shall have the meaning given to such terms in the Credit Agreement.

1. The full and exact name of each Company as set forth in its certificate of incorporation (or its certificate of formation or other organizational document filed with the applicable state governmental authority, as the case may be) is as follows:

Toolrock Holding, Inc. (“Toolrock”)

Latrobe Steel Company (“Latrobe”)

OH&R Special Steels Company (“OH&R”)

2. Each Company uses the following trade name(s) in the operation of its business:

Latrobe Electric Steel Company

Latrobe uses a trade name “Koncor Industries” to describe the distribution division that is located at Wauseon, OH (an unregistered trade name)

3. Each Company is a registered organization of the following type:

Company	Date of Organization	Jurisdiction of Organization
Toolrock	December 7, 2006	Delaware
Latrobe	March 10, 1913	Pennsylvania
OH&R	August 6, 1996	Delaware

4. The organizational identification number of each Company issued by its jurisdiction of organization is as set forth below:

Company	ID No.
Toolrock	4250006
Latrobe	199331
OH&R	2647272

5. The Federal Employer Identification Number of each Company is as follows:

Company	FEIN
Toolrock		20-5927926
Latrobe		25-0610595
OH&R		04-3324809

6. Each Company is duly qualified and authorized to transact business as a foreign organization in the following states and is in good standing in such states:

Company	Jurisdiction
Toolrock	None
Latrobe1	California Connecticut Georgia Illinois Massachusetts Michigan Ohio South Carolina
OH&R	California
	Illinois
	Massachusetts
	Ohio
	Pennsylvania
	South Carolina
	Tennessee

7. During the last five years, the name of each Company as set forth in its organizational documentation as filed of record with the applicable state authority has been changed as follows:

¹  Latrobe filed for withdrawal of its qualification in the State of New Jersey in late 2005. The withdrawal is still pending because of an unresolved tax dispute of about $6,000 for the years 2002-2004. The withdrawal request may have expired and will need to be refiled after the taxes have been resettled.

2

Company	Date of Change		Prior Name
Toolrock		No changes		N/A
Latrobe		No changes		N/A
OH&R		No changes		N/A

8. Since the date of five (5) years prior to the date hereof, each Company has made or entered into the following mergers or acquisitions:

Company	Merger/Acquisition	Date
Toolrock/Latrobe	Toolrock Acquisition Corp. purchase of all of the outstanding stock of Latrobeand subsequent merger with and into Toolrock		December 8, 2006

9. The chief executive office and mailing address of each Company is located at the address indicated for such Company on Schedule 8.2 hereto.

10. The books and records of each Company pertaining to accounts, contract rights, inventory, and other assets are located at the addresses indicated for such Company on Schedule 8.2 hereto.

11. Each Company has other places of business and/or maintains inventory or other assets only at the addresses (indicate whether locations are owned, leased or operated by third parties and if leased or operated by third parties, their name and address) indicated for such Company on Schedule 8.2 hereto.

12. Each Company’s assets are owned and held free and clear of liens, mortgages, pledges, security interests, encumbrances or charges except as set forth on Schedule 8.4 hereto and as otherwise permitted by the Credit Agreement.

13. Except as set forth on Schedule 8.6 hereto, (a) there is no investigation by any Governmental Authority pending, or to any Company’s knowledge threatened, against or affecting any Company, its or their assets or business and (b) there is no action, suit, proceeding or claim by any Person pending, or to any Company’s knowledge threatened, against any Company or its or their assets or goodwill, or against or affecting any transactions contemplated by the Credit Agreement, in each case under clauses (a) and (b), which if adversely determined against such Company could reasonably be expected to have a Material Adverse Effect.

14. (a) Except as set forth on Schedule 8.8 hereto, the Companies and any Subsidiary of any Company have not generated, used, stored, treated, transported, manufactured, handled, produced or disposed of any Hazardous Materials, on or to the best of such Company’s knowledge, off its premises (whether or not owned by it) in any manner which at any time violates any applicable Environmental Law or Permit where such violation has or could reasonably be expected to have a Material Adverse Effect, and the operations of Companies and any Subsidiary of any Company complies with all Environmental Laws and all Permits

3

where the failure to so comply has or could reasonably be expected to have a material adverse effect.

(b) Except as set forth on Schedule 8.8 hereto, there has been no investigation by any Governmental Authority or any proceeding, written complaint, order, directive, claim, citation or notice by any Governmental Authority or any other person nor is any pending or to the best of any Company’s knowledge threatened, with respect to any non compliance with or violation of the requirements of any Environmental Law by any Company and any Subsidiary of any Company or the release, spill or discharge, of any Hazardous Material or the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous Materials which adversely affects or could reasonably be expected to have a Material Adverse Effect.

(c) Except as set forth on Schedule 8.8 hereto, to the best of the Companies’ knowledge, there has been no release, spill or discharge of any Hazardous Materials or the generation, use, storage, treatment, transportation, manufacture, handling, production or disposal of any Hazardous Materials which could reasonably be expected to give rise to liability under any Environmental Law, and such that either individually or in the aggregate, has or could reasonably be expected to have a Material Adverse Effect.

(d) Except as set forth on Schedule 8.8 hereto, the Companies and their Subsidiaries have all Permits required to be obtained or filed in connection with the operations of Companies under any Environmental Law and all of such licenses, certificates, approvals or similar authorizations and other Permits are valid and in full force and effect where the failure to do so has or could reasonably be expected to have a Material Adverse Effect.

15. All of the deposit accounts, investment accounts or other accounts in the name of or used by any Company maintained at any bank or other financial institution are set forth on Schedule 8.10 hereto, subject to the right of each Company to establish new accounts in accordance with Section 5.2 of the Credit Agreement.

16. As of the date hereof, the Companies do not have any material Intellectual Property registered, or subject to pending applications, in the United States Patent and Trademark Office or any similar office or agency in the United States, any State thereof, any political subdivision thereof or in any other country, other than those described in Schedule 8.11 hereto and has not granted any licenses with respect thereto other than as set forth in Schedule 8.11 hereto. Schedule 8.11 hereto sets forth all of the material agreements or other arrangements of any Company pursuant to which such Company has a license or other right to use any trademarks, logos, designs, representations or other Intellectual Property owned by another person as in effect on the date hereof and Schedule 8.11 hereto sets forth the dates of the expiration of such agreements or other arrangements of such Company as in effect on the date hereof.

17. Each Company does not have any direct or indirect Subsidiaries or Affiliates and is not engaged in any joint venture or partnership except as set forth in Schedule 8.12 hereto and Sponsor Portfolio Companies.

18. Each Company is the record and beneficial owner of all of the issued and outstanding shares of Capital Stock of each of the Subsidiaries listed on Schedule 8.12 hereto. The

4

issued and outstanding shares of Capital Stock of each Company as of the date hereof are directly and beneficially owned and held by the persons indicated on Schedule 8.12 hereto (except with respect to those shareholders of Toolrock which own less than ten (10%) percent of the Capital Stock of Toolrock).

19. Set forth on Schedule 8.13 hereto is a list (including dates of termination) of all collective bargaining or similar agreements between or applicable to each Company and any union, labor organization or other bargaining agent in respect of the employees of any Company on the date hereof.

20. No Company is a party to or bound by any Material Contract.

21. No Company has any Indebtedness except as set forth on Schedule 9.9 hereto or as otherwise permitted by the Credit Agreement.

22. No Company has made any loans or advances or guaranteed or otherwise become liable for the obligations of any others, except as set forth on Schedule 9.10 hereto and as otherwise permitted by the Credit Agreement.

23. No Company has any chattel paper (whether tangible or electronic) or instruments as of the date hereof.

24. No Company has any commercial tort claims.

25. The officers of each Company and their respective titles are as follows:

Company	Title	Name
(a) Toolrock	President	Hans J. Sack
	Vice President, Secretary & Treasurer	Dale B. Mikus
(b) Latrobe	President & Chief Executive Officer, Vice President, Secretary & Treasurer	Hans J. Sack Dale B. Mikus
(c) OH&R	President	Hans J. Sack
	Vice President, Secretary & Treasurer	Dale B. Mikus

The following will have signatory powers as to all transactions of each Company pursuant to, or in connection with the transactions contemplated by, the Credit Agreement: Dale B. Mikus, Hans J. Sack.

5

26. The members of the Board of Directors of each Company (or, if the Company is a limited partnership, the general partner or, if the Company is a limited liability company, the managers) are:

Company	Directors
Toolrock	Steven E. Karol
	Thomas O. Hicks
Latrobe	Steven E. Karol
	Thomas O. Hicks
OH&R	Steven E. Karol
	Thomas O. Hicks

27. Each Company has filed, or caused to be filed, in a timely manner all income and other material tax returns, reports and declarations which are required to be filed by it. All information in such tax returns, reports and declarations is complete and accurate in all material respects. Each Company has paid or caused to be paid all federal and other material taxes due and payable or claimed due and payable in any assessment received by it, except taxes the validity of which are being contested in good faith by appropriate proceedings reasonably diligently pursued and available to such Company and with respect to which adequate reserves have been set aside on its books. Adequate provision has been made for the payment of all accrued and unpaid Federal, State, county, local, foreign and other taxes whether or not yet due and payable and whether or not disputed.

28. Certified Public Accountants for each Company is the firm of:

Name: KPMG

Address: One Mellon Center, Pittsburgh, PA 15219

Partner Handling Relationship: Richard Creese

Were statements uncertified for any fiscal year? No

6

Agent and Lenders shall be entitled to rely upon the foregoing in all respects and each of the undersigned is duly authorized to execute and deliver this Information Certificate on behalf of the Company for which he is signing.

Very truly yours, TOOLROCK HOLDING, INC.
By:	/s/ Dale B. Mikus
Title:	VP. Chief Financial Officer

LATROBE STEEL COMPANY
By:	/s/ Dale B. Mikus
Title:	VP. Chief Financial Officer

OH&R SPECIAL STEELS COMPANY
By:	/s/ Dale B. Mikus
Title:	VP. Chief Financial Officer

Signature Page to Information Certificate

SCHEDULE 8.2

to

INFORMATION CERTIFICATE

Locations

A. Company: Toolrock

1. Chief Executive Office

One Cranberry Hill

750 Marrett Road, Suite 401

Lexington, MA 02421

2. Location of Books and Records

One Cranberry Hill

750 Marrett Road, Suite 401

Lexington, MA 02421

3. Locations of Inventory, Equipment and Other Assets

None.

B. Company: Latrobe

1. Chief Executive Office

2626 Ligonier Street

P.O. Box 31

Latrobe, PA 15650

2. Location of Books and Records

2626 Ligonier Street

P.O. Box 31

Latrobe, PA 15650

3. Locations of Inventory, Equipment and Other Assets

Division	City/State	Address	Operation
Owned Locations
Latrobe Steel	Latrobe, PA	2626 Ligonier St., P. O. Box, Latrobe, PA 15650	Manufacturing
Latrobe Steel	Franklin, PA	1680 Debence Rd., Franklin, PA 16323	Manufacturing
Koncor Industries	Wauseon, OH	14614 County Rd., Wauseon, OH 43567	Manufacturing
Latrobe Steel	Latrobe PA	Avenue E, Latrobe PA 15650	None

S-1

Leased Locations:
Latrobe Steel	Sterling Heights, MI	34100 Mound Rd., Sterling Heights, MI 48310	Warehouse
Latrobe Distribution	Chicago, IL	933 East 95th Street, Chicago, IL 60619	Warehouse
Latrobe Distribution	Northborough, MA	2 Beeman Rd., Northborough, MA 01532	Warehouse
Latrobe Specialty Steel Europe, Inc.	Sheffield, UK	Newhall Rd, Sheffield, UK S9 2QL	Warehouse
Manufacturing (Consignment Locations):
Alcoa Fastening Systems	Fullerton, CA	801 S. Placentia Ave., Fullerton, CA 92831	Customer Location
Dauphin Precision Tool LLC	Millersburg, PA	200 Front Street, Millerburg, PA 17061	Customer Location
Firth Brown Tools Inc.	Cambridge, ON	115 Dundas Street, Cambridge, ON N1R 5T8	Customer Location
Firth Rixson Inc.	Rochester, NY	181 McKee Road, Rochester, NY 14603	Customer Location
Greenfield Industries Inc.	Evans, GA	470 Old Evans Road, Evans, GA 30809	Customer Location
Greenfield Industries Inc.	Clemson, SC	2501 Davis Creek Road, Clemson, SC 29631	Customer Location
Irwin Industrial Tool Co.	De Witt, NE	108 South Pear Street, De Witt, NE 68341	Customer Location
Landis Threading Systems	Waynesboro, PA	360 South Church Street, Waynesboro, PA 17268	Customer Location
Niagara Cutter	Reynoldsville, PA	150 South Fifth Street, Reynoldsville, PA 15851	Customer Location
SPS Technologies Inc.	Jenkintown, PA	301 Highland Avenue, Jenkintown, PA 19046	Customer Location
Tivoly Inc.	Derby Line, VT	434 Baxter Avenue, Derby Line, VT 05830	Customer Location
Distribution (Outside Processors):
Trinel	Brook Park, OH	5251 W. 137 St, Brook Park, OH 44142	Vendor Location
Braeburn	Lower Burrell, PA	101 Braeburn St, Lower Burrell, PA 15068	Vendor Location
Universal	Bridgeville, PA	600 Mayer St., Bridgeville, PA 15017	Vendor Location
Latrobe	Latrobe, PA	Po Box 31, Latrobe PA 15650	Vendor Location
Keystone	Titusville, PA	11663 McKinney Street, Titusville, PA 16354	Vendor Location
Hammond & Irving	Auburn, NY	254 North Street, Auburn, NY 13021	Vendor Location
Carpenter	Bridgeville, PA	600 Mayer Street, Bridgeville, PA 15017	Vendor Location
C.     Company: OH&R

S-2

1. Chief Executive Office

1551 Vienna Parkway

Vienna, OH 44473

2. Location of Books and Records

1551 Vienna Parkway

Vienna, OH 44473

3. Locations of Inventory, Equipment and Other Assets

Division	City/State	Address	Operation
Owned Locations:
	Northborough, MA	2 Beeman Rd., Northborough, MA 01532	Warehouse
	White House, TN	3123 Pleasant Grove Rd., Whitehouse, TN 37188	Warehouse
Leased Locations:
	Marlborough, MA	225 Cedar Hill St., Suite 17, Marlborough, MA 01752	Office
	Chicago, IL	933 East 95th Street, Chicago, IL 60619	Warehouse
	Sterling Heights, MI	34100 Mound Rd., Sterling Heights, MI 48310	Warehouse
	Vienna, OH	1551 Vienna Industrial Pkwy, Vienna, OH 44473	Office&Warehouse
Distribution (Consignment Locations):
Concor Tool	Hayward, WI	9665 N. Concor Rd., Hayward, WI 54843	Customer Location
Precision Steel	Toledo, OH	31 E. Sylvania Ave., Toledo, OH 43612	Customer Location
Hudson Metals	Huntingdon Beach, CA	7932 Earl Circle, Huntington Beach, CA 92647	Customer Location
Carpenter Powder Prod	Bridgeville, PA	600 Mayer Street, Bridgeville, PA 15017	Customer Location
Manufacturing (Outside Processors):
American Hollow Bar	Erie, PA	1901 Raspberry Street, P.O. Box 228, Erie, PA 16512	Customer Location
Banner	Carol Stream, IL	494 E. Lies Rd., Carol Stream, IL 60188	Customer Location
Bluff City	Maple Heights, OH	5800 Sterling Avenue, Maple Heights, OH 44137	Customer Location
Braeburn	Lower Burrell, PA	101 Braeburn Road, Lower Burrell, PA 15068	Customer Location

S-3

Division	City/State	Address	Operation
Brown-Pacific	Santa Fe Springs, CA	13639 E. Bora Drive, Santa Fe Springs, CA 90670	Customer Location
Carpenter Technologies	Reading, PA	101 West Bern Street, Bldg 104, Reading, PA 19601	Customer Location
Dearborn	Fryenurg, ME	6 Dearborn Drive, PO Box 126, Fryenurg, ME 04037	Customer Location
Dynamic Machine Works	Billerica, MA	Dynamic Flowform, 12 Suburban Park Drive, Billerica, MA 01821	Customer Location
Haynes International	Arcadia, LA	3786 Second Street, Arcadia, LA 71001	Customer Location
Lehigh Heavy Forge	Bethlehem, PA	275 Emery Street, Bethlehem, PA 18015-2042	Customer Location
Metal Finishing Services	Beaver Falls, PA	4023 4th Avenue, Beaver Falls, PA 15010	Customer Location
Orbit	Middleburg Heights, OH	6840 Lake Abram Drive, Middleburg Heights, OH 44130	Customer Location
Penn State Special Mettals LLC	Koppel, PA	7544 Rt. 18 North, Koppel, PA 16136-0617	Customer Location
Pittsburgh Flat Roll	Pittsburgh, PA	1200 Reedsdale Street, Pittsburgh, PA 15233	Customer Location
Precision Kidd	Aliquippa, PA	One Quality Way, Aliquippa, PA 15001	Customer Location
Republic Special Metals, Inc.	South West Canton, OH	2201 Harrison Avenue, South West Canton, OH 44706	Customer Location
Rex Heat Treat	Landsdale, PA	8th Street and Valley Forge Road, P.O. Box 270, Landsdale, PA 19446	Customer Location
Rome Metals	Rochester, PA	499 Delaware Avenue, Rochester, PA 15074	Customer Location
Shasta	Aliquippa, PA	300 Steel Street, Aliquippa, PA 15001	Customer Location
Timken – Canton	Canton, OH	2401 Gambrinus Road, Canton, OH 44706	Customer Location
Universal Welding	Export, PA	5578 Old William Penn Highway, Export, PA 15632	Customer Location
Wptl Imm Tank	New Kensington, PA	1010 Industrial Blvd., New Kensington, PA 15068	Customer Location
Wptl lg. Tactic and Wptl SM. Tactic	New Kensington, PA	1010 Industrial Blvd., New Kensington, PA 15068	Customer Location

S-4

SCHEDULE 8.4

to

INFORMATION CERTIFICATE

Existing UCC Filings*

Latrobe Steel Company

JURISDICTION	File #	File Date	Type	Secured Party	Collateral Description
PA Department of State Uniform Commercial Code Section	2006121300400	12/11/06	UCC-1	Sankaty Advisors, LLC	The Collateral described in Exhibit A attached hereto. All of Latrobe Steel Company’s right, title and interest in, to and under all personal and real property and fixtures and other assets... (a) All accounts, contract rights, instruments, document, chattel paper...(b) All goods (other than Inventory)...(c) All general intangibles...(d) All now owned or hereafter acquired goods....
PA Venango County Recorder	BK0429PG0350	12/12/06	UCC-1	Sankaty Advisors, LLC	All of those assets of the Debtor described in Exhibit A attached hereto. All present and future right, title and interest of the Debtor in and to all property constituting the following property....

* Does not indicate liens of existing lender(s) to be repaid with proceeds of initial disbursements of loans under new Wachovia facility.

S-1

Latrobe Steel Company

JURISDICTION	File #	File Date	Type	Secured Party	Collateral Description
					(1) all of the tenements, hereditaments, appurtenances and all the estates and rights of the Debtor in and to the Land; (2) all right, title and interest of the Debtor in and to all streets, roads and public places... Schedule A-l: Legal Description (Franklin)
OH Fulton County Recorder	66377	12/12/06	UCC-1	Sankaty Advisors, LLC	All of those assets of the Debtor described in Exhibit A attached hereto. All present and future right, title and interest of the Debtor in and to all property constituting the following property... (1) all of the tenements, hereditaments, appurtenances and all the estates and rights of the Debtor in and to the Land; (2) all right, title and interest of the Debtor in and to all streets, roads and public places... Schedule A-l: Legal Description (Wauseon) - Situated in the Township of Dover, County of Fulton and State of Ohio....
PA Westmoreland County Recorder	200612120060130	12/12/06	UCC-1	Sankaty Advisors, LLC	All of those assets of the Debtor described in Exhibit A attached hereto. All present and future right, title and interest of the Debtor in and to all property constituting the following property... (1) all of the tenements, hereditaments, appurtenances and all the estates and rights of the Debtor in and to the Land; (2) all

S-6

Latrobe Steel Company

JURISDICTION	File #	File Date	Type	Secured Party	Collateral Description
					right, title and interest of the Debtor in and to all streets, roads and public places.... Schedule A-1: Legal Description (Latrobe)
PA Westmoreland County Recorder	200702230008350	02/23/07	UCC-3 Amendment	Sankaty Advisors, LLC	Amendment of #200612120060130 Collateral deleted: All that certain parcel of land situate in the City of Latrobe, Westmoreland County, Pennsylvania, being known and designated as Parcel B-1 in the Latrobe Steel Company Subdivision No. 3 as recorder in the Recorders Office of Westmoreland County as Instrument Number 200612220062092....

S-7

OH&R Special Steels Company

JURISDICTION	File #	File Date	Type	Secured Party	Collateral Description
DE Secretary of State	20410104	02/14/02	UCC-1	Ferrostaal Incorporated	Electric Furnace Melted, Fine Grain, Vacuum Degassed, Ingot Cast, Press Forged, Annealed Tool Steel Rounds ACC To AISI D 2 and ASTM 681. Material is rough turned and decarb free Hardness 255 BHN Electric Furnace Melted, Fine Grain, Vacuum Degassed, Ingot Cast, Press Forged, Annealed Tool Steel Rounds ACC To AISI A 2 and ASTM 681. Material is rough turned and decarb free Hardness 248 BHN
DE Secretary of State	21592678	06/28/02	UCC-1	Ferrostaal Incorporated	Powered Metal High Speed Tool Steel rolled or forged round bars, slabs (flat bars), and billets in the following grades: ALL, T15, M2, M$, M48, M50, Duratech 30, Duratech Nine, Duratech 20CV
DE Secretary of State	31785495	06/05/03	UCC-1	Mazak Corporation	One Mazak Nexus Quick Turn 200 with Fusion 640T Nexus Control S/N 160136
DE Secretary of State	40341083	02/09/04	UCC-1	Raymond Leasing Corporation	Raymond 76SL60TN 01957, 01959 C&D 9C15011 4H00532, 4H00533, 4H00534, 4H00535, 4H00536, 4H00537
DE Secretary of State	64241188	12/05/06	UCC-1	Director of Development of the State of Ohio	See attached. 5 Magnet Lifts, Rework P&H Crane, 12 Pallet Racks, 2 Lifts & Conveyor System-Bar Pulls, 6 Lift Tables for Bandsaws, 6 Storage Racks-Maint Dept, Racks-Storage Room, Jarke Racks Relocation, 4 Cantilever

S-8

OH&R Special Steels Company

JURISDICTION	File #	File Date	Type	Secured Party	Collateral Description
					Racks, Pallet Racks-CNC Dept, Clymer Racks-39 Double 31 Single, Horiz Prod Mill w/ Fixtures ...machinery and equipment....
DE Secretary of State	64326815	12/11/06	UCC-1	Sankaty Advisors, LLC	The Collateral described in Exhibit A attached hereto. All of OH&R Special Steels Company’s right, title and interest in, to and under all personal and real property and fixtures and other assets... (a) All accounts, contract rights, instruments, document, chattel paper...(b) All goods (other than Inventory)...(c) All general intangibles...(d) All now owned or hereafter acquired goods....
TN Robertson County Register of Deeds	BK1161/PG487	01/13/07	UCC-l	Sankaty Advisors, LLC	All of those assets of the Debtor described in Exhibit A attached hereto. The maximum principal Indebtedness for Tennessee recording tax purpose is $198,979.59. All present and future right, title and interest of the Debtor in and to all property constituting the following property... (1) all of the tenements, hereditaments, appurtenances and all the estates and rights of the Debtor in and to the Land; (2) all right, title and interest of the Debtor in and to all streets, roads and public places... Schedule A-l: Legal Description (White

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OH&R Special Steels Company

JURISDICTION	File #	File Date	Type	Secured Party	Collateral Description
					House) – All that certain piece, parcel, or tract of land situate, lying, and being located in Robertson County, State of Tennessee, containing 1.996 acres....
MA Worcester County (Worcester District) Registry	BK40457/PG362	01/04/07	UCC-l	Sankaty Advisors, LLC	All of those assets of the Debtor described in Exhibit A attached hereto. All present and future right, title and interest of the Debtor in and to all property constituting the following property... (1) all of the tenements, hereditaments, appurtenances and all the estates and rights of the Debtor in and to the Land; (2) all right, title and interest of the Debtor in and to all streets, roads and public places... Schedule A-1: Legal Description (Northborough) - A certain parcel of land situated on Beeman Road (a private way) in the Town of Northborough, Worcester County, Commonwealth of Massachusetts, being shown as Lot No. 2-B....

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Toolrock Holding, Inc.

JURISDICTION	File #	File Date	Type	Secured Party	Collateral Description
DE Secretary of State	64326823	12/11/06	UCC-1	Sankaty Advisors, LLC	The Collateral described in Exhibit A attached hereto. All of Toolrock Holding, Inc.’s right, title and interest in, to and under all personal and real property and fixtures and other assets... (a) All accounts, contract rights, instruments, document, chattel paper...(b) All goods (other than Inventory)...(c) All general intangibles...(d) All now owned or hereafter acquired goods....

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Continuation to Schedule 8.4

Existing Mortgages

A. Latrobe

1. Open-End Mortgage and Security Agreement dated December 8, 2006 in favor of Sankaty Advisors, LLC, as collateral agent (the “Sankaty Agent”) (Latrobe, PA)

2. Open-End Mortgage and Security Agreement dated December 8, 2006 in favor of the Sankaty Agent (Franklin, PA)

3. Open-End Mortgage and Security Agreement dated December 8, 2006 in favor of the Sankaty Agent (Wauseon, Ohio)

B. OH&R

1. Deed of Trust and Security Agreement dated December 8, 2006 in favor of the Sankaty Agent (White House, Tennessee)

2. Open-End Mortgage and Security Agreement dated December 8, 2006 in favor of the Sankaty Agent (Northborough, Massachusetts)

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SCHEDULE 8.6

to

INFORMATION CERTIFICATE

Pending Litigation

Pending or Threatened Actions:

1. George Thomas Dziak v. The Timken Company and Timken Latrobe Steel and Derry Construction Company, Inc., Case No. 08476 of 2004, In The Court of Common Pleas, Westmoreland County, Pennsylvania. The matter arises out of an accident which occurred in a parking lot at the Latrobe site in December of 2002 when plaintiff, George Dziak, was clearing snow with a backhoe. The plaintiffs backhoe struck a pipe and the impact caused the plaintiff to be jerked forward in his seat. He sustained a spinal cord injury, resulting in nearly total paralysis. Latrobe’s insurers have been put on notice and local counsel was retained. Damages are not specified in the complaint, but they will be significant given the permanent paralysis suffered by plaintiff. Damages could be as high as $1.5 million even if a jury would find some fault on the part of the plaintiff. It is the intention of Latrobe to vigorously defend in this matter. The case is not suitable for summary disposition since questions of fact on negligence and assumption of risk are jury questions. This case has definite settlement value, but no demand yet made.

2. Pennsylvania Human Relations Commission Case No. 2004 07 236; EEOC number 17FA563023 (Dwayne R. Skillings charge of discrimination against Latrobe). In August 2005, Dwayne Skillings filed a charge of discrimination with the Pennsylvania Human Relations Commission against Latrobe, alleging that his former position at the Latrobe’s Latrobe Plant had been restructured and that only white employees were selected for the new position. Latrobe has supplied requested information and data to the Pennsylvania Human Relations Commission and denies that Mr. Skillings’ race was any consideration in the determination to staff the newly restructured job position which he formerly held. Latrobe intends to continue to contest this matter vigorously. There is no exposure assessment yet.

3. In November, 2005, Bell Helicopter (“Bell”) made a claim for $201,000 that alloy sold by Latrobe did not meet the specification. Latrobe rejected the claim. Claim seems to have faded away. Some product might be returned, but the cost would be minimal. There is no exposure assessment.

Actions showing on the Prothonotary’s docket for which no complaint was ever filed:

1. Wilson, et al. v. Latrobe, et al.; Case No. 2668 of 1999. James Wilson was an employee of Latrobe who was injured in an accident on June 10, 1997. He filed a Praecipe for Writ of summons on May 20, 1999, apparently to toll the two-year statute of limitations. Because Mr. Wilson was an employee of Latrobe at the time of the accident, the liability of Latrobe would be limited to any recovery made under Workers’ Compensation. Since no complaint was ever filed, the exact nature of the claim is unknown. Latrobe decided not to issue a rule

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upon them to file a complaint, which explains why the case remains open on the Prothonotary’s docket.

2. Yokopenic v. Latrobe; Case No. 6817 of 2001. A Praecipe for Writ of Summons was filed, but no pleadings have ever been filed. The nature of the claim is unknown.

Pending grievances:

1. Grievance No. 1207A (John Austraw and all affected employees). In May, 2006, an external audit revealed an error in the payroll for January, 2004. One pay period had been input twice. As a result, an internal audit was done of all employees that retired after that period. Of all the employees that retired during that period, nine were negatively impacted as a result. The reduction in monthly pension ranges from $9.18 per month to $54.68 per month, most however, fall in the $20-35.00 range. The grievance was heard at Step 3 process of the grievance procedure. The Union is asking that the employees be allowed to return to work at their pre-retirement job, with no abridged service, but continuation of service. It is expected that the Union will appeal to arbitration. It is unlikely that the arbitrator would deny this grievance and require LSS to return these employees to their previous jobs. We have examined the option of a one time payment, based on life expectancy and have estimated the total cost to equal between $44,000-51,000.

2. Grievance No. 1407A (Brian Trice and all affected employees). Certain group of employees of the Mesta crew allege that the Mesta press schedule went from 2 turns to 3 turns. Employees were not offered shift selection according to seniority. This grievance does not involve a monetary remedy. The remedy would be that LSC would be obligated to offer shift preference in accordance with seniority and job qualifications when there is a schedule change.

3. Grievance No. 3007D (Andrew Urban). Employee claims that he reported to work on a Saturday, December 8, 2007 and was sent home. He is asking for 4 hour reporting pay as defined in the Collective Bargaining Agreement. Mr. Urban was not scheduled to work on Saturday, December 8, 2007. The Finishing Department schedule shows Mr. Urban as off for Saturday, December 8, 2007. This grievance is scheduled for Step 3 of the grievance procedure. It is expected that this grievance will be withdrawn by the Union.

4. Grievance No. 3107D (David Opsitnick & Andrew Urban). Employees protest disciplinary action of an oral warning for leaving their assignment before the end of the shift. Both were seen entered the shower room before the end of their shift. A Step 3 meeting was held between the Company and the Union on January 28, 2007. It is expected that this grievance will be withdrawn by the Union.

5. Grievance No. 108D (Edgar Dahlman). This grievance involves seniority rights when on a Temporary Bidded Job. Mr. Dahlman was on a temporary bid, when he bid on a job in the department he was currently working in. The Company and the Union had

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previously agreed that you cannot hold seniority in two departments, therefore, when you are on a temporary bid, you will hold seniority in the department where you are currently working. If the permanent employee returns, the employee on the Temporary bid will return to his original department, and maintain his department seniority. By the time the bid sheet got down to Mr. Dahlman’s name, he was no longer in the finishing department. He had been returned to prior department and now held seniority in that department. Therefore, he was ineligible for the job. We skipped him on the bid sheet and went down to the next employee. He is claiming he is entitled to that job as he was in the department when he signed the bid sheet. The Company position is that you can not hold seniority in two departments, therefore, once he was back in his original department that is where his seniority held. I suspect this will end in arbitration. This may have some monetary effect, but the employee has been working so it does not appear to be substantial. The issue here is the contract language and the seniority rights.

6. Grievance No. 208B (George Cole). This grievance involves an employee who protests not being permitted to bump a non-departmental employee from daylight shift the week of 11/5/2007. Contractually, employees have no bumping rights. In addition, there was no vacancy on the daylight shift that week. The employee in question was an employee in training, and occasionally was paid at a non-training rate depending upon what he was doing. The only time an employee can move shifts is when a vacancy becomes available on the shift. It is expected that this grievance will be withdrawn, as since it was filed, a vacancy has become available due to a retirement and Mr. Cole is now working the daylight shift.

Orders:

Decision and Order re Thiry vs. Latrobe, No. 3309 of 2003 in the Court of Common Pleas of Westmoreland County, Pennsylvania. This litigation arose out of a claim by the former wife of a deceased salaried retiree. It was alleged that the former spouse was entitled to benefits pursuant to the 1985 pension plan for salaried employees at Latrobe. At the time of the salaried employee’s death, a second spouse survived him. It was the prior spouse’s assertion that a Qualified Domestic Relations Order granted her a lifetime benefit and that she should be entitled to the benefits under the Latrobe’s plan rather than the surviving second spouse. This matter proceeded to trial. Court finds in favor of the plaintiff and awarded to the plaintiff the sum of $7125, which represents the 15 months of $475.00 that have been withheld to date. As further damages, the Court directs that the defendants pay to the plaintiff the sum of $475.00 per month for her lifetime.

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SCHEDULE 8.8

to

INFORMATION CERTIFICATE

Environmental Compliance

Latrobe, PA

1. Past releases of leachate to surface waters and soils surrounding the residual waste landfill, as described in the Phase I Environmental Site Assessment, Timken Latrobe Steel Company, Latrobe, PA (“Latrobe, PA Phase I Report”), prepared by Delta Environmental Consultants, Inc. (“Delta”), dated October 31, 2006

2. Area of dark stained soil adjacent to treatment (settling) ponds located at the southeast corner of the Continuous Rolling Mill portion of the Latrobe property, as described in the Latrobe, PA Phase I Report

3. Dark stained area surrounding staging area for dry grinding swarf, scale and small metal scrap located behind Continuous Rolling Mill building and in close proximity to storm water outfall No. 3 which discharges into Loyalhanna Creek, as described in the Latrobe, PA Phase I Report

4. Release of slag wastewater to Loyalhanna Creek via runoff to adjacent storm water catch basin adjacent to slag storage building at Melt Shop, as described in the Latrobe, PA Phase I Report

5. Releases of Argon Oxygen Decarburization baghouse dust, as described in the Latrobe, PA Phase I Report

6. Releases of Electric Arc Furnace baghouse dust, as described in the Latrobe, PA Phase I Report

7. Discharge from storm and floor drains in manufacturing areas both within buildings and at outside areas to nearby storm water discharge locations, including August 1992 release of oily water to storm water management system which discharges to Loyalhanna Creek, as described in the Latrobe, PA Phase I Report

8. Staining of concrete and brick floor in Main Site buildings, concrete floor of Melt Shop buildings and Continuous Rolling Mill buildings, as described in the Latrobe, PA Phase I Report

9. Contamination in soil and ground water on portion of property formerly owned by American Cyanamid (the Cap Works and Ross Site) and former coke ovens located on the former Cap Works property, as described in the Remedial Investigation Report Act 2 Release of Liability Former American Cyanamid Cap Works and Ross Sites, dated February 28, 2003 and in the Latrobe, PA Phase I Report

10. Former underground tanks used for storage of diesel fuel, as described in the Latrobe, PA Phase I Report

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11. Disposal of Continuous Rolling Mill cooling pond sludge, as cited in June 27, 1989 Notice of Violation from Pennsylvania Department of Environmental Protection (“PA DEP”), as described in the Latrobe, PA Phase I Report

12. PCB wastes from Thermal Induction Vacuum Furnace adjacent to Melt Shop, as described in the Latrobe, PA Phase I Report

13. Unmanaged, unlabelled, damaged and leaking drums containing raw materials, oils and petroleum products, coolants and wastes, as described in the Latrobe, PA Phase I Report

14. Asbestos containing materials, including in cement mortar between bricks in old coal fired boiler located in boiler room next to VAP area and in isolated boiler located in cold milling area, as described in the Latrobe, PA Phase I Report

15. Metal grindings saturated with oil and cutting fluids which are drained to a concrete sump and then pumped to an aboveground storage tank, as described in the Latrobe, PA Phase I Report

16. Fugitive air emission incidents, Notices of Violation and a Consent Order (1997), including reference to complaints from resident neighbors, as described in the Latrobe, PA Phase I Report

17. General Notice/Demand and Request for Information Pursuant to Section 104 of CERCLA and Section 3007 of RCRA for the Elmore Waste Disposal Superfund Site, Greer, SC issued by US EPA Region 4 to The Timken Company (Aug. 2, 2000), and response thereto, as described in the Latrobe, PA Phase I Report

18. Letter from PA DEP, dated August 15, 2005, indicating Timken may be responsible party in connection with Everglade Junkyard Site, Hempfield, PA, as described in the Latrobe, PA Phase I Report

19. US EPA Region 7 Request for Information by letters dated August 15, 1996 and August 22, 1996, regarding the Hayford Bridge Road Groundwater Superfund Site and response thereto stating no information available, as described in the Latrobe, PA Phase I Report

20. Notice of completion from US EPA in March 2000 regarding Metcoa Superfund Site, as described in the Latrobe, PA Phase I Report

21. Notice of Potential Liability regarding PCB Treatment, Inc. Superfund Site from U.S. EPA Region VII to Latrobe Steel Co. (Sept. 16, 1997), PCB Treatment, Inc., and subsequent cash-out settlement, as described in the Latrobe, PA Phase I Report

22. Letter from Indiana Department of Environmental Management to Latrobe Steel Co. regarding Four County Landfill Special Notice of Potential Liability (April 3, 2002), and subsequent de minimis settlement for OU #1, as described in the Latrobe, PA Phase I Report

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23. Letter from Douglas G. Haynam, Shumaker, Loop & Kendrick, LLP regarding Commercial Oil Services Group Ninth Phase II Assessment (Dec. 30, 2004), as described in the Latrobe, PA Phase I Report

24. Deficiencies associated with aboveground storage tanks, as noted in the following in-service inspection reports, all prepared by Orbital Engineering, Inc.: Waste Water Storage Tank, dated January 11, 2006; Virgin Hydrochloric Acid Storage Tank No. 001A, dated May 19, 2006; Waste Hydrochloric Acid Storage Tank No. 002A, dated May 22, 2006; Sulfuric Acid Storage Tank No. 003A, dated May 22, 2006; Nitric Acid Storage Tank No. 004A, dated May 24, 2006; Spent Sulfuric Acid Storage Tank No. 005A, dated May 22, 2006; Spent Sulfuric Acid Storage Tank, dated May 22, 2006; Spent Nitric Hydrofluoric Acid Storage Tank No. 006A, dated May 22, 2006; Used Oil Storage Tank No. 007A, dated May 22, 2006; Diesel Fuel Storage Tank No. 008A, dated May 24, 2006. Indemnification is provided pursuant to Section 9.2(a)(xviii) of the Stock Purchase Agreement for certain of these deficiencies which are considered to be more significant.

25. Citation and Notification of Penalty from OSHA to Timken Latrobe Steel Co. (April 17, 2001); Complaint: Chao v. Timken Latrobe Steel Co., Occupational Safety and Health Review Commission Docket No. 01-966; and subsequent Formal Settlement Agreement of September 2001

26. Citation and Notification of Penalty from OSHA to Latrobe Steel Co. (Sept. 9, 1997), and Notice of Contest dated September 26, 1997; resolved, per OSHA’s on-line Inspection Data database

27. Letter from OSHA to Latrobe Steel Co. regarding notice of safety and/or health hazards (Aug. 11, 2005), stating that no inspection would be conducted at that time; response thereto dated August 16, 2005 setting forth corrective actions; no further correspondence from OSHA

28. Citation and Notification of Penalty from OSHA to Timken Latrobe Steel Co. (March 6, 2003), and subsequent Informal Settlement Agreement dated March 28, 2003

29. Leaking of water soluble hydraulic oil, as cited in November 30, 2007 Notice of Violation from PA DEP, and response to Incident Report Request; no further correspondence from PA DEP

30. Citation and Notification of Penalty from OSHA to Latrobe Specialty Steel Company (January 26, 2007), and subsequent Informal Settlement Agreement dated February 20, 2007

Franklin, PA

31. On-site septic system/leachfield installed in 1994, and in use until at least 1996, as described in the Phase I Environmental Site Assessment, Timken Latrobe Steel Company, Franklin, PA (“Franklin, PA Phase I Report”), prepared by Delta, dated October 30, 2006

32. Some areas of debris in drainage trench associated with storm water retention pond at east edge of parking lot, with no sheen or odor observed in water in retention pond, as described in the Franklin, PA Phase I Report

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33. Oil staining throughout manufacturing area on concrete floor, which was observed to be in excellent condition, below cutting and grinding machines, as described in the Franklin, PA Phase I Report

34. Residual material in drums stored outside on northeast corner of property on asphalt, as described in the Franklin, PA Phase I Report

Wauseon, OH

35. As described in the Phase I Environmental Site Assessment, Timken Latrobe Steel Koncor Plant, Wauseon, OH (“Wauseon, OH Phase I Report”), prepared by Delta, dated October 31, 2006, a septic system/on-site sewage treatment system was installed in 1974. The site has a long history of industrial use and waste generation, including generation of hazardous wastes and use of petroleum products which may have had the potential to be discharged to the sewer system via sinks or toilets.

36. As described in the Wauseon, OH Phase I Report, the Wauseon, OH facility operated and maintained a barium salt heat treating operation with associated hazardous waste accumulation area and storage tank. The heat treating operation was discontinued and the hazardous waste tank and accumulation pad was closed in 1996.

37. Four vents on the north side of building K-1 of the Wauseon, OH facility were observed to have a small black-stained area on the side of the building around the vents and on vegetation/soil directly beneath the vents, as described in the Wauseon, OH Phase I Report.

38. Potential for runoff to be contaminated with petroleum products and/or hazardous substances and to be discharged to storm water system from catch basins located in northeast corner of parking area and on concrete storage pad adjacent to and east of building K-2 and eventually to Turkey Foot Creek, as described in the Wauseon, OH Phase I Report

39. Stained areas of concrete floor observed to be in relatively good shape in manufacturing areas in buildings K-1 and K-2 and the concrete floor of K-3, as described in the Wauseon, OH Phase I Report

40. Heavily stained area of concrete floor in building K-5, as described in the Wauseon, OH Phase I Report

41. Former 10,000-gallon underground diesel fuel storage tank, as described in the Wauseon, OH Phase I Report

42. Former 250-gallon aboveground kerosene tank with no documentation of removal or closure, as described in the Wauseon, OH Phase I Report

43. Non-compliance with terms and conditions of NPDES Ohio EPA Facility Permit No. 2GR00582*AG, dated June 2004, as described in the Wauseon, OH Phase I Report

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44. Non-compliance with regulatory requirements with respect to the Spill Prevention Control and Countermeasures Plan, as described in the Wauseon, OH Phase I Report

45. Non-compliance with respect to requirements for operating as Conditionally Exempt Small Quantity Generator of Hazardous Waste, as described in the Wauseon, OH Phase I Report

46. A permit may be required for the air emissions from the oil/water evaporator, as described in the Wauseon, OH Phase I Report

47. Suspect asbestos containing material in building K-1, as described in the Wauseon, OH Phase I Report

Northborough, MA

48. On-site septic tank with leachfield constructed in 1985, as described in the Phase I Environmental Site Assessment, Timken Latrobe Steel Distribution, Northborough, MA (“Northborough, MA Phase I Report”), prepared by Delta, dated October 30, 2006

49. No stormwater permitting documentation, as described in the Northborough, MA Phase I Report

50. Unneeded chemical materials are stored in a fire-proof location at the facility, as described in the Northborough, MA Phase I Report

51. Drums containing machine coolant/hydraulic oil, as described in the Northborough, MA Phase I Report

52. Speedi-dry absorbent used to clean up minor hydraulic oil spills associated with saws is disposed of in on-site solid waste dumpster as non-regulated waste, as described in the Northborough, MA Phase I Report

White House, TN

53. Petroleum hydrocarbons were identified in groundwater monitoring wells downgradient of a former septic tank/leachfield in 1996, as described in the Phase I Environmental Site Assessment, Timken Latrobe Steel Distribution, White House, TN (“White House, TN Phase I Report”), prepared by Delta, dated October 30, 2006.

54. Two former sumps (a 150-gallon below-ground machine coolant sump in the southeasterly portion of the building and a 2,800 gallon “sludge pit” located near the southeast building) and one current sump (a 150-gallon below-ground machine coolant sump in the northwesterly portion of the building) have been used at the White House, TN facility, as described in the White House, TN Phase I Report.

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55. Approximately 20 gallons of diesel fuel were released to the ground on the south side of the White House, TN plant (near the property line) on December 4, 2002, as described in the White House, TN Phase I Report.

56. Release of motor oil from truck located in shipping/receiving bay on August 28, 2006, as described in the White House, TN Phase I Report

57. Removal of petroleum contaminated soils from north storm water ditch, as described in the White House, TN Phase I Report

58. Oil staining at various locations in manufacturing area on concrete floor, which was observed to be in excellent condition, as described in the White House, TN Phase I Report

59. Storm water samples from Outfalls 001 and 002 were not analyzed for total recoverable zinc as listed in the permit, as described in the White House, TN Phase I Report

Sterling Heights, MI

60. Surficial staining of concrete floor of warehouse and receiving area, as described in the Phase I Summary Findings

61. Former 6,000-gallon heating fuel underground storage tank in December 1994, as described in the Phase I Summary Findings

62. Used oil stored in unlabeled plastic containers and brought to local used oil recycle facility, as described in the Phase I Summary Findings

63. Suspect asbestos containing materials, as described in the Phase I Summary Findings

Chicago, IL

64. Removal of former 10,000-gallon underground fuel oil storage tank, as described in the Phase I Summary Findings

65. Storm water retention basin with no sheen or odor observed to be associated with the pond at southern edge of parking lot within three feet of neighboring property, which contains stockpiles of debris and scrap, as described in the Phase I Summary Findings

66. Oil staining on concrete, which was observed to be in good condition, below wooden pallet on which hydraulic oil and coolant are stored, as described in the Phase I Summary Findings

67. Broken pallets and racks stored outside in gravel parking area, as described in the Phase I Summary Findings

68. No storm water permitting documentation, as described in the Phase I Summary Findings

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69. Unlabelled hydraulic oil storage drums, as described in the Phase I Summary Findings

Vienna, OH

70. Staining on concrete floor, which was observed to be in excellent condition, in manufacturing area below cutting and grinding machines, as described in the Phase I Summary Findings

Greer, SC

71. Oil spillage beneath two above-ground storage tanks, one containing a mixture of waste motor oil and spent soluble oil and one containing virgin soluble oil, where no visible cracks were observed in the floor and the spillage did not appear to extend to the exterior wall, as described in the Phase I Environmental Site Assessment, OH&R Special Steels Company, 310 Brookshire Road, Greer, SC, dated March 2004 (“Greer, SC Phase I Report”)

72. Dark stained soils limited in extent and of a surficial nature adjacent to eastern edge of concrete pad southwest of facility, reportedly resulting from previous storage/disposal practices for metal scraps and cuttings associated with cutting steel stock, which were discontinued in August 2003, as described in the Greer, SC Phase I Report

Marlborough, MA

73. Petroleum staining on concrete floor of former manufacturing/warehouse area, as described in the Phase I/II Environmental Site Review, Houghton & Richards Facility, Marlborough, MA, dated August 1996 (“Marlborough, MA Phase I/II Report”)

74. Petroleum hydrocarbons related to steel cutting operations between 1970 and 1191/1992 have penetrated the concrete floor of the former manufacturing/warehouse area, detected in 1996 in concentrations below the then-applicable regulatory standards set forth by the Massachusetts Contingency Plan, as described in the Marlborough, MA Phase I/II Report

Sheffield, United Kingdom

75. Site-wide investigation of soil and groundwater quality, which identified hydrocarbons, PAH compounds, nickel, lead and copper, as described in the Phase I Summary Findings

76. Oil staining in Building 61 on concrete floor below cutting and grinding machines, near two sunken sumps, as described in the Phase I Summary Findings

77. Non-compliance with regulatory requirements for 300-gallon aboveground storage tank north of Building 38, as described in the Phase I Summary Findings

78. Asbestos containing materials, including suspected asbestos containing material in fascia over entrance to Building 38 and lack of signs and asbestos management plan, as described in the Phase I Summary Findings

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79. Lack of documentation regarding proper disposal of hazardous waste, as described in the Phase I Summary Findings

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SCHEDULE 8.10

to

INFORMATION CERTIFICATE

Deposit Accounts; Investment Accounts

Latrobe

Bank Accounts

Bank Name	Location	Acct. Name
Mellon	Pittsburgh, PA	Timken Latrobe Steel Company (Lockbox)
Mellon	Pittsburgh, PA	Koncor Industries (Lockbox)
PNC Bank	Pittsburgh, PA	Latrobe Steel Company Collection Account
PNC Bank	Pittsburgh, PA	Latrobe Steel Company Funding Account
PNC Bank	Pittsburgh, PA	Latrobe Steel Company Controlled Disbursement Account

Investment Accounts: None

OH&R

Bank Accounts

Bank Name	Location	Acct. Name
Mellon	Pittsburgh, PA	OH&R Special Steel Company (Lockbox)
PNC Bank	Pittsburgh, PA	OH&R Special Steel Company Collection Account
PNC Bank	Pittsburgh, PA	OH&R Special Steel Company Controlled Disbursement Account

Investment Accounts: None

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SCHEDULE 8.11

to

INFORMATION CERTIFICATE

Intellectual Property

1. Company: Latrobe

(a) Trademarks

The following federally registered trademarks:

Mark	Application No.		Filing Date		Registration No.		Registration Date
G.S.N. (Stylized)		71/482106		04/13/45		417324		10/23/45
STAMINAL		71/483227		05/11/45		417918		11/20/45
L.P.D.		71/474697		09/28/44		419971		03/19/46
LESCO		71/470616		05/25/44		428968		04/15/47
VDC (Block letters)		71/573781		02/12/49		560070		06/17/52
XL (Block Letters)		71/669893		07/13/54		603509		03/22/55
VISCOUNT		72/039650		10/28/57		666483		09/02/58
VISCOUNT 20 (Stylized)		72/026365		03/18/57		670490		12/02/58
VISCOUNT 44 (Block letters)		72/026366		03/18/57		670491		12/02/58
VAC-ARC		72/033250		07/05/57		671084		12/16/58
HEDERVAN (Block letters)		72/049500		04/11/58		674433		02/24/59
DYNAFLEX (Stylized)		72/044626		01/24/58		681694		07/14/59
LESCALLOY (Block letters)		72/062197		11/10/58		683538		08/18/59
BR-4 (Stylized)		72/100268		07/05/60		722498		10/10/61
L in Diamond in Square		72/143745		05/03/62		774374		08/04/64
THERM-I-VAC (Stylized)		72/182191		12/02/63		774843		08/11/64
DYNAMAX		72/283013		10/20/67		870335		06/03/69
BG42		73/026131		07/05/74		1000945		01/07/75
BEARCAT		73/767554		12/05/88		1560474		10/17/89

The following unregistered trademarks:

Tool, Die and High Speed Steels

Badger	Dynavan	Riptide
Brickmold	E. No. 1	Saxman-6R
Cascade	GSN-Mo	Select B

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Chipper Knife	HW-108	Stark
CLW	Kelvan	Super Cobalt
CM-50	Koncor	Tatmo
CM-52	Lanark	Tatmo Cobalt
CO06	Lescowear	Tatmo-V
Corsair	Magnadie	Tatmo-VN
Crusader	Mazeman	TNW
Dart	MGR	Whitebear
Double Six	Montana	XL Chisel
Dycast No. 1	Olympic	440 N-Die
		440C Air Melt

Specialty Alloy Steels

Lescalloy® HP 9-4TM-30 VAC-ARC®	Nitralloy NTM VAC-ARC®
Nitralloy 135TM Modified VAC-ARC®	CBS-50 NiLTM VIM-VAR
CBS-600TM VIM-VAR	440 N-DURTM
CSS-42LTM

(b) Patents - The patents attached hereto as Exhibit 8.11

(c) Copyrights

(i) Owned: None

(ii) Licensed: None

(d) Other: Domain Names (Latrobe, d/b/a Latrobe Specialty Steel Co.)

koncor.biz

koncor. info

koncordrillrod.com

koncorflatground.com

koncorspecials.com

koncortoolbits.com

latrobesteel.com

(e) License Agreements:

Software Licenses

(i) Purchase and Support Agreement between OH&R Special Steels, Inc. [sic] and Intrix Systems Group Inc. effective as of November, 1997.

(ii) License Agreement between Taxware, a division of govONE Solutions, LP and Latrobe Steel Company dated May 28, 1998 and amended December 20, 2004 and Addendum.

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(iii) Authorized Affiliate Agreement between Timken Latrobe Steel and SAP America, Inc. dated November 20, 1998.

(iv) Software License Agreement between The Timken Company and Intellection Inc. i2 Technologies US, Inc. dated April 13, 1994 and amended March 29, 1996, April 17, 1996 and June 22, 2004.

(v) Sales, Software License and Services Agreement between The Timken Co and Kronos Incorporated dated October 28, 2005, as amended by that Amendment to Kronos Sales, Software License and Services Agreement dated November 8, 2006. (for Workforce Connect).

(vi) License Agreement between Kronos Incorporated and Latrobe Specialty Steel Company dated March 30, 2007.

(vii) SAP America, Inc. Software and user License Agreement dated July 20, 2007 and amended December 14, 2007.

(viii) Master maintenance and sales agreement between IKON and Latrobe Steel Company dated April 19, 2007.

(ix) License Agreement between Symantec and Latrobe Steel Company dated August 1, 2007.

(x) Software License Agreement between Black Berry Enterprise and Latrobe Steel Company dated May 1, 2007.

Other Licenses

(xi) A license agreement between Latrobe Steel Company and Carnegie Mellon University dated July 20, 2007 with respect to CMU’s martensitic stainless steels technology for potential use in the manufacture of aircraft landing gear.

(xii) Proprietary Production Agreement between Timken Latrobe Steel Company and Firth Rixson Special Steels dated January 1, 2006 thru December 31, 2008.

(xiii) There is an unsigned copy of a Trademark License Agreement between SPS Technologies, Inc. and Latrobe Steel Company re Aerex bearing a date of July 9, 1996. The Company is in the process of determining whether it was ever signed. This Trademark License Agreement references a Patent License Agreement. To the knowledge of Latrobe, no such Patent License Agreement exists.

(xiv) A license agreement between Latrobe Specialty Steel Company and QuesTek Innovation LLC dated October 20, 2007 whereby Latrobe acquired a non-exclusive non-transferable license of certain nanostructured high-strength structured stainless steels.

2. Company: OH&R

(a) Trademarks: None

(b) Patents: None

S-28

(c) Copyrights: None

(d) Other: None

(e) License Agreements: None

3. Company: Toolrock

(a) None

(b) Patents: None

(c) Copyrights: None

(d) Other: None

(e) License Agreements: None

S-29

EXHIBIT 8.11

Latrobe Steel Company

Patent Report by Invention

COUNTRY

REFERENCE#

TYPE

FILED

SERIAL#

ISSUED

PATENT

STATUS

Next Action Due

(Original)

“Case Carborized Stainless Steel Alloy for High Temperature Applications”

UNITED STATES

931033

NEW

12/23/1993

08/174,180

6/13/1995

5,424,028

ISSUED

8/13/2006

3RD MA/NT FEE DUE

GERMANY

971424

DCA

11/7/1994

DE69405375.9

9/3/1997

69405375.9

ISSUED

EUROPEAN PATENT CO

940972

CEQ

11/7/1994

94308179.4

9/3/1997

EP 0684342

ISSUED

FRANCE

971423

DCA

1117/1994

94308179.4

9/3/1997

EP 0684342

ISSUED

UNITED KINGDOM

971425

DCA

11/7/1994

n/a

9/3/1997

EP 0664342

ISSUED

SWEDEN

971426

DCA

11/7/1994

n/a

9/3/1997

EP 0664342

ISSUED

JAPAN

940973

CEQ

12/22/1994

318939/1994

11/21/1997

2,719,892

ISSUED

“Improved Chromium Hot Work Steel”

UNITED STATES

91070

NEW

7/31/1991

07/738,805

5/4/1993

5,207,843

ISSUED

1“Nickel-Cobalt Base Alloy”

UNITED STATES

86552-FBZ

CON

8/6/1988

893,834

1/3/1989

4,795,504

ISSUED

ISRAEL

88835

CEQ

10/5/1988

87927

11/19/1992

87,927

ISSUED

SWEDEN

88838

CEQ

10/8/1988

880a535-6

7/15/1991

8803655-5

ISSUED

“Nickel-Cobalt Based Alloy”

UNITED STATES

980777

NEW

PROPOSED

S-30

SCHEDULE 8.12

to

INFORMATION CERTIFICATE

Subsidiaries; Affiliates; Investments

1. Subsidiaries (More than 50% owned by Company indicated)

Company	Subsidiary	Jurisdiction of Incorporation	Percentage Owned
Toolrock	Latrobe	Pennsylvania	100%
Latrobe	OH&R	Delaware	100%
Latrobe	Latrobe Specialty Steel Europe, Inc.	Delaware	100%

2. Affiliates (Less than 50% Owned by Company) None.

3. Affiliates (Subject to common ownership with Company)

Company	Affiliate	Jurisdiction of Incorporation of	Parent	Percentage of Affiliate Owned
OH&R	Latrobe Specialty Steel Europe, Inc.	Delaware	Latrobe	100%

4. Shareholders (Only holders with more than 10%)

Company	Shareholders	Jurisdiction of Incorporation of Shareholder	Percentage of Company Owned
Toolrock Latrobe	Toolrock Investments, LLC Toolrock	Delaware Delaware	93.62%2 100%
OH&R	Latrobe	Pennsylvania	100%
Latrobe Specialty Steel Europe, Inc.	Latrobe	Pennsylvania	100%

²  Toolrock Investments, LLC owns 93.62% of all Capital Stock of Toolrock Holding, Inc. on a fully–diluted, as-converted basis, 94.08% of all outstanding Capital Stock on an as-converted basis, and 98.73% of all Series A Convertible Participating Preferred Stock outstanding.

S-31

SCHEDULE 8.13

to

INFORMATION CERTIFICATE

Labor Matters

Timken Latrobe Steel and United Steelworkers of America (May 15, 2002)

Latrobe and International Brotherhood of Teamsters Local No. 247 (April 1, 2006)

Latrobe and the International Brotherhood of Teamsters (April 1, 2001)

Timken Latrobe Steel and United Steelworkers of America AFL-CIO (May 15, 2002) - Pension Agreement

Timken Latrobe Steel and United Steelworkers of America AFL-CIO (May 15, 2002) - Insurance Agreement

Timken Latrobe Steel and United Steelworkers of America AFL-CIO (May 15, 2002) - Supplemental Unemployment

Benefit Agreement

Timken Latrobe Steel and United Steelworkers of America AFL-CIO (May 15, 2002) - 401(k) Agreement

Latrobe and International Brotherhood of Teamsters (April 1, 2002)

Latrobe and International Brotherhood of Teamsters (April 1, 2006)

Latrobe and the International Brotherhood of Teamsters (April 1, 2006) - Insurance Agreement

S-32

SCHEDULE 9.9

to

INFORMATION CERTIFICATE

Existing Indebtedness

1. Primary Debt

A. Credit Card Purchase Program with PNC Bank, National Association, with a maximum credit of $100,000.

2. Guarantees

A. Primary Guaranty Agreement of Latrobe in favor of The Director of Development of the State of Ohio, The Provident Bank (as Trustee) and Western Reserve Port Authority dated June 1, 2000.

B. Security Agreement between OH&R and The Director of Development of the State of Ohio dated June 1, 2000.

C. Sublease Agreement between OH&R and Western Reserve Port Authority dated June 1, 2000.

D. First Amendment and Supplement to Financing Agreements between Director of Development of the State of Ohio, Western Reserve Port Authority, The Provident Bank, County of Trumbull, Ohio, OH&R Special Steels Company, dba Timken Latrobe Steel Distribution, Latrobe Steel Company and The Timken Company dated November 1, 2001.

E. In connection with that certain Consent and Release (the “Consent”) dated as of December 8, 2006, by and among The Director of Development of the State of Ohio, The Huntington National Bank, as successor trustee to The Provident Bank (the “Trustee”), Western Reserve Port Authority, the Seller and Latrobe, Latrobe is required to deliver a supporting letter of credit in an amount not less than 25% of the aggregate principal balance of the Bonds (as defined in the Consent) and the State 166 Amount (as defined in the Consent) outstanding from time to time to the Trustee on or around May 1, 2009 if Latrobe does not achieve positive net income in accordance with GAAP and a net worth of $30,000,000. The current amount of the letter of credit issued for the account of the Seller is approximately 1,800,000.00 and such amount is based upon the formula set forth above with respect to the potential letter of credit to be issued for the account of Latrobe.

S-33

SCHEDULE 9.10

to

INFORMATION CERTIFICATE

Loans and Advances

None.

S-34

EXHIBIT D

TO

LOAN AND SECURITY AGREEMENT

Compliance Certificate

To: Wachovia Bank, National Association,

as Agent

301 South College Street

Charlotte, North Carolina 28202

Attention: Portfolio Manager-Latrobe

Ladies and Gentlemen:

I am a duly elected Responsible Officer of Latrobe Steel Company, a Pennsylvania corporation (“Latrobe”), and OH&R Special Steels Company, a Delaware corporation (“OH&R”, and together with Latrobe, each individually a “Borrower” and collectively, “Borrowers”. Capitalized terms used herein without definition shall have the meanings given to such terms in the Loan and Security Agreement, dated March         , 2008, by and among Wachovia Bank, National Association, as agent for the financial institutions party thereto as lenders (in such capacity, “Agent”) and the financial institutions party thereto as lenders (collectively, “Lenders”), Borrowers and certain of their affiliates and the other parties thereto (as such Loan and Security Agreement is amended, modified or supplemented, from time to time, the “Loan Agreement”).

I hereby certify to you, on behalf of the Borrowers and the Guarantors, and without assuming any personal liability, pursuant to Section 9.6 of the Loan Agreement as follows:

1. I have reviewed the terms of the Loan Agreement, and have made, or have caused to be made under my supervision, a review in reasonable detail of the transactions and the financial condition of Borrowers and Guarantors, during the immediately preceding fiscal month.

2. The review described in Section 1 above did not disclose the existence during or at the end of such fiscal month, and I have no knowledge of the existence and continuance on the date hereof, of any condition or event which constitutes a Default or an Event of Default, except as set forth on Schedule I attached hereto. Described on Schedule I attached hereto are the exceptions, if any, to this Section 2 listing, in detail, the nature of the condition or event, the period during which it has existed and the action which any Borrower or Guarantor has taken, is taking, or proposes to take with respect to such condition or event.

3. Based on the review described in Section 1 above, no Borrower or Guarantor has at any time during or at the end of such fiscal month, except as specifically described on Schedule II attached hereto or as permitted by the Loan Agreement, done any of the following:

(a) Changed its respective corporate name, or transacted business under any trade name, style, or fictitious name, other than those previously described to you or set forth in the Financing Agreements.

D-l

(b) Changed the location of its chief executive office, changed its jurisdiction of incorporation, changed its type of organization or changed the location of or disposed of any of its properties or assets (other than pursuant to the sale of Inventory in the ordinary course of its business or as otherwise permitted by Section 9.7 of the Loan Agreement), or established any new asset locations.

(c) Materially changed the terms upon which it sells goods (including sales on consignment) or provides services in a manner that is materially adverse to the rights of the Lenders or the Agent under the Financing Agreements, nor has any vendor or trade supplier to any Borrower or Guarantor during or at the end of such period materially adversely changed the terms upon which it supplies goods to any Borrower or Guarantor in each case, except as set forth on Schedule III attached hereto.

4. Attached hereto as Schedule IV are the calculations used in determining, as of the end of such fiscal month whether Borrowers and Guarantors are in compliance with the covenants set forth in Sections 9.17, 9.18 and 9.19 of the Loan Agreement for such fiscal month.

The foregoing certifications are made and delivered this day of                 , 20    .

Very truly yours,

By:

Title:

D-2

EXHIBIT E

TO

LOAN AND SECURITY AGREEMENT

Commitments

Lender	Tranche A Commitment1		Tranche B Commitment		Total Commitment		Percentage
Wachovia Bank, National Association	$	39,375,000	$	5,625,000	$	45,000,000		22.5	%
Wells Fargo Foothill, LLC	$	35,000,000	$	5,000,000	$	40,000,000		20.00	%
PNC Bank, National Association	$	19,687,500	$	2,812,500	$	22,500,000		11.25	%
RZB Finance LLC	$	19,687,500	$	2,812,500	$	22,500,000		11.25	%
LaSalle Business Credit, LLC	$	19,687,500	$	2,812,500	$	22,500,000		11.25	%
U.S. Bank National Association	$	17,500,000	$	2,500,000	$	20,000,000		10.00	%
National City Business Credit, Inc.	$	15,312,500	$	2,187,500	$	17,500,000		8.75	%
Sovereign Bank	$	8,750,000	$	1,250,000	$	10,000,000		5.00	%
TOTAL:	$	175,000,000	$	25,000,000	$	200,000,000		100.00	%

(1)

¹  Each Lender’s Tranche A Commitment will automatically increase dollar for dollar by each permanent reduction of such Lender’s Tranche B Commitment as a result of a reduction in the Tranche B Loan Limit.

E-1

EXHIBIT F

to

LOAN AND SECURITY AGREEMENT

FORM OF REVOLVING NOTE

REVOLVER NOTE

$             Date:              , 200    

FOR VALUE RECEIVED, the undersigned (the “Borrowers”), hereby promise to pay to              (the “Lender”), in accordance with the provisions of the Loan Agreement (as hereinafter defined), the lesser of (i) the principal amount of              Dollars ($             ) or (ii) the aggregate unpaid principal amount of all Revolving Loans made to the Borrowers by the Lender under the Loan and Security Agreement, dated March     , 2008 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Loan Agreement;” capitalized terms used, but not defined herein, are used herein as therein defined), among the Borrowers, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, Wachovia Bank, National Association, as Agent (in such capacity, “Agent”), and the other parties thereto.

This Revolving Note is payable at such times and in such amounts as provided in the Loan Agreement. The Borrowers promise to pay interest on the unpaid principal amount of each Revolving Loan from the date such Revolving Loan is made until such principal amount is paid in full, at such interest rates and at such times as provided in the Loan Agreement. Except as otherwise provided in Section 2.1(b) of the Loan Agreement with respect to Swing Line Loans, all payments of principal and interest shall be made to Agent for the account of the Lender in U.S. Dollars in immediately available funds at Agent’s office.

This Revolving Note is one of the promissory notes referred to in Section 6.14 of the Loan Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Revolving Note is also entitled to the benefits of the Guarantee, dated March     , 2008, by Borrowers and Toolrock Holdings, Inc. in favor of Agent, and is secured by the Collateral. The Lender may attach schedules to this Revolving Note and endorse thereon the date and amount of its Revolving Loans and payments with respect thereto.

The Borrowers, for themselves, their successors and assigns, hereby waive diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Revolving Note.

[SIGNATURES ON FOLLOWING PAGE]

F-1

This Revolving Note shall be governed by and construed in accordance with the laws of the State of New York.

LATROBE STEEL COMPANY

By:

Name:

Title:

OH&R SPECIAL STEELS COMPANY

By:

Name:

Title:

F-2

SCHEDULE 1.42

to

LOAN AND SECURITY AGREEMENT

Equity Investors

HHEP-Latrobe, L.P.

Watermill-Toolrock Partners, L.P.

Sankaty Advisors, LLC

SCHEDULE 1.51

to

LOAN AND SECURITY AGREEMENT

Existing Lenders

PNC Bank, National Association

LaSalle Business Credit, LLC

Fifth Third Bank

Sovereign Bank

The CIT Group/Business Credit, Inc.

The Huntington National Bank (successor by merger to Sky Bank)

First Commonwealth Bank

U.S. Bank National Association

RZB Finance LLC

National City Business Credit, Inc.

Wachovia Bank, National Association

TD Banknorth, N.A.

E*Trade Bank

2

SCHEDULE 1.52

to

LOAN AND SECURITY AGREEMENT

Existing Letters of Credit

1. Irrevocable Standby Letter of Credit No. 18104075-00-000 issued by PNC Bank, National Association dated December 8, 2006, as amended on March 1, 2007, and extended on February 11, 2008, in the original face amount of $283,589 for the benefit of the Pennsylvania Department of Environmental Protection.

2. Irrevocable Standby Letter of Credit No. 18104076-00-000 issued by PNC Bank, National Association dated December 8, 2006, as amended on November 6, 2007, in the original face amount of $618,500 in connection with the State of Ohio’s State Economic Development Revenue Bonds (Ohio Enterprise Bond Fund), Series 2000-2, for the benefit of Huntington National Bank, as Indenture Trustee.

3

SCHEDULE 1.59

to

LOAN AND SECURITY AGREEMENT

Freight Forwarders

US FORWARDERS DESIGNATED BY THE BORROWERS

A. Hartrodt (USA) Inc.

Lynbrook, New York 11563

Phone: 516-203-3111

Contact: Mike Moreno

Alpha International

510 Thornall Street, Suite 390

Edison, New Jersey 08837

Phone: 908-527-6900

Contact: James Ullmann

Import Logistics Inc

1005 N. Commons Drive

Aurora, Illinois 60504

Phone: 630-851-2111

Contact: Linda Edwards, Mary Arnobit

US FORWARDERS DESIGNATED BY THE BORROWERS’ CUSTOMERS

A. Hartrodt (USA) Inc.

777 Sunrise Highway, Suite 204

Lynbrook, New York 11563

Phone: 516-203-3111

Contact: Mike Moreno

Bax Global Express

Coraopolis, Pa 15108

Phone: 412-631-6009

Contact: Cristy Varli

Concordia International

Folcroft, Pa 19032

Phone: 800-621-8558

Contact: Anita Dambrowski

4

Conterm

C/O Vanguard Logistics

300 Middlesex Avenue

Carteret, New Jersey 0708

Phone: 732-661-4168

Contact: Dieter Plompen

DHL Global Forwarding

508 McCormick Drive

Glen Burnie, Maryland 21061

Phone: 410-424-4362

Contact: Sadiq Farouq

Eagle Global Logistics

93 Spring Run Road Ext, Bldg #5

Pittsburgh Airport Industrial park

Coraopolis, Pa 15108

Phone: 724-457-1400

Contact: Robert Stewart

Ibex International Forwarding Corp

132 Nassau Street

New York, New York 10038

Phone: 2112-233-4137

Contact: Manny San Antonio

IJS Global

52 Fadem Road

Springfield, New Jersey 07081

Phone: 973-467-5516

Contact: Karen Hurtwitz

Interglobal Forwarding SVC

Bayonne, New Jersey 07002

Phone: 201-339-1600

Contact: Seeta Sookdeo

5

SCHEDULE 1.106

to

LOAN AND SECURITY AGREEMENT

Permitted Holders

(a) HHEP-Latrobe, L.P. and any of its Control Investment Affiliates;

(b) Watermill-Toolrock Partners, L.P. and any of its Control Investment Affiliates; and

(c) for the purpose of clauses (b) and (c) of the definition of Change of Control only, Sankaty Advisors, LLC and any of its Control Investment Affiliates; provided that in determining the percentages of the voting power of the total outstanding Voting Stock of Parent owned by the Permitted Holders, the amount of such Voting Stock owned by the entities listed in this paragraph (c) shall not exceed sixteen percent (16%).

For purposes of this Schedule 1.105, “Control Investment Affiliate” shall mean, with respect to any Person, any other Person that (a) directly or indirectly, is in control of, is controlled by, or is under common control with, such Person and (b) is organized by such Person primarily for the purpose of making equity or debt investments in one or more companies. For purposes of this definition, “control” of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

6

SCHEDULE 9.7

to

LOAN AND SECURITY AGREEMENT

Assets Permitted to be Sold

Certain assets of Latrobe Steel Company (d/b/a Koncor Industries), located at the Wauseon, Ohio facility, related to flat ground stock, drill rod and tool bit products and the manufacturing processes, including cutting and grinding.

SCHEDULE 9.8(k)

to

LOAN AND SECURITY AGREEMENT

Certain Equipment Subject to Liens

5 Magnet Lifts

Rework P&H Crane

12 Pallet Racks

2 Lifts & Conveyor System-Bar Pulls

6 Lift Tables for Bandsaws

6 Storage Racks-Maint Dept

Racks-Storage Room

Jarke Racks Relocation

4 Cantilever Racks

Pallet Racks-CNC Dept

Clymer Racks-39 Double 31 Single

Horiz Prod Mill w/ Fixtures

EX-10.2

Exhibit 10.2

[Execution]

AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT AND CONSENT

AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT AND CONSENT, dated January 22, 2009 (this “Amendment No. 1”), is by and among Wachovia Bank, National Association, a national banking association, in its capacity as agent pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf of the parties thereto as lenders (in such capacity, “Agent”), the parties to the Loan Agreement as lenders (individually, each a “Lender” and collectively, “Lenders”), Latrobe Steel Company, a Pennsylvania corporation (“Latrobe”), OH&R Special Steels Company, a Delaware corporation (“OH&R”), Specialty Steel Supply, Inc., a Texas corporation (“Specialty Steel” and together with Latrobe and OH&R, each individually a “Borrower” and collectively, “Borrowers”), and Toolrock Holding, Inc., a Delaware corporation (“Parent”, sometimes individually referred to herein as a “Guarantor” and collectively, “Guarantors” as defined in the Loan Agreement).

W I T N E S S E T H:

WHEREAS, Agent, Lenders, Borrowers and Guarantors have entered into financing arrangements pursuant to which Lenders (or Agent on behalf of Lenders) have made and may make loans and advances and provide other financial accommodations to Borrowers as set forth in the Loan and Security Agreement, dated March 6, 2008, by and among Agent, Lenders, Borrowers and Guarantors (as the same now exists and is amended and supplemented pursuant hereto and may hereafter be further amended, modified, supplemented, extended, renewed, restated or replaced, the “Loan Agreement”) and the other Financing Agreements;

WHEREAS, Borrowers and Guarantors have requested that Agent and Lenders consent to certain arrangements by Borrowers with the United States of America as set forth herein and agree to amend certain provisions of the Loan Agreement as set forth herein, and Agent and Lenders are willing to agree to such consent and amendments on the terms and subject to the conditions set forth herein;

WHEREAS, by this Amendment No. 1, Agent, Lenders, Borrowers and Guarantors desire and intend to evidence such consent and amendments;

NOW THEREFORE, in consideration of the foregoing and the mutual agreements and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions.

(a) Additional Definitions. As used herein, the following terms shall have the meanings given to them below and the Loan Agreement and the other Financing Agreements are hereby amended to include, in addition and not in limitation, the following definitions:

(i) “Amendment No. 1” shall mean this Amendment No. 1 to Loan and Security Agreement and Consent by and among Agent, Lenders, Borrowers and Guarantors, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(ii) “Mezzanine VIM Amendment” shall mean the consent and/or amendment to the Securities Purchase Agreement, dated on or about the date of Amendment No. 1, by and among Mezzanine Note Agent, Borrowers and Parent;

(iii) “VIM Agreement” shall mean the Technology Investment Agreement, dated December 10, 2008, by and between the United States of America, acting through DET 1 AF Research Laboratory, and Latrobe (doing business as Latrobe Specialty Steel Company) concerning the Title III vacuum induction melting vacuum arc re-melting furnace capacity program, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(iv) “VIM Equipment” shall mean the equipment described on Exhibit A attached hereto owned by Latrobe.

(v) “VIM Intercreditor Agreement” shall mean the Lien Subordination Agreement, dated on or about the date of Amendment No. 1, by and among Agent, Mezzanine Note Agent, the holders of the Mezzanine Notes and The United States of America, acting through DET 1 AF Research Laboratory, as acknowledged and agreed to by Latrobe, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(vi) “VIM Security Agreement” shall mean the Security Agreement, dated on or about the date of Amendment No. 1, by and between Latrobe and The United States of America, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(b) Interpretation. For purposes of this Amendment No. 1, all terms used herein which are not otherwise defined herein, including but not limited to, those terms used in the recitals hereto, shall have the respective meanings assigned thereto in the Loan Agreement as amended by this Amendment No. 1.

2. Consent. Notwithstanding anything to the contrary contained in the Loan Agreement and subject to the terms and conditions contained herein, Agent and Supermajority Lenders hereby consent to Latrobe granting in favor of the United States of America a first lien on the VIM Equipment.

3. Fixed Charges. Notwithstanding anything to the contrary contained in the Loan Agreement, the amount of any repayment by Latrobe to the United States of America of the cost share amount granted to Latrobe by the United States of America pursuant to the terms of the VIM Agreement shall not be included within Fixed Charges.

-2-

4. Applicable Margin. From and after the date hereof, so long as the lien of The United States of America is in effect and has not been terminated as against the VIM Equipment, each applicable percentage set forth in the grid to the definition of Applicable Margin in the Loan Agreement shall be deemed increased by one-quarter (.25%) percent.

5. Encumbrances. Section 9.8 of the Loan Agreement is hereby amended by adding the following new subsection (t) at the end thereof:

“(t) the security interests in and liens upon the VIM Equipment to secure the Indebtedness or other obligations owing by Latrobe or any other Borrower to the United States of America arising under the VIM Agreement, as permitted under Section 9.9(t) hereof.”

6. Indebtedness. Section 9.9 of the Loan Agreement is hereby amended by adding the following new subsection (t) at the end thereof:

“(t) Indebtedness of Latrobe to the United States of America (and/or the cost share amount granted to Latrobe by the United States of America) evidenced by and pursuant to the VIM Agreement as in effect on the date hereof, provided, that, each of the following conditions is satisfied:

(i) the aggregate amount of such Indebtedness shall not exceed $16,606,000;

(ii) Agent shall have received, in form and substance satisfactory to Agent, the VIM Intercreditor Agreement, duly authorized, executed and delivered by the United States of America, Mezzanine Note Agent, the holders of the Mezzanine Notes and Latrobe;

(iii) Agent shall have received, each in form and substance satisfactory to Agent, true, correct and complete copies of all agreements, documents and instruments evidencing or otherwise related to such Indebtedness and the liens related thereto, including, but not limited to, the VIM Agreement (substantially in the form annexed hereto as Exhibit B and containing such changes as Agent may agree to), the VIM Security Agreement and any UCC financing statements filed by the United States of America in connection therewith;

(iv) Agent shall have received, in form and substance satisfactory to Agent, the Mezzanine VIM Amendment, duly authorized, executed and delivered by Mezzanine Note Agent, Borrowers and Parent;

(v) Latrobe shall not, directly or indirectly, (A) amend, modify, alter or change in any material respect any terms of such Indebtedness or any agreement, document or instrument related thereto in a manner that adversely affects Latrobe in any material respect, or (B) redeem, retire,

-3-

defease, purchase or otherwise acquire such Indebtedness or set aside or otherwise deposit or invest any sums for such purpose other than upon the demand for repayment of the United States of America pursuant to its rights under the VIM Agreement as in effect on the date hereof;

(vi) Latrobe shall furnish to Agent all notices or demands in connection with such Indebtedness either received by Latrobe or on its behalf, promptly after the receipt thereof, or sent by Latrobe or on its behalf, concurrently with the sending thereof, as the case may be.”

7. Amendment Fee. In consideration of the consents and amendments set forth herein, Borrowers shall on the date hereof, pay to Agent, for the account of Lenders who have executed this Amendment No. 1 as of the date hereof, or Agent, at its option, may charge the loan account of Borrowers maintained by Agent, an amendment fee in the aggregate amount equal to five one-hundredths (.05%) percent of the Commitments of each such Lender, which fee is fully earned and payable as of the date hereof and shall constitute part of the Obligations.

8. Representations and Warranties. Borrowers and Guarantors, jointly and severally, represent and warrant with and to Agent and Lenders as follows, which representations and warranties shall survive the execution and delivery hereof, the truth and accuracy of, or compliance with each, together with the representations, warranties and covenants in the other Financing Agreements, being a continuing condition of the making of Revolving Loans and providing Letters of Credit to Borrowers:

(a) no Default or Event of Default exists or has occurred and is continuing as of the date of this Amendment No. 1;

(b) Latrobe owns the full right, title and interest in and to the VIM Equipment;

(c) this Amendment No. 1 and each other agreement to be executed and delivered by Borrowers and Guarantors in connection herewith has been duly authorized, executed and delivered by all necessary action on the part of each Borrower and Guarantor which is a party hereto and, if necessary, their respective equity holders and is in full force and effect as of the date hereof, as the case may be, and the agreements and obligations of each of the Borrowers and Guarantors, as the case may be, contained herein and therein constitute legal, valid and binding obligations of each of the Borrowers and Guarantors, enforceable against them in accordance with their terms;

(d) the execution, delivery and performance of this Amendment No. 1 (i) are all within each Borrower’s and Guarantor’s corporate powers and (ii) are not in contravention of law or the terms of any Borrower’s or Guarantor’s certificate or articles of incorporation, by laws, or other organizational documentation, or any indenture, agreement or undertaking to which any Borrower or Guarantor is a party or by which any Borrower or Guarantor or its property are bound; and

(e) all of the representations and warranties set forth in the Loan Agreement

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and the other Financing Agreements, each as amended hereby, are true and correct in all material respects on and as of the date hereof, as if made on the date hereof, except to the extent any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct as of such date.

9. Conditions Precedent. The amendments and consents contained herein shall only be effective upon the satisfaction of each of the following conditions precedent in a manner satisfactory to Agent:

(a) Agent shall have received counterparts of this Amendment No. 1, duly authorized, executed and delivered by Borrowers and Guarantors;

(b) Agent shall have received the consent or authorization from such Lenders as are required for the amendments provided for herein to execute this Amendment No. 1 and the VIM Intercreditor Agreement on behalf of the Lenders;

(c) Agent shall have received, in form and substance satisfactory to Agent, the VIM Intercreditor Agreement, duly authorized, executed and delivered by the United States of America, Mezzanine Note Agent and Latrobe;

(d) Agent shall have received, in form and substance satisfactory to Agent, the Mezzanine VIM Amendment, duly authorized, executed and delivered by Mezzanine Note Agent, Borrowers and Parent;

(e) Agent shall have received, each in form and substance satisfactory to Agent, true, correct and complete copies of all agreements, documents and instruments evidencing or otherwise related to such arrangements and the liens related thereto, including, but not limited to, the VIM Agreement (substantially in the form annexed hereto as Exhibit B and containing such changes as Agent may agree to), the VIM Security Agreement and any UCC financing statements filed by the United States of America in connection therewith

(f) Agent shall have received a true and correct copy of each consent, waiver or approval (if any) to or of this Amendment No. 1, which Borrowers and Guarantors are required to obtain from any other Person, and such consent, approval or waiver (if any) shall be in form and substance reasonably satisfactory to Agent; and

(g) No Default or Event of Default shall exist or have occurred and be continuing.

10. Authorization. The Supermajority Lenders, by their signatures hereto, hereby authorize the Agent to enter into the VIM Intercreditor Agreement in the form annexed hereto as Exhibit C, with such changes and modifications as Agent deems necessary or desirable and each Lender agrees that it is and will be bound (as a Lender) by the terms and conditions of the VIM Intercreditor Agreement, whether or not executed by such Lender.

11. Effect of this Amendment. Except as expressly set forth herein, no other

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amendments, consents, changes or modifications to the Financing Agreements are intended or implied, and in all other respects the Financing Agreements are hereby specifically ratified, restated and confirmed by all parties hereto as of the effective date hereof and Borrowers and Guarantors shall not be entitled to any other or further amendment or consent by virtue of the provisions of this Amendment No. 1 or with respect to the subject matter of this Amendment No. 1. To the extent of conflict between the terms of this Amendment No. 1 and the other Financing Agreements, the terms of this Amendment No. 1 shall control. The Loan Agreement and this Amendment No. 1 shall be read and construed as one agreement.

12. Governing Law. The validity, interpretation and enforcement of this Amendment No. 1 and any dispute arising out of the relationship between the parties hereto whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

13. Binding Effect. This Amendment No. 1 shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

14. Further Assurances. Borrowers and Guarantors shall execute and deliver such additional documents and take such additional action as may be reasonably requested by Agent to effectuate the provisions and purposes of this Amendment No. 1.

15. Entire Agreement. This Amendment No. 1 represents the entire agreement and understanding concerning the subject matter hereof among the parties hereto, and supersedes all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written.

16. Headings. The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this Amendment No. 1.

17. Counterparts. This Amendment No. 1 may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Amendment No. 1 by telefacsimile or other electronic method of transmission shall have the same force and effect as delivery of an original executed counterpart of this Amendment No. 1. Any party delivering an executed counterpart of this Amendment No. 1 by telefacsimile or other electronic method of transmission shall also deliver an original executed counterpart of this Amendment No. 1, but the failure to do so shall not affect the validity, enforceability, and binding effect of this Amendment No. 1.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to be duly executed and delivered by their authorized officers as of the day and year first above written.

WACHOVIA BANK, NATIONAL ASSOCIATION, as Agent and a Lender
By:	[Illegible]
Title:	Managing Director

LATROBE STEEL COMPANY
By:	[Illegible]
Title:	VP. Chief Financial Officer
OH&R SPECIAL STEELS COMPANY
By:	[Illegible]
Title:	VP. Chief Financial Officer
SPECIALTY STEEL SUPPLY, INC.
By:	[Illegible]
Title:	VP. Chief Financial Officer
TOOLROCK HOLDING, INC.
By:	[Illegible]
Title:	VP. Chief Financial Officer

Latrobe - Amendment No. 1 to LSA

WELLS FARGO FOOTHILL, LLC as a Lender
By:	/s/ David P Hill
Title:	Vice President

Latrobe - Amendment No. 1 to LSA

NATIONAL CITY BUSINESS CREDIT, INC., as a Lender
By:	[Illegible]
Title:	VP

Latrobe - Amendment No. 1 to LSA

RZB FINANCE, LLC, as a Lender
By:	[Illegible]
Title:	Illegible
By:	/s/ ASTRID NOEBAUER
Title:	ASTRID NOEBAUER Group Vice President

Latrobe - Amendment No. 1 to LSA

LASALLE BUSINESS CREDIT, LLC, as a Lender
By:	[Illegible]
Title:	AVP

Latrobe - Amendment No. 1 to LSA

PNC BANK, NATIONAL ASSOCIATION, as a Lender
By:	/s/ A.Roger Craig, Jr.
	A.Roger Craig, Jr.
Title:	Vice President

Latrobe - Amendment No. 1 to LSA

EXHIBIT A

“VIM Equipment”

That certain custom-designed 30-ton vacuum induction melting furnace (identified as VIM #2 (tracking #712320) and pictured below) located at 2626 Ligonier Street, Latrobe, Pennsylvania 15650 used to produce high purity heats in a computer controlled process that liquefy alloys, ridding them of inclusions and optimizing their chemical composition.

EXHIBIT B

VIM Agreement

See attached.

EXHIBIT C

VIM Intercreditor Agreement

See attached.

[Execution]

LIEN SUBORDINATION AGREEMENT

THIS LIEN SUBORDINATION AGREEMENT (“Lien Subordination Agreement”) dated as of January     , 2009 is by and among Wachovia Bank, National Association, in its capacity as agent for the Revolving Credit Lenders (as hereinafter defined) (in such capacity, the “Revolving Credit Agent”), Sankaty Advisors LLC, a Delaware limited liability company, in its capacity as collateral agent for the Subordinated Noteholders (as hereinafter defined) (in such capacity the “Subordinated Note Agent”), Sankaty Credit Opportunities II, L.P., a Delaware limited partnership, Prospect Harbor Credit Partners, L.P., a Delaware limited partnership, Sankaty High Yield Partners III, L.P., a Delaware limited partnership, RGIP, LLC, a Delaware limited liability company (each of Sankaty Advisors LLC, Sankaty Credit Opportunities II, L.P., Prospect Harbor Credit Partners, L.P., Sankaty High Yield Partners III, L.P., and RGIP, LLC, together with each of their respective successors and assigns, is a “Subordinated Noteholder” and collectively, the “Subordinated Noteholders”), and the United States of America, acting through DET 1 AF Research Laboratory (the “Government”). The Government, the Revolving Credit Agent, on behalf of itself and the Revolving Credit Lenders and Subordinated Note Agent are sometimes individually referred to herein as a “Creditor” and collectively as “Creditors.”

W I T N E S S E T H:

WHEREAS, the Government has entered or is about to enter into an investment agreement with Latrobe Steel Company (doing business as Latrobe Specialty Steel Company), a Pennsylvania corporation (the “Company”) with respect to certain equipment;

WHEREAS, pursuant to the terms and subject to the conditions of the Loan and Security Agreement, dated March 6, 2008, by and among the Company and certain of its affiliates (as hereinafter defined), the Revolving Credit Lenders and the Revolving Credit Agent (the “Revolving Credit Loan Agreement”), and the Revolving Credit Loan Documents (as hereinafter defined), the Revolving Credit Lenders have agreed to make loans and provide other financial accommodations to the Company and certain of its affiliates secured by the assets and properties of the Company;

WHEREAS, the Subordinated Noteholders have purchased subordinated notes from the Company and certain of its affiliates in the aggregate original principal amount of Thirty Million Six Hundred Twelve Thousand Two Hundred Forty-Five and 00/100 Dollars ($30,612,245.00) pursuant to the terms and subject to the conditions of the Subordinated Note Documents (as hereinafter defined); and

WHEREAS, the Creditors desire to enter into this Lien Subordination Agreement to confirm the relative priority of the security interests of the Creditors in the equipment subject to the investment arrangements with the Government and agree upon certain related matters;

NOW, THEREFORE, in consideration of the mutual benefits accruing to the Creditors hereunder and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:

1. In addition to other words and terms defined elsewhere in this Agreement, the following words and terms have the following meanings:

“Revolving Credit Lenders” shall mean, collectively, the financial institutions at any time and, from time to time, party to the Revolving Credit Loan Agreement as lenders and their respective successors and assigns as permitted thereunder.

“Revolving Credit Loan Documents” shall mean, collectively, the Revolving Credit Loan Agreement and all agreements, documents and instruments at any time executed and/or delivered by the Company or any affiliate of the Company or any other person to, with or in favor of Revolving Credit Agent or any Revolving Credit Lender in connection therewith or related thereto, as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated, refinanced, replaced or restructured (in whole or in part and including any agreements with, to or in favor of any other lender or group of lenders that at any time refinances, replaces or succeeds to all or any portion of the indebtedness owing to the Revolving Credit Lenders and the Revolving Credit Agent thereunder).

“Senior Creditors” shall mean, collectively, the Revolving Credit Agent, the Revolving Credit Lenders, the Subordinated Note Agent and the Subordinated Noteholders, sometimes being referred to herein individually as a “Senior Creditor”.

“Senior Creditor Intercreditor Agreement” shall mean the Intercreditor and Subordination Agreement, dated March 6, 2008, by and among the Revolving Credit Agent, on behalf of itself and the Revolving Credit Lenders, the Subordinated Note Agent and the Subordinated Noteholders, as acknowledged and agreed to by the Company and certain of its subsidiaries and affiliates, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

“Subordinated Note Documents” shall mean: (i) the Securities Purchase Agreement, dated as of December 8, 2006, by and among the Company and certain of its subsidiaries and affiliates and the Subordinated Noteholders (the “Securities Purchase Agreement”); (ii) the “Notes” (as defined in the Securities Purchase Agreement); and (iii) any and all other documents, financing statements, instruments, certificates, and agreements executed and delivered in connection with the aforementioned agreements, or any of the other Note Documents (as defined in the Securities Purchase Agreement), as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated, refinanced, replaced or restructured.

2. Each Creditor hereby acknowledges and agrees that the other Creditor has a security interest in the equipment described on Exhibit A hereto (the “VIM Collateral”); provided, that, the VIM Collateral shall not include (a) any amounts at any time deposited in or received in the lockbox or blocked account established by the Company in connection with its financing arrangements with the Revolving Credit Agent for the handling of collections of accounts or other assets and the remittance thereof to the Revolving Credit Agent or (b) any other amounts at any time paid to any Senior Creditor in respect to the obligations of the Company to any Senior Creditor. The Government acknowledges and agrees in favor of the Revolving Credit Agent, the Subordinated Note Agent and each other Senior Creditor that (a) the Government does not have

2

and will not obtain or assert, a claim, title to or security interest in or lien upon any of the assets (tangible or intangible) of the Company other than the VIM Collateral identified on Exhibit A hereto, and (b) notwithstanding anything to the contrary set forth in the Equipment Agreement, the Company has good and marketable fee simple title to the VIM Collateral, subject to the valid and perfected liens in favor of the Creditors.

3. Notwithstanding the order or time of attachment, or the order, time or manner of perfection, or the order or time of filing or recordation of any document or instrument, or other method of perfecting a security interest in favor of each Creditor in the VIM Collateral, the perfected security interests in and liens upon the VIM Collateral of the Government have and shall have priority over the security interests in and liens upon the VIM Collateral of Revolving Credit Agent and the Subordinated Note Agent to the extent that the VIM Collateral secures the cost share amount granted to the Company by the Government pursuant to the Equipment Agreement (as hereinafter defined), not to exceed the amount of $16,606,000.00 pursuant to the Technology Investment Agreement, dated December 10, 2008, by and between the Government and the Company (doing business as Latrobe Specialty Steel Company) (the “Equipment Agreement”). The relative interests and priorities established under this Section 3 apply only as between the Senior Creditors and the Government, and this Section 3 shall be deemed to be null and void to the extent (but only to the extent) that the operation of this Section 3 would otherwise entitle any other person (including a trustee in bankruptcy) to either a prior security or other interest in or lien on the VIM Collateral over either the Senior Creditors or the Government or any of them, or a right to avoid the security interest in or lien on the VIM Collateral of any or all of the Senior Creditors or the Government. Each Creditor agrees that it will not contest the validity, perfection, priority or enforceability of the security interest in and lien upon the VIM Collateral of any other Creditor and that as among the Creditors, the terms of this Lien Subordination Agreement shall govern even if the security interest in and lien upon the VIM Collateral of any Creditor is not perfected or is avoided, disallowed, set aside or otherwise invalidated in any judicial proceeding or otherwise.

4. Neither the Revolving Credit Agent nor the Subordinated Note Agent shall, directly or indirectly, foreclose (judicially or non-judicially) upon its security interest in or lien on any of the VIM Collateral unless and until the earliest of (a) the completion of the Equipment Agreement’s period of performance for the technical effort, (b) December 15, 2011 or (c) the date the Government notifies the Revolving Credit Agent and the Subordinated Note Agent, in writing that all obligations under the Equipment Agreement have either been paid or satisfied in full or that the Equipment Agreement has been terminated. The foregoing shall not in any way limit or impair the right of the Revolving Credit Agent or the Subordinated Note Agent from bidding for and purchasing the VIM Collateral at any private or judicial foreclosure upon the VIM Collateral initiated by the Government, its agent or designees.

5. The Government agrees to give notice in writing to the Revolving Credit Agent and the Subordinated Note Agent of any default under the arrangements of the Company with the Government. The Revolving Credit Agent or the Subordinated Note Agent shall have the right and opportunity, but not the obligation, to cure such default within ninety (90) days after the receipt by such Creditor of such notice. Any payment made or act done by such Creditor to cure any such default shall not constitute an assumption of any of the agreements between the Company and the Government or any obligations thereunder.

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6. The Government hereby agrees that Revolving Credit Agent or Subordinated Note Agent may use any of the VIM Collateral to handle, manufacture or otherwise deal with or dispose of any assets (other than the VIM Collateral itself) of the Company in which Revolving Credit Agent or Subordinated Note Agent at any time has a security interest or lien. Such license shall be irrevocable and shall continue without charge at Revolving Credit Agent’s or Subordinated Note Agent’s option, as the case may be, for a period of three hundred sixty five (365) days (such period of use to commence upon the earlier of (a) Revolving Credit Agent’s or Subordinated Note Agent’s written notification to the Government that an event of default has occurred under the Revolving Credit Loan Documents or the Subordinated Note Documents and that such Creditor is pursuing its enforcement rights or (b) Revolving Credit Agent’s and Subordinated Note Agent’s receipt of notice from the Government that an event of default has occurred under the Equipment Agreement and that the Government is commencing an enforcement action in respect thereof). Use of the VIM Collateral by Revolving Credit Agent or Subordinated Note Agent as set forth herein shall not constitute an assumption by Revolving Credit Agent, Subordinated Note Agent or any other Senior Creditor, of any of the agreements between the Company and the Government or of any obligations thereunder.

7. This Lien Subordination Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of each Creditor and its respective successors, participants and assigns.

8. All notices under this Agreement shall be effective upon receipt, shall be in writing, and shall be sent by certified mail, return receipt requested, mailgram, telecopy, telegram or telex, (a) if to the Revolving Credit Agent, to Wachovia Bank, National Association, 301 South College Street, NC 0479, Charlotte, North Carolina 28202, Attention: Mr. Eric Butler, Portfolio Manager — Latrobe, Telephone No. (704) 383-1893, Telecopy No. (704) 383-8067; (b) if to the Subordinated Note Agent (on behalf of the Subordinated Noteholders), to Sankaty Advisors, LLC, 111 Huntington Avenue, Boston, Massachusetts 02199, Attention: Michael Ewald, Vice President, Telephone No.: (617) 516-2778, Telecopy No.: (617) 516-2710, with a copy to: Ropes & Gray LLP, 1211 Avenue of the Americas, New York, New York 10036, Attn: Marc Hirschfield, Esq.; Telephone No.: (212) 841-0665, Telecopy No.: (646) 728-1598, (c) if to the Government, to Anita M. Bailey, Chief, Title III Contracting Branch, Det 1 AFRL/PKMD, 2310 Eighth Street, Wright -Patterson AFB, Ohio 45433-7810, Telephone No.: (937) 656-9023, Telecopy No.: (937) 255-5302 and to Brian Allport, Agreements Negotiator, Title III Contracting Branch, Det 1 AFRL/PKMD, 2310 Eighth Street, Wright -Patterson AFB, Ohio 45433-7810, Telephone No.: (937) 255-0808, Telecopy No.: (937) 255-5302, and (d) if to the Company, to Latrobe Steel Company, 2626 Ligonier Street, Latrobe, Pennsylvania 15650, Attention: Dale B. Mikus, Telephone No.: (724) 532-6306, Telecopy No.: (724) 532-6362; or to such other address or person as any of the parties to this Agreement may designate in writing to the other parties. Notice shall be deemed received when presented for delivery to the United States Post Office or the transmitting utility.

9. Except as expressly provided in Section 7 hereof, this Lien Subordination Agreement is solely for the benefit of the Creditors and their respective successors, participants and assigns, and no other person shall have any right, benefit, priority or interest under, or because of the existence of, this Lien Subordination Agreement.

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10. Notwithstanding the lien subordination agreement set forth herein, as between the Revolving Credit Agent and the Revolving Credit Lenders on the one hand, and the Subordinated Note Agent and the Subordinated Noteholders on the other hand, their respective rights in and to the VIM Collateral as between them shall be governed by the terms of the Senior Creditor Intercreditor Agreement.

11. This Lien Subordination Agreement may be executed in any number of counterparts, each of which shall be an original with the same force and effect as if the signatures thereto and hereto were upon the same instrument.

12. The validity, construction and effect of this Lien Subordination Agreement shall be governed by the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would result in the application of the law of any jurisdiction other than the laws of the State of New York.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties have caused this Lien Subordination Agreement to be duly executed as of the day and year first above written.

UNITED STATES OF AMERICA	WACHOVIA BANK, NATIONAL ASSOCIATION,     as Revolving Credit Agent
By:	By:
Title:	Title:
	SANKATY ADVISORS LLC, as Subordinated Note Agent     and a Subordinated Noteholder
	By:
	Title:
	SANKATY CREDIT OPPORTUNITIES II, L.P.,     as a Subordinated Noteholder
	By:
	Title:
	PROSPECT HARBOR CREDIT PARTNERS, L.P.,     as a Subordinated Noteholder
	By:
	Title:
	SANKATY HIGH YIELD PARTNERS III, L.P.,     as a Subordinated Noteholder
	By:
	Title:
	RGIP, LLC,     as a Subordinated Noteholder
	By:
	Title:

Signature Page to Lien Subordination Agreement

The undersigned hereby acknowledges and agrees to the foregoing terms and provisions. By its signature below, the undersigned agrees that it will, together with its successors and assigns, be bound by the provisions hereof.

The undersigned acknowledges and agrees that: (i) although it may sign this Lien Subordination Agreement it is not a party hereto and does not and will not receive any right, benefit, priority or interest under or because of the existence of the foregoing Lien Subordination Agreement and (ii) it will execute and deliver such additional documents and take such additional action as may be reasonably necessary or desirable in the reasonable opinion of any Creditor to effectuate the provisions and purposes of the foregoing Lien Subordination Agreement.

LATROBE STEEL COMPANY

By:

Title:

Signature Page to Lien Subordination Agreement

EXHIBIT A

“VIM Equipment”

That certain custom-designed 30-ton vacuum induction melting furnace (identified as VIM #2 (tracking #712320) and pictured below) located at 2626 Ligonier Street, Latrobe, Pennsylvania 15650 used to produce high purity heats in a computer controlled process that liquefy alloys, ridding them of inclusions and optimizing their chemical composition.

EX-10.3

Exhibit 10.3

[Execution]

WAIVER AND AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT

WAIVER AND AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT, dated March 17, 2010 (this “Amendment No. 2”), is by and among Wachovia Bank, National Association, a national banking association, in its capacity as agent pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf of the parties thereto as lenders (in such capacity, “Agent”), the parties to the Loan Agreement as lenders (individually, each a “Lender” and collectively, “Lenders”), Latrobe Steel Company, a Pennsylvania corporation (“Latrobe”), OH&R Special Steels Company, a Delaware corporation (“OH&R”), Specialty Steel Supply, Inc., a Texas corporation (“Specialty Steel” and together with Latrobe and OH&R, each individually a “Borrower” and collectively, “Borrowers”), and Toolrock Holding, Inc., a Delaware corporation (“Parent”, sometimes individually referred to herein as a “Guarantor” and collectively, “Guarantors” as defined in the Loan Agreement).

W I T N E S S E T H:

WHEREAS, Agent, Lenders, Borrowers and Guarantors have entered into financing arrangements pursuant to which Lenders (or Agent on behalf of Lenders) have made and may make loans and advances and provide other financial accommodations to Borrowers as set forth in the Loan and Security Agreement, dated March 6, 2008, by and among Agent, Lenders, Borrowers and Guarantors, as amended by Amendment No. 1 to Loan and Security Agreement, dated January 22, 2009, by and among Agent, Lenders, Borrowers and Guarantors (as the same now exists and is amended and supplemented pursuant hereto and may hereafter be further amended, modified, supplemented, extended, renewed, restated or replaced, the “Loan Agreement”) and the other Financing Agreements;

WHEREAS, on May 8, 2009, Agent sent Borrowers and Guarantors a Notice of Default and Reservation of Rights letter as a result of Borrowers’ failure to maintain Excess Availability in the amount required under Section 9.19 of the Loan Agreement and on May 29, 2009, Borrowers notified Agent that as of April 30, 2009, Borrowers were not in compliance with the Fixed Charge Coverage Ratio as required under Section 9.17 of the Loan Agreement;

WHEREAS, an Event of Default has occurred as a result of the failure by Borrower to deliver to Agent, by January 28, 2010, the financial statements and other items for the fiscal year ended September 30, 2009 as required under Section 9.6(a)(iii) of the Loan Agreement;

WHEREAS, Borrowers and Guarantors have requested that Agent and Lenders agree to waive certain Events of Default under the Loan Agreement and amend certain provisions of the Loan Agreement as set forth herein, and Agent and Lenders are willing to agree to such requests on the terms and subject to the conditions set forth herein;

WHEREAS, by this Amendment No. 2, Agent, Lenders, Borrowers and Guarantors desire and intend to evidence such waiver and amendments;

NOW THEREFORE, in consideration of the foregoing and the mutual agreements and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions.

(a) Additional Definitions. As used herein, the following terms shall have the meanings given to them below and the Loan Agreement and the other Financing Agreements are hereby amended to include, in addition and not in limitation, the following definitions:

(i) “Accrued Amounts” shall mean Accrued Management Fees and Accrued Mezzanine Debt Interest.

(ii) Accrued Management Fees” shall mean $937,500, which represents

the aggregate amount of accrued and unpaid management fees owing to Sponsors or any of their Affiliates from July 1, 2009 through January 1, 2010.

(iii) “Accrued Mezzanine Debt Interest” shall mean (a) $4,856,645.36 which amount represents the aggregate accrued amount of interest owing in respect of the Mezzanine Notes during the period commencing March 16, 2009 and ending March 15, 2010 and (b) PIK Interest (as such term is defined in the Mezzanine Note Documents as in effect on the date of Amendment No. 2) accruing on and after December 16, 2009.

(iv) “Amendment No. 2” shall mean this Waiver and Amendment No. 2 to Loan and Security Agreement by and among Agent, Lenders, Borrowers and Guarantors, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(v) “Amendment No. 2 Effective Date” shall mean the date on which each of the conditions precedent set forth in Section 25 of Amendment No. 2 shall have been satisfied or waived in accordance with the terms of Amendment No. 2.

(vi) “Mezzanine Fourth Amendment” shall mean the Waiver and Fourth Amendment Agreement, dated the date of Amendment No. 2, by and among the issuers party thereto, the purchasers party thereto and the Mezzanine Note Agent, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(vii) “Monthly Payment Date” shall have the meaning set forth in Section 9.9(g)(iii)(A)(2)(aa) of the Loan Agreement.

(viii) “QDO Priority Collateral Release Date” shall mean the date each of the conditions set forth in Section 9.9(h) of this Agreement are satisfied.

(ix) “QDO Release Reserve” shall mean (a) from the date of Amendment No. 2 through and including the QDO Priority Collateral Release Date, $0, and (b) after the QDO

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Priority Collateral Release Date, a Reserve established and/or maintained in an amount equal to $15,000,000.

(b) Amendments to Definitions.

(i) The definition of “Applicable Margin” set forth in the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

“Applicable Margin” shall mean with respect to Base Rate Loans and Eurodollar Rate Loans, the applicable percentage (on a per annum basis) set forth below based on the Quarterly Average Excess Availability for the immediately preceding calendar quarter:

Tier	Quarterly Average Excess Availability	Applicable Margin for Eurodollar Rate Loans			Applicable Margin for Base Rate Loans
1	Greater than $100,000,000		3.75	%		2.50	%
2	Less than or equal to $100,000,000 and greater than $60,000,000		4.00	%		2.75	%
3	Less than or equal to $60,000,000 and greater than $20,000,000		4.25	%		3.00	%
4	Less than or equal to $20,000,000		4.50	%		3.25	%

provided, that, (i) the Applicable Margin for Revolving Loans shall be calculated and established once each calendar quarter and shall remain in effect until adjusted for the next calendar quarter and (ii) each adjustment of the Applicable Margin shall be effective as of the first day of a calendar quarter based on the Quarterly Average Excess Availability for the immediately preceding calendar quarter. In the event that at any time after the end of a calendar quarter the Quarterly Average Excess Availability for such calendar quarter used for the determination of the Applicable Margin was less than the actual amount of the Quarterly Average

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Excess Availability for such calendar quarter as a result of the inaccuracy of information provided by or on behalf of Borrowers to Agent for the calculation of Excess Availability, the Applicable Margin for such prior calendar quarter shall be adjusted to the applicable percentage based on such actual Quarterly Average Excess Availability and any additional interest for the applicable period as a result of such recalculation shall be promptly paid to Agent. The foregoing shall not be construed to limit the rights of Agent and Lenders with respect to the amount of interest payable after an Event of Default whether based on such recalculated percentage or otherwise. The Applicable Margin for Revolving Loans through March 31, 2010 shall be the Applicable Margin set forth in Tier 4 set forth above.

(ii) The definition of “Cash Dominion Event” set forth in the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

“Cash Dominion Event” shall mean either (a) an Event of Default shall have occurred and be continuing, or (b) Excess Availability shall at any time be less than the amount equal to thirty (30%) percent of the Maximum Credit.

(iii) The definition of “EBITDA” in the Loan Agreement is hereby amended by deleting subsection (b)(viii) of such definition and substituting the following therefor:

“(viii) non-recurring cash items incurred during such period as determined in accordance with GAAP in an aggregate amount not to exceed $1,000,000 during any consecutive twelve (12) month period, which include, (A) extraordinary non recurring one time charges in accordance with GAAP and extraordinary nonrecurring one time cash expenses and (B) earn-outs and similar contingent payments in connection with investments permitted under Section 9.10 hereof;”

(iv) The definition of “Eligible Inventory” in the Loan Agreement is hereby amended by deleting each reference to “Section 1.122(v)” contained therein and substituting “Section 1.123(v)” therefor.

(v) The term “Financing Agreements” set forth in the Loan Agreement is hereby deemed to be amended to include, in addition to and not in limitation, Amendment No. 2.

(vi) The definition of “Maximum Credit” in the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

“Maximum Credit” shall mean the amount of $175,000,000.

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(vii) The definition of “Mezzanine Notes” in the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

“Mezzanine Notes” shall mean the subordinated notes issued under the terms of Securities Purchase Agreement dated December 8, 2006, by and among the issuers party thereto, the purchasers from time to time party thereto and the Mezzanine Note Agent in the form of (a) Exhibit A thereto as in effect on the date hereof and (b) Exhibit A to the Mezzanine Fourth Amendment as in effect on the date of Amendment No. 2.

(viii) The definition of “Permitted Acquisitions” in the Loan Agreement is hereby deleted in its entirety and the following substituted therefor: “Intentionally Deleted.”

(ix) The definition of “Reserves” in the Loan Agreement is hereby amended by (A) deleting “and” appearing at the end of clause (viii) of the second sentence of such definition, and (B) inserting the following immediately prior to the period at the end of the second sentence of such definition:

“; and (x) QDO Release Reserve.”

(x) The definition of “Tranche A Commitments” in the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

“Tranche A Commitments” shall mean, at any time, as to each Lender, the principal amount set forth next to such Lender’s name on Exhibit A to Amendment No. 2 designated as the Tranche A Commitment of such Lender or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to which such Lender became a Lender under the Loan Agreement in accordance with the provisions of Section 13.7 of this Agreement, sometimes being collectively referred to herein as “Tranche A Commitments”.

(xi) The definition of “Tranche A Loan Limit” in the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

“Tranche A Loan Limit” shall mean $175,000,000.

(c) Interpretation. For purposes of this Amendment No. 2, all terms used herein which are not otherwise defined herein, including but not limited to, those terms used in the recitals hereto, shall have the respective meanings assigned thereto in the Loan Agreement as amended by this Amendment No. 2.

2. Increase in Maximum Credit. Section 2.3 of the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

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“2.3 Intentionally Omitted.”

3. Unused Line Fee. Section 3.2(a) of the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

“(a) Borrowers shall pay to Agent, for the account of Tranche A Lenders, for the period on and after the date of Amendment No. 2, monthly an unused line fee at a rate equal to three quarters of one (.75%) percent per annum calculated upon the amount by which the Tranche A Loan Limit exceeds the average daily principal balance of the outstanding Tranche A Loans (exclusive of Swing Line Loans), and Letters of Credit during the immediately preceding month (or part thereof), for so long thereafter as any Obligations are outstanding. Such fees shall be payable on the first day of each month in arrears and calculated based on a three hundred sixty (360) day year and actual days elapsed. For any applicable period of time prior to the date of Amendment No. 2, the unused line fee shall be calculated at the rate that was in effect immediately prior to the effectiveness of Amendment No. 2.”

4. Collateral Reporting.

(a) Section 7.1(a) of the Loan Agreement is hereby deleted and the following is substituted therefor:

“(a) Borrowers shall provide Agent with the following documents in a form reasonably satisfactory to Agent:

(i) on a weekly basis commencing with the week following the Amendment No. 2 Effective Date (but in any event within two (2) Business Days after the end of a week) so long as Excess Availability shall be greater than $35,000,000, twice weekly (on the Monday and Thursday of each week) commencing with the week following the Amendment No. 2 Effective Date so long as Excess Availability shall be less than or equal to $35,000,000 and greater than $20,000,000 and daily so long as Excess Availability is less than or equal to $20,000,000, and more frequently as Agent may request at any time a Default or Event Default shall have occurred and be continuing,

(A) a Borrowing Base Certificate setting forth the calculation of the Borrowing Base as of the last Business Day of the immediately preceding period, duly completed and executed by the president, chief executive officer, chief

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financial officer, vice president of finance, treasurer or controller of Administrative Borrower or Parent (each, a “Responsible Officer”), together with all schedules required pursuant to the terms of the Borrowing Base Certificate duly completed; provided, that, at all times that only a weekly Borrowing Base Certificate is required, Borrowers may at any time elect but shall not be required to provide a Borrowing Base Certificate more frequently but in the event Borrowers elect to provide such Borrowing Base Certificate on any one or more occasion it shall not be required to continue to do so (subject to the rights of Agent hereunder to require more frequent delivery in accordance with the terms hereof),

(B) (1) summary inventory reports by location and category (and including the amounts of consigned Inventory accepted on consignment by Borrowers and amounts of inventory consigned to third parties by Borrowers, and the value of Inventory held by processors), (2) summary agings of accounts receivable together with schedules of sales made, credits issued and cash received, (3) summary agings of accounts payable (and including information indicating the amounts owing to owners and lessors of leased premises, warehouses, processors and other third parties from time to time in possession of any Collateral), and (4) a cash report in form satisfactory to Agent indicating the amount of cash (and the deposit accounts in which such cash is held) of Borrowers as of the end of preceding week or day, as applicable, and

(C) a report with respect to the VIM/VAR furnace projects, which shall include information relating to the estimated total cost of the projects to date, the actual cash expenditure by Borrowers and Guarantors related to the projects for such period, the amount of reimbursements committed to by any third party for such period in connection with the projects and the total cash expenditure by Borrowers and Guarantors related to the projects to date,

(ii) such other reports as to the Collateral as Agent shall reasonably request from time to time with respect to such information not otherwise specified above (and if such request is for a report to be on a periodic basis after the initial request therefor, such frequency to be agreed to by Administrative

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Borrower and Agent), and

(iii) on a monthly basis (but in any event within five (5) Business Days after the end of a month), (A) a report setting forth a rolling thirteen (13) week cash flow forecast reflecting such information for the month immediately following the last month reflected in such immediately prior report and (B) a report, duly completed and executed by a Responsible Officer, which specifies all material changes to or deviations from any of the projected information for the immediately preceding month set forth in any budget previously delivered to Agent, compared to the actual results for such periods (including any deviations, plan to date, from projected information to actual results as of the day of the delivery of such report).”

5. Financial Statements.

(a) Section 9.6(a)(iii) of the Loan Agreement is hereby amended by inserting the following immediately after the reference to “within one hundred twenty (120) days after the end of each fiscal year”: “(but with respect to the fiscal year ended September 30, 2009, by no later than March 31, 2010)”.

(b) Section 9.6(a) of the Loan Agreement is hereby amended by (A) deleting “.” appearing at the end of Section 9.6(a)(iv) and substituting “, and” therefor and (B) inserting the following immediately thereafter:

“(v) concurrently with the delivery of the financial statements referred to in Section 9.6(a)(i) hereof, (a) information for such month and year-to-date period reflecting actual performance compared to plan and a comparison of such information in such financial statements to information for the same period in the immediately preceding year, and (b) a management discussion and analysis (in substantially the same format and with the same scope of information as provided to Agent prior to the date of Amendment No. 2).”

6. Mezzanine Notes. Section 9.9(g) of the Loan Agreement is hereby amended by deleting each reference to “on the date hereof contained therein and substituting “on the date of Amendment No. 2” therefor.

7. Mezzanine Debt Limit. Section 9.9(g)(i) of the Loan Agreement is hereby amended by deleting the reference to “$31,000,000” and replacing it with “$41,000,000 plus PIK Interest (as such term is defined in the Mezzanine Note Documents as in effect on the date of Amendment No. 2)”.

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8. Interest on Mezzanine Notes. Section 9.9(g)(iii)(A) of the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

“(A) as to

(1) regularly scheduled payments of interest due and owing after January 15, 2010, such interest may be paid when due; provided, that, (aa) such interest is paid in accordance with the terms of the Mezzanine Note Documents (as in effect on the date of Amendment No. 2), (bb) after giving effect to such payment, the average Excess Availability for the consecutive thirty (30) calendar day period ending on the day prior to such applicable Interest Payment Date (as such term is defined in the Mezzanine Note Documents, as in effect on the date of Amendment No. 2) is equal to or greater than $15,000,000 (without giving effect to the QDO Release Reserve, if applicable at such time), (cc) on the date of such payment and after giving effect thereto, the Excess Availability is equal to or greater than $15,000,000 (without giving effect to the QDO Release Reserve, if applicable at such time), (dd) on the date of any such payment and after giving effect thereto, no Event of Default shall have occurred and be continuing, and (ee) on the date of any such payment, Agent shall have received a certificate executed by the chief financial officer of Latrobe, certifying that each of the conditions to such payment set forth in this Section 9.9(g)(iii)(A)(1) have been satisfied, and

(2) Accrued Mezzanine Debt Interest, Parent may pay Accrued Mezzanine Debt Interest; provided, that,

(aa) such Accrued Mezzanine Debt Interest is paid no more frequently than once every thirty (30) consecutive days (each such date being a “Monthly Payment Date”), with the first payment in respect of Accrued Mezzanine Debt Interest to occur no earlier than June 15, 2010,

(bb) as of the date of any such payment and after giving effect thereto, Excess Availability (calculated on a pro forma basis after giving effect to any such payment) shall not be less than $20,000,000,

(cc) with respect to all payments of Accrued Amounts made during any consecutive ninety (90) day period, once the aggregate amount of payments during any such period equals or exceeds $500,000, as of the date of any such payment and after

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giving effect thereto, the Fixed Charge Coverage Ratio of Parent and its Subsidiaries (calculated on a pro forma basis after giving effect to any such payment) shall be not less than 1.10:1.00 for the period then applicable under Section 9.17(b) hereof most recently ended for which Agent has received financial statements for Parent and its Subsidiaries,

(dd) the aggregate amount of Accrued Amounts paid on any Monthly Payment Date shall not exceed (i) $500,000 with respect to the first payment made during any consecutive ninety day period, and $400,000 on any Monthly Payment Date during such period thereafter and (ii) $1,000,000 during any consecutive ninety day period,

(ee) on the date of any such payment and after giving effect thereto, no Event of Default shall have occurred and be continuing, and

(ff) on the date of any such payment, Agent shall have received a certificate executed by the chief financial officer of Latrobe, certifying that each of the conditions to such payment set forth in this Section 9.9(g)(iii)(A)(2) have been satisfied;

notwithstanding the foregoing, (x) payments of Accrued Mezzanine Debt Interest in an amount not to exceed $1,907,008.09 may be made on the Amendment No. 2 Effective Date and without subject to satisfying the conditions set forth in Sections 9.9(g)(iii)(A)(2)(aa), (bb), (cc), (dd) and (ff) hereof and (y) payments of Accrued Mezzanine Debt Interest permitted with the proceeds of tax refunds pursuant to Section 19 of Amendment No. 2 may be made at any time, and without subject to satisfying the conditions set forth in Sections 9.9(g)(iii)(A)(2)(aa), (bb), (cc), (dd) and (ff) hereof, and”

9. Principal Payments on Mezzanine Notes. Section 9.9(g)(iii)(B) of the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

“(B) as to payments of principal:

(1) Borrower and Guarantors may make payments of the principal amount of the Mezzanine Notes and other obligations under the Mezzanine Note Documents at the stated maturity of the Mezzanine Notes; and

(2) Borrower and Guarantors may pay up to $5,000,000 of principal owing in respect of the Mezzanine Notes prior to the stated maturity thereof at anytime

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after September 1, 2010; provided, that,

(aa) Agent shall have received notice of such proposed payment no later than five (5) Business Days prior thereto,

(bb) the daily average of the Excess Availability shall have been not less than $30,000,000, (x) for the immediately preceding ninety (90) consecutive day period for which the Borrowing Base has been calculated prior to the date of such payment, and (y) on the date of such payment, in each case on a pro forma basis using the Excess Availability as of the date of the most recent calculation of the Borrowing Base immediately prior to giving effect to any such payment,

(cc) the Fixed Charge Coverage Ratio of Parent and its Subsidiaries (calculated without giving effect to any such payment) determined as of the end of the fiscal month most recently ended prior to such proposed payment for which Senior Agent has received financial statements shall be not less than 1.10 to 1.00 for the period of the immediately preceding twelve (12) consecutive fiscal months ending on the last day of such fiscal month,

(dd) on the date of any such payment and after giving effect thereto, no Event of Default shall have occurred and be continuing, and

(ee) on the date of any such payment, Agent shall have received a certificate executed by the chief financial officer of Latrobe, certifying that each of the conditions to such payment of principal in respect of the Mezzanine Notes set forth in this Section 9.9(g)(iii)(B) have been satisfied,”

10. Qualified Debt Offering. Section 9.9(h) of the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

“(h) Indebtedness arising after the date of Amendment No. 2 to the Qualified Debt Agent or other holders thereof (but not to any other Borrower or Guarantor or other Subsidiary of Parent) pursuant to a Qualified Debt Offering; provided, that, each of the following conditions is satisfied:

(i) Agent shall have received not less than fifteen (15) Business Days prior written notice of the intention of such Borrower or Guarantor to incur such Indebtedness, which notice shall set forth in detail reasonably satisfactory to Agent the amount of such Indebtedness, the initial person or persons to whom such Indebtedness will be owed, the interest rate, the schedule of repayments and maturity date with respect thereto and such other

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information as Agent may reasonably request with respect thereto,

(ii) the initial proceeds of such Indebtedness may but shall not be required to repay the outstanding Indebtedness, either in whole or in part, set forth in Section 9.9(g) hereof,

(iii) such Indebtedness shall, in the determination of Agent, be on commercially reasonable terms and conditions with market rate pricing and scheduled principal payments due no earlier than six (6) months after the Maturity Date and shall not include terms and conditions with respect to any Borrower or Guarantor which are more burdensome or restrictive in any material respect than those contained in this Agreement, taken as a whole, except with respect to financial covenants and call protection provisions (and other payments permitted pursuant to clause (x) below); provided, that, no later than ten (10) days prior to incurring such Indebtedness, Borrowers shall have delivered to Agent, (A) projections, in form and substance reasonably satisfactory to Agent, which show that Borrowers will be in compliance with such financial covenants and call protection provisions (and other payments permitted pursuant to clause (x) below) through the end of the term of such Indebtedness and (B) at least two (2) days prior to the incurrence of such Indebtedness, Agent shall have received a Pro Forma Compliance Certificate demonstrating that, upon giving effect on a Pro Forma Basis to such transactions (including the application of any proceeds of such Indebtedness), (1) the Fixed Charge Coverage Ratio for Parent and its Subsidiaries is equal to or greater than 1.00 to 1.00 and (2) Excess Availability (after giving effect to the QDO Release Reserve) shall be greater than $20,000,000, for the first twelve (12) months after giving effect to the incurrence of such Indebtedness and on an annual basis thereafter for the remaining term of the Credit Facility,

(iv) the Indebtedness incurred pursuant to this Section 9.9(h) together with any Hedge Agreement provided by the Qualified Debt Agent or any holder of any such Indebtedness in connection with the Qualified Debt Offering may be secured by a lien on the Collateral; provided, that, Agent shall have received the Qualified Debt Intercreditor Agreement applicable to such Indebtedness, duly authorized, executed and delivered by the holders of such Indebtedness or the Qualified Debt Agent (on behalf of the holders of such Indebtedness), which shall provide among other things for the subordination of Qualified Debt Agent’s and such holders’ lien on the Collateral (other than the

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Qualified Debt Offering Priority Collateral) and the subordination of the Secured Parties’ lien on the Qualified Debt Offering Priority Collateral as provided in Section 9.8(j) hereof,

(v) Agent shall have received the Qualified Debt Intercreditor Agreement, duly authorized, executed and delivered by the Qualified Debt Agent, Borrowers and Guarantors, and true, correct and complete copies of all agreements, documents or instruments evidencing or otherwise related to such Indebtedness, in each case in form and substance reasonably satisfactory to Agent,

(vi) the proceeds of such Qualified Debt Offering (after payment of any of the obligations and Indebtedness set forth in subsection (ii) above) shall be paid to Agent for application to the Obligations in accordance with Section 6.4 hereof,

(vii) [Reserved],

(viii) the daily average of the Excess Availability shall have been not less than $20,000,000 on the date any such Indebtedness is incurred, and after giving effect thereto (including the application of any proceeds of Indebtedness), in each case on a Pro Forma Basis using the Excess Availability (after giving effect to the QDO Release Reserve) as of the date of the most recent calculation of the Borrowing Base immediately prior to giving effect to any such incurrence of Indebtedness,

(ix) as of the date of incurring such Indebtedness and after giving effect thereto, no Event of Default shall have occurred and be continuing,

(x) Borrowers and Guarantors may make regularly scheduled payments of principal and interest and mandatory prepayments in respect of such Indebtedness, in each case, as agreed to by Agent and to the extent permitted under the Qualified Debt Intercreditor Agreement,

(xi) Borrowers and Guarantors shall not, directly or indirectly, (A) amend, modify or otherwise change (or permit the amendment, modification or other change in any manner of) any of the provisions of any agreements, documents or instruments in respect of any such Indebtedness (except to the extent permitted under the Qualified Debt Intercreditor Agreement), and except,

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that, Borrowers and Guarantors, and any Subsidiary, may, after prior written notice to Agent, amend, modify, alter or change the terms thereof to forgive, or cancel any portion of such Indebtedness (other than pursuant to payments thereof), or to reduce the interest rate or any fees in connection therewith, or to make the terms thereof less restrictive or burdensome to Borrowers, Guarantors or such Subsidiary or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness or set aside or otherwise deposit or invest any sums for such purpose except as permitted in this Section 9.9(h), and

(xii) only one Qualified Debt Offering can be incurred.”

11. Loans, Investments, Etc. Section 9.10(b) of the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

“(b) Intentionally Deleted;

12. Dividends and Redemptions. Section 9.11(e) of the Loan Agreement is hereby deleted in its entirety and the following substituted therefor: “(e) Intentionally Deleted.”

13. Transactions with Affiliates; Management Fees. Section 9.12(b)(ii) of the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

“(ii) Borrowers and Guarantors may pay

(A) (1) a yearly management fee and other fees (such “other fees” do not include the fees referred to in clauses (iii) and (vi) below) to the Sponsors or any Affiliate thereof in the aggregate annual amount not to exceed $5,000,000 so long as on the date of any such payment and after giving effect thereto, no Event of Default shall have occurred and be continuing, and (2) to the extent that any management fee referred to in clause (A)(1) above accrued but was unpaid in any calendar year (other than Accrued Management Fees), the amount of such accrued and unpaid management fee may be paid to Sponsors or any Affiliate thereof in the following calendar year (or in any other calendar year in which Sponsors or any Affiliate thereof are permitted to receive such payment), in the case of this clause (b)(ii)(A), so long as on the date of the payment of such accrued and unpaid management fee and after giving effect thereto, (aa) Excess Availability shall be not less than an amount equal to 15% of the Maximum Credit then in effect and (bb) no Event of Default shall have occurred and be continuing, and

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(B) Accrued Management Fees; provided, that,

(1) such Accrued Management Fees are paid no more frequently than a Monthly Payment Date and on the same date that a payment of Accrued Mezzanine Debt Interest is paid, with the first payment in respect of Accrued Management Fees to occur no earlier than June 15, 2010,

(2) as of the date of any such payment and after giving effect thereto, Excess Availability (calculated on a pro forma basis after giving effect to any such payment) shall not be less than $20,000,000,

(3) with respect to all payments of Accrued Amounts made during any consecutive ninety (90) day period, once the aggregate amount of payments during any such period equals or exceeds $500,000, as of the date of any such payment and after giving effect thereto, the Fixed Charge Coverage Ratio of Parent and its Subsidiaries (calculated on a pro forma basis after giving effect to any such payment) shall be not less than 1.10:1.00 for the period then applicable under Section 9.17(b) hereof most recently ended for which Agent has received financial statements for Parent and its Subsidiaries,

(4) the aggregate amount of Accrued Amounts paid on any Monthly Payment Date shall not exceed (aa) $500,000 with respect to the first payment made during any consecutive ninety day period, and $400,000 on any Monthly Payment Date during such period thereafter and (bb) $1,000,000 during any consecutive ninety day period,

(5) on the date of any such payment and after giving effect thereto, no Event of Default shall have occurred and be continuing, and

(6) on the date of any such payment, Agent shall have received a certificate executed by the chief financial officer of Latrobe, certifying that each of the conditions to such payment set forth in this Section 9.12(b)(ii)(B) have been satisfied;

notwithstanding the foregoing, (x) payment of Accrued Management Fees in an amount not to exceed $325,000 may be made on the Amendment No. 2 Effective Date and without being subject to satisfying the conditions set forth in Sections

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9.12(b)(ii)(B)(l), (2), (3), (4) and (6) hereof and (y) payments of Accrued Management Fees permitted with the proceeds of tax refunds pursuant to Section 19 of Amendment No. 2 may be made at any time, and without subject to satisfying the conditions set forth in Sections 9.12(b)(ii)(B)(l), (2), (3), (4) and (6) hereof;

14. Financial Covenants. Section 9.17 of the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

“(a) Minimum EBITDA. At any time that

(i) the aggregate principal amount of outstanding Loans is less than $110,000,000 and Excess Availability is less than $20,000,000, or

(ii) the aggregate principal amount of outstanding Loans is greater than or equal to $110,000,000 but less than $125,000,000 and Excess Availability is less than $25,000,000, or

(iii) the aggregate principal amount of outstanding Loans is greater than or equal to $125,000,000 and Excess Availability is less than $30,000,000,

Parent and its Subsidiaries shall maintain, on a consolidated basis, EBITDA of not less than the amount set forth below for each respective period set forth below most recently ended for which Agent has received financial statements for Parent and its Subsidiaries:

Period	Minimum EBITDA
for the two (2) consecutive month period ending November 30, 2009		($900,000	)
for the three (3) consecutive month period ending December 31, 2009		($1,500,000	)
for the four (4) consecutive month period ending January 31, 2010		($900,000	)
for the five (5) consecutive month period ending February 28, 2010		($400,000	)
for the six (6) consecutive month period ending March 31, 2010	$	700,000
for the seven (7) consecutive month period ending April 30, 2010	$	2,400,000

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(b) Fixed Charge Coverage Ratio. As of the end of each month, commencing May 31, 2010 (and during any such month), that

(i) the aggregate principal amount of outstanding Loans is less than $110,000,000 and Excess Availability is less than $20,000,000, or

(ii) the aggregate principal amount of outstanding Loans is greater than or equal to $110,000,000 but less than $125,000,000 and Excess Availability is less than $25,000,000, or

(iii) the aggregate principal amount of outstanding Loans is greater than or equal to $125,000,000 and Excess Availability is less than $30,000,000,

Parent and its Subsidiaries shall maintain, on a consolidated basis, a Fixed Charge Coverage Ratio of not less than the ratio set forth below for each respective period set forth below most recently ended for which Agent has received financial statements for Parent and its Subsidiaries:

Period	Fixed  Charge Coverage Ratio
for the three (3) consecutive month period ending May 31, 2010		0.50:1.00
for the four (4) consecutive month period ending June 30, 2010		0.60:1.00
for the five (5) consecutive month period ending July 31, 2010		0.80:1.00
for the six (6) consecutive month period ending August 31, 2010		1.00:1.00
for the seven (7) consecutive month period ending September 30, 2010		1.00:1.00
for the eight (8) consecutive month period ending October 31, 2010		1.00:1.00
for the nine (9) consecutive month period ending November 30, 2010		1.00:1.00
for the ten (10) consecutive month period ending December 31, 2010		1.00:1.00
for the eleven (11) consecutive month period ending January 31, 2011		1.00:1.00

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Period	Fixed  Charge Coverage Ratio
for the twelve (12) consecutive month period ending February 28, 2011 and as of the end of each month thereafter (calculated on a trailing twelve (12) consecutive month basis)		1.00:1.00”

15. Capital Expenditures. Section 9.18 of the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

“9.18 Capital Expenditures. Parent and its Subsidiaries shall not, directly or indirectly, make or commit to make, whether through purchase, capital leases or otherwise, Capital Expenditures (a) in an aggregate amount in excess of $12,000,000 in fiscal year 2010, and (b) in each fiscal year after 2010, in an aggregate amount in excess of $15,000,000; provided, that, the maximum amount of Capital Expenditures which may be made by Parent and its Subsidiaries in a particular fiscal year under clauses (a) or (b) above shall be increased by (i) the difference (if any) between the amount of all Capital Expenditures made in the previous fiscal year and the maximum permitted amount for such year, up to a maximum carry-over amount of $3,000,000, plus (ii) the amount of any Permitted Additional Capital Expenditure(s).”

16. Minimum Excess Availability. Section 9.19 of the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

“9.19 Minimum Excess Availability. Borrowers shall not permit Excess Availability at any time to be less than the amount indicated in respect of each period set forth below:

Period	Minimum  Excess Availability
From the date of Amendment No. 2 Effective Date through and including April 30, 2010	$	2,500,000
May 1, 2010 through and including May 31, 2010	$	3,000,000

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Period	Minimum  Excess Availability
From June 1, 2010 through and including June 30, 2010	$	3,500,000
July 1, 2010 through and including July 31, 2010	$	4,000,000
August 1, 2010 through and including August 31, 2010	$	4,500,000
At all times on and after September 1, 2010	$	5,000,000”

17. Concerning the Collateral and the Related Financing Agreements. Section 12.9(b)(ii) of the Loan Agreement is hereby amended by deleting the reference to “(if applicable)” therein and replacing it with “(in the event a Qualified Debt Offering is consummated)”.

18. Tranche B Loans. The parties acknowledge and agree that pursuant to and in accordance with the terms of the Loan Agreement, (a) the Tranche B Loan Limit is $0, and shall at all times on and after the Amendment No. 2 Effective Date continue to be $0, (b) there are no Tranche B Loans outstanding, and (c) all Tranche B Commitments have been terminated.

19. Tax Refund; Payment of Accrued Mezzanine Debt Interest and Accrued Management Fees. To the extent that Parent receives, by no later than April 30, 2010, federal tax refund(s) related to the federal tax return filed for fiscal year ended September 30, 2009 (and related carry back provisions to prior years) in excess of $4,000,000 (and upon the receipt by Agent of evidence, in form and substance satisfactory to Agent, of the receipt of such tax refund and its amount), Borrowers may pay Accrued Mezzanine Debt Interest and Accrued Management Fees then owing to Sponsors or any Affiliate thereto in an aggregate amount not to exceed the lesser of (a) $1,500,000 and (b) the amount of the refund in excess of $4,000,000; provided, that, 83.3% percent of such excess may be used by Borrowers to pay Accrued Mezzanine Debt Interest and 16.7% percent of such excess may be used by Borrowers to pay Accrued Management Fees.

20. Notices. Notwithstanding anything to the contrary contained in Section 13.3(a) of the Loan Agreement or in any of the other Financing Agreements, from and after the date hereof, any notice, request, demand or communication sent to Agent or Issuing Bank by any Borrower or Guarantor pursuant to and in accordance with the Loan Agreement or any of the other Financing Agreements shall be sent to:

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Wachovia Bank, National Association

12 East 49^th Street

New York, New York 10017

Attention: Portfolio Manager-Latrobe

Telephone No.: (212) 545-4491

Telecopy No.: (212) 545-4283

21. Waiver.

(a) Subject to the terms and conditions set forth herein, Agent and Lenders hereby waive (i) the Event of Default under Section 10.1(a)(iii) of the Loan Agreement arising as a result of Borrowers failure to maintain Fixed Charge Coverage Ratio as required under Section 9.17 of the Loan Agreement as of the date hereof, (ii) the Event of Default under Section 10.1(a)(iii) of the Loan Agreement arising as a result of Borrowers failure to maintain Excess Availability in the amount required under Section 9.19 of the Loan Agreement as of the date hereof, (iii) the Event of Default under Section 10.1(a)(iii) of the Loan Agreement arising as a result of the failure by Borrowers to deliver to Agent, by January 28, 2010, the financial statements and other items for the fiscal year ended September 30, 2009 as required under Section 9.6(a)(iii) of the Loan Agreement, provided, that, Agent shall have received such financial statements and other items by no later than March 31, 2010 and (iv) the Event of Default under Section 10.1(i)(A) of the Loan Agreement as a result of the defaults in respect of the Indebtedness evidenced by the Mezzanine Notes (A) as specified in the Default Notice, dated January 5, 2010, received by Agent from Mezzanine Note Agent and (B) arising as a result of the Borrowers failure to make interest payments on the Original Notes (as such term is defined in the Mezzanine Fourth Amendment) on March 15, 2010 as required by Section 3.1.1 of the Securities Purchase Agreement (collectively, the “Acknowledged Events of Default”).

(b) Agent and Lenders have not waived, are not by this Amendment No. 2 waiving, and have no intention of waiving any Event of Default which may have occurred on or prior to the date hereof, whether or not continuing on the date hereof, or which may occur after the date hereof (whether the same or similar to the Acknowledged Events of Default or otherwise), other than the Acknowledged Events of Default. The foregoing waiver shall not be construed as a bar to or a waiver of any other or further Event of Default on any future occasion, whether similar in kind or otherwise and shall not constitute a waiver, express or implied, of any of the rights and remedies of Agent and Lenders arising under the terms of the Loan Agreement or any other Financing Agreements on any future occasion or otherwise.

22. Amendment Fee. In consideration of the waiver and amendments set forth herein, Borrowers shall on the date hereof, pay to Agent, for the account of Tranche A Lenders who have executed this Amendment No. 2 on or before the date hereof, or Agent, at its option, may charge the loan account of Borrowers maintained by Agent, an amendment fee in the aggregate amount equal to one-half of one (.5%) percent of the Tranche A Commitments (as defined after

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giving effect to Amendment No. 2) of each such Tranche A Lender, which fee is fully earned and payable as of the date hereof and shall constitute part of the Obligations.

23. Amendment to Mezzanine Note Intercreditor Agreement. Required Lenders, by their signature below, authorize Agent to enter into the Amendment to the Mezzanine Note Intercreditor Agreement substantially in the form annexed here to as Exhibit B to Amendment No. 2.

24. Representations and Warranties. Borrowers and Guarantors, jointly and severally, represent and warrant with and to Agent and Lenders as follows, which representations and warranties shall survive the execution and delivery hereof, the truth and accuracy of, or compliance with each, together with the representations, warranties and covenants in the other Financing Agreements, being a continuing condition of the making of Revolving Loans and providing Letters of Credit to Borrowers:

(a) after giving effect to the waiver of the Acknowledged Events of Default described in Section 21 (a) hereof, no Event of Default or event, which with notice or passage or time or both would constitute an Event of Default, exists or has occurred and is continuing;

(b) this Amendment No. 2 and each other agreement to be executed and delivered by Borrowers and Guarantors in connection herewith has been duly authorized, executed and delivered by all necessary action on the part of each Borrower and Guarantor which is a party hereto and, if necessary, their respective equity holders and is in full force and effect as of the date hereof, as the case may be, and the agreements and obligations of each of the Borrowers and Guarantors, as the case may be, contained herein and therein constitute legal, valid and binding obligations of each of the Borrowers and Guarantors, enforceable against them in accordance with their terms;

(c) the execution, delivery and performance of this Amendment No. 2 (i) are all within each Borrower’s and Guarantor’s corporate powers and (ii) are not in contravention of law or the terms of any Borrower’s or Guarantor’s certificate or articles of incorporation, by laws, or other organizational documentation, or any indenture, agreement or undertaking to which any Borrower or Guarantor is a party or by which any Borrower or Guarantor or its property are bound; and

(d) all of the representations and warranties set forth in the Loan Agreement and the other Financing Agreements, each as amended hereby, are true and correct in all material respects on and as of the date hereof, as if made on the date hereof, except to the extent any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct as of such date.

25. Conditions Precedent. The waiver and amendments contained herein shall only be effective upon the satisfaction of each of the following conditions precedent in a manner satisfactory to Agent:

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(a) Agent shall have received counterparts of this Amendment No. 2, duly authorized, executed and delivered by Borrowers and Guarantors, and the Required Lenders;

(b) Agent shall have received the consent or authorization from such Lenders as are required for the amendments provided for herein to execute this Amendment No. 2 on behalf of the Lenders;

(c) Agent shall have received, in form and substance reasonably satisfactory to Agent, the Amendment to the Mezzanine Note Intercreditor Agreement, duly authorized, executed and delivered by Mezzanine Note Agent, Borrowers and Guarantors;

(d) Agent shall have received a true and correct copy of each consent, waiver or approval (if any) to or of this Amendment No. 2, which Borrowers and Guarantors are required to obtain from any other Person, and such consent, approval or waiver (if any) shall be in form and substance reasonably satisfactory to Agent;

(e) Agent shall have received satisfactory evidence, in form and substance satisfactory to Agent, of the receipt by Parent on or prior to the date hereof of a net aggregate amount of not less than $10,000,000 in cash as an equity contribution by one or more of the Equity Investors and/or their respective Affiliates (excluding Borrowers and Guarantors);

(f) Agent shall have received satisfactory evidence, in form and substance satisfactory to Agent, of the receipt by Parent on or prior to the date hereof of a net aggregate amount of not less than $10,000,000 in cash as proceeds of loans made to Borrowers and Guarantors under the Mezzanine Note Documents,

(g) Agent shall have received, in form and substance satisfactory to Agent, true, correct and complete copies of the Mezzanine Notes and all other agreements, documents or instruments related to the additional $10,000,000 loan to Borrowers and Guarantors under the Mezzanine Loan Documents;

(h) Agent shall have received, in form and substance satisfactory to Agent, a true, correct and complete copy of the Mezzanine Fourth Amendment, providing for among other things, the issuance of not less than $10,000,000 of additional Mezzanine Notes and provision for the payment of interest as set forth in Section 9.9(g) of the Loan Agreement;

(i) Agent shall have received evidence, in form and substance reasonably satisfactory to Agent, that the Acknowledged Events of Default (as defined in Section 21 hereof) have been waived by the Mezzanine Note Agent and the holders of the Mezzanine Notes as of the date hereof.

(j) Agent shall have received, in form and substance satisfactory to Agent, the letter agreement, duly authorized, executed and delivered by Borrowers and Guarantors, relating to the delivery by Borrowers to Agent of (i) a Deposit Account Control Agreement with respect to the deposit accounts of Specialty Steel maintained at PNC Bank and (ii) a lender’s loss

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payable endorsement with respect to the insurance of Borrowers;

(k) Agent shall have received, in form and substance satisfactory to Agent, the Information Certificate, duly authorized, executed and delivered by Specialty Steel;

(1) Agent shall have received, in form and substance satisfactory to Agent, evidence of insurance required under the Loan Agreement and under the other Financing Agreements with respect to Specialty Steel, and certificates of insurance policies naming Agent as loss payee; and

(m) after giving effect to the waiver of the Acknowledged Events of Default described in Section 21 (a) hereof, no Event of Default shall have occurred and be continuing and no event shall have occurred or condition be existing and continuing which, with notice or passage of time or both, would constitute an Event of Default.

26. Effect of this Amendment. Except as expressly set forth herein, no other amendments, consents, changes or modifications to the Financing Agreements are intended or implied, and in all other respects the Financing Agreements are hereby specifically ratified, restated and confirmed by all parties hereto as of the effective date hereof and Borrowers and Guarantors shall not be entitled to any other or further amendment or consent by virtue of the provisions of this Amendment No. 2 or with respect to the subject matter of this Amendment No. 2. To the extent of conflict between the terms of this Amendment No. 2 and the other Financing Agreements, the terms of this Amendment No. 2 shall control. The Loan Agreement and this Amendment No. 2 shall be read and construed as one agreement.

27. Governing Law. The validity, interpretation and enforcement of this Amendment No. 2 and any dispute arising out of the relationship between the parties hereto whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

28. Binding Effect. This Amendment No. 2 shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

29. Further Assurances. Borrowers and Guarantors shall execute and deliver such additional documents and take such additional action as may be reasonably requested by Agent to effectuate the provisions and purposes of this Amendment No. 2.

30. Entire Agreement. This Amendment No. 2 represents the entire agreement and understanding concerning the subject matter hereof among the parties hereto, and supersedes all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written.

31. Headings. The headings listed herein are for convenience only and do not

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constitute matters to be construed in interpreting this Amendment No. 2.

32. Counterparts. This Amendment No. 2 may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Amendment No. 2 by telefacsimile or other electronic method of transmission shall have the same force and effect as delivery of an original executed counterpart of this Amendment No. 2. Any party delivering an executed counterpart of this Amendment No. 2 by telefacsimile or other electronic method of transmission shall also deliver an original executed counterpart of this Amendment No. 2, but the failure to do so shall not affect the validity, enforceability, and binding effect of this Amendment No. 2.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to be duly executed and delivered by their authorized officers as of the day and year first above written.

WACHOVIA BANK, NATIONAL ASSOCIATION, as Agent and a Lender
By:	[Illegible]
Title:	Vice President

LATROBE STEEL COMPANY
By:	[Illegible]
Title:	Vice President, Secretary and Treasurer
OH&R SPECIAL STEELS COMPANY
By:	[Illegible]
Title:	Vice President, Secretary and Treasurer
SPECIALTY STEEL SUPPLY, INC.
By:	[Illegible]
Title:	Vice President, Secretary and Treasurer
TOOLROCK HOLDING, INC.
By:	[Illegible]
Title:	Vice President, Secretary and Treasurer

Latrobe - Amendment No. 2 to LSA

PNC BANK, NATIONAL ASSOCIATION, as a Lender and as successor to National City Business Credit, Inc.
By:	[Illegible]
	Illegible
Title:	Vice President

Latrobe - Amendment No. 2 to LSA

SOVEREIGN BANK., as a Lender
By:	[Illegible]
	Illegible
Title:	Vice President

Latrobe - Amendment No. 2 to LSA

RZB FINANCE LLC, as a Lender
By:	/s/ CHRISTOPH HOEDL
	CHRISTOPH HOEDL
Title:	First Vice President
By:	/s/ SHIRLEY RITCH
	SHIRLEY RITCH
Title:	Vice President

Latrobe - Amendment No. 2 to LSA

LASALLE BUSINESS CREDIT, LLC, as a Lender
By:	[Illegible]
Title:	AVP

Latrobe - Amendment No. 2 to LSA

U.S. BANK NATIONAL ASSOCIATION, as a Lender.
By:	[Illegible]
Title:	AVP

Latrobe - Amendment No. 2 to LSA

EXHIBIT A

Commitments

Lender	Tranche A Commitment		Percentage
Wachovia Bank, National Association	$	74,375,000		42.5	%
PNC Bank, National Association*	$	35,000,000		20.00	%
RZB Finance LLC	$	19,687,500		11.25	%
LaSalle Business Credit, LLC	$	19,687,500		11.25	%
U.S. Bank National Association	$	17,500,000		10.00	%
Sovereign Bank	$	8,750,000		5.00	%
TOTAL:	$	175,000,000		100	%

* also includes share of its predecessor, National City Business Credit, Inc.

EXHIBIT B

Form of Amendment to Mezzanine Note Intercreditor Agreement

See attached.

[Execution]

AMENDMENT NO. 1 TO

INTERCREDITOR AND SUBORDINATION AGREEMENT

THIS AMENDMENT NO. 1 TO INTERCREDITOR AND SUBORDINATION AGREEMENT, dated March 17, 2010, is by and among Wachovia Bank, National Association, in its capacity as agent for the Senior Lenders (in such capacity, “Senior Agent”), Sankaty Advisors LLC, a Delaware limited liability company, in its capacity as collateral agent for the Junior Lenders (as hereinafter defined) (in such capacity “Junior Agent”), Sankaty Credit Opportunities II, L.P., a Delaware limited partnership, Prospect Harbor Credit Partners, L.P., a Delaware limited partnership, Sankaty High Yield Partners III, L.P., a Delaware limited partnership, RGIP, LLC, a Delaware limited liability company (each of Sankaty Advisors LLC, Sankaty Credit Opportunities II, L.P., Prospect Harbor Credit Partners, L.P., Sankaty High Yield Partners III, L.P., and RGIP, LLC, together with each of their respective successors and assigns, is a “Junior Lender” and collectively, the “Junior Lenders”), Latrobe Steel Company, a Pennsylvania corporation (“LSC”), OH&R Special Steels Company, a Delaware corporation (OH&R), Specialty Steel Supply, Inc., a Texas corporation (“Specialty Steel” and together with LSC and OH&R, each, a “Borrower and collectively, the “Borrowers”), and Toolrock Holding, Inc., a Delaware corporation (“Holding”).

W I T N E S S E T H:

WHEREAS, Senior Agent, Junior Agent and Junior Lenders have previously entered into the Intercreditor and Subordination Agreement, dated March 6, 2008 (as the same may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the “Intercreditor Agreement”), among Senior Agent, Junior Agent and Junior Lenders, as acknowledged by Borrowers and Holding; and

WHEREAS, the parties hereto wish to make certain amendments to the Intercreditor Agreement, and by this Amendment the parties desire and intend to evidence such amendments;

NOW THEREFORE, in consideration of the mutual benefits accruing to the parties hereunder and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do hereby agree as follows:

1. Definitions.

(a) Additional Definitions. As used herein, the following terms shall have the meanings given to them below and the Intercreditor Agreement shall be deemed and is hereby amended to include, in addition and not in limitation, the following definitions:

(i) “Amendment No. 1” shall mean Amendment No. 1 to Intercreditor and Subordination Agreement, dated March 17, 2010, by and among Senior Agent, Junior Agent and Junior Lenders, as the same now exists or may hereafter be amended, modified, supplemented,

extended, renewed, restated or replaced.

(ii) “Amendment No. 2 to Senior Lender Loan Agreement” shall mean Waiver and Amendment No. 2 to Loan and Security Agreement, dated March 17, 2010, by and among Senior Agent, the lenders party thereto, Borrowers and Holding, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(iii) “Accrued Note Interest” shall mean (a) $4,856,645.36 which amount represents the aggregate accrued amount of interest owing in respect of the Notes during the period commencing March 16, 2009 and ending March 15, 2010 and (b) PIK Interest (as such term is defined in the Junior Lender Loan Agreement as in effect on the date of Amendment No. 1) accruing on and after December 16, 2009.

(b) Amendment to Definitions. All references to each of the following terms herein and in the Intercreditor Agreement shall be deemed and each such reference is hereby amended to mean the following:

(i) The definition of “Senior Lender Credit Amount” is hereby amended by deleting the reference to “$240,000,000” contained in subsection (a) thereof and replacing it with “$185,000,000”.

(c) Interpretation. For purposes of this Amendment, unless otherwise defined herein, all capitalized terms used herein shall have the meaning given to them in the Intercreditor Agreement. All references to the plural herein shall also mean the singular and all references to the singular herein shall also mean the plural, in each case unless otherwise required by the context of the use thereof.

2. Restricted Period. Each of the parties hereto acknowledge and agree that the Restricted Period imposed prior to the date hereof shall not be counted towards any of the limitations set forth in subsections (ii), (iii) and (iv) of the definition of Restricted Period.

3. Prohibited Payments on the Junior Lender Claim. Section 2.03 of the Intercreditor Agreement is hereby amended by deleting subsection (b) thereof in its entirety and replacing it with the following:

“(b) Notwithstanding any other provision of this Agreement to the contrary, during any period that is not a Restricted Period, the Loan Parties or any guarantor of the Junior Lender Claim may pay, and the Junior Agent and the Junior Lenders may accept and retain:

(i) as to

(A) regularly scheduled payments of interest due and owing after January 15, 2010, such interest may be paid when due, provided, that, (1) such interest is paid in accordance with the

2

terms of the Junior Lender Loan Documents (as in effect on the date of Amendment No. 1), (2) after giving effect to such payment, the average Excess Availability (as defined in the Senior Lender Loan Agreement) for the consecutive thirty (30) calendar day period ending on the day prior to such applicable Interest Payment Date (as such term is defined in the Junior Lender Loan Agreement, as in effect on the date of Amendment No. 1) is equal to or greater than $15,000,000 (without giving effect to the QDO Release Reserve (as defined in the Senior Lender Loan Agreement after giving effect to Amendment No. 2 to Senior Lender Loan Agreement), if applicable at such time), (3) on the date of such payment and after giving effect thereto, the Excess Availability is equal to or greater than $15,000,000 (without giving effect to the QDO Release Reserve, if applicable at such time), and (4) on the date of any such payment and after giving effect thereto, no Event of Default (as defined in the Senior Lender Loan Agreement) shall have occurred and be continuing, and

(B) Accrued Note Interest, Parent may pay Accrued Note Interest, provided, that, (1) such Accrued Note Interest is paid no more frequently than once every thirty (30) consecutive days (each such date being a “Monthly Payment Date”), with the first payment in respect of Accrued Note Interest to occur no earlier than June 15, 2010, (2) as of the date of any such payment and after giving effect thereto, Excess Availability (calculated on a pro forma basis after giving effect to any such payment) shall not be less than $20,000,000, (3) with respect to all payments of Accrued Amounts (as defined in the Senior Lender Loan Agreement after giving effect to Amendment No. 2 to Senior Lender Loan Agreement) made during any consecutive ninety day period, once the aggregate amount of payments during any such period equals or exceeds $500,000, as of the date of any such payment and after giving effect thereto, the Fixed Charge Coverage Ratio (as defined in the Senior Lender Loan Agreement) of Holding and its Subsidiaries (calculated on a pro forma basis after giving effect to any such payment) is not less than 1.10:1.00 for the period then applicable under Section 9.17(b) of the Senior Lender Loan Agreement (after giving effect to Amendment No. 2 to Senior Lender Loan Agreement), (4) the aggregate amount of Accrued Amounts paid on any Monthly Payment Date shall not exceed (aa) $500,000 with respect to the first payment made during any consecutive ninety day period, and $400,000 on any Monthly Payment Date during such period thereafter and (bb) $1,000,000 during any consecutive ninety day period, and (5) on the date of

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any such payment and after giving effect thereto, no Event of Default shall have occurred and be continuing;

(ii) reimbursement of expenses and counsel fees incurred by Junior Lenders in connection with any amendment, supplement or waiver to the Junior Lender Loan Documents not prohibited by this Agreement;

(iii) Proceeds of any issuance of equity securities that are required to be applied to the Notes pursuant to Section 3.2.4 of the Junior Lender Loan Agreement to the extent that such Proceeds are not required to be paid to Senior Agent for application to the Senior Lender Claim pursuant to the terms of the Senior Lender Loan Documents or to the extent that Senior Agent and Senior Lenders may waive their rights to any portion of such payments; and

(iv) payment of:

(A) the principal amount of the Notes and other obligations under the Junior Lender Loan Agreement at the stated maturity of the Notes; and

(B) up to $5,000,000 of principal owing in respect of the Notes prior to the stated maturity thereof at anytime after September 1, 2010, so long as (1) Senior Agent shall have received notice of such proposed payment no later than five (5) Business Days prior thereto, (2) the daily average of the Excess Availability shall have been not less than $30,000,000, (aa) for the immediately preceding ninety (90) consecutive day period for which the Borrowing Base has been calculated prior to the date of such payment, and (bb) on the date of such payment, in each case on a pro forma basis using the Excess Availability as of the date of the most recent calculation of the Borrowing Base immediately prior to giving effect to any such payment, (3) the Fixed Charge Coverage Ratio of Parent and its Subsidiaries (calculated without giving effect to any such payment) determined as of the end of the fiscal month most recently ended prior to such proposed payment for which Senior Agent has received financial statements pursuant to the Senior Lender Loan Agreement shall be not less than 1.10 to 1.00 for the period of the immediately preceding twelve (12) consecutive fiscal months ending on the last day of such fiscal month, (4) on the date of any such payment and after giving effect thereto, no Event of Default shall have occurred and be continuing, and (5) on the date of any such payment, Senior Agent shall have

4

received a certificate executed by the chief financial officer of Latrobe, certifying that each of the conditions to such payment of principal in respect of the Notes set forth in this Section have been satisfied.

Notwithstanding the foregoing, (x) payments of Accrued Note Interest in an amount not to exceed $1,907,008.09 may be made on the Amendment No. 2 Effective Date (as defined in Amendment No. 2 to Senior Lender Loan Agreement) and without subject to satisfying the conditions set forth in Sections 2.03(b)(i)(B)(1), (2), (3) and (4) hereof and (y) payments of Accrued Note Interest permitted with the proceeds of tax refunds pursuant to Section 19 of Amendment No. 2 to Senior Lender Loan Agreement may be made at any time, and without subject to satisfying the conditions set forth in Sections 2.03(b)(i)(B)(l), (2), (3) and (4) hereof. Until the Senior Lender Claim shall have been fully paid, satisfied and performed in accordance with the terms of the Senior Lender Loan Documents and all obligations and commitments of the Senior Lenders and the Senior Agent to all of the Borrowers have been terminated, no Loan Party shall pay to the Junior Agent or Junior Lenders and the Junior Agent and Junior Lenders shall not accept or receive, directly or indirectly, any payments or prepayments in respect of the Junior Lender Claim, other than the payments expressly permitted by this Section 2.03(b).”

4. Amendments to Financing Arrangements. Section 2.08 of the Intercreditor Agreement is hereby deleted in its entirety and replaced with the following:

“2.08 Amendments to Financing Arrangements.

(a) Junior Agent and Junior Lenders agree that, subject to the terms and conditions of this Agreement, the Senior Agent and the Senior Lenders shall have the right, without the consent of Junior Lenders, to amend, restate, supplement, replace, refinance, extend, consolidate, restructure, otherwise modify or permit any amendment, restatement, supplement, replacement, refinancing, extension, consolidation, restructuring or other modification to the Senior Lender Loan Documents except that, without the prior written consent of the Junior Agent or Junior Lenders, the Senior Agent shall not amend, modify, or supplement any provision of, or waive any other party’s compliance with any of the terms of any Senior Lender Loan Document which: (i) restricts or prohibits payments by the Loan Parties to the Junior Lenders (except as set forth in the Senior Lender Loan Documents as in effect on the date hereof); or (ii) extend the Maturity Date (as such term is defined in the Senior Lender Loan Agreement as in effect on the date hereof), (iii) increases the maximum principal amount of the Senior Lender Credit

5

Amount; (iv) after the date of Amendment No. 1, increases any “Applicable Margin” with respect to (x) any Revolving Loans (as defined in the Senior Lender Loan Agreement) except as provided for in the Senior Lender Loan Agreement (as in effect on the date hereof), (y) the fees with respect to Letters of Credit (as defined in the Senior Lender Loan Agreement as in effect on the date hereof) set forth in Section 3.2(a) of the Senior Lender Loan Agreement (as in effect on the date hereof), in each case, by more than two percent (2.00%) (excluding increases resulting from the accrual or payment of interest at the default rate as provided for in any of the Senior Lender Loan Documents as in effect on the date hereof). Any such amendments or modifications to the Senior Lender Loan Documents shall be secured by the Collateral and shall be entitled to the benefits of this Agreement.

(b) Junior Agent and Junior Lenders agree that, without the prior written consent of the Senior Agent, they shall not amend, modify or permit any amendment or modifications to the Junior Lender Loan Documents in any manner which: (i) modifies the Maturity Date (as defined in the Junior Lender Loan Agreement) provided for in the Junior Lender Loan Documents; (ii) accelerates, change to earlier dates or shortens the timing of or increases the amount of any payment (or prepayment) of the principal or premium, if any, due under the Junior Lender Loan Documents; (iii) after the date of Amendment No. 1, accelerates, change to earlier dates or shortens the timing of or increases the amount of any interest due under the Junior Lender Loan Documents by more than two percent (2.00%); provided that any such permitted increase shall be in the form of PIK interest only; (iv) increases any fee(s) payable under the Junior Lender Loan Documents or imposes an additional fee under the Junior Lender Loan Documents; (v) modifies the amortization of principal provided for in the Junior Lender Loan Documents; (vi) imposes any greater monetary obligation or modifies any existing covenant to cause such existing covenant to be materially more stringent or restrictive on any of the Loan Parties or imposes an additional covenant that is materially more stringent or restrictive on any of the Loan Parties other than those provided in the Junior Lender Loan Agreement as of the date of this Agreement; (vii) changes, in a manner adverse to any Loan Party, or adds any event of default or any covenant with respect to the Junior Lender Loan Documents; (viii) changes any redemption or prepayment provisions of the Junior Lender Loan Documents in a manner adverse to any Loan Party; (ix) changes or amends any other term of any Junior Lender Loan Document if such change or amendment would result in a Senior Lender Default, increase the obligations of any Loan Party, confer additional material rights on Junior Agent or any Junior Lender in a manner adverse to any Loan Party, or otherwise contravene the provisions of this Agreement; or (x) secures the Junior Lender Claim with the grant of any security interests, mortgage or deed of trust Liens or other collateral assignments or Liens on the property of any Loan Party that is not subject to a senior priority Lien under the Senior Lender Loan Documents; provided, however, following the date hereof, in the event that either (y) any existing

6

covenant in the Senior Lender Loan Agreement is modified or (z) any additional covenant which is not included in the Senior Lender Loan Agreement on the date hereof is added to the Senior Lender Loan Agreement, then the Junior Lenders may amend the Junior Lender Loan Agreement to either (A) modify any corresponding existing covenant in the Junior Lender Loan Agreement or (B) add a corresponding additional covenant to the Junior Lender Loan Agreement; provided further, however, after the date of Amendment No. 1, any such modified or additional covenant in the Junior Lender Loan Agreement that is a financial covenant shall be adjusted such that (1) the level of any such modified existing financial covenant shall be increased or decreased by the same relative amount as any such increase or decrease to the corresponding modified existing financial covenant in the Senior Lender Loan Agreement and (2) the level of any such new financial covenant is at least fifteen percent (15%) more lenient to the Borrowers than the corresponding new financial covenant in the Senior Lender Loan Agreement.”

5. Notices. Section 3.01 of the Intercreditor Agreement is hereby amended by deleting subsection (a) thereof and replacing it with the following: “(a) if to Senior Agent, to Wachovia Bank, National Association, 12 East 49^th Street, New York, New York 10017, Attention: Portfolio Manager-Latrobe, Telephone No. (212) 545-4491, Telecopy No.: (212) 545-4283;”

6. Effect of this Amendment. Except as modified pursuant hereto, no other changes or modifications to the Intercreditor Agreement are intended or implied, and in all other respects, the Intercreditor Agreement is hereby specifically ratified, restated and confirmed by the parties hereto as of the effective date hereof. To the extent of conflict between the terms of this Amendment and the Intercreditor Agreement, the terms of this Amendment shall control. The Intercreditor Agreement and this Amendment shall be read as one agreement.

7. Further Assurances. The parties hereto shall execute and deliver such additional documents and take such additional actions as may be necessary to effectuate the provisions and purposes of this Amendment.

8. Governing Law. The rights and obligations hereunder of each of the parties hereto shall be governed by and interpreted and determined in accordance with the laws of the State of New York, without regard to any principles of conflicts of laws or other rule of law that would result in the application of the law of any jurisdiction other than the State of New York.

9. Binding Effect. This Amendment shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

10. Counterparts. This Amendment may be executed in any number of counterparts, but all of such counterparts shall together constitute but one and the same agreement. In making proof of this Amendment, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties thereto. Delivery of an executed counterpart of this Amendment by telefacsimile or other method of electronic transmission shall have the same

7

force and effect as delivery of an original executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telefacsimile or other method of electronic transmission also shall deliver an original executed counterpart of this Amendment, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment as to such party or any other party.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to Intercreditor and Subordination Agreement to be duly executed as of the day and year first above written.

Wachovia Bank, National Association, as Senior Agent

By:

Title:

Sankaty Advisors LLC, as Junior Agent and a Junior Lender

By:

Title:

Sankaty Credit Opportunities II, LP.

By:

Title:

Prospect Harbor Credit Partners, L.P.

By:

Title:

Sankaty High Yield Partners III, L.P.

By:

Title:

RGIP, LLC

By:

Title:

[Signature Page to Amendment No. 1 to Intercreditor and Subordination]

ACKNOWLEDGMENT

Each of the undersigned hereby acknowledges and agrees to the terms and provisions of the foregoing Amendment No. 1 to Intercreditor and Subordination Agreement, and confirms and restates the terms of the Acknowledgment to the Intercreditor and Subordination Agreement made by each of the undersigned.

LATROBE STEEL COMPANY

By:

Title:

OH&R SPECIAL STEELS COMPANY

By:

Title:

SPECIALTY STEEL SUPPLY, INC.

By:

Title:

TOOLROCK HOLDING, INC.

By:

Title:

[Signature Page to Amendment No. 1 to Intercreditor and Subordination]

EX-10.4

Exhibit 10.4

[Execution]

AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT

AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT, dated July 30, 2010 (this “Amendment No. 3”), is by and among Wells Fargo Bank, National Association, successor by merger to Wachovia Bank, National Association, a national banking association, in its capacity as agent pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf of the parties thereto as lenders (in such capacity, “Agent”), the parties to the Loan Agreement as lenders (individually, each a “Lender” and collectively, “Lenders”), Latrobe Steel Company, a Pennsylvania corporation (“Latrobe”), OH&R Special Steels Company, a Delaware corporation (“OH&R”), Specialty Steel Supply, Inc., a Texas corporation (“Specialty Steel” and together with Latrobe and OH&R, each individually a “Borrower” and collectively, “Borrowers”), and Toolrock Holding, Inc., a Delaware corporation (“Parent”, sometimes individually referred to herein as a “Guarantor” and collectively, “Guarantors” as defined in the Loan Agreement).

W I T N E S S T H :

WHEREAS, Agent, Lenders, Borrowers and Guarantors have entered into financing arrangements pursuant to which Lenders (or Agent on behalf of Lenders) have made and may make loans and advances and provide other financial accommodations to Borrowers as set forth in the Loan and Security Agreement, dated March 6, 2008, by and among Agent, Lenders, Borrowers and Guarantors, as amended by Amendment No. 1 to Loan and Security Agreement, dated January 22, 2009, by and among Agent, Lenders, Borrowers and Guarantors and Amendment No. 2 to Loan and Security Agreement, dated March 17, 2010, by and among Agent, Lenders, Borrowers and Guarantors (as the same now exists and is amended and supplemented pursuant hereto and may hereafter be further amended, modified, supplemented, extended, renewed, restated or replaced, the “Loan Agreement”) and the other Financing Agreements;

WHEREAS, Borrowers and Guarantors have requested that Agent and Lenders agree to amend certain provisions of the Loan Agreement as set forth herein, and Agent and Lenders are willing to agree to such requests on the terms and subject to the conditions set forth herein;

WHEREAS, by this Amendment No. 3, Agent, Lenders, Borrowers and Guarantors desire and intend to evidence such amendments;

NOW THEREFORE, in consideration of the foregoing and the mutual agreements and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions.

(a) Additional Definitions. As used herein, the following terms shall have the

meanings given to them below and the Loan Agreement and the other Financing Agreements are hereby amended to include, in addition and not in limitation, the following definitions:

(i) “Amendment No. 3” shall mean Amendment No. 3 to Loan and Security Agreement, dated July 30, 2010, by and among Agent, Lenders, Borrowers and Guarantors, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(ii) “Amendment No. 3 Effective Date” shall mean the date on which each of the conditions precedent set forth in Section 27 of Amendment No. 3 shall have been satisfied or waived in accordance with the terms of Amendment No. 3.

(iii) “Excess Cash Flow” means, for any period, the excess (if any) of an amount equal to: (a) EBITDA of the Parent and its Subsidiaries, minus (b) the sum of (i) the cash portion of Capital Expenditures made by the Parent and its Subsidiaries to the extent permitted to be made under this Agreement, (ii) income taxes paid by the Parent and its Subsidiaries in cash, (iii) Interest Expenses paid in cash by the Parent and its Subsidiaries to the extent permitted to be paid under this Agreement, (iv) principal, fees and other payment obligations paid by the Parent and its Subsidiaries with respect to Indebtedness other than (x) principal payments in respect of the Term Loan (including in connection with a refinancing of any Indebtedness) to the extent permitted to be made under this Agreement to the extent paid during such period and (y) principal payments in respect of the Obligations (including in connection with a refinancing of any such Indebtedness) to the extent permitted to be made under this Agreement and to the extent paid during such period (unless such payment is made in connection with a mandatory prepayment pursuant to this Agreement), (v) cash payments paid under Capital Leases during such period, (vi) cash contributions for pensions and OPEB obligations in excess of the annually non-cash expensed amounts reflected in Parent’s and its Subsidiaries’ income statement, and (vii) the aggregate amount of Capital Expenditures committed to be made in the next twelve (12) months under legally binding agreements by Parent and its Subsidiaries in an aggregate amount not to exceed $2,000,000 to the extent such committed Capital Expenditures are permitted to be made under this Agreement.

(iv) “Excess Cash Flow Certificate” shall have the meaning provided for such term in the definition of “Excess Cash Flow Prepayment Conditions”.

(v) “Excess Cash Flow Prepayment” shall mean any mandatory prepayment in respect of the outstanding principal amount of the Term Loan from Excess Cash Flow required to be made pursuant to Section 2.2(a) of the Term Loan Agreement as in effect on the Amendment No. 3 Effective Date and permitted by Section 9.9(h)(ii)(C) herein.

(vi) “Excess Cash Flow Prepayment Conditions” shall mean, each of the following conditions precedent to making an Excess Cash Flow Prepayment: (a) within one hundred twenty (120) days after the end of any fiscal year of Borrowers and Guarantors (commencing with the fiscal year ending September 30, 2011), Agent shall have received from

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the chief financial officer of Parent, a certificate, in the form of Exhibit G attached hereto, setting forth the calculation of the Excess Cash Flow for such fiscal year (such certificate being referred to herein as the “Excess Cash Flow Certificate”), (b) only one such Excess Cash Flow Prepayment is permitted to be made with respect to any such fiscal year and such payment shall be made within thirty (30) days after the receipt by Agent of the audited consolidated financial statements of Parent and its Subsidiaries for such fiscal year as required by and in accordance with Section 9.6 (a)(iii) herein (the “Excess Cash Flow Prepayment Period”), (c) after giving effect to any Excess Cash Flow Prepayment, the average Excess Availability for the consecutive thirty (30) calendar day period ending on the day prior to such payment shall be equal to or greater than $30,000,000, (d) on the date of any Excess Cash Flow Prepayment and after giving effect thereto, Excess Availability shall be equal to or greater than $30,000,000, (e) Agent shall have received a Pro Forma Compliance Certificate demonstrating that, upon giving effect on a Pro Forma Basis to such Excess Cash Flow Prepayment, (i) the Fixed Charge Coverage Ratio for Parent and its Subsidiaries is equal to or greater than 1.00 to 1.00 and (ii) Excess Availability shall be equal to or greater than $30,000,000 for each of the first thirty (30) days after giving effect to such payment, and (f) on the date of any Excess Cash Flow Prepayment and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing.

(vii) “Excess Cash Flow Prepayment Period” shall have the meaning provided for such term in the definition of “Excess Cash Flow Prepayment Conditions”.

(viii) “Fixed Asset Subordination Reserve” shall mean, at all times, a Reserve established and/or maintained in an amount equal to $10,000,000. The term “Reserves” as used herein shall include, without limitation, the Fixed Asset Subordination Reserve.

(ix) “Net Equity Cash Proceeds” shall mean, with respect to the issuance by any Borrower or Guarantor of any shares of its Capital Stock other than to any other Borrower or Guarantor, the aggregate amount of cash actually received (directly or indirectly) from time to time (whether as initial consideration or through the payment or disposition of deferred consideration) by or on behalf of such Borrower or Guarantor in connection with such issuance, after deducting therefrom only (i) reasonable fees, commissions, and expenses (including, reasonable attorneys’ fees, accountants’ fees, investment banking fees, sales commissions, other customary expenses and brokerage, consultant and other customary fees) related thereto and required to be paid by such Borrower or Guarantor in connection with such issuance or receipt of the proceeds thereof; provided, that, any such fee payable hereunder to an Affiliate of Parent or a Subsidiary of Parent shall not exceed the amount permitted under Section 9.12(b)(iii) herein; provided, further, that, any fees permitted pursuant to Section 9.12(b)(iii) herein shall only be deducted in the event that no Default or Event of Default exists at such time unless otherwise consented to by Agent in writing, (ii) taxes paid or payable to any taxing authorities by Parent or such Subsidiary in connection with such issuance or receipt, in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash proceeds, actually paid or payable and such proceeds are properly attributable to such transaction, and (iii) any amounts held in escrow or other holdbacks in connection with such issuance.

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(x) “Term Loan” shall mean the Indebtedness permitted pursuant to Section 9.9(h) hereof.

(xi) “Term Loan Agent” shall mean The Bank of New York Mellon, in its capacity as agent for the Term Loan Lenders, and its successors and assigns in such capacity.

(xii) “Term Loan Agreement” shall mean the Loan and Security Agreement, dated July 30, 2010, among Term Loan Agent, Term Loan Lenders, Borrowers and Guarantors, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated, refinanced or replaced.

(xiii) “Term Loan Documents” shall mean, collectively, the Term Loan Agreement and all agreements, documents and instruments at any time executed and/or delivered by any Borrower or Guarantor or any other person to, with or in favor of Term Loan Agent or any Term Loan Lender in connection therewith or related thereto, as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated, refinanced, replaced or restructured (in whole or in part and including any agreements with, to or in favor of any other lender or group of lenders that at any time refinances, replaces or succeeds to all or any portion of the Term Loan).

(xiv) “Term Loan Intercreditor Agreement” shall mean the Intercreditor Agreement, dated July 30, 2010, by and between Agent and Term Loan Agent, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(xv) “Term Loan Lenders” shall mean the financial institutions from time to time party to the Term Loan Agreement as lenders, together with their respective successors and assigns.

(xvi) “Term Loan Priority Collateral” shall mean all collateral granted by Borrowers and Guarantors pursuant to the Term Loan Documents in favor of Term Loan Agent to secure the payment of the Term Loan as set forth in Exhibit H hereto.

(b) Amendments to Definitions.

(i) The definition of “Change of Control” set forth in the Loan Agreement is hereby amended by deleting clause (e) thereof in its entirety and replacing it with the following:

“(e) the occurrence of any “Change of Control” (or similar term) as defined in the Term Loan Documents.”

(ii) The definition of “Deposit Account Control Agreement” set forth in the Loan Agreement is hereby amended by (A) deleting the parenthetical contained therein and

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replacing it with the following: “(and if applicable, Term Loan Agent)” and (B) adding the following at the end thereof: “or, in connection with a deposit account specifically and exclusively used to hold deposits that are required to be delivered to the Term Loan Agent or applied to repay the Term Loan pursuant to Section 2.2 of the Term Loan Agreement, such bank will comply with instructions originated by Term Loan Agent after delivery of a Control Notice under (and as defined in) the Term Loan Agreement.”

(iii) The definition of “Fixed Charge Coverage Ratio” set forth in the Loan Agreement is hereby amended by deleting clause (iv) thereof in its entirety and replacing it with the following:

“(iv) all dividends, distributions, repurchases and redemptions in respect of Capital Stock of Parent paid by such Person and its Subsidiaries during such period in cash (other than dividends, distributions, repurchases and redemptions paid after the date hereof, the payment of which is made with the initial proceeds of the Term Loan),”

(iv) The definition of “Indebtedness” set forth in the Loan Agreement is hereby amended by deleting the reference to “a Permitted Acquisition or” in clause (m) thereof.

(v) The definition of “Obligations” set forth in the Loan Agreement is hereby amended by deleting the reference to “Mezzanine Note Intercreditor Agreement” at the end thereof and replacing it with “Term Loan Intercreditor Agreement”.

(vi) The definition of “Reserves” in the Loan Agreement is hereby amended by deleting clause (x) thereof in its entirety and replacing it with the following:

“(x) the Fixed Asset Subordination Reserve.”

(vii) The definition of “Subsidiary” set forth in the Loan Agreement is hereby amended by deleting the last sentence thereof, and replacing it with the following:

“For purposes of Sections 8.8, 9.6, 9.7, 9.8, 9.9 and 9.10, the term “Subsidiary” shall not include any Foreign Subsidiary (other than at any time such Foreign Subsidiary is a Borrower or Guarantor hereunder) and Latrobe Specialty Steels Europe, Inc.”

(c) Deleted Definitions. Each of the following definitions set forth in the Loan Agreement is hereby deleted in its entirety and replaced with “Intentionally Deleted.”: (i) “Mezzanine Note Agent”, (ii) “Mezzanine Note Documents”, (iii) “Mezzanine Note Intercreditor Agreement”, (iv) “Mezzanine Notes”, (v) “Qualified Debt Agent”, (vi) “Qualified Debt Intercreditor Agreement”, (vii) “Qualified Debt Offering”, (viii) “Qualified Debt Offering Priority Collateral”, (ix) “QDO Priority Collateral Release Date”, and (x) “QDO Release Reserve”.

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(d) Interpretation. For purposes of this Amendment No. 3, all terms used herein that are not otherwise defined herein, including but not limited to, those terms used in the recitals hereto, shall have the respective meanings assigned thereto in the Loan Agreement as amended by this Amendment No. 3.

2. Prepayments.

(a) Section 2.4(d) of the Loan Agreement is hereby amended by deleting the reference to “Qualified Debt Intercreditor Agreement (if applicable)” at the end thereof and replacing it with “Term Loan Intercreditor Agreement”.

(b) Section 2.4(e) of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“(e) Intentionally Deleted.”

3. Corporate Existence, Power and Authority. Section 8.1 of the Loan Agreement is hereby amended by deleting the reference to “has or would reasonably be expected to have a Material Adverse Effect” at the end of the first sentence thereof and replacing them with the words “does not have or would not reasonably be expected to have a Material Adverse Effect”.

4. Maintenance of Existence. Section 9.1 (a) of the Loan Agreement is hereby amended by deleting clause (B) thereof in its entirety and replacing it with the following:

“(B) in the cases of clauses (i) and (ii), where the failure to so maintain could not reasonably be expected to have a Material Adverse Effect.”

5. New Collateral Locations. Section 9.2 of the Loan Agreement is hereby amended by (a) deleting the period at the end thereof and (b) adding the following at the end thereof:

“provided, further, that Borrowers and Guarantors may maintain Inventory at locations outside the continental United States only to the extent that the aggregate Value of such Inventory at any time, plus the aggregate outstanding amount of all loans and investments made under Section 9.10(h) hereof shall not exceed the aggregate amount of $7,000,000.”

6. Insurance.

(a) Section 9.5(a) of the Loan Agreement is hereby amended by deleting the last sentence thereof and replacing it with the following:

“Such lender’s loss payable endorsements shall specify that the proceeds of such insurance (including, without limitation, the proceeds of any business interruption insurance and/or loss profits or similar type of insurance) shall be

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payable to Agent as its interests may appear and further specify that Agent and Lenders shall be paid regardless of any act or omission by any Borrower, Guarantor or any of its or their Affiliates.”

(b) Section 9.5(b) of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“(b) Without limiting any other rights of Agent or Lenders, any insurance proceeds received by Agent at any time (other than (x) insurance proceeds of Equipment which is subject to purchase money security interests or liens permitted by Section 9.8 hereof, in which case Agent shall, to the extent it receives such insurance proceeds, remit same to the applicable Borrower and (y) after the incurrence of the Term Loan, insurance proceeds with respect to Term Loan Priority Collateral, in which case Agent shall, to the extent it receives such insurance proceeds, remit same to Term Loan Agent, as applicable, subject to the terms of the Term Loan Intercreditor Agreement), may be applied to payment of the Obligations in accordance with the terms of Section 6.4(b) hereof and except, that, so long as no Cash Dominion Event exists, such proceeds of insurance as to any one event of less than $500,000 may be paid to Administrative Borrower.”

7. Sale of Assets, Etc.

(a) Section 9.7(b)(ii) of the Loan Agreement is hereby amended by deleting the last proviso therein and replacing it with the following:

“provided, that, at any time a Cash Dominion Event exists, all of the proceeds of any such sale or other disposition not required to be delivered to the Term Loan Agent or applied to repay the Term Loan pursuant to Section 2.2(d) of the Term Loan Agreement (as in effect on the Amendment No. 3 Effective Date) shall be paid to Agent for application to the Obligations in accordance with Section 2.4(d) hereof,”

(b) Section 9.7(b)(iii)(D) of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“(D) (1) at all times when no Default arising under Sections 10.1(a)(i), 10.1 (a)(ii) (caused by the failure to comply with Section 9.3), 10.1(g) or 10.1 (1) or Event of Default has occurred and is continuing, the first $15,000,000 of the Net Equity Cash Proceeds of the sale and issuance of such Capital Stock (minus, without duplication, on any date of determination, the aggregate principal amount of any new Indebtedness incurred in accordance with Section 9.9(f) hereof after the Amendment No. 3 Effective Date and on or prior to such date of determination) and fifty (50%) percent of the Net Equity Cash Proceeds in excess of such $15,000,000 shall be paid to Agent for application to the Obligations in

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accordance with the term of this Agreement and (2) at all times upon and after the occurrence, and the during the continuance, of a Default arising under Sections 10.1(a)(i), 10.1(a)(ii) (caused by the failure to comply with Section 9.3, 10.1(g) or 10.1(i) or Event of Default, one hundred (100%) percent of the Net Equity Cash Proceeds of the sale and issuance of such Capital Stock shall be paid to Agent for application to the Obligations in accordance with the term of this Agreement,”

(c) Section 9.7(b)(vii)(A) of the Loan Agreement is hereby amended by deleting the reference to “Qualified Debt Intercreditor Agreement, if applicable,” set forth in clause (4) therein and replacing it with “Term Loan Intercreditor Agreement,”.

8. Encumbrances.

(a) Section 9.8(i) of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“(i) Intentionally Deleted.”

(b) Section 9.8(j) of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“(j) the security interests and liens in favor of the Term Loan Agent, in and on the assets and properties of Borrowers and Guarantors to secure the Term Loan; provided, that, such security interests and liens on any assets other than the Term Loan Priority Collateral shall be subordinate and subject to the liens and security interests securing the Obligations, in each case, in accordance with the terms of the Term Loan Intercreditor Agreement;”

9. Indebtedness.

(a) Section 9.9(e) of the Loan Agreement is hereby amended by deleting clause (b) thereof and replacing it with the following:

“(B) part of the obligations arising under or pursuant to Hedge Agreements that are secured under the terms of the documents evidencing the Term Loan as permitted pursuant to the terms of the Term Loan Intercreditor Agreement”

(b) Section 9.9(g) of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“(g) Intentionally deleted.”

(c) Section 9.9(h) of the Loan Agreement is hereby deleted in its entirety and

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replaced with the following:

“(h) Indebtedness of Borrowers and Guarantors evidenced by the Term Loan Documents, provided, that, each of the following conditions is satisfied, as determined by Agent,

(i) the amount of such Indebtedness shall not exceed (A) the sum of (1) the principal amount of up to (x) $50,000,000 (provided, that, such amount may be increased on a dollar-for-dollar basis up to $5,000,000 to reflect the principal amount of any additional term loans made by Term Loan Lenders pursuant to the Term Loan Agreement after the date hereof but prior to the commencement of any case with respect to any Borrower or Guarantor under the Bankruptcy Code or any other Insolvency or Liquidation Proceeding), plus (y) the amount of post-petition financing (if any) provided as permitted pursuant to Section 6.2(b) of the Term Loan Intercreditor Agreement, minus (2) the aggregate amount of all principal payments and prepayments of the Term Loan received by Term Loan Agent or the Term Loan Lenders plus (B) the amount of any interest (including default interest and any interest that is payable in kind) on such amount at the rate provided for in the Term Loan Documents as in effect on the Amendment No. 3 Effective Date (and including, without limitation, any interest that would accrue and become due but for the commencement of Insolvency or Liquidation Proceeding (as defined in the Term Loan Intercreditor Agreement), whether or not such amounts are allowed or allowable in whole or in part in such case or similar proceeding), plus (C) any prepayment premium fees, costs, expenses and indemnities payable under any of the Term Loan Documents as in effect on the Amendment No. 3 Effective Date (and including, without limitation, any fees, costs, expenses and indemnities that would accrue and become due on such amounts but for the commencement of Insolvency or Liquidation Proceeding, whether or not such amounts are allowed or allowable in whole or in part in such case or similar proceeding),

(ii) Borrowers and Guarantors shall not, directly or indirectly, make any payments in respect of such Indebtedness, except that Borrowers and Guarantors may make:

(A) regularly scheduled quarterly payments of principal and monthly payments of interest (and the payments of fees) in respect of such Indebtedness in accordance with the terms of the Term Loan Documents as in effect on the Amendment No. 3 Effective Date, and

(B) mandatory prepayments (other than Excess

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Cash Flow Prepayments) in respect of the outstanding principal amount of such Indebtedness required to be made pursuant to Section 2.2 of the Term Loan Agreement as in effect on the Amendment No. 3 Effective Date;

(C) (1) Excess Cash Flow Prepayments in an amount not to exceed fifty (50%) percent (or such lesser percentage as set forth below) of Excess Cash Flow for the fiscal year ending on September 30 of each year (commencing with the fiscal year ending on September 30, 2011) minus the sum of all payments of principal of the Term Loan during any such fiscal year; provided, that, all of the Excess Cash Flow Prepayment Conditions have been satisfied in the determination of Agent ;except that in the event that Borrowers satisfy all of the Excess Cash Flow Prepayment Conditions other than attaining the Excess Availability thresholds, then Borrowers may make an Excess Cash Flow Prepayment in an amount not to exceed thirty-five (35%) percent of Excess Cash Flow for any such fiscal year (minus the sum of all payments of principal of the Term Loan during any such fiscal year) so long as (x) after giving effect to such Excess Cash Flow Prepayment, the average Excess Availability for the consecutive thirty (30) calendar day period ending on the day prior to such payment shall be equal to or greater than $25,000,000, (y) on the date of such Excess Cash Flow Prepayment and after giving effect thereto, Excess Availability shall be equal to or greater than $25,000,000 and (z) Agent shall have received a Pro Forma Compliance Certificate demonstrating that, upon giving effect on a Pro Forma Basis to such Excess Cash Flow Prepayment, Excess Availability shall be equal to or greater than $25,000,000 for each of the first thirty (30) days after giving effect to such payment, and

(2) in the event that an Excess Cash Flow Prepayment in respect of a fiscal year is not permitted to be made due to the failure of Borrowers to satisfy any of the Excess Availability thresholds set forth in the Excess Cash Flow Prepayment Conditions, such Excess Cash Flow Prepayment may be made after the Excess Cash Flow Prepayment Period expires but prior to start of the next fiscal year, provided, that, all of the following conditions are satisfied at the time of any such payment, as determined by Agent, (aa) after giving effect to any such Excess Cash Flow Prepayment, the average Excess Availability for the consecutive ninety (90) calendar day period ending on the day prior to such payment is equal to or greater than $30,000,000, (bb) on the date of such Excess Cash Flow Prepayment and after giving effect thereto, the Excess Availability is equal to or greater than $30,000,000, (cc) Agent shall have received a Pro Forma Compliance Certificate demonstrating that, upon giving effect on a Pro Forma Basis to such Excess Cash Flow Prepayment, (x) the Fixed Charge Coverage Ratio for Parent and its

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Subsidiaries is equal to or greater than 1.00 to 1.00 and (y) Excess Availability shall be equal to or greater than $30,000,000 for each of the first thirty (30) days after giving effect to such payment, and (dd) on the date of any such Excess Cash Flow Prepayment and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing,

(iii) Agent shall have received the Term Loan Intercreditor Agreement, duly authorized, executed and delivered by the Term Loan Agent, and such Indebtedness shall at all times be subject to the terms of the Term Loan Intercreditor Agreement,

(iv) Agent shall have received, in form and substance satisfactory to Agent, true, correct and complete copies of all agreements, documents and instruments evidencing or otherwise related to such Indebtedness issued prior to or substantially contemporaneously with the Amendment No. 3 Effective Date,

(v) Borrowers and Guarantors shall not, directly or indirectly, (A) amend, modify or otherwise change (or permit the amendment, modification or other change in any manner of) any of the provisions of any agreements, documents or instruments in respect of any such Indebtedness, except, that, Borrowers and Guarantors, and any Subsidiary, may, after prior written notice to Agent, amend, modify, alter or change the terms thereof to forgive, or cancel any portion of such Indebtedness (other than pursuant to payments thereof), or to reduce the interest rate or any fees in connection therewith, or to make the terms thereof less restrictive or burdensome to Borrowers, Guarantors or such Subsidiary, or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness or set aside or otherwise deposit or invest any sums for such purpose except as permitted in Section 9.9(h)(ii) hereof,

(vi) Administrative Borrower shall furnish to Agent copies of all notices or demands in connection with such Indebtedness either received by any Borrower or Guarantor or on its behalf promptly after the receipt thereof, or sent by any Borrower or Guarantor on its behalf concurrently with the sending thereof, as the case may be;”

(d) Section 9.9(m) of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“(m) Intentionally deleted.”

(e) Section 9.9(p)(ix) of the Loan Agreement is hereby amended by deleting

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the first parenthetical therein.

10. Loans, Investments, Etc.

(a) Section 9.10 of the Loan Agreement is hereby amended by re-designating the clause (i) of such Section immediately following clause (g) of such Section, as clause (gg) of such Section.

(b) Section 9.10(h) of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

(h) loans, advances or other investments by any Borrower or Guarantor to any Subsidiary that is not a Borrower or Guarantor; provided, that, as to any such loans or advances, each of the following conditions is satisfied: (1) the principal amount of all such loans, advances and other investments shall not exceed $5,000,000 in the aggregate outstanding at any time, (2) as of the date of any such loan, advance or other investment and after giving effect thereto, Excess Availability shall be not less than an amount equal to 15% of the Maximum Credit then in effect, and (3) as of the date of any such loan, advance or other investment and after giving effect thereto, no Event of Default shall have occurred and be continuing;

11. Transactions with Affiliates.

(a) Section 9.12(b)(ii)(B) of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“(B) all Accrued Management Fees on or substantially contemporaneously with the Amendment No. 3 Effective Date; provided, that, on the date of any such payment and after giving effect thereto, no Event of Default shall have occurred and be continuing,”

(b) Section 9.12(b)(iii) of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“(iii) Borrowers and Guarantors may pay the fees payable to the Sponsors or any Affiliate thereof pursuant to the terms of the Transaction Services Agreements in an amount not to exceed (A) one and one-half (1.50%) percent of the Maximum Credit as in effect on the date hereof and (B) on or before February 15, 2011, up to 2.00% of the original principal amount of the Term Loan provided no Default or Event of Default exists or has occurred, or would result, after giving effect thereto;”

(c) Section 9.12(b)(vii) of the Loan Agreement is hereby amended by deleting the reference to “Permitted Acquisitions and” therein.

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12. Limitation of Restrictions Affecting Subsidiaries. Section 9.16(d)(ii) is hereby amended by deleting the reference to “the Mezzanine Note Documents, the documents governing the Qualified Debt Offering (if applicable)” and replacing it with “the Term Loan Documents”.

13. Financial Covenants. Section 9.17 of the Loan Agreement is hereby deleted in its entirety and the following substituted therefor:

“(a) Intentionally deleted.

(b) Fixed Charge Coverage Ratio. As of the end of each month (and during any such month), that

(i) the aggregate principal amount of outstanding Loans is less than $110,000,000 and Excess Availability is less than $25,000,000, or

(ii) the aggregate principal amount of outstanding Loans is greater than or equal to $110,000,000 but less than $125,000,000 and Excess Availability is less than $30,000,000, or

(iii) the aggregate principal amount of outstanding Loans is greater than or equal to $125,000,000 and Excess Availability is less than $35,000,000,

Parent and its Subsidiaries shall maintain, on a consolidated basis, a Fixed Charge Coverage Ratio of not less than the ratio set forth below for each respective period set forth below most recently ended for which Agent has received financial statements for Parent and its Subsidiaries:

Period	Fixed Charge Coverage Ratio
for the four (4) consecutive month period ending June 30, 2010		0.60:1.00
for the five (5) consecutive month period ending July 31, 2010		0.80:1.00
for the six (6) consecutive month period ending August 31, 2010		1.00:1.00
for the seven (7) consecutive month period ending September 30, 2010		1.00:1.00
for the eight (8) consecutive month period ending October 31, 2010		1.00:1.00

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Period	Fixed Charge Coverage Ratio
for the nine (9) consecutive month period ending November 30, 2010		1.00:1.00
for the ten (10) consecutive month period ending December 31, 2010		1.00:1.00
for the eleven (11) consecutive month period ending January 31, 2011		1.00:1.00
for the twelve (12) consecutive month period ending February 28, 2011 and as of the end of each month thereafter (calculated on a trailing twelve (12) consecutive month basis)		1.00:1.00”

14. Designation of Designated Senior Debt. Section 9.21 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“Borrowers and Guarantors shall not, and shall not permit any Subsidiary to, designate any Indebtedness, other than the Obligations and the Obligations (as defined in the Term Loan Agreement), as “Designated Senior Debt”, or any similar term under and as defined in the agreements relating to any Indebtedness of Borrowers or Guarantors, including Indebtedness of any Borrower or Guarantor evidenced by any of the documents governing the Term Loan Documents, which contains such designation. Borrowers and Guarantors shall, and shall cause any Subsidiary to, designate the Obligations as “Designated Senior Debt” or any similar term under and as defined in the agreements relating to any Indebtedness (including any Indebtedness otherwise permitted under Section 9.9 hereof) of any Borrower or Guarantor which contains such designation.”

15. After Acquired Real Property. Section 9.23 of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“9.23 After Acquired Real Property. If any Borrower or Guarantor hereafter acquires any Real Property, fixtures or any other property that is of the kind or nature described in the Mortgages and such Real Property, fixtures or other property is adjacent to, contiguous with or necessary or related to or used in connection with any Real Property then subject to a Mortgage, or if such Real Property is not adjacent to, contiguous with or related to or used in connection with such Real Property, then if such Real Property, fixtures or other property at any location (or series of adjacent, contiguous or related locations, and regardless of the number of parcels) has a fair market value in an amount equal to or greater than $2,000,000 (or if an Event of Default exists, then regardless of the fair

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market value of such assets), without limiting any other rights of Agent or any Lender, or duties or obligations of any Borrower or Guarantor, promptly upon Agent’s request, and, in the event that the Term Loan Agent requires such Borrower or Guarantor to execute and deliver a mortgage, deed of trust or deed to secure debt with respect to any such Real Property, such Borrower or Guarantor shall execute and deliver to Agent a mortgage, deed of trust or deed to secure debt, as Agent may determine, in form and substance substantially similar to the Mortgages and as to any provisions relating to specific state laws satisfactory to Agent and in form appropriate for recording in the real estate records of the jurisdiction in which such Real Property or other property is located granting to Agent a first and only lien and mortgage on and security interest in such Real Property, fixtures or other property (except as such Borrower or Guarantor would otherwise be permitted to incur hereunder or under the Mortgages or as otherwise consented to in writing by Agent) and such other agreements, documents and instruments as Agent may require in connection therewith.”

16. Formation of Foreign Subsidiaries. Section 9 of the Loan Agreement is hereby amended by adding the following new Section 9.26 at the end thereof:

“9.26 Formation of Foreign Subsidiaries. Notwithstanding anything to the contrary contained in the Loan Agreement or in any of the other Financing Agreements, no Borrower or Guarantor shall, or shall be permitted to, form a Foreign Subsidiary after the Amendment No. 3 Effective Date without the prior written consent of Agent.”

17. Events of Default. Section 10.1 (i)(A) of the Loan Agreement is hereby amended by deleting the parenthetical therein and replacing it with the following: “(including the Term Loan but excluding Indebtedness owing to Agent and Lenders hereunder)”.

18. Amendments and Waivers. Section 11.3(a)(ix) of the Loan Agreement is hereby amended by (a) deleting the reference to “Qualified Debt Priority Collateral” therein and replacing it with “Term Loan Priority Collateral” and (b) deleting the reference to ‘Qualified Debt Intercreditor Agreement” therein and replacing it with “Term Loan Intercreditor Agreement”.

19. Concerning the Collateral and the Related Financing Agreements. Section 12.9(b) of the Loan Agreement is hereby deleted in its entirety and replaced with the following:

“(b) Without limiting the generality of the foregoing, each Lender (i) consents to the subordination of Agent’s liens in and on Term Loan Priority Collateral as provided for in the Term Loan Intercreditor Agreement, (ii) authorizes and directs Agent to enter into on behalf of such Lender and such Lender will be bound (as a Lender) by the terms and conditions of the Term Loan Intercreditor Agreement, whether or not such Lender executes such intercreditor agreement, and (iii) agrees that it will be bound by and take

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no actions contrary to the provisions of the Term Loan Intercreditor Agreement.

20. Notices. Section 13.3(a) of the Loan Agreement is hereby amended by deleting the notice addresses provided therein in their entirety and replacing them as follows:

“If to any Borrower or Guarantor:	Latrobe Steel Company 2626 Ligonier Street P.O. Box 31 Latrobe, Pennsylvania 15650 Attention: Dale B. Mikus Telephone No.: (724) 532-6306 Telecopy No.: (724) 532-6362 Email: Dale.Mikus@latrobesteel.com
with a copy to:	Weil Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attention: Andrew Colao Telephone No.: (212) 310-8830 Telecopy No.: (212) 310-8007 Email: andrew.colao@weil.com
If to Agent or Issuing Bank:	Wachovia Bank, National Association 12 East 49th Street New York, New York 10017 Attention: Portfolio Manager-Latrobe Telephone No.: (212) 545-4491 Telecopy No.: (212) 545-4283”

21. Intercreditor Agreement. Section 13 of the Loan Agreement is hereby amended by adding the following new Section 13.11 at the end thereof:

“13.11 Intercreditor Agreement. Until such time that the Term Loan has been discharged, notwithstanding anything herein to the contrary, the exercise of any right or remedy by the Agent or the Lenders hereunder with respect to any Term Loan Priority Collateral and any requirement for Borrowers and Guarantors to deliver, endorse, remit, assign, notate or give control of any Term Loan Priority Collateral to or in favor of Agent or Lenders is subject to the provisions of the Term Loan Intercreditor Agreement.”

22. Form of Excess Cash Flow Certificate. Annexed hereto an Exhibit A is the form

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of Excess Cash Flow Certificate, which shall constitute Exhibit G to the Loan Agreement.

23. Term Loan Priority Collateral. Exhibit B annexed hereto (which sets forth the Term Loan Priority Collateral), shall constitute Exhibit H to the Loan Agreement.

24. Authorization. The Supermajority Lenders, by their signatures hereto, hereby authorize the Agent to enter into the Term Loan Intercreditor Agreement in the form annexed hereto as Exhibit C, with such changes and modifications as Agent deems necessary or desirable and each Lender agrees that it is and will be bound (as a Lender) by the terms and conditions of the Term Loan Intercreditor Agreement, whether or not executed by such Lender.

25. Amendment Fee. In consideration of the amendments set forth herein, Borrowers shall on the date hereof, pay to Agent, for the account of Lenders who have executed this Amendment No. 3 on or before the date hereof, or Agent, at its option, may charge the loan account of Borrowers maintained by Agent, an amendment fee in the aggregate amount equal to $437,500, which fee is fully earned and payable as of the date hereof and shall constitute part of the Obligations.

26. Representations and Warranties. Borrowers and Guarantors, jointly and severally, represent and warrant with and to Agent and Lenders as follows, which representations and warranties shall survive the execution and delivery hereof, the truth and accuracy of, or compliance with each, together with the representations, warranties and covenants in the other Financing Agreements, being a continuing condition of the making of Revolving Loans and providing Letters of Credit to Borrowers:

(a) no Default or Event of Default exists or has occurred and is continuing;

(b) this Amendment No. 3 and each other agreement to be executed and delivered by Borrowers and Guarantors in connection herewith has been duly authorized, executed and delivered by all necessary action on the part of each Borrower and Guarantor which is a party hereto and, if necessary, their respective equity holders and is in full force and effect as of the date hereof, as the case may be, and the agreements and obligations of each of the Borrowers and Guarantors, as the case may be, contained herein and therein constitute legal, valid and binding obligations of each of the Borrowers and Guarantors, enforceable against them in accordance with their terms;

(c) the execution, delivery and performance of this Amendment No. 3 (i) are all within each Borrower’s and Guarantor’s corporate powers and (ii) are not in contravention of law or the terms of any Borrower’s or Guarantor’s certificate or articles of incorporation, by laws, or other organizational documentation, or any indenture, agreement or undertaking to which any Borrower or Guarantor is a party or by which any Borrower or Guarantor or its property are bound; and

(d) all of the representations and warranties set forth in the Loan Agreement and the other Financing Agreements, each as amended hereby, are true and correct in all material

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respects on and as of the date hereof, as if made on the date hereof, except to the extent any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct as of such date.

27. Conditions Precedent. The amendments contained herein shall only be effective upon the satisfaction of each of the following conditions precedent in a manner satisfactory to Agent:

(a) Agent shall have received counterparts of this Amendment No. 3, duly authorized, executed and delivered by Borrowers and Guarantors, and the Supermajority Lenders;

(b) Agent shall have received the consent or authorization from such Lenders as are required for the amendments provided for herein to execute this Amendment No. 3 on behalf of the Lenders;

(c) Agent shall have received, in form and substance satisfactory to Agent, the Term Loan Intercreditor Agreement, duly authorized, executed and delivered by Term Loan Agent;

(d) Agent shall have received, in form and substance satisfactory to Agent, true, correct and complete copies of each of the Term Loan Documents;

(e) Agent shall have received evidence, in form and substance satisfactory to Agent, that the Mezzanine Note Documents have been terminated and the Indebtedness arising in connection therewith has been paid in full;

(f) Agent shall have received a true and correct copy of each consent, waiver or approval (if any) to or of this Amendment No. 3, which Borrowers and Guarantors are required to obtain from any other Person, and such consent, approval or waiver (if any) shall be in form and substance reasonably satisfactory to Agent; and

(g) no Default or Event of Default shall have occurred and be continuing.

28. Effect of this Amendment. Except as expressly set forth herein, no other amendments, consents, changes or modifications to the Financing Agreements are intended or implied, and in all other respects the Financing Agreements are hereby specifically ratified, restated and confirmed by all parties hereto as of the effective date hereof and Borrowers and Guarantors shall not be entitled to any other or further amendment or consent by virtue of the provisions of this Amendment No. 3 or with respect to the subject matter of this Amendment No. 3. To the extent of conflict between the terms of this Amendment No. 3 and the other Financing Agreements, the terms of this Amendment No. 3 shall control. The Loan Agreement and this Amendment No. 3 shall be read and construed as one agreement.

29. Governing Law. The validity, interpretation and enforcement of this Amendment

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No. 3 and any dispute arising out of the relationship between the parties hereto whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

30. Binding Effect. This Amendment No. 3 shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

31. Further Assurances. Borrowers and Guarantors shall execute and deliver such additional documents and take such additional action as may be reasonably requested by Agent to effectuate the provisions and purposes of this Amendment No. 3.

32. Entire Agreement. This Amendment No. 3 represents the entire agreement and understanding concerning the subject matter hereof among the parties hereto, and supersedes all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written.

33. Headings. The headings listed herein are for convenience only and do not constitute matters to be construed in interpreting this Amendment No. 3.

34. Counterparts. This Amendment No. 3 may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Amendment No. 3 by telefacsimile or other electronic method of transmission shall have the same force and effect as delivery of an original executed counterpart of this Amendment No. 3. Any party delivering an executed counterpart of this Amendment No. 3 by telefacsimile or other electronic method of transmission shall also deliver an original executed counterpart of this Amendment No. 3, but the failure to do so shall not affect the validity, enforceability, and binding effect of this Amendment No. 3.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3 to be duly executed and delivered by their authorized officers as of the day and year first above written.

WELLS FARGO BANK, NATIONAL ASSOCIATION, successor by merger to Wachovia Bank, National Association, as Agent and a Lender
By:	[Illegible]
Title:	V.P.

LATROBE STEEL COMPANY
By:	[Illegible]
Title:	Vice President
OH&R SPECIAL STEELS COMPANY
By:	[Illegible]
Title:	Vice President
SPECIALTY STEEL SUPPLY, INC.
By:	[Illegible]
Title:	Vice President
TOOLROCK HOLDING, INC.
By:	[Illegible]
Title:	Vice President

Amendment No. 3 to LSA - Latrobe

PNC BANK NATIONAL, ASSOCIATION (as successor to National City Business Credit, Inc.), as a Lender
By:	[Illegible]
Title:	AVP

Amendment No. 3 to LSA - Latrobe

BANK OF AMERICA, N.A. (as successor by merger to LaSalle Business Credit, LLC), as a Lender
By:	[Illegible]
Title:	SVP

Amendment No. 3 to LSA - Latrobe

RZB FINANCE LLC, as a Lender
By:	/s/ JOHN A. VALISKA
Title:	First Vice President
By:	/s/ MARTA MILLER
Title:	Vice President

Amendment No. 3 to LSA - Latrobe

U.S. BANK NATIONAL ASSOCIATION, as a Lender
By:	[Illegible]
Title:	[Illegible]

Amendment No. 3 to LSA - Latrobe

SOVEREIGN BANK, as a Lender
By:	/s/ Charles H. O’Donnell
Title:	Senior Vice President

EXHIBIT A TO

AMENDMENT NO. 3 TO

LOAN AND SECURITY AGREEMENT

EXHIBIT G

TO

LOAN AND SECURITY AGREEMENT

Form of Excess Cash Flow Prepayment Certificate

See attached.

Amendment No. 3 to LSA - Latrobe

EXHIBIT G

to

LOAN AND SECURITY AGREEMENT

Form of Excess Cash Flow Certificate

EXCESS CASH FLOW CERTIFICATE

Date:                     , 201    

This Excess Cash Flow Certificate (this “Certificate”) is given by Toolrock Holding, Inc., a Delaware corporation (“Parent”) pursuant to clause (a) of the definition of Excess Cash Flow Prepayment Conditions set forth in the Loan and Security Agreement, dated March 6, 2008, among Latrobe Steel Company, a Pennsylvania corporation (“Latrobe”), OH&R Special Steels Company, a Delaware corporation (“OH&R”), Specialty Steel Supply, Inc., a Texas corporation (“Specialty Steel” and together with Latrobe and OH&R, collectively, “Borrowers” and each individually, a “Borrower”), Parent, Wells Fargo Bank, National Association, successor by merger to Wachovia Bank, National Association, in its capacity as agent pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf of the financial institutions which are parties thereto as lenders (in such capacity, “Agent”), and the financial institutions which are parties to the Loan Agreement as lenders (individually, each a “Lender” and collectively, “Lenders”) (as such agreement now exists and may hereafter be further amended, modified supplemented, extended, renewed, restated or replaced, the “Loan Agreement”). Capitalized terms used herein without definition shall have the meanings set forth in the Loan Agreement.

The officer executing this Certificate is the Chief Financial Officer of Parent and, as such, is duly authorized pursuant to the Loan Agreement to execute and deliver this certificate on behalf of Borrowers. By executing this Certificate, such Chief Financial Officer hereby certifies to Agent and Lenders that:

(a) set forth below is a correct calculation of Excess Cash Flow for the fiscal year ended September 30, 201_ and a correct calculation of the required prepayment of $                 ;

(b) the schedule set forth below is based on the audited financial statements which have been delivered to Agent in accordance with Section 9.6(a) of the Loan Agreement.

IN WITNESS WHEREOF, Parent has caused this Certificate to be executed by its Chief Financial Officer this              day of                     , 201    .

TOOLROCK HOLDING, INC.

By:

Name:

Title:

Excess Cash Flow, for any period, is defined as follows:

EBITDA of Parent and its Subsidiaries (as calculated per the Compliance Certificate attached as Exhibit D to the Loan Agreement)		$
Less:	the cash portion of Capital Expenditures made by the Parent and its Subsidiaries to the extent permitted to be made under the Loan Agreement	$
	income taxes paid by the Parent and its Subsidiaries in cash	$
	Interest Expenses paid in cash by the Parent and its Subsidiaries to the extent permitted to be paid under the Loan Agreement	$
	principal, fees and other payment obligations paid by the Parent and its Subsidiaries with respect to Indebtedness other than (x) principal payments in respect of the Term Loan (including in connection with a refinancing of any Indebtedness) to the extent permitted to be made under the Loan Agreement and to the extent paid during such period and (y) principal payments in respect of the Obligations (including in connection with a refinancing of any such Indebtedness) to the extent permitted to be made under the Loan Agreement and to the extent paid during such period (unless such payment is made in connection with a mandatory prepayment pursuant to the Loan Agreement)	$
	cash payments paid under Capital Leases during such period	$
	cash contributions for pensions and OPEB obligations in excess of the annually non-cash expensed amounts reflected in Parent’s and its Subsidiaries’ income statement	$
	the aggregate amount of Capital Expenditures during such period committed to be made in the next twelve (12) months under legally binding agreements by Parent and its Subsidiaries in an aggregate amount not to exceed $2,000,000 to the extent such committed Capital Expenditures are permitted to be made under the Loan Agreement	$
Excess Cash Flow		$
Prepayment percent*		%
Prepayment amount		$

* Percentage determined by Excess Availability as set forth in Section 9.9(h)(ii)(C) of the Loan Agreement.

2

EXHIBIT B TO

AMENDMENT NO. 3 TO

LOAN AND SECURITY AGREEMENT

EXHIBIT H

TO

LOAN AND SECURITY AGREEMENT

Term Loan Priority Collateral

The term “Term Loan Priority Collateral” shall mean all of the following property now owned or at any time hereafter acquired by any Borrower or Guarantor, in which such Borrower or Guarantor now has or at any time in the future may acquire any right, title or interests:

(a) all Equipment;

(b) all owned real property and Fixtures;

(c) all Pledged Stock;

(d) all Intellectual Property;

(e) all Term Loan Priority Accounts;

(f) all Chattel Paper (including all Tangible Chattel Paper and Electronic Chattel Paper) arising in connection with or directly related to any of the Term Loan Priority Collateral described in clauses (a) through (e) above;

(g) all Instruments (including any Promissory Notes) arising in connection with or directly related to any of the Term Loan Priority Collateral described in clauses (a) through (e) above;

(h) all Documents arising in connection with or directly related to any of the Term Loan Priority Collateral described in clauses (a) through (e) above;

(i) all Letters of Credit, Letter of Credit Rights, banker’s acceptances and similar instruments arising in connection with or directly related to any of the Term Loan Priority Collateral described in clauses (a) through (e) above;

(j) all Supporting Obligations arising in connection with or directly related to any of the Term Loan Priority Collateral described in clauses (a) through (e) above;

(k) all Investment Property (including securities, whether certificated or uncertificated, securities accounts, security entitlements, commodity contracts or commodity

Amendment No. 3 to LSA - Latrobe

accounts) and all monies, credit balances, deposits and other property in each case arising in connection with or directly related to any of the Term Loan Priority Collateral described in clauses (a) through (e) above; and

(l) all products and Proceeds of the foregoing, in any form, including insurance proceeds and all claims against third parties for loss or damage to or destruction of or other involuntary conversion of any kind of nature of any or all of the Term Loan Priority Collateral.

For purposes of this Exhibit H, the following terms shall have the meanings given to them below:

The (a) terms “Chattel Paper,” “Documents,” “Electronic Chattel Paper,” “Equipment,” “Fixtures,” “Instrument,” “Investment Property,” “Letter of Credit Rights,” “Promissory Note,” “Supporting Obligation,” “Tangible Chattel Paper,” shall have their meanings as set forth in Article 9 of the Uniform Commercial Code as from time to time in effect in the State of New York (“UCC”), and (b) term “Letters of Credit” shall its meaning as set forth in defined in Article 5 of the UCC.

“Copyright Licenses” shall mean any and all agreements providing for the granting of any right in or to Copyrights (whether such Borrower or Guarantor is licensee or licensor thereunder).

“Copyrights” shall mean all United States, and foreign copyrights, including but not limited to copyrights in software and databases, and all Mask Works (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, and, with respect to any and all of the foregoing, including but not limited to: (i) all registrations and applications therefor, (ii) all extensions and renewals thereof, (iii) all rights corresponding thereto throughout the world, (iv) all rights to sue for past, present and future infringements thereof, and (v) all Proceeds of the foregoing, including, without limitation, licenses, royalties, income, payments, claims, damages and proceeds of suit.

“Intellectual Property” shall mean, collectively, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses.

“Patent Licenses” shall mean all agreements providing for the granting of any right in or to Patents (whether such Borrower or Guarantor is licensee or licensor thereunder).

“Patents” shall mean all United States and foreign patents and certificates of invention, or similar industrial property rights, and applications for any of the foregoing, including but not limited to: (i) all registrations and applications referred to in Schedule A of the Patent Security Agreement which is part of the Term Loan Documents, (ii) all reissues, divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations thereof, (iii) all rights corresponding thereto throughout the world, (iv) all inventions and improvements described therein, (v) all rights to sue for past, present and future infringements thereof, (vi) all licenses,

Amendment No. 3 to LSA - Latrobe

claims, damages, and proceeds of suit arising therefrom, and (vii) all Proceeds of the foregoing, including, without limitation, licenses, royalties, income, payments, claims, damages, and proceeds of suit.

“Pledged Stock” shall mean the shares of Capital Stock (as defined in the Term Loan Agreement) of any Borrower, any Guarantor (other than Parent) or any Subsidiary of any Borrower or any Guarantor.

“Proceeds” shall mean: all “proceeds” as defined in Article 9 of the UCC, and in any event, shall include, without limitation whatever is receivable or received when Term Loan Priority Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary.

“Term Loan Priority Account” shall mean any deposit account which is required to be established pursuant to Section 2.2 of the Term Loan Agreement and on which the Term Loan Agent has a first priority lien.

“Trademark Licenses” shall mean any and all agreements providing for the granting of any right in or to Trademarks (whether such Borrower or Guarantor is licensee or licensor thereunder).

“Trademarks” shall mean all United States, and foreign trademarks, trade names, corporate names, company names, business names, fictitious business names, Internet domain names, service marks, certification marks, collective marks, logos, other source or business identifiers, designs and general intangibles of a like nature, all registrations and applications for any of the foregoing including, including but not limited to: (i) all registrations and applications referred to in Schedule A of the Trademark Security Agreement which is part of the Term Loan Documents, (ii) all extensions or renewals of any of the foregoing, (iii) all of the goodwill of the business connected with the use of and symbolized by the foregoing, (iv) the right to sue for past, present and future infringement or dilution of any of the foregoing or for any injury to goodwill, and (v) all Proceeds of the foregoing, including, without limitation, licenses, royalties, income, payments, claims, damages, and proceeds of suit.

“Trade Secret Licenses” shall mean any and all agreements providing for the granting of any right in or to Trade Secrets (whether such Borrower of Guarantor is licensee or licensor thereunder).

“Trade Secrets” shall mean trade secrets, confidential information, know-how, manufacturing, system process, techniques, designs, prototypes, enhancements, improvements, work-in progress, and research and development information.

Amendment No. 3 to LSA - Latrobe

EXHIBIT C TO

AMENDMENT NO. 3 TO

LOAN AND SECURITY AGREEMENT

Term Loan Intercreditor Agreement

See attached.

Amendment No. 3 to LSA - Latrobe

[Execution]

INTERCREDITOR AGREEMENT

INTERCREDITOR AGREEMENT, dated as of July 30, 2010, among Wells Fargo Bank, National Association, in its capacity as administrative and collateral agent for the Revolving Loan Secured Parties (in such capacity, the “Revolving Loan Agent” as hereinafter further defined), and The Bank of New York Mellon, in its capacity as agent for the Term Loan Secured Parties (in such capacity, “Term Loan Agent” as hereinafter further defined).

W I T N E S S E T H :

WHEREAS, Latrobe Steel Company, a Pennsylvania corporation (“Latrobe”), OH&R Special Steels Company, a Delaware corporation (“OH&R”), Specialty Steel Supply, Inc., a Texas corporation (“Specialty Steel” and together with Latrobe and OH&R, each individually a “Borrower” and collectively, “Borrowers”), and Toolrock Holding, Inc., a Delaware corporation (“Parent”, sometimes individually referred to herein as a “Guarantor” and collectively, “Guarantors” as hereinafter further defined) have entered into a secured revolving credit facility with the Revolving Loan Agent and the lenders and other parties for whom it is acting as agent as set forth in the Revolving Loan Agreement (as hereinafter defined) pursuant to which, among other things, such lenders have made and from time to time may make loans and provide other financial accommodations to Borrowers which are guaranteed by Guarantors and secured by substantially all of the assets of Borrowers and Guarantors;

WHEREAS, Borrowers and Guarantors have entered into a secured term loan facility with the Term Loan Agent and the lenders and other parties for whom it is acting as agent as set forth in the Term Loan Agreement (as hereinafter defined) pursuant to which, among other things, such lenders have made a term loan to Borrowers which are guaranteed by Guarantors and secured by substantially all of the assets of Borrowers and Guarantors;

WHEREAS, Revolving Loan Agent, the other Revolving Loan Secured Parties, Term Loan Agent and the other Term Loan Secured Parties (as hereinafter defined) desire to enter into this Intercreditor Agreement to (i) confirm the relative priority of the security interests of Revolving Loan Agent and Term Loan Agent in the assets and properties of Borrowers and Guarantors, (ii) provide for the orderly sharing among them, in accordance with such priorities, of proceeds of such assets and properties upon any foreclosure thereon or other disposition thereof and (iii) address related matters;

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

Section 1. Definitions; Interpretation

1.1 Definitions. As used in this Agreement, the following terms have the meanings specified below:

“Agents” shall mean, collectively, the Revolving Loan Agent and the Term Loan Agent, sometimes being referred to herein individually as an “Agent”.

“Agreement” shall mean this Intercreditor Agreement, as amended, amended and restated, renewed, extended, supplemented or otherwise modified or replaced from time to time in accordance with the terms hereof.

“Availability” shall mean, at any time, the sum of the aggregate principal amount of Loans (as such term is defined in the Revolving Loan Agreement as in effect on the date hereof) and letters of credit available to Borrowers from Revolving Credit Lenders based on the applicable percentages (as in effect on the date hereof) of Eligible Accounts and Eligible Inventory (as such terms are defined in the Revolving Loan Agreement as in effect on the date hereof) set forth in the definition of Borrowing Base (as such term is defined in the Revolving Loan Agreement as in effect on the date hereof) (determined without regard to any such loans or letters of credit then outstanding), and, accordingly, the term “Availability” is used herein to mean the aggregate amount of loans and letters of credit available without any reduction for the amount of loans or letters of credit outstanding. The term “Availability” shall be calculated by including the reductions from the amount of loans and letters of credit available calculated in the Borrowing Base as may be reduced by the Reserves (as such term is defined in the Revolving Loan Agreement) in accordance with the terms and conditions of the Revolving Loan Agreement as in effect on the date hereof.

“Bank Product Obligations” shall mean Cash Management Obligations and Hedging Obligations.

“Bankruptcy Code” shall mean the United States Bankruptcy Code, being Title 11 of the United States Code, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented.

“Bankruptcy Law” shall mean the Bankruptcy Code and any similar Federal, state or foreign law for the relief of debtors.

“Borrowers” shall mean shall mean, collectively, the following (together with their respective successors and assigns): (a) Latrobe Steel Company, a Pennsylvania corporation, (b) OH&R Special Steels Company, a Delaware corporation, (c) Specialty Steel Supply, Inc., a Texas corporation; and (d) any other Person that at any time after the date hereof becomes a Borrower; each sometimes being referred to herein individually as a “Borrower”.

“Business Day” shall mean any day other than a Saturday, a Sunday or a day that is a legal holiday under the laws of the States of California, North Carolina, or New York or on which banking institutions in the States of California, North Carolina or New York are required or authorized by law or other governmental action to close.

“Cash Management Obligations” shall mean with respect to any Person, the obligations of such Person in connection with: (a) credit cards, debit cards or stored value cards or the processing of payments and other administrative services with respect to credit cards, debit cards or stored value cards or (b) cash management or related services, including (i) the

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automated clearinghouse transfer of funds for the account of such Person pursuant to agreement or overdraft for any accounts of such Person, and (ii) controlled disbursement services.

“Collateral” shall mean, collectively, the Revolving Loan Priority Collateral and the Term Loan Priority Collateral.

“Default” shall have the meaning given in the Revolving Loan Agreement.

“DIP Financing” shall have the meaning set forth in Section 6.2 hereof.

“Discharge of Revolving Loan Debt” shall mean (a) the termination of the commitments of the Revolving Credit Lenders and the financing arrangements provided by Revolving Loan Agent and the other Revolving Credit Lenders to Grantors under the Revolving Loan Documents that constitutes Maximum Priority Revolving Loan Debt, (b) the final payment in full in cash (or other consideration acceptable to the Revolving Credit Lenders in their sole discretion) of the Revolving Loan Debt (other than the Revolving Loan Debt described in clause (c) of this definition) that constitutes Maximum Priority Revolving Loan Debt, (c) payment in full in cash of cash collateral, or at Revolving Loan Agent’s option, the delivery to Revolving Loan Agent of a letter of credit payable to Revolving Loan Agent, in either case as required under the terms of the Revolving Loan Agreement, in respect of letters of credit issued under the Revolving Loan Documents, Bank Product Obligations, continuing obligations of Revolving Loan Agent and Revolving Credit Lenders under control agreements and other contingent Revolving Loan Debt that constitutes Maximum Priority Revolving Loan Debt. If after receipt of any payment of, or proceeds of Collateral applied to the payment of, the Maximum Priority Revolving Loan Debt, Revolving Loan Agent or any other Revolving Loan Secured Party is required to surrender or return such payment or proceeds to any person for any reason, then the Revolving Loan Debt intended to be satisfied by such payment or proceeds shall be reinstated and continue and this Agreement shall continue in full force and effect as if such payment or proceeds had not been received by such Revolving Loan Agent or other Revolving Loan Secured Party, as the case may be, and no Discharge of Revolving Loan Debt shall be deemed to have occurred.

“Discharge of Term Loan Debt” shall mean the final payment in full in cash of the Term Loan Debt that constitutes Maximum Priority Term Loan Debt. If after receipt of any payment of, or proceeds of Collateral applied to the payment of, the Maximum Priority Term Loan Debt, Term Loan Agent or any other Term Loan Secured Party is required to surrender or return such payment or proceeds to any person for any reason, then the Term Loan Debt intended to be satisfied by such payment or proceeds shall be reinstated and continue and this Agreement shall continue in full force and effect as if such payment or proceeds had not been received by such Term Loan Agent or other Term Loan Secured Party, as the case may be, and no Discharge of Term Loan Debt shall be deemed to have occurred.

“Event of Default” shall have the meaning given in the Revolving Loan Agreement.

“Excess Availability” shall have the meaning given in the Revolving Loan Agreement as in effect on the date hereof.

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“Excess Cash Flow Prepayment” shall mean any mandatory prepayment in respect of the outstanding principal amount of the Term Loan from Excess Cash Flow (as defined in the Term Loan Agreement (as in effect on the date hereof)) made pursuant to Section 2.2(a) of the Term Loan Agreement (as in effect on the date hereof) and permitted by Section 9.9(h)(ii)(C) of the Revolving Loan Agreement (as in effect on the date hereof).

“Excess Cash Flow Prepayment Conditions” shall mean, each of the following conditions precedent to making an Excess Cash Flow Prepayment: (a) within one hundred twenty (120) days after the end of any fiscal year of Borrowers and Guarantors (commencing with the fiscal year ending September 30, 2011), Revolving Loan Agent shall have received from the chief financial officer of Parent, a certificate, in the form of Exhibit G attached to the Revolving Loan Agreement, setting forth the calculation of the Excess Cash Flow (as defined in the Term Loan Agreement as in effect on the date hereof) for such fiscal year, (b) only one such Excess Cash Flow Prepayment is permitted to be made with respect to any such fiscal year and such payment shall be made within thirty (30) days after the receipt by Revolving Loan Agent of the audited consolidated financial statements of Parent and its Subsidiaries for such fiscal year as required by and in accordance with Section 9.6 (a)(iii) of the Revolving Loan Agreement (the “Excess Cash Flow Prepayment Period”), (c) after giving effect to any Excess Cash Flow Prepayment, the average Excess Availability for the consecutive thirty (30) calendar day period ending on the day prior to such payment shall be equal to or greater than $30,000,000, (d) on the date of any such Excess Cash Flow Prepayment and after giving effect thereto, Excess Availability shall be equal to or greater than $30,000,000, (e) Revolving Loan Agent shall have received a Pro Forma Compliance Certificate (as defined in the Revolving Loan Agreement) demonstrating that, upon giving effect on a Pro Forma Basis (as defined in the Revolving Loan Agreement) to such Excess Cash Flow Prepayment, (i) the Fixed Charge Coverage Ratio (as defined in the Revolving Loan Agreement) for Parent and its Subsidiaries is equal to or greater than 1.00 to 1.00 and (ii) Excess Availability shall be equal to or greater than $30,000,000 for each of the first thirty (30) days after giving effect to such payment, and (f) on the date of any Excess Cash Flow Prepayment and after giving effect thereto, no Default (as defined in the Revolving Loan Agreement) or Event of Default (as defined in the Revolving Loan Agreement) shall have occurred and be continuing.

“Grantors” shall mean, collectively, Borrowers, Guarantors and each Subsidiary of Borrowers or Guarantors that shall have created a Lien on its assets to secure any Revolving Loan Debt or Term Loan Debt, together with their respective successors and assigns; sometimes being referred to herein individually as a “Grantor”.

“Guarantors” shall mean shall mean, collectively, (a) Toolrock Holding, Inc., a Delaware corporation, (b) any other person that at any time after the date hereof becomes a party to a guarantee in favor of Revolving Loan Agent or the Revolving Credit Lenders in respect of any of the Revolving Loan Debt or Term Loan Agent or the Term Loan Lenders in respect of any of the Term Loan Debt, and (c) their respective successors and assigns; sometimes being referred to herein individually as a “Guarantor”.

“Hedging Obligations” shall mean, with respect to any Person, the obligations of such Person under (a) interest rate swap agreements, interest rate cap agreements and interest rate

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collar agreements and (b) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or the value of foreign currencies.

“Insolvency or Liquidation Proceeding” shall mean (a) any voluntary or involuntary case or proceeding under any Bankruptcy Law with respect to any Grantor, (b) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to any Grantor or with respect to any of their respective assets, (c) any proceeding seeking the appointment of any trustee, receiver, liquidator, custodian or other insolvency official with similar powers with respect to such Person or any or all of its assets or properties, (d) any liquidation, dissolution, reorganization or winding up of any Grantor whether voluntary or involuntary and whether or not involving insolvency or bankruptcy or (e) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of any Grantor.

“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest intended as security for an obligation, encumbrance (including, but not limited to, easements, rights of way and the like), lien (statutory or other), security agreement or transfer intended as security for an obligation, including without limitation, any conditional sale or other title retention agreement, the interest of a lessor under a capital lease or any financing lease having substantially the same economic effect as any of the foregoing.

“Maximum Priority Cash Management Obligations” shall mean, as of any date of determination, the amount of the Revolving Loan Debt constituting Cash Management Obligations that is in excess of any reserve established with respect thereto by Revolving Loan Agent under the terms of the Revolving Loan Agreement outstanding on such date, up to $2,000,000 in the aggregate at any one time outstanding.

“Maximum Priority Hedging Obligations” shall mean, as of any date of determination, the amount of the Revolving Loan Debt constituting Hedging Obligations that is in excess of any reserve established with respect thereto by Revolving Loan Agent under the terms of the Revolving Loan Agreement outstanding on such date, up to $2,000,000 in the aggregate at any one time outstanding.

“Maximum Priority Revolving Loan Debt” shall mean, as of any date of determination, the sum of (a) the lesser of (i) the Maximum Credit (as such term is defined in the Revolving Loan Agreement) or (ii) the Availability, plus (b) the lesser of (i) $7,500,000 or (ii) ten (10%) percent of the lesser of (i) the amount of the Maximum Credit then in effect or (ii) Availability, plus (c) the amount of any interest (including default interest) on such amount (and including, without limitation, any interest that would accrue and become due but for the commencement of Insolvency or Liquidation Proceeding, whether or not such amounts are allowed or allowable in whole or in part in such case or similar proceeding), plus (d) the Maximum Priority Cash Management Obligations, plus (e) the Maximum Priority Hedging Obligations, plus (f) any fees, costs, expenses and indemnities payable under any of the Revolving Loan Documents (and including, without limitation, any fees, costs, expenses and indemnities that would accrue and become due but for the commencement of Insolvency or Liquidation Proceeding, whether or not such amounts are allowed or allowable in whole or in

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part in such case or similar proceeding), minus (g) the aggregate amount of all permanent reductions of the Commitments under (and as defined in) the Revolving Loan Agreement made from and after the date hereof; provided, that, the portion of the aggregate outstanding principal of loans and letters of credit that are made or issued pursuant to the Revolving Loan Documents but that are not made or issued intentionally or with actual knowledge that such loans and letters of credit cause the aggregate principal amount of loans and letters of credit to exceed the amount equal to the Availability plus ten (10%) percent of the amount of the Maximum Credit then in effect (plus the lesser of (i) $7,500,000 or (ii) ten (10%) percent of the lesser of (A) the amount of the Maximum Credit then in effect or (B) Availability) calculated at the time made or issued shall be included, together with related interest, fees, indemnities, costs and expenses arising under the Revolving Loan Documents, in the term Maximum Priority Revolving Loan Debt, as used herein.

“Maximum Priority Term Loan Debt” shall mean, as of any date of determination, (a) the sum of (i) the principal amount of up to (A) $50,000,000 (provided, that, such amount may be increased on a dollar-for-dollar basis up to $5,000,000 to reflect the principal amount of any additional term loans made by Term Loan Lenders pursuant to the Term Loan Agreement after the date hereof but prior to the commencement of any case with respect to any Grantor under the Bankruptcy Code or any other Insolvency or Liquidation Proceeding), plus (B) the amount of post-petition financing (if any) provided as permitted pursuant to Section 6.2(b) hereof, minus (ii) the aggregate amount of all principal payments and prepayments of the Term Loan Debt received by Term Loan Agent or the Term Loan Lenders plus (b) the amount of any interest (including default interest and any interest that is payable in kind) on such amount (and including, without limitation, any interest that would accrue and become due but for the commencement of Insolvency or Liquidation Proceeding, whether or not such amounts are allowed or allowable in whole or in part in such case or similar proceeding), plus (c) any prepayment premium fees, costs, expenses and indemnities payable under any of the Term Loan Documents (and including, without limitation, any fees, costs, expenses and indemnities that would accrue and become due on such amounts but for the commencement of Insolvency or Liquidation Proceeding, whether or not such amounts are allowed or allowable in whole or in part in such case or similar proceeding).

“Person” or “person” shall mean any individual, sole proprietorship, partnership, corporation (including, without imitation, any corporation which elects subchapter S status under the Internal Revenue Code of 1986, as amended), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock company, trust, joint venture, or other entity or any government or any agency or instrumentality or political subdivision thereof.

“Pledged Collateral” shall have the meaning set forth in Section 5.1 hereof.

“Recovery” shall have the meaning set forth in Section 6.8 hereof.

“Revolving Credit Lenders” shall mean, collectively, any person party to the Revolving Loan Documents as lender (and including any other lender or group of lenders that at any time refinances, replaces or succeeds to all or any portion of the Revolving Loan Debt or is

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otherwise party to the Revolving Loan Documents as a lender); sometimes being referred to herein individually as a “Revolving Credit Lender”.

“Revolving Loan Agent” shall mean Wells Fargo Bank, National Association, and its successors and assigns in its capacity as administrative and collateral agent pursuant to the Revolving Loan Documents acting for and on behalf of itself and the other Revolving Loan Secured Parties and any successor or replacement agent.

“Revolving Loan Agreement” shall mean the Loan and Security Agreement, dated as of March 6, 2008, by and among Grantors, Revolving Loan Agent and Revolving Credit Lenders, as the same now exists or may hereafter be amended, amended and restated, modified, supplemented, extended, renewed, restated, refinanced or replaced.

“Revolving Loan Debt” shall mean all “Obligations” as such term is defined in the Revolving Loan Agreement, including, without limitation, obligations, liabilities and indebtedness of every kind, nature and description owing by any Grantor to any Revolving Loan Agent and any other Revolving Loan Secured Party, including principal, interest, charges, fees, premiums, indemnities and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under any of the Revolving Loan Documents, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Revolving Loan Documents or after the commencement of any case with respect to any Grantor under the Bankruptcy Code or any other Insolvency or Liquidation Proceeding (and including, without limitation, any principal, interest, fees, costs, expenses and other amounts, which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case or similar proceeding), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured.

“Revolving Loan Documents” shall mean, collectively, the Revolving Loan Agreement and all agreements, documents and instruments at any time executed and/or delivered by any Grantor or any other person to, with or in favor of any Revolving Loan Secured Party in connection therewith or related thereto, as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated, refinanced, replaced or restructured (in whole or in part and including any agreements with, to or in favor of any other lender or group of lenders that any time refinances, replaces or succeeds to all or any portion of the Revolving Loan Debt).

“Revolving Loan Priority Collateral” shall mean all of the collateral granted by Grantors pursuant to the Revolving Loan Documents in favor of the Revolving Loan Agent to secure the Revolving Loan Debt other than the Term Loan Priority Collateral.

“Revolving Loan Secured Parties” shall mean, collectively, (a) the Revolving Loan Agent, (b) the Revolving Credit Lenders, (c) the issuing bank or banks of letters of credit or similar instruments under the Revolving Loan Agreement, (d) each other person to whom any of the Revolving Loan Debt (including Revolving Loan Debt constituting Bank Product Obligations) is owed, and (e) the successors, replacements and assigns of each of the foregoing: sometimes being referred to herein individually as a “Revolving Loan Secured Party”.

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“Secured Parties” shall mean, collectively, the Revolving Loan Secured Parties and the Term Loan Secured Parties; sometimes being referred to herein individually as a “Secured Party”.

“Subsidiary” means any “Subsidiary” of Borrowers as defined in the Revolving Loan Agreement.

“Term Loan Agent” shall mean The Bank of New York Mellon, and its successors and assigns in its capacity as administrative and collateral agent pursuant to the Term Loan Documents acting for and on behalf of itself and the other Term Loan Secured Parties and any successor or replacement agent.

“Term Loan Agreement” shall mean the Term Loan and Security Agreement, dated of even date herewith, by and among Borrowers, Term Loan Agent and Term Loan Lenders, as the same now exists or may hereafter be amended, amended and restated, modified, supplemented, extended, renewed, restated, refinanced or replaced.

“Term Loan Debt” shall mean all “Obligations” as such term is defined in the Term Loan Agreement, including, without limitation, obligations, liabilities and indebtedness of every kind, nature and description owing by any Grantor to any Term Loan Secured Party, including principal, interest, charges, fees, premiums, indemnities and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under any of the Term Loan Documents, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of the Term Loan Documents or after the commencement of any case with respect to any Grantor under the Bankruptcy Code or any other Insolvency or Liquidation Proceeding (and including, without limitation, any principal, interest, fees, costs, expenses and other amounts, which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case or similar proceeding), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, secured or unsecured.

“Term Loan Documents” shall mean, collectively, the Term Loan Agreement and all agreements, documents and instruments at any time executed and/or delivered by any Grantor or any other person to, with or in favor of any Term Loan Secured Party in connection therewith or related thereto, as all of the foregoing now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated, refinanced, replaced or restructured (in whole or in part and including any agreements with, to or in favor of any other lender or group of lenders that at any time refinances, replaces or succeeds to all or any portion of the Term Loan Debt).

“Term Loan Lenders” shall mean, collectively, any person party to the Term Loan Documents as lender (and including any other lender or group of lenders that at any time refinances, replaces or succeeds to all or any portion of the Term Loan Debt or is otherwise party to the Term Loan Documents as a lender); sometimes being referred to herein individually as a “Term Loan Lender”.

“Term Loan License Period” shall mean, with respect to any Intellectual Property, the longer of: (a) that period which is 240 days from the date on which the Term Loan Agent has

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notified the Revolving Loan Agent that the Term Loan Agent has acquired possession or control of such Intellectual Property (the date of such acquisition, the “Trigger Date”), (b) that period which ends on the earlier of the date of the (i) Discharge of the Term Loan Debt, (ii) the Discharge of the Revolving Loan Debt or (iii) the conversion of substantially all of the Term Loan Debt into any security of a Grantor (whether by virtue of the conversion of some or a portion of the Term Loan Debt to equity, credit bid of Term Loan Debt for Term Loan Priority Collateral or otherwise), (c) forty-five (45) days after Term Loan Agent has notified Revolving Loan Agent that a sale or other disposition of such Intellectual Property has occurred, so long as such sale or disposition occurs not less than 240 days from the Trigger Date.

“Term Loan Priority Account” shall mean any deposit account which is required to be established pursuant to Section 2.2 of the Term Loan Agreement and on which the Term Loan Agent has a first priority lien.

“Term Loan Priority Collateral” shall mean all collateral granted by Grantors pursuant to the Term Loan Documents in favor of Term Loan Agent to secure the payment of the Term Loan Debt as set forth in Exhibit A hereto.

“Term Loan Secured Parties” shall mean, collectively, (a) the Term Loan Agent, (b) the Term Loan Lenders, (c) each other person to whom any of the Term Loan Debt is owed and (d) the successors, replacements and assigns of each of the foregoing; sometimes being referred to herein individually as a “Term Loan Secured Party”.

“Third Party Purchaser” shall have the meaning set forth in Section 8.1 hereof.

“Triggering Event” means the occurrence of any one of the following events: (a) the occurrence and continuance of an Event of Default under the Revolving Loan Documents that remains unwaived for a period of at least ninety (90) days after any applicable cure period, (b) the acceleration of all or any portion of the Revolving Loan Debt, (c) the occurrence of any Insolvency or Liquidation Proceeding with respect to any Borrower or Guarantor, (d) the intentional cessation, termination or suspension by Revolving Loan Agent or all Revolving Credit Lenders in their commitment to provide revolving loans to Grantors for a period of seven (7) consecutive Business Days, (e) the exercise of remedies by the Revolving Loan Agent or the Revolving Loan Secured Parties against a Borrower or a Guarantor or their respective assets, (f) the occurrence and continuance of an Event of Default under the Revolving Loan Agreement resulting from the failure by any Borrower to pay when due any principal or interest in respect of the Revolving Loan Debt, or (g) the occurrence and continuance of an event of default under (and as defined in) the Term Loan Agreement resulting from the failure by any Borrower to pay when due any principal or interest in respect of the Term Loan Debt.

“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as from time to time in effect in the State of New York.

1.2 Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, (a) feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.

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The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (b) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented, refinanced, replaced, or otherwise modified as set forth herein, (c) any reference herein to any Person shall be construed to include such Person’s successors and assigns, and as to Borrowers, any Guarantor or any other Grantor shall be deemed to include a receiver, trustee or debtor-in-possession on behalf of any of such person or on behalf of any such successor or assign, (d) the words “herein”, “hereof and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) all references herein to Sections and Exhibits shall be construed to refer to Sections and Exhibits of this Agreement except as otherwise set forth herein and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

Section 2. Lien Priorities.

2.1 Acknowledgment of Liens.

(a) Revolving Loan Agent, on behalf of itself and each Revolving Credit Secured Party, hereby acknowledges that Term Loan Agent, acting for and on behalf of itself and the other Term Loan Secured Parties, has been granted Liens upon all of the Collateral pursuant to the Term Loan Documents to secure the Term Loan Debt.

(b) Term Loan Agent, on behalf of itself and each other Term Loan Secured Party, hereby acknowledges that Revolving Loan Agent, acting for and on behalf of itself and the Revolving Loan Secured Parties, has been granted Liens upon all of the Collateral pursuant to the Revolving Loan Documents to secure the Revolving Loan Debt.

2.2 Relative Priorities.

(a) Notwithstanding the date, manner or order of grant, attachment or perfection of any Liens granted to the Revolving Loan Agent or the Revolving Loan Secured Parties or the Term Loan Agent or the Term Loan Secured Parties and notwithstanding any provision of the UCC, or any other applicable law or any provisions of the Revolving Loan Documents or the Term Loan Documents or any other circumstance whatsoever:

(i) The Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties, hereby agrees that: (A) any Lien on the Revolving Loan Priority Collateral securing the Revolving Loan Debt (other than the amount thereof that exceeds the Maximum Priority Revolving Loan Debt) now or hereafter held by or for the benefit or on behalf of any Revolving Loan Secured Party or any agent or trustee therefor shall be senior in right, priority, operation, effect and in all other respects to any Lien on the Revolving Loan Priority Collateral securing the Term Loan Debt now or hereafter held by or for the benefit or on behalf of any Term Loan Secured Party or any agent or trustee therefor; and (B) any Lien on the Revolving Loan Priority Collateral securing any of the Term Loan Debt now or hereafter held by or for the benefit or on behalf of any Term Loan Secured Party or any agent or trustee therefor regardless

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of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Revolving Loan Priority Collateral securing any Revolving Loan Debt (other than the amount thereof that exceeds the Maximum Priority Revolving Loan Debt).

(ii) The Revolving Loan Agent, for itself and on behalf of the other Revolving Loan Secured Parties, hereby agrees that: (A) any Lien on the Term Loan Priority Collateral securing the Term Loan Debt (other than the amount thereof that exceeds the Maximum Priority Term Loan Debt) now or hereafter held by or for the benefit or on behalf of any Term Loan Secured Party or any agent or trustee therefor shall be senior in right, priority, operation, effect and in all other respects to any Lien on the Term Loan Priority Collateral securing the Revolving Loan Debt now or hereafter held by or for the benefit or on behalf of any Revolving Loan Secured Party or any agent or trustee therefor; and (B) any Lien on the Term Loan Priority Collateral securing the Revolving Loan Debt now or hereafter held by or for the benefit or on behalf of any Revolving Loan Secured Party or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Term Loan Priority Collateral securing any Term Loan Debt (other than the amount thereof that exceeds the Maximum Priority Term Loan Debt).

(iii) The Revolving Loan Agent, for itself and on behalf of the other Revolving Loan Secured Parties, hereby agrees that: (A) any Lien on the Revolving Loan Priority Collateral securing the Term Loan Debt now or hereafter held by or for the benefit or on behalf of any Term Loan Secured Party or any agent or trustee therefor shall be senior in right, priority, operation, effect and in all other respects to any Lien on the Revolving Loan Priority Collateral to the extent securing Revolving Loan Debt in excess of the Maximum Priority Revolving Loan Debt now or hereafter held by or for the benefit or on behalf of any Revolving Loan Secured Party or any agent or trustee therefor; and (B) any Lien on the Revolving Loan Priority Collateral securing any of the Revolving Loan Debt in excess of the Maximum Priority Revolving Loan Debt now or hereafter held by or for the benefit or on behalf of any Revolving Loan Secured Party or any agent or trustee therefore regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Revolving Loan Priority Collateral securing any Term Loan Debt.

(iv) The Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties, hereby agrees that: (A) any Lien on the Term Loan Priority Collateral securing the Revolving Loan Debt now or hereafter held by or for the benefit or on behalf of any Revolving Loan Secured Party or any agent or trustee therefor shall be senior in right, priority, operation, effect and in all other respects to any Lien on the Term Loan Priority Collateral to the extent securing the principal amount of any Term Loan Debt in excess of the Maximum Priority Term Loan Debt now or hereafter held by or for the benefit or on behalf of any Term Loan Secured Party or any agent or trustee therefor; and (B) any Lien on the Term Loan Priority Collateral securing any of the Term Loan Debt in excess of the Maximum Priority Term Loan Debt now or hereafter held by or for the benefit or on behalf of any Term Loan Secured Party or any agent or trustee therefor regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall be junior and subordinate in all respects to all Liens on the Term Loan Priority Collateral securing any Revolving Loan Debt.

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(b) As between Revolving Loan Secured Parties and Term Loan Secured Parties, the terms of this Intercreditor Agreement, including the priorities set forth above, shall govern even if part or all of the Revolving Loan Debt or Term Loan Debt or the Liens securing payment and performance thereof are not perfected or are subordinated, avoided, disallowed, set aside or otherwise invalidated in any judicial proceeding or otherwise.

2.3 Prohibition on Contesting Liens. Each of the Revolving Loan Agent, for itself and on behalf of the other Revolving Loan Secured Parties, and the Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties, agrees that it shall not (and hereby waives any right to) contest or support any other Person in contesting, in any proceeding (including any Insolvency or Liquidation Proceeding), the perfection, priority, validity or enforceability of a Lien held by or for the benefit or on behalf of any Revolving Loan Secured Party in any Collateral or by or on behalf of any Term Loan Secured Party in any Collateral, as the case may be; provided that nothing in this Agreement shall be construed to prevent or impair the rights of any Revolving Loan Secured Party or Term Loan Secured Party (a) to enforce this Agreement or (b) to vote any claim that the Revolving Loan Secured Parties or the Term Loan Secured Parties may have in an Insolvency or Liquidation Proceeding to accept or reject any plan or partial or complete liquidation, reorganization, arrangement, composition or extension; provided, that, notwithstanding any inconsistency between the terms of any such plan and the terms of this Agreement, the terms of this Agreement shall govern and control.

2.4 Similar Liens and Agreements. The parties hereto agree, subject to the other provisions of this Agreement, upon request by the Revolving Loan Agent or the Term Loan Agent, as the case may be, to advise the other from time to time of the Collateral for which such party has taken steps to perfect its Liens and to identify the parties obligated under the Revolving Loan Documents or Term Loan Documents, as the case may be.

Section 3. Enforcement.

3.1 Exercise of Rights and Remedies.

(a) The Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties:

(i) will not, so long as the Discharge of Revolving Loan Debt has not occurred, enforce or exercise, or seek to enforce or exercise, any rights or remedies (including any right of setoff or notification of account debtors) with respect to any Revolving Loan Priority Collateral (including the enforcement of any right under any lockbox agreement, account control agreement, landlord waiver or bailee’s letter or any similar agreement or arrangement to which the Term Loan Agent or any other Term Loan Secured Party is a party) or commence or join with any Person (other than Revolving Loan Agent with its consent) in commencing, or filing a petition for, any action or proceeding with respect to such rights or remedies (including any foreclosure action or proceeding or any Insolvency or Liquidation Proceeding); provided, that, (A) subject at all times to the provisions of Section 4 hereof, the Term Loan Agent may enforce or exercise any or all such rights and remedies, or commence or petition for any such action or proceeding, after a period ending one hundred eighty (180) days after the date of the receipt by Revolving Loan Agent of written notice from Term Loan Agent of the declaration by Term Loan

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Secured Parties of an event of default under (and as defined in) the Term Loan Documents as a result of the failure of Borrowers to make any payment in respect of the Term Loan Debt in accordance with the terms of the Term Loan Documents (as in effect on the date hereof) that is continuing and the written demand by Term Loan Secured Parties for the immediate payment of all of the Term Loan Debt under the Term Loan Documents so long as the Revolving Loan Agent or any other Revolving Loan Secured Party is not diligently pursuing in good faith the exercise of its enforcement rights or remedies against Grantors or the Revolving Loan Priority Collateral (including, without limitation, any of the following: solicitation of bids from third parties to conduct the liquidation of all or any material portion of the Revolving Loan Priority Collateral, the engagement or retention of sales brokers, marketing agents, investment bankers, accountants, auctioneers or other third parties for the purpose of valuing, marketing, promoting or selling all or any material portion of the Revolving Loan Priority Collateral, the notification of account debtors to make payments to the Revolving Loan Agent or its agents, the initiation of any action to take possession of all or any material portion of the Revolving Loan Priority Collateral or the commencement of any legal proceedings or actions against or with respect to all or any material portion of the Revolving Loan Priority Collateral) and (B) Term Loan Agent may enforce or exercise any or all such rights and remedies with respect to Term Loan Priority Account or any control agreement with respect thereto;

(ii) will not contest, protest or object to any foreclosure action or proceeding brought by the Revolving Loan Agent or any other Revolving Loan Secured Party, or any other enforcement or exercise by any Revolving Loan Secured Party of any rights or remedies relating to the Revolving Loan Priority Collateral under the Revolving Loan Documents or otherwise, so long as the Liens of Term Loan Agent attach to the proceeds thereof subject to the relative priorities set forth in Section 2.1 and such actions or proceedings are being pursued in good faith;

(iii) subject to the Term Loan Secured Parties’ rights under Section 3.1(a)(i) above, will not object to the forbearance by the Revolving Loan Agent or the other Revolving Loan Secured Parties from commencing or pursuing any foreclosure action or proceeding or any other enforcement or exercise of any rights or remedies with respect to any of the Revolving Loan Priority Collateral;

(iv) will not, so long as the Discharge of Revolving Loan Debt has not occurred and except for actions permitted under Sections 3.1(a)(i) above, take or receive any Revolving Loan Priority Collateral, or any proceeds thereof or payment with respect thereto, in connection with the exercise of any right or remedy (including any right of setoff) with respect to any Revolving Loan Priority Collateral or in connection with any insurance policy award in respect of any Revolving Loan Priority Collateral;

(v) agrees that no covenant, agreement or restriction contained in any Term Loan Document shall be deemed to restrict in any way the rights and remedies of the Revolving Loan Agent or the other Revolving Loan Secured Parties with respect to the Revolving Loan Priority Collateral as set forth in this Agreement and the Revolving Loan Documents; provided, however, that, nothing in this Agreement shall be construed as a waiver of any existing or future default under the Term Loan Documents;

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(vi) will not object to the manner in which the Revolving Loan Agent or any other Revolving Loan Secured Party may seek to enforce or collect the Revolving Loan Debt or the Liens of such Revolving Loan Secured Party, regardless of whether any action or failure to act by or on behalf of the Revolving Loan Agent or any other Revolving Loan Secured Party is, or could be, adverse to the interests of the Term Loan Secured Parties, and will not assert, and hereby waive, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or claim the benefit of any marshalling, appraisal, valuation or other similar right that may be available under applicable law with respect to the Revolving Loan Priority Collateral or any other rights a junior secured creditor may have under applicable law with respect to the matters described in this clause (vi), provided that at all times Revolving Loan Agent is acting in good faith;

(vii) will not require any Grantor to sell, liquidate or otherwise dispose of all or substantially all of its assets and properties within a specific time period in connection with a DIP Financing or the exercise by Term Loan Agent or Term Loan Secured Parties of their rights and remedies (or consent to any Grantor taking such action in connection with an amendment, waiver or forbearance entered into in connection with the Term Loan Documents), in each case, unless Revolving Loan Agent has agreed to such time periods; and

(viii) will not attempt, directly or indirectly, whether by judicial proceeding or otherwise, to challenge or question the validity or enforceability of any Revolving Loan Debt or any Lien of Revolving Loan Agent or this Agreement, or the validity or enforceability of the priorities, rights or obligations established by this Agreement.

(b) The Revolving Loan Agent, for itself and on behalf of the other Revolving Loan Secured Parties:

(i) will not, so long as the Discharge of Term Loan Debt has not occurred, enforce or exercise, or seek to enforce or exercise, any rights or remedies with respect to any Term Loan Priority Collateral or commence or join with any Person (other than Term Loan Agent with its consent) in commencing, or filing a petition for, any action or proceeding with respect to such rights or remedies (including any foreclosure action or proceeding); provided, that, subject at all times to the provisions of Section 4 hereof, the Revolving Loan Agent may enforce or exercise any or all such rights and remedies, or commence or petition for any such action or proceeding, after a period ending one hundred eighty (180) days after the date of the receipt by Term Loan Agent of written notice from Revolving Loan Agent of the declaration by Revolving Loan Agent as a result of an Event of Default under the Revolving Loan Documents that is continuing so long as the Term Loan Agent or any other Term Loan Secured Party is not diligently pursuing in good faith the exercise of its enforcement rights or remedies against Grantors and/or the Term Loan Priority Collateral (including, without limitation, any of the following: solicitation of bids from third parties to conduct the liquidation of all or any material portion of the Term Loan Priority Collateral, the engagement or retention of sales brokers, marketing agents, investment bankers, accountants, auctioneers or other third parties for the purpose of valuing, marketing, promoting or selling all or any material portion of the Term Loan Priority Collateral, the initiation of any action to take possession of all or any material portion of the Term Loan Priority Collateral or the commencement of any legal proceedings or actions against or with respect to all or any material portion of the Term Loan Priority Collateral);

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(ii) will not contest, protest or object to any foreclosure action or proceeding brought by the Term Loan Agent or any other Term Loan Secured Party, or any other enforcement or exercise by any Term Loan Secured Party of any rights or remedies relating to the Term Loan Priority Collateral under the Term Loan Documents or otherwise, so long as the Liens of Revolving Loan Agent attach to the proceeds thereof subject to the relative priorities set forth in Section 2.1 hereof and such actions or proceedings are being pursued in good faith;

(iii) subject to the Revolving Loan Secured Parties’ rights under Section 3.1 (b)(i) hereof, will not object to the forbearance by the Term Loan Agent or the other Term Loan Secured Parties from commencing or pursuing any foreclosure action or proceeding or any other enforcement or exercise of any rights or remedies with respect to any of the Term Loan Priority Collateral;

(iv) will not, so long as the Discharge of the Term Loan Debt has not occurred and except for actions permitted under Sections 3.1(b)(i) hereof, take or receive any Term Loan Priority Collateral, or any proceeds thereof or payment with respect thereto, in connection with the exercise of any right or remedy (including any right of setoff) with respect to any Term Loan Priority Collateral or in connection with any insurance policy award or any condemnation award (or deed in lieu of condemnation);

(v) agrees that no covenant, agreement or restriction contained in any Revolving Loan Document shall be deemed to restrict in any way the rights and remedies of the Term Loan Agent or the other Term Loan Secured Parties with respect to the Term Loan Priority Collateral as set forth in this Agreement and the Term Loan Documents; provided, however that nothing in this Agreement shall be construed as a waiver of any existing or future default under the Revolving Loan Documents;

(vi) will not object to the manner in which the Term Loan Agent or any other Term Loan Secured Party may seek to enforce or collect the Term Loan Debt or the Liens of such Term Loan Secured Party, regardless of whether any action or failure to act by or on behalf of the Term Loan Agent or any other Term Loan Secured Party is, or could be, adverse to the interests of the Term Loan Secured Parties, and will not assert, and hereby waive, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or claim the benefit of any marshalling, appraisal, valuation or other similar right that may be available under applicable law with respect to the Term Loan Priority Collateral or any other rights a junior secured creditor may have under applicable law with respect to the matters described in this clause (vi), provided that at all times Term Loan Agent is acting in good faith;

(vii) will not require any Grantor to sell, liquidate or Otherwise dispose of all or substantially all of its assets and properties within a specific time period in connection with a DIP Financing or the exercise by Revolving Loan Agent or Revolving Loan Secured Parties of their rights and remedies (or consent to any Grantor taking such action in connection with an amendment, waiver or forbearance entered into in connection with the Revolving Loan Documents), in each case, unless Term Loan Agent has agreed to such time periods; and

(viii) will not attempt, directly or indirectly, whether by judicial proceeding or otherwise, to challenge or question the validity or enforceability of any Term Loan Debt or any

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Lien of Term Loan Agent or this Agreement, or the validity or enforceability of the priorities, rights or obligations established by this Agreement.

(c) Notwithstanding anything to the contrary contained in this Agreement, the Term Loan Agent and any other Term Loan Secured Party may:

(i) join (but not control) any foreclosure or judicial lien enforcement proceeding with respect to the Revolving Loan Priority Collateral initiated by Revolving Loan Agent, so long as such action would not and would not reasonably be expected to delay or interfere in any respect with the exercise by Revolving Loan Agent of its rights with respect to the Revolving Loan Priority Collateral;

(ii) file a claim or statement of interest with respect to the Term Loan Debt; provided that an Insolvency or Liquidation Proceeding has been commenced by or against any Grantor;

(iii) take any action (not adverse to the priority status of the Liens on the Revolving Loan Priority Collateral securing the Revolving Loan Debt or the rights of any Revolving Loan Secured Party to exercise remedies in respect thereof) in order to create or perfect the Liens held by the Term Loan Agent on the Revolving Loan Priority Collateral;

(iv) file any necessary responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding or other pleading made by any Person objecting to or otherwise seeking the disallowance of the claims of the Term Loan Secured Parties, including any claims secured by the Revolving Loan Priority Collateral, if any, in each case, to the extent that such actions do not violate the terms of this Agreement;

(v) file any proof of claim, make other filings in any Insolvency or

Liquidation Proceeding of any Grantor, but in each case not in a manner which is inconsistent with the terms of this Agreement;

(vi) vote on any plan of reorganization; provided, that, notwithstanding any inconsistency between the terms of any such plan and the terms of this Agreement, the terms of this Agreement shall govern and control; and

(vii) present bids (including, without limitation, credit bids) for and purchase Revolving Loan Priority Collateral at any private, public or judicial foreclosure upon or other disposition of Revolving Loan Priority Collateral initiated by any Person (including, without limitation, any disposition thereof pursuant to Section 363 of the Bankruptcy Code).

(d) Notwithstanding anything to the contrary contained in this Agreement, the Revolving Loan Agent (and any other Revolving Loan Secured Party in accordance with the terms of the Revolving Loan Agreement) may:

(i) join (but not control) any foreclosure or judicial lien enforcement proceeding with respect to the Term Loan Priority Collateral initiated by Term Loan Agent, so long as such action would not and would not reasonably be expected to delay or interfere in any

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respect with the exercise by Term Loan Agent of its rights with respect to the Term Loan Priority Collateral;

(ii) file a claim or statement of interest with respect to the Revolving Loan Debt; provided that an Insolvency or Liquidation Proceeding has been commenced by or against any Grantor;

(iii) take any action (not adverse to the priority status of the Liens on the Term Loan Priority Collateral securing the Term Loan Debt or the rights of any Term Loan Secured Party to exercise remedies in respect thereof) in order to create or perfect the Liens held by the Revolving Loan Agent on the Term Loan Priority Collateral;

(iv) file any necessary responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding or other pleading made by any Person objecting to or otherwise seeking the disallowance of the claims of the Revolving Loan Secured Parties, including any claims secured by the Term Loan Priority Collateral, if any, in each case, to the extent that such actions do not violate the terms of this Agreement;

(v) file any proof of claim, make other filings in any Insolvency or Liquidation Proceeding of any Grantor, but in each case not in a manner which is inconsistent with the terms of this Agreement;

(vi) vote on any plan of reorganization; provided, that, notwithstanding any inconsistency between the terms of any such plan and the terms of this Agreement, the terms of this Agreement shall govern and control;

(vii) present bids (including, without limitation, credit bids) for and purchase Term Loan Priority Collateral at any private, public or judicial foreclosure upon or other disposition of Term Loan Priority Collateral initiated by any Person (including, without limitation, any disposition thereof pursuant to Section 363 of the Bankruptcy Code).

3.2 Rights As Unsecured Creditors. Notwithstanding anything to the contrary in this Agreement, either Agent and the Secured Parties on whose behalf such Agent acts, may exercise any and all rights and remedies available to an unsecured creditor against any Grantor in accordance with the terms of the Revolving Loan Documents and the Term Loan Documents, respectively and applicable law. For purposes hereof, the rights of an unsecured creditor do not include a creditor that holds a judgment lien. Nothing in this Agreement shall prohibit the receipt by either Agent or any of the other Secured Parties of the required payments of principal, interest, fees and other amounts so long as such receipt is not the direct or indirect result of the exercise by such Agent or any other Secured Party of foreclosure rights or other remedies as a secured creditor or enforcement in contravention of this Agreement of any Lien held by any of them or any other act in contravention of this Agreement.

3.3 Release of Second Priority Liens.

(a) Notwithstanding anything to the contrary contained in any of the Revolving Loan Documents or Term Loan Documents, as applicable, only the Agent that, in accordance with the terms of this Agreement, has the senior Lien in any Collateral shall have the right to

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restrict or permit, or approve or disapprove, the sale, transfer or other disposition of such Collateral. The Agent that, in accordance with the terms of this Agreement, has the junior Lien on any Collateral shall:

(i) be deemed to have automatically and without further action released and terminated any Liens it may have on such Collateral to the extent such Collateral is sold or otherwise disposed of either by the Agent that, in accordance with the terms of this Agreement, has the senior Lien on such Collateral, any agent of such Agent, or any Grantor with the consent of such Agent, provided that, the Liens of the Agent with such senior Lien on the Collateral so sold or disposed of are released at the same time, and the net proceeds of such sale or disposition are applied in accordance with Section 4.1 hereof,

(ii) be deemed to have authorized the Agent that, in accordance with the terms of this Agreement, has the senior Lien on such Collateral to file UCC amendments and terminations covering the Collateral so sold or otherwise disposed of with respect to the UCC financing statements between any Grantor and the Agent with such junior Lien thereon to evidence such release and termination,

(iii) promptly upon the request of the Agent that, in accordance with the terms of this Agreement, has the senior Lien thereon, execute and deliver such other release documents and confirmations of the authorization to file UCC amendments and terminations provided for herein, in each case as the Agent that, in accordance with the terms of this Agreement, has the senior Lien thereon may reasonably require in connection with such sale or other disposition by such Agent, such Agent’s agents or any Grantor with the consent of such Agent to evidence and effectuate such termination and release, without representation, warranty or recourse, express or implied; provided, that, any such release or UCC amendment or termination by or on behalf of the Agent with the junior Lien thereon shall not extend to or otherwise affect any of the rights, if any, of such Agent with the junior Lien to the proceeds from any such sale or other disposition of Collateral upon the payment and satisfaction in full of the Revolving Loan Debt or the Term Loan Debt, as the case may be, whichever is secured by the senior Lien on such Collateral; and

(iv) be deemed to have consented under the Revolving Loan Documents or the Term Loan Documents, as applicable, of the Agent with such junior Lien thereon and the Secured Parties for whom such Agent is acting to such sale or other disposition, provided that, nothing in this Agreement shall be construed as a waiver of any existing or future default under the Revolving Loan Documents or the Term Loan Documents.

(b) Each Agent, for itself and on behalf of the other Secured Parties for whom such Agent is acting, hereby irrevocably constitutes and appoints the other Agent and any officer or agent of such Agent, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of such Agent with the junior lien or such holder or in the Agent’s own name, from time to time in such Agent’s (holding the senior lien) discretion, for the purpose of carrying out the terms of this Section 3.3, to take any and all appropriate action and to execute any and all documents and instruments that may be reasonably necessary to accomplish the purposes of this Section 3.3, including any UCC termination statements, endorsements or other instruments of transfer or release, without representation, warranty or recourse, express or implied. Nothing contained in this Agreement shall be

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construed to modify the obligation of the Agent with the senior lien to act in a commercially reasonable manner in the exercise of its rights to sell, lease, license, exchange, transfer or otherwise dispose of any Collateral.

3.4 Insurance and Condemnation Awards.

(a) So long as the Discharge of Revolving Loan Debt has not occurred, the Revolving Loan Agent and the other Revolving Loan Secured Parties shall have the sole and exclusive right, subject to the rights of Grantors under the Revolving Loan Documents, to settle and adjust claims in respect of the Revolving Loan Priority Collateral under policies of insurance and to approve any award granted in any condemnation or similar proceeding, or any deed in lieu of condemnation in respect of the Revolving Loan Priority Collateral. So long as the Discharge of Revolving Loan Debt has not occurred, all proceeds of any such policy and any such award, or any payments with respect to a deed in lieu of condemnation, shall be paid in accordance with Section 4.1 hereof. Until the Discharge of Revolving Loan Debt, if the Term Loan Agent or any other Term Loan Secured Party shall, at any time, receive any proceeds of any such insurance policy or any such award or payment, it shall pay such proceeds over to the Revolving Loan Agent in accordance with the terms of Section 4.2 hereof.

(b) So long as the Discharge of Term Loan Debt has not occurred, the Term Loan Agent and the other Term Loan Secured Parties shall have the sole and exclusive right, subject to the rights of Grantors under the Term Loan Documents, to settle and adjust claims in respect of the Term Loan Priority Collateral under policies of insurance and to approve any award granted in any condemnation or similar proceeding, or any deed in lieu of condemnation in respect of the Term Loan Priority Collateral. So long as the Discharge of Term Loan Debt has not occurred, all proceeds of any such policy and any such award, or any payments with respect to a deed in lieu of condemnation with respect to any of the Term Loan Priority Collateral, shall be paid in accordance with Section 4.1 hereof. Until the Discharge of Revolving Loan Debt, if the Revolving Loan Agent or any other Revolving Loan Secured Party shall, at any time, receive any proceeds of any such insurance policy or any such award or payment, it shall pay such proceeds over to the Revolving Loan Agent in accordance with the terms of Section 4.2 hereof.

(c) To the extent that an insured loss covers both Revolving Loan Priority Collateral and Term Loan Priority Collateral, then Revolving Loan Agent and Term Loan Agent will work jointly and in good faith to collect, adjust or settle any claims or amounts under the insurance policy. The parties hereto agree that any business interruption insurance and/or loss profits or similar type of insurance is Revolving Loan Priority Collateral.

Section 4. Payments.

4.1 Application of Proceeds.

(a) The Revolving Loan Priority Collateral or proceeds thereof received in connection with the sale or other disposition of, or collection on, such Revolving Loan Priority Collateral, shall be applied in the following order of priority:

(i) first, to the Revolving Loan Debt (other than the amount thereof in excess of the Maximum Priority Revolving Loan Debt) and for cash collateral as required under the

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Revolving Loan Documents, and in such order as specified in the applicable Revolving Loan Documents until the Discharge of Revolving Loan Debt has occurred;

(ii) second, to the Term Loan Debt (other than the amount thereof in excess of the Maximum Priority Term Loan Debt) in such order as specified in the applicable Term Loan Documents until the Discharge of Term Loan Debt has occurred;

(iii) third, to the Revolving Loan Debt in excess of the Maximum Priority Revolving Loan Debt until the Discharge of Revolving Loan Debt has occurred; and

(iv) fourth, to the Term Loan Debt in excess of the Maximum Priority Term Loan Debt.

(b) The Term Loan Priority Collateral or proceeds thereof received in connection with the sale or other disposition of, or collection on, such Term Loan Priority Collateral, shall be applied in the following order of priority:

(i) first, to the Term Loan Debt (other than the amount thereof in excess of the Maximum Priority Term Loan Debt) and for cash collateral as required under the Term Loan Documents, and in such order as specified in the applicable Term Loan Documents until the Discharge of Term Loan Debt has occurred;

(ii) second, to the Revolving Loan Debt (other than the amount thereof in excess of the Maximum Priority Revolving Loan Debt) in such order as specified in the applicable Revolving Loan Documents until the Discharge of Revolving Loan Debt has occurred;

(iii) third, to the Term Loan Debt in excess of the Maximum Priority Term Loan Debt until the Discharge of Term Loan Debt has occurred; and

(iv) fourth, to the Revolving Loan Debt in excess of the Maximum Priority Revolving Loan Debt.

(c) Upon the Discharge of Revolving Loan Debt and the termination of the commitments of the Revolving Loan Credit Lenders and the financing arrangements provided by Revolving Credit Lenders to Grantors under the Revolving Loan Documents, to the extent permitted under applicable law and without risk of legal liability to Revolving Loan Agent or any other Revolving Loan Secured Party, the Revolving Loan Agent shall deliver to the Term Loan Agent, without representation or recourse, any proceeds of Collateral held by it at such time in the same form as received, with any necessary endorsements or as a court of competent jurisdiction may otherwise direct, to be applied by the Term Loan Agent to the Term Loan Debt in such order as specified in the relevant Term Loan Documents. Upon the Discharge of Term Loan Debt (other than the amount thereof in excess of the Maximum Priority Term Loan Debt) and the termination of the commitments of the Term Loan Lenders and the financing arrangements provided by Term Loan Lenders to Grantors under the Term Loan Documents, to the extent permitted under applicable law and without risk of legal liability to Term Loan Agent or any other Term Loan Secured Party, the Term Loan Agent shall deliver to the Revolving Loan Agent, without representation or recourse, any proceeds of Collateral held by it at such time in the same form as received, with any necessary endorsements or as a court of competent

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jurisdiction may otherwise direct, to be applied by the Revolving Loan Agent to the Revolving Loan Debt in such order as specified in the relevant Revolving Loan Documents.

(d) The foregoing provisions of this Agreement are intended solely to govern the respective lien priorities as between the Term Loan Agent and the Revolving Loan Agent and shall not impose on Revolving Loan Agent or any other Revolving Loan Secured Party any obligations in respect of the disposition of proceeds of foreclosure on any Collateral which would conflict with prior perfected claims therein in favor of any other person or any order or decree of any court or other governmental authority or any applicable law.

(e) Notwithstanding anything to the contrary contained herein or in any of the Term Loan Documents, Borrowers and Guarantors shall not, directly or indirectly, make any prepayments of principal in respect of the Term Loan Debt and Term Loan Agent and Term Loan Secured Parties shall not accept any such payments except, that, Borrowers may make and Term Loan Agent and Term Loan Lenders may accept

(i) the mandatory prepayments (other than Excess Cash Flow Prepayments) of principal as set forth in Section 2.2 of the Term Loan Agreement (as in effect on the date hereof) and

(ii) (A) Excess Cash Flow Prepayments in an amount not to exceed fifty (50%) percent (or such lesser percentage as set forth below) of Excess Cash Flow (as defined in the Term Loan Agreement (as in effect on the date hereof)) for the fiscal year ending on September 30 of each year (commencing with the fiscal year ending on September 30, 2011) minus the sum of all payments of principal of the Term Loan Debt during any such fiscal year; provided, that, all of the Excess Cash Flow Prepayment Conditions (as set forth in the Revolving Loan Agreement, as in effect on the date hereof) have been satisfied in the determination of Revolving Loan Agent; except that in the event that Borrowers satisfy all of the Excess Cash Flow Prepayment Conditions other than attaining the Excess Availability thresholds, then Borrowers may make and Term Loan Lenders may accept an Excess Cash Flow Prepayment in an amount not to exceed thirty-five (35%) percent of Excess Cash Flow for any such fiscal year (minus the sum of all payments of principal of the Term Loan Debt during any such fiscal year) so long as (1) after giving effect to such Excess Cash Flow Prepayment, the average Excess Availability for the consecutive thirty (30) calendar day period ending on the day prior to such payment shall be equal to or greater than $25,000,000, (2) on the date of such Excess Cash Flow Prepayment and after giving effect thereto, Excess Availability shall be equal to or greater than $25,000,000 and (3) Agent shall have received a Pro Forma Compliance Certificate (as defined in the Revolving Loan Agreement) demonstrating that, upon giving effect on a Pro Forma Basis (as defined in the Revolving Loan Agreement) to such Excess Cash Flow Prepayment, Excess Availability shall be equal to or greater than $25,000,000 for each of the first thirty (30) days after giving effect to such payment] .

(B) In the event that an Excess Cash Flow Prepayment in respect of a fiscal year is not permitted to be made due to the failure of Borrowers to satisfy any of the Excess Availability thresholds set forth in the Excess Cash Flow Prepayment Conditions, such Excess Cash Flow Prepayment may be made and accepted after the Excess Cash Flow Prepayment Period expires but prior to start of the next fiscal year, provided, that, all of the following conditions are

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satisfied at the time of any such payment, as determined by Revolving Loan Agent, (A) after giving effect to any such Excess Cash Flow Prepayment, the average Excess Availability for the consecutive ninety (90) calendar day period ending on the day prior to such payment is equal to or greater than $30,000,000, (B) on the date of such Excess Cash Flow Prepayment and after giving effect thereto, the Excess Availability is equal to or greater than $30,000,000, (C) Revolving Loan Agent shall have received a Pro Forma Compliance Certificate (as defined in the Revolving Loan Agreement) demonstrating that, upon giving effect on a Pro Forma Basis (as defined in the Revolving Loan Agreement) to such Excess Cash Flow Prepayment, (1) the Fixed Charge Coverage Ratio (as defined in the Revolving Loan Agreement) for Parent and its Subsidiaries is equal to or greater than 1.00 to 1.00 and (2) Excess Availability shall be equal to or greater than $30,000,000 for each of the first thirty (30) days after giving effect to such payment, and (D) on the date of any such Excess Cash Flow Prepayment and after giving effect thereto, no Default (as defined in the Revolving Loan Agreement) or Event of Default shall have occurred and be continuing.

4.2 Payments Over.

(a) So long as the Discharge of Revolving Loan Debt has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against any Grantor, the Term Loan Agent agrees, for itself and on behalf of the other Term Loan Secured Parties, that any Revolving Loan Priority Collateral or proceeds thereof or payment with respect thereto received by the Term Loan Agent or any other Term Loan Secured Party (including any right of set-off) with respect to the Revolving Loan Priority Collateral, and including in connection with any insurance policy claim, shall be segregated and held in trust and promptly transferred or paid over to the Revolving Loan Agent for the benefit of the Revolving Loan Secured Parties in the same form as received, with any necessary endorsements or assignments or as a court of competent jurisdiction may otherwise direct. The Revolving Loan Agent is hereby authorized to make any such endorsements or assignments, without any representation, warranty or recourse, express or implied, as agent for the Term Loan Agent. This authorization is coupled with an interest and is irrevocable.

(b) So long as the Discharge of Term Loan Debt has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced by or against any Grantor, the Revolving Loan Agent agrees, for itself and on behalf of the other Revolving Loan Secured Parties, that any Term Loan Priority Collateral or proceeds thereof or payment with respect thereto received by the Revolving Loan Agent or any other Revolving Loan Secured Party (including any right of set-off) with respect to the Term Loan Priority Collateral, and including in connection with any insurance policy claim or any condemnation award (or deed in lieu of condemnation), shall be segregated and held in trust and promptly transferred or paid over to the Term Loan Agent for the benefit of the Term Loan Secured Parties in the same form as received, with any necessary endorsements or assignments or as a court of competent jurisdiction may otherwise direct. The Term Loan Agent is hereby authorized to make any such endorsements or assignments, without any representation, warranty or recourse, express or implied, as agent for the Revolving Loan Agent. This authorization is coupled with an interest and is irrevocable.

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Section 5. Bailee for Perfection; Collateral Access Agreements.

5.1 Each Agent as Bailee.

(a) Each Agent agrees to hold any Collateral that is in the possession or control of such Agent (or its agents or bailees), to the extent that possession or control thereof is necessary to perfect a Lien thereon under the UCC (such Collateral being referred to herein as the “Pledged Collateral”), as bailee and agent for and on behalf of the other Agent solely for the purpose of perfecting the security interest granted to the other Agent in such Pledged Collateral (including, but not limited to, any securities or any deposit accounts or securities accounts, if any) pursuant to the Revolving Loan Documents or Term Loan Documents, as applicable, subject to the terms and conditions of this Section 5.

(b) Until the Discharge of Revolving Loan Debt has occurred, the Revolving Loan Agent shall be entitled to deal with the Pledged Collateral constituting Revolving Loan Priority Collateral in accordance with the terms of the Revolving Loan Documents. The rights of the Term Loan Agent to such Pledged Collateral shall at all times be subject to the terms of this Agreement and to the Revolving Loan Agent’s rights under the Revolving Loan Documents. Until the Discharge of Term Loan Debt has occurred, the Term Loan Agent shall be entitled to deal with the Pledged Collateral constituting Term Loan Priority Collateral in accordance with the terms of the Term Loan Documents, The rights of the Revolving Loan Agent to such Pledged Collateral shall at all times be subject to the terms of this Agreement and to the Term Loan Agent’s rights under the Term Loan Documents.

(c) Each Agent shall have no obligation whatsoever to the other Agent or any other Secured Party to assure that the Pledged Collateral is genuine or owned by any of the Grantors or to preserve rights or benefits of any Person except as expressly set forth in this Section 5. The duties or responsibilities of each Agent under this Section 5 shall be limited solely to holding the Pledged Collateral as bailee and agent for and on behalf of the other Agent for purposes of perfecting the Lien held by the other Agent.

(d) Each Agent shall not have by reason of the Revolving Loan Documents, the Term Loan Documents or this Agreement or any other document a fiduciary relationship in respect of the other Agent or any of the other Secured Parties and shall not have any liability to the other Agent or any other Secured Party in connection with its holding the Pledged Collateral, other than for its gross negligence or willful misconduct as determined by a final, non-appealable order of a court of competent jurisdiction.

5.2 Transfer of Pledged Collateral.

(a) Upon the Discharge of Revolving Loan Debt, to the extent permitted under applicable law, upon the request of the Term Loan Agent, the Revolving Loan Agent shall, without recourse or warranty, transfer the possession and control of the Pledged Collateral, if any, then in its possession or control to Term Loan Agent, except in the event and to the extent (i) Revolving Loan Agent or any other Revolving Loan Secured Party has retained or otherwise acquired such Collateral in full or partial satisfaction of any of the Revolving Loan Debt, (ii) such Collateral is sold or otherwise disposed of by Revolving Loan Agent or any other

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Revolving Loan Secured Party or by a Grantor as provided herein or (iii) it is otherwise required by any order of any court or other governmental authority or applicable law or would result in the risk of liability of Revolving Loan Secured Party to any third party. The foregoing provision shall not impose on Revolving Loan Agent or any other Revolving Loan Secured Party any obligations that would conflict with prior perfected claims therein in favor of any other person or any order or decree of any court or other governmental authority or any applicable law. In connection with any transfer described herein to Term Loan Agent, the Revolving Loan Agent agrees to take reasonable actions in its power (with all costs and expenses in connection therewith to be for the account of the Term Loan Agent and to be paid by Borrowers) as shall be reasonably requested by the Term Loan Agent to permit the Term Loan Agent to obtain, for the benefit of the Term Loan Secured Parties, a first priority security interest in the Pledged Collateral.

(b) Upon the Discharge of Term Loan Debt, to the extent permitted under applicable law, upon the request of the Revolving Loan Agent, the Term Loan Agent shall, without recourse or warranty, transfer the possession and control of the Pledged Collateral, if any, then in its possession or control to Revolving Loan Agent, except in the event and to the extent (i) Term Loan Agent or any other Term Loan Secured Party has retained or otherwise acquired such Collateral in full or partial satisfaction of any of the Term Loan Debt, (ii) such Collateral is sold or otherwise disposed of by Term Loan Agent or any other Term Loan Secured Party or by a Grantor as provided herein or (iii) it is otherwise required by any order of any court or other governmental authority or applicable law or would result in the risk of liability of Term Loan Secured Party to any third party. The foregoing provision shall not impose on Term Loan Agent or any other Term Loan Secured Party any obligations which would conflict with prior perfected claims therein in favor of any other person or any order or decree of any court or other governmental authority or any applicable law. In connection with any transfer described herein to Revolving Loan Agent, the Term Loan Agent agrees to take reasonable actions in its power (with all costs and expenses in connection therewith to be for the account of the Revolving Loan Agent and to be paid by Borrowers) as shall be reasonably requested by the Revolving Loan Agent to permit the Revolving Loan Agent to obtain, for the benefit of the Revolving Loan Secured Parties, a first priority security interest in the Pledged Collateral.

5.3 Deposit Accounts; Collateral Access Agreements. In the case of any deposit accounts (other than with respect to the Term Loan Priority Account for so long as the Term Loan Debt remains outstanding) subject to Deposit Account Control Agreements (as such term is defined in the Revolving Loan Documents) or any rights with respect to Collateral obtained by the Revolving Loan Agent pursuant to Collateral Access Agreements (as such term is defined in the Revolving Loan Agreement), after the event of the Discharge of the Revolving Loan Debt, and to the extent that the Term Loan Debt remains outstanding, the Revolving Loan Agent agrees, at the request of the Term Loan Agent and at the expense of Grantors, to (a) with respect to deposit accounts other than the Term Loan Priority Account, promptly deliver written notice to the bank at which deposit accounts are maintained that (i) such account(s) remain subject to a Lien in favor of the Term Loan Agent and the Revolving Loan Agent is no longer the “Agent” or “Lender Representative” as the case may be or otherwise entitled to act under such agreement and (ii) from the date of the notice and at all times thereafter until the Discharge of Term Loan Debt or the Term Loan Agent instructs the bank at which the deposit account is maintained otherwise, that the Term Loan Agent is to be deemed the “Agent” for all purposes in connection

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with such agreement and that the bank is to follow the directions of the Term Loan Agent for all purposes in connection with such deposit accounts, and (b) with respect to Collateral Access Agreements (as such term is defined in the Revolving Loan Agreement), promptly deliver written notice to the Person party to the applicable Collateral Access Agreement that (i) the Collateral located at such location remains subject to a Lien in favor of the Term Loan Agent, and (ii) from the date of the notice and at all times thereafter until the Term Loan Agent instructs such party otherwise, the Term Loan Agent is to be deemed the “Agent” for all purposes in connection with such agreement. Term Loan Agent agrees after the event of the Discharge of the Term Loan Debt, and to the extent that the Revolving Loan Debt remains outstanding, the Term Loan Agent agrees, at the request of the Revolving Loan Agent and at the expense of Grantors, (c) with respect to the Term Loan Priority Account, promptly deliver written notice to the bank at which such deposit account is maintained that (i) such account(s) remain subject to a Lien in favor of the Revolving Loan Agent and the Term Loan Agent is no longer the “Agent” or “Lender Representative” as the case may be or otherwise entitled to act under such agreement and (ii) from the date of the notice and at all times thereafter until the Discharge of Revolving Loan Debt or the Revolving Loan Agent instructs the bank at which the Term Loan Priority Account is maintained otherwise, that the Revolving Loan Agent is to be deemed the “Agent” for all purposes in connection with such agreement and that the bank is to follow the directions of the Term Loan Agent for all purposes in connection with such deposit accounts.

Section 6. Insolvency or Liquidation Proceedings

6.1 General Applicability. This Agreement shall be applicable both before and after the institution of any Insolvency or Liquidation Proceeding involving Borrowers or any other Grantor, including, without limitation, the filing of any petition by or against Borrowers or any other Grantor under the Bankruptcy Code or under any other Bankruptcy Law and all converted or subsequent cases in respect thereof, and all references herein to Borrowers or any Grantor shall be deemed to apply to the trustee for Borrowers or such Grantor and Borrowers or such Grantor as debtor-in-possession. The relative rights of the Revolving Loan Secured Parties and the Term Loan Secured Parties in or to any distributions from or in respect of any Collateral or proceeds of Collateral shall continue after the institution of any Insolvency or Liquidation Proceeding involving Borrowers or any other Grantor, including, without limitation, the filing of any petition by or against Borrowers or any other Grantor under the Bankruptcy Code or under any other Bankruptcy Law and all converted cases and subsequent cases, on the same basis as prior to the date of such institution, subject to any court order approving the financing of, or use of cash collateral by, Borrowers or any other Grantor as debtor-in-possession, or any other court order affecting the rights and interests of the parties hereto not in conflict with this Agreement. This Agreement shall constitute a subordination agreement for the purposes of Section 510(a) of the Bankruptcy Code and shall be enforceable in any Insolvency or Liquidation Proceeding in accordance with its terms.

6.2 Bankruptcy Financing. If any Grantor becomes subject to any Insolvency or Liquidation Proceeding, until the Discharge of Revolving Loan Debt has occurred, the Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties, agrees that:

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(a) each Term Loan Secured Party will raise no objection to, nor support any other Person objecting to, and will be deemed to have consented to, the use of any Revolving Loan Priority Collateral constituting cash collateral under Section 363 of the Bankruptcy Code, or any comparable provision of any other Bankruptcy Law or any post-petition financing, provided by Revolving Loan Agent or any Person approved by Revolving Loan Agent (which agrees to be bound by Section 8 hereof) under Section 364 of the Bankruptcy Code, or any comparable provision of any other Bankruptcy Law (a “DIP Financing”), will not request or accept adequate protection or any other relief in connection with the use of such cash collateral or such DIP Financing except as set forth in the proviso immediately below and will subordinate (and will be deemed hereunder to have subordinated) the Liens granted to Term Loan Secured Parties to such DIP Financing on the same terms as such Liens are subordinated to the Liens granted to Revolving Loan Agent hereunder (and such subordination will not alter in any manner the terms of this Agreement), to any adequate protection provided to the Revolving Loan Secured Parties and to any “carve out” agreed to by the Revolving Loan Agent, provided that:

(i) the Revolving Loan Agent does not oppose or object to such use of cash collateral or DIP Financing,

(ii) the aggregate principal amount of such DIP Financing, together with the Revolving Loan Debt as of such date, does not exceed the Maximum Priority Revolving Loan Debt, and the DIP Financing is treated as Revolving Loan Debt hereunder,

(iii) the Liens granted to the Revolving Loan Secured Parties or such other person in connection with such DIP Financing are subject to this Agreement and considered to be Liens of Revolving Loan Agent for purposes hereof,

(iv) the Term Loan Agent retains a Lien on the Revolving Loan Priority Collateral (including proceeds thereof) with the same priority relative to the Liens of Revolving Loan Agent as existed prior to such Insolvency or Liquidation Proceeding,

(v) the Term Loan Agent receives replacement Liens on all post-petition assets of any Grantor in which any of the Revolving Loan Agent obtains a replacement Lien, or which secure the DIP Financing, with the same priority relative to the Liens of Revolving Loan Agent as existed prior to such Insolvency or Liquidation Proceeding,

(vi) the Revolving Loan Secured Parties do not establish or require a timetable for the disposition of all or substantially all of any Grantor’s assets and properties within a specific time period in violation of Section 3.1(b)(vii) hereof, and

(vii) the Term Loan Secured Parties may oppose or object to such use of Cash Collateral or DIP Financing on the same bases as an unsecured creditor, so long as such opposition or objection is not based on the Term Loan Secured Parties’ status as secured creditors.

(b) No Term Loan Secured Party shall, directly or indirectly, provide, or seek to provide DIP Financing secured by Liens equal to or senior in priority to the Liens on the Revolving Loan Priority Collateral of Revolving Loan Agent, without the prior written consent of Revolving Loan Agent; provided, that, any fund or similar investment vehicle managed or

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advised by DDJ Capital Management, LLC that invests in commercial loans may seek to provide postpetition financing under Section 364 of the Bankruptcy Code or any comparable provisions of any other Bankruptcy Law so long as:

(i) As a condition of such financing, all proceeds of Revolving Loan Priority Collateral shall either be (A) be remitted to Revolving Loan Agent for application to the Revolving Loan Debt up to the Maximum Priority Revolving Loan Debt or (B) used by Borrowers subject to terms and conditions acceptable to Revolving Loan Agent, including without limitation, that all use of cash collateral shall be subject to the same Availability criteria as set forth in the Revolving Loan Agreement (provided, that, the calculation of such Availability during the Insolvency Proceeding shall be calculated by the Revolving Loan Agent in the same manner as if the Revolving Loan Agent and Revolving Loan Lenders were providing DIP Financing to Borrowers pursuant to Section 6.2(a) above, which shall include among other things, a Reserve in the amount of any professional fee carve out or similar priority administrative claims) and used in accordance with a budget (in form and substance reasonably acceptable to Revolving Loan Agent), with any cash collateral in excess of the amounts necessary to fund the expenses for any applicable period in the budget being remitted to Revolving Loan Agent for application against the Revolving Loan Debt up to the Maximum Priority Revolving Loan Debt,

(ii) the aggregate principal amount of such post-petition financing to be provided pursuant to this Section 6.2(b) under Section 364 of the Bankruptcy Code or any comparable provisions of any other Bankruptcy Law shall be in an amount of not less than $10,000,000 but when taken together with the outstanding Term Loan Debt as of such date shall not exceed the Maximum Priority Term Loan Debt, plus $20,000,000 (the $20,000,000 being subject to a dollar-for-dollar reduction equal to any increase in the principal amount of the Term Loans after the date hereof but prior to the commencement of any case with respect to any Grantor under the Bankruptcy Code or any other Insolvency or Liquidation Proceeding),

(iii) no portion of the Revolving Loan Priority Collateral shall be used to repay the Term Loan Debt outstanding as of the date of the commencement of any Insolvency or Liquidation Proceeding or any Term Loan Debt incurred thereafter pursuant to any financing to be provided pursuant to this Section 6.2(b), whether such payments are approved by the Bankruptcy Court or otherwise prior to the repayment of the Revolving Loan Debt up to the Maximum Priority Revolving Loan Debt,

(iv) such financing is secured by Liens junior in priority to the Liens on the Revolving Loan Priority Collateral of the Revolving Loan Agent, and

(v) the Revolving Loan Agent, for itself or on behalf of the other Revolving Loan Secured Parties, shall be granted adequate protection pursuant to an order of the Bankruptcy Court (in form and substance satisfactory to Revolving Loan Agent) in the form of (A) additional or replacement Liens on the Collateral (including proceeds thereof arising after the commencement of any Insolvency or Liquidation Proceeding), with such Liens being subject to the priority provisions of Section 2.2 hereof, (B) a super-priority administrative expense claim for any diminution in the value of the Collateral, (C) all reporting notices and inspection rights granted to the Revolving Loan Agent and Revolving Loan Lenders pursuant to and in accordance

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with the Revolving Loan Documents, and (D) payment of all interest that accrues post-petition and fees or expenses that are incurred post-petition pursuant to the Revolving Loan Documents as and when due under the Revolving Loan Documents to the Revolving Loan Agent or any other Revolving Loan Secured Party.

6.3 Relief from the Automatic Stay.

(a) The Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties, agrees that, so long as the Discharge of Revolving Loan Debt has not occurred, no Term Loan Secured Party shall, without the prior written consent of the Revolving Loan Agent, seek or request relief from or modification of the automatic stay or any other stay in any Insolvency or Liquidation Proceeding in respect of any part of the Revolving Loan Priority Collateral, any proceeds thereof or any Lien thereon securing any of the Term Loan Debt. Notwithstanding anything to the contrary set forth in this Agreement, no Grantor waives or shall be deemed to have waived any rights under Section 362 of the Bankruptcy Code.

(b) The Revolving Loan Agent, for itself and on behalf of the other Revolving Loan Secured Parties, agrees that, so long as the Discharge of Term Loan Debt has not occurred, no Revolving Loan Secured Party shall, without the prior written consent of the Term Loan Agent, seek or request relief from or modification of the automatic stay or any other stay in any Insolvency or Liquidation Proceeding in respect of any part of the Term Loan Priority Collateral, any proceeds thereof or any Lien thereon securing any of the Revolving Loan Debt. Notwithstanding anything to the contrary set forth in this Agreement, no Grantor waives or shall be deemed to have waived any rights under Section 362 of the Bankruptcy Code.

6.4 [Reserved]

6.5 Reorganization Securities. If, in any Insolvency or Liquidation Proceeding, debt obligations of any reorganized Grantor secured by Liens upon any property of such reorganized Grantor are distributed, pursuant to a plan of reorganization, on account of both the Revolving Loan Debt and the Term Loan Debt, then, to the extent the debt obligations distributed on account of the Revolving Loan Debt and on account of the Term Loan Debt are secured by Liens upon the same assets or property, the provisions of this Agreement will survive the distribution of such debt obligations pursuant to such plan and will apply with like effect to the Liens securing such debt obligations.

6.6 Separate Classes. Each of the parties hereto irrevocably acknowledges and agrees that (a) the claims and interests of the Revolving Loan Secured Parties and the Term Loan Secured Parties are not “substantially similar” within the meaning of Section 1122 of the Bankruptcy Code, or any comparable provision of any other Bankruptcy Law, (b) the grants of the Liens to secure the Revolving Loan Debt and the grants of the Liens to secure the Term Loan Debt constitute two separate and distinct grants of Liens, (c) the Revolving Loan Secured Parties’ rights in the Collateral are fundamentally different from the Term Loan Secured Parties’ rights in the Collateral, and (d) as a result of the foregoing, among other things, the Revolving Loan Debt and the Term Loan Debt must be separately classified in any plan of reorganization proposed or adopted in any Insolvency or Liquidation Proceeding.

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6.7 Asset Dispositions.

(a) Until the Discharge of Revolving Loan Debt has occurred, the Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties, agrees that, in the event of any Insolvency or Liquidation Proceeding, the Term Loan Secured Parties will not object or oppose (or support any Person in objecting or opposing) a motion to any sale, lease, license, exchange, transfer or other disposition of any Revolving Loan Priority Collateral free and clear of the Liens of Term Loan Agent and the other Term Loan Secured Parties or other claims under Section 363 of the Bankruptcy Code, or any comparable provision of any Bankruptcy Law and shall be deemed to have consented to any such any sale, lease, license, exchange, transfer or other disposition of any Revolving Loan Priority Collateral under Section 363(f) of the Bankruptcy Code that has been consented to by the Revolving Loan Agent; provided, that, the proceeds of such sale, lease, license, exchange, transfer or other disposition of any Collateral to be applied to the Revolving Loan Debt or the Term Loan Debt are applied in accordance with Sections 4.1 and 4.2 hereof.

(b) Until the Discharge of Term Loan Debt has occurred, the Revolving Loan Agent, for itself and on behalf of the other Revolving Loan Secured Parties, agrees that, in the event of any Insolvency or Liquidation Proceeding, the Revolving Loan Secured Parties will not object or oppose (or support any Person in objecting or opposing) a motion to any sale, lease, license, exchange, transfer or other disposition of any Term Loan Priority Collateral free and clear of the Liens of Revolving Loan Agent and the other Revolving Loan Secured Parties or other claims under Section 363 of the Bankruptcy Code, or any comparable provision of any Bankruptcy Law and shall be deemed to have consented to any such any sale, lease, license, exchange, transfer or other disposition of any Term Loan Priority Collateral under Section 363(f) of the Bankruptcy Code that has been consented to by the Term Loan Agent; provided, that, the proceeds of such sale, lease, license, exchange, transfer or other disposition of any Collateral to be applied to the Revolving Loan Debt or the Term Loan Debt are applied in accordance with Sections 4.1 and 4.2 hereof.

6.8 Avoidance Issues. If any Revolving Loan Secured Party or Term Loan Secured Party is required on any date in any Insolvency or Liquidation Proceeding or otherwise to turn over or otherwise pay to the estate of any Grantor any amount (a “Recovery”), then the Revolving Loan Debt or the Term Loan Debt, as the case may be shall be reinstated on such date to the extent of such Recovery. If this Agreement shall have been terminated prior to such Recovery, this Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties hereto from such date of reinstatement.

6.9 Certain Waivers as to Section 1111(b)(2) of Bankruptcy Code. The Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties, waives any claim any Term Loan Secured Party may hereafter have against any Revolving Loan Secured Party arising out of the election by any Revolving Loan Secured Party of the application of Section 1111(b)(2) of the Bankruptcy Code, or any comparable provision of any other Bankruptcy Law. The Revolving Loan Agent, for itself and on behalf of the other Revolving Loan Secured Parties, waives any claim any Revolving Loan Secured Party may hereafter have against any Term Loan Secured Party arising out of the election by any Term Loan Secured Party of the application of

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Section 1111(b)(2) of the Bankruptcy Code or any comparable provision of any other Bankruptcy Law.

6.10 Other Bankruptcy Laws. In the event that an Insolvency of Liquidation Proceeding is filed in a jurisdiction other than the United States or is governed by any Bankruptcy Law other than the Bankruptcy Code, each reference in this Agreement to a section of the Bankruptcy Code shall be deemed to refer to the substantially similar or corresponding provision of the Bankruptcy Law applicable to such Insolvency or Liquidation Proceeding, or in the absence of any specific similar or corresponding provision of the Bankruptcy Law, such other general Bankruptcy Law as may be applied in order to achieve substantially the same result as would be achieved under each applicable section of the Bankruptcy Code.

Section 7. Term Loan Lenders’ Purchase Option

7.1 Exercise of Option. On or after the occurrence and during the continuance of a Triggering Event, the Term Loan Secured Parties shall have the option at any time, within thirty (30) days of the occurrence of such Triggering Event and upon five (5) Business Days’ prior written notice by Term Loan Agent to Revolving Loan Agent, to purchase all (but not less than all) of the Revolving Loan Debt from the Revolving Loan Secured Parties. Such notice from Term Loan Agent to Revolving Loan Agent shall be irrevocable.

7.2 Purchase and Sale. On the date specified by Term Loan Agent in such notice (which shall not be less than five (5) Business Days, nor more than fifteen (15) Business Days, after the receipt by Revolving Loan Agent of the notice from Term Loan Agent of its election to exercise such option), Revolving Loan Secured Parties shall, subject to any required approval of any court or other regulatory or governmental authority then in effect, if any, sell to Term Loan Secured Parties, and Term Loan Secured Parties shall purchase from Revolving Loan Secured Parties, all of the Revolving Loan Debt. Notwithstanding anything to the contrary contained herein, in connection with any such purchase and sale, Revolving Loan Secured Parties shall retain all rights under the Revolving Loan Documents to be indemnified or held harmless by Grantors in accordance with the terms thereof.

7.3 Payment of Purchase Price.

(a) Upon the date of such purchase and sale, Term Loan Secured Parties shall (i) pay to Revolving Loan Agent for the account of the Revolving Loan Secured Parties as the purchase price therefor the full amount of all of the Revolving Loan Debt then outstanding and unpaid (including principal, interest, fees and expenses, including reasonable attorneys’ fees and legal expenses), (ii) furnish cash collateral to Revolving Loan Agent in such amounts as Revolving Loan Agent determines is reasonably necessary to secure Revolving Loan Secured Parties in connection with any issued and outstanding letters of credit, banker’s acceptances or similar instruments or guarantees or indemnities in respect thereof issued under the Revolving Loan Documents (but not in any event in an amount greater than one hundred five (105%) percent of the aggregate undrawn face amount of such letters of credit, banker’s acceptances or similar instruments or guarantees or indemnities in respect thereof), (iii) agree to reimburse Revolving Loan Secured Parties for any loss, cost, damage or expense (including reasonable attorneys’ fees and legal expenses) in connection with any commissions, fees, costs or expenses

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related to any issued and outstanding letters of credit, banker’s acceptances or similar instruments as described above and any checks or other payments provisionally credited to the Revolving Loan Debt, and/or as to which Revolving Loan Secured Parties have not yet received final payment, and (iv) agree to reimburse Revolving Loan Secured Parties in respect of indemnification obligations of Grantors under the Revolving Loan Documents as to matters or circumstances known to Revolving Loan Secured Parties and disclosed in writing to Term Loan Agent (unless such disclosure is not permitted under applicable law) at the time of the purchase and sale which would reasonably be expected to result in any loss, cost, damage or expense (including reasonable attorneys’ fees and legal expenses) to Revolving Loan Secured Parties; provided, that, in no event shall the Term Loan Secured Parties have any liability under this clause (iv) for amounts in excess of the proceeds of Collateral received by the Term Loan Secured Parties.

(b) Such purchase price and cash collateral shall be remitted by wire transfer in federal funds to such bank account of Revolving Loan Agent as Revolving Loan Agent may designate in writing to Term Loan Agent for such purpose. Interest shall be calculated to but excluding the Business Day on which such purchase and sale shall occur if the amounts so paid by Term Loan Secured Parties to the bank account designated by Revolving Loan Agent are received in such bank account prior to 2:00 p.m., New York City time and interest shall be calculated to and including such Business Day if the amounts so paid by Term Loan Secured Parties to the bank account designated by Revolving Loan Agent are received in such bank account later than 2:00 p.m., New York City time.

(c) In the event that any one or more Term Loan Secured Parties exercises and consummates the purchase option set forth in this Section 7 and upon the receipt by Revolving Loan Agent of all amounts payable pursuant to Section 7.3(a) hereof, (i) the Term Loan Secured Parties shall have the right, but not the obligation, to require the Revolving Loan Agent to immediately resign in its capacity as Revolving Loan Agent under the Revolving Loan Documents and (ii) Revolving Loan Agent may immediately resign in its capacity as Revolving Loan Agent under the Revolving Loan Documents.

7.4 Representations Upon Purchase and Sale. Such purchase shall be expressly made without representation or warranty of any kind by Revolving Loan Secured Parties as to the Revolving Loan Debt, the Collateral or otherwise and without recourse to Revolving Loan Secured Parties, except that each Revolving Loan Secured Party shall represent and warrant, severally, as to it: (a) the amount of the Revolving Loan Debt being purchased from it are as reflected in the books and records of such Revolving Loan Secured Party (but without representation or warranty as to the collectibility, validity or enforceability thereof), (b) that such Revolving Loan Secured Party owns the Revolving Loan Debt being sold by it free and clear of any liens or encumbrances, and (c) such Revolving Loan Secured Party has the right to assign the Revolving Loan Debt being sold by it and the assignment is duly authorized.

Section 8. Access and Use of Term Loan Priority Collateral

8.1 Access and Use Rights of Revolving Loan Agent. In the event that the Term Loan Agent shall acquire control or possession of any of the Term Loan Priority Collateral or shall, through the exercise of remedies under the Term Loan Documents or otherwise, sell any of the

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Term Loan Priority Collateral to any third party (a “Third Party Purchaser”), the Term Loan Agent shall permit the Revolving Loan Agent (or require as a condition of such sale to the Third Party Purchaser that the Third Party Purchaser agree to permit the Revolving Loan Agent), at its option and in accordance with applicable law, and at the expense of the Revolving Secured Parties: (a) to enter and use any or all of the Term Loan Priority Collateral under such control or possession (or sold to a Third Party Purchaser) consisting of real property and the improvements, structures, buildings thereon and all related rights during normal business hours or in order to inspect, remove or take any action with respect to the Revolving Loan Priority Collateral or to enforce the Revolving Loan Agent’s rights with respect thereto, including, but not limited to, the examination and removal of Revolving Loan Priority Collateral and the examination and duplication of the books and records of any Grantor related to the Revolving Loan Priority Collateral, or to otherwise handle, deliver, ship, transport, deal with or dispose of any Revolving Loan Priority Collateral, such right to include, without limiting the generality of the foregoing, the right to conduct one or more public or private sales or auctions thereon; and (b) use any of the Term Loan Priority Collateral under such control or possession (or sold to a Third Party Purchaser) consisting of equipment (including computers or other data processing equipment related to the storage or processing of records, documents or files pertaining to the Revolving Loan Priority Collateral) or other equipment to handle, deal with or dispose of any Revolving Loan Priority Collateral pursuant to the rights of the Revolving Loan Agent and the other Revolving Loan Secured Parties as set forth in the Revolving Loan Documents, the UCC of any applicable jurisdiction and other applicable law. The Term Loan Agent shall not have any responsibility or liability for the acts or omissions of the Revolving Loan Agent or any of the other Revolving Loan Secured Parties, and the Revolving Loan Agent and the other Revolving Loan Secured Parties shall not have any responsibility or liability for the acts or omissions of the Term Loan Agent, in each case arising in connection with such other Person’s use and/or occupancy of any of the Term Loan Priority Collateral. The rights of the Revolving Loan Agent set forth in clauses (a) and (b) above as to the Term Loan Priority Collateral shall be irrevocable and shall continue at the Revolving Loan Agent’s option for a period of one hundred eighty (180) days as to any such Term Loan Priority Collateral from the date on which the Term Loan Agent has notified the Revolving Loan Agent that the Term Loan Agent has acquired possession or control of such Term Loan Priority Collateral. The time periods set forth herein shall be tolled during the pendency of any proceeding of a Grantor under the U.S. Bankruptcy Code or other proceedings to the extent that Revolving Loan Agent is stayed from enforcing its rights against the Revolving Loan Priority Collateral. In no event shall Term Loan Agent or any of the Term Loan Secured Parties take any action to interfere, limit or restrict the rights of Revolving Loan Agent or the exercise of such rights by Revolving Loan Agent to have access to or to use any of such Term Loan Priority Collateral under such possession or control pursuant to this Section 8.1 prior to the expiration of such periods. The Revolving Loan Agent, on behalf of itself and the other Revolving Loan Secured Parties, hereby acknowledges that, during the period any Term Loan Priority Collateral shall be under control or possession of the Term Loan Agent or the other Term Loan Secured Parties, the Term Loan Agent and the other Term Loan Secured Parties shall not be obligated to take any action to protect any Revolving Loan Priority Collateral or to procure insurance with respect to any Revolving Loan Priority Collateral that may be located on or in the Term Loan Priority Collateral, provided, that, nothing contained herein shall relieve the Term Loan Secured Parties for any loss or damage to the Revolving Loan Priority Collateral resulting from the gross negligence or willful misconduct of the Term Loan Agent and/or Term

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Loan Secured Parties or their agents, as determined by a final non-appealable judgment of a court of competent jurisdiction.

8.2 Intellectual Property. In addition to and not in limitation of Section 8.1, in the event that the Term Loan Agent shall acquire control or possession of any of the Term Loan Priority Collateral consisting of Intellectual Property, the Term Loan Agent hereby grants to the Revolving Loan Agent, in connection with any enforcement action by the Revolving Loan Agent with respect to the Collateral, a non-exclusive, irrevocable royalty free license with respect to any intellectual property necessary to realize upon any Revolving Loan Priority Collateral for the purpose of effecting such realization until the Discharge of the Revolving Loan Debt during the Term Loan License Period. Upon the expiration of the Term Loan License Period, the license granted to the Revolving Loan Agent pursuant to this Section 8.2 shall automatically terminate. Notwithstanding anything to the contrary contained herein, any purchaser or assignee of Revolving Loan Priority Collateral pursuant to the exercise by Revolving Loan Agent of any of its rights or remedies with respect thereto shall have the right to sell or otherwise dispose of any such Revolving Loan Priority Collateral to which any such Intellectual Property is affixed.

8.3 Responsibilities of Revolving Loan Secured Parties. During the period of actual occupation, use and/or control by the Revolving Loan Agent of any Term Loan Priority Collateral (or any assets or property subject to a leasehold interest constituting Term Loan Priority Collateral), the Revolving Secured Parties shall be obligated (a) to reimburse the Term Secured Parties any incremental additional amounts required to be paid in respect of increases in utilities, taxes and all other operating costs of such Term Loan Priority Collateral as a result of the use thereof by Revolving Loan Agent that Term Loan Agent or the other Term Loan Secured Parties would not have had to pay or be responsible for but for the use thereof by Revolving Loan Agent pursuant to its rights hereunder during any such period of actual occupation, use and/or control to the extent the same are actually paid by the Term Loan Secured Parties, (b) to repair at their expense any physical damage to such Term Loan Priority Collateral resulting from such occupancy, use or control, and to leave such Term Loan Priority Collateral in substantially the same condition as it was at the commencement of such occupancy, use or control (ordinary wear and tear excepted), (c) to deliver to the Term Loan Agent a certificate of insurance from a financially sound and reputable insurer having an A rating or better from Best’s Rating Service showing property and liability coverage reasonably satisfactory to the Term Loan Agent on such Term Loan Priority Collateral during any such period of actual occupation, use and/or control thereof by the Revolving Loan Agent and naming the Term Loan Agent as an additional named insured and loss payee, as applicable, and (d) to indemnify and hold harmless the Term Secured Parties from and against any third party claims against the Term Loan Secured Parties to the extent resulting from actions or omissions by the Revolving Loan Secured Parties or their agents or representatives during the period of such occupancy, use or control by the Revolving Loan Agent. Without limiting the rights granted in this section, the Revolving Loan Agent and the other Revolving Loan Secured Parties shall cooperate with the Term Loan Secured Parties in connection with any efforts made by the Term Loan Agent or the Term Loan Secured Parties to sell the Term Loan Priority Collateral.

Section 9. Reliance; Waivers; etc.

9.1 Reliance.

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(a) The consent by the Revolving Loan Secured Parties to the execution and delivery of the Term Loan Documents and the grant to the Term Loan Agent on behalf of the Term Loan Secured Parties of a Lien on the Collateral and all loans and other extensions of credit made or deemed made on and after the date hereof by the Revolving Loan Secured Parties to any Grantor shall be deemed to have been given and made in reliance upon this Agreement.

(b) The consent by the Term Loan Secured Parties to the execution and delivery of the Revolving Loan Documents and the grant to the Revolving Loan Agent on behalf of the Revolving Loan Secured Parties of a Lien on the Collateral and all loans and other extensions of credit made or deemed made on and after the date hereof by the Term Loan Secured Parties to any Grantor shall be deemed to have been given and made in reliance upon this Agreement.

9.2 No Warranties or Liability.

(a) The Term Loan Agent, for itself and on behalf of the other Term Loan Secured Parties, acknowledges and agrees that each of the Revolving Loan Agent and the other Revolving Loan Secured Parties have made no express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectibility or enforceability of any of the Revolving Loan Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon. The Term Loan Agent agrees, for itself and on behalf of the other Term Loan Secured Parties, that the Revolving Loan Secured Parties will be entitled to manage and supervise their respective loans and extensions of credit under the Revolving Loan Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate, and the Revolving Loan Secured Parties may manage their loans and extensions of credit without regard to any rights or interests that the Term Loan Agent or any of the other Term Loan Secured Parties have in the Collateral or otherwise, except as otherwise provided in this Agreement. Neither the Revolving Loan Agent nor any of the other Revolving Loan Secured Parties shall have any duty to the Term Loan Agent or any of the other Term Loan Secured Parties to act or refrain from acting in a manner which allows, or results in, the occurrence or continuance of an event of default or default under any agreements with any Grantor (including the Term Loan Documents), regardless of any knowledge thereof which they may have or be charged with.

(b) The Revolving Loan Agent, for itself and on behalf of the other Revolving Loan Secured Parties, acknowledges and agrees that each of the Term Loan Agent and the other Term Loan Secured Parties have made no express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectibility or enforceability of any of the Term Loan Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon. The Revolving Loan Agent agrees, for itself and on behalf of the other Revolving Loan Secured Parties, that the Term Loan Secured Parties will be entitled to manage and supervise their respective loans and extensions of credit under the Term Loan Documents in accordance with law and as they may otherwise, in their sole discretion, deem appropriate, and the Term Loan Secured Parties may manage their loans and extensions of credit without regard to any rights or interests that the Revolving Loan Agent or any of the other Revolving Loan Secured Parties have in the Collateral or otherwise, except as otherwise provided in this Agreement. Neither the Term Loan Agent nor any of the other Term Loan Secured Parties shall have any duty to the Revolving Loan Agent or any of the other Revolving

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Loan Secured Parties to act or refrain from acting in a manner which allows, or results in, the occurrence or continuance of an event of default or default under any agreements with any Grantor (including the Revolving Loan Documents), regardless of any knowledge thereof which they may have or be charged with.

9.3 No Waiver of Lien Priorities;

(a) No right of the Revolving Loan Agent or any of the other Revolving Loan Secured Parties to enforce any provision of this Agreement or any of the Revolving Loan Documents shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Grantor or by any act or failure to act by Revolving Loan Agent or any other Revolving Loan Secured Party, or by any noncompliance by any Person with the terms, provisions and covenants of this Agreement, any of the Revolving Loan Documents or any of the Term Loan Documents, regardless of any knowledge thereof which the Revolving Loan Agent or any of the other Revolving Loan Secured Parties may have or be otherwise charged with.

(b) No right of the Term Loan Agent or any of the other Term Loan Secured Parties to enforce any provision of this Agreement or any of the Term Loan Documents shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of any Grantor or by any act or failure to act by Term Loan Agent or any other Term Loan Secured Party, or by any noncompliance by any Person with the terms, provisions and covenants of this Agreement, any of the Term Loan Documents or any of the Revolving Loan Documents, regardless of any knowledge thereof which the Term Loan Agent or any of the other Term Loan Secured Parties may have or be otherwise charged with.

(c) Without in any way limiting the generality of the foregoing paragraph (but subject to the rights of the Grantors under the Revolving Loan Documents), the Revolving Loan Agent and any of the other Revolving Loan Secured Parties may, at any time and from time to time, without the consent of, or notice to, the Term Loan Agent or any other Term Loan Secured Party, without incurring any liabilities to the Term Loan Agent or any other Term Loan Secured Party and without impairing or releasing the Lien priorities and other benefits provided in this Agreement (even if any right of subrogation or other right or remedy of the Term Loan Agent or any other Term Loan Secured Party is affected, impaired or extinguished thereby) do, subject to Section 10.4(b) hereof, any one or more of the following:

(i) change the manner, place or terms of payment or change or extend the time of payment of, or amend, renew, exchange, increase or alter, the terms of any of the Revolving Loan Debt or any Lien on any Collateral or guaranty thereof or any liability of any Grantor, or any liability incurred directly or indirectly in respect thereof (including any increase in or extension of the Revolving Loan Debt, without any restriction as to the amount, tenor or terms of any such increase or extension) or otherwise amend, renew, exchange, extend, modify or supplement in any manner any Liens held by the Revolving Loan Agent or any of the other Revolving Loan Secured Parties, the Revolving Loan Debt or any of the Revolving Loan Documents

(ii) sell, exchange, release, surrender, realize upon, enforce or otherwise deal with in any manner and in any order any part of the Revolving Loan Priority Collateral or any

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liability of any Grantor to the Revolving Loan Agent or any of the other Revolving Loan Secured Parties, or any liability incurred directly or indirectly in respect thereof in accordance with the terms hereof;

(iii) exercise or delay in or refrain from exercising any right or remedy against any Grantor or any other Person, elect any remedy and otherwise deal freely with any Grantor or any Revolving Loan Priority Collateral and any security and any guarantor or any liability of any Grantor to any of the Revolving Loan Secured Parties or any liability incurred directly or indirectly in respect thereof.

(d) Without in any way limiting the generality of the foregoing paragraph (but subject to the rights of the Grantors under the Term Loan Documents), the Term Loan Agent and any of the other Term Loan Secured Parties may, at any time and from time to time, without the consent of, or notice to, the Revolving Loan Agent or any other Revolving Loan Secured Party, without incurring any liabilities to the Revolving Loan Agent or any other Revolving Loan Secured Party and without impairing or releasing the Lien priorities and other benefits provided in this Agreement (even if any right of subrogation or other right or remedy of the Revolving Loan Agent or any other Revolving Loan Secured Party is affected, impaired or extinguished thereby) do, subject to Section 10.4(b) hereof, any one or more of the following:

(i) change the manner, place or terms of payment or change or extend the time of payment of, or amend, renew, exchange, increase or alter, the terms of any of the Term Loan Debt or any Lien on any Collateral or guaranty thereof or any liability of any Grantor, or any liability incurred directly or indirectly in respect thereof (including any increase in or extension of the Term Loan Debt, without any restriction as to the amount, tenor or terms of any such increase or extension) or otherwise amend, renew, exchange, extend, modify or supplement in any manner any Liens held by the Term Loan Agent or any of the other Term Loan Secured Parties, the Term Loan Debt or any of the Term Loan Documents

(ii) sell, exchange, release, surrender, realize upon, enforce or otherwise deal with in any manner and in any order any part of the Term Loan Priority Collateral or any liability of any Grantor to the Term Loan Agent or any of the other Term Loan Secured Parties, or any liability incurred directly or indirectly in respect thereof in accordance with the terms hereof;

(iii) exercise or delay in or refrain from exercising any right or remedy against any Grantor or any other Person, elect any remedy and otherwise deal freely with any Grantor or any Term Loan Priority Collateral and any security and any guarantor or any liability of any Grantor to any of the Term Loan Secured Parties or any liability incurred directly or indirectly in respect thereof.

(e) The Term Loan Agent agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the benefit of, any marshalling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to the Revolving Loan Priority Collateral or any other similar rights a junior secured creditor may have under applicable law.

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(f) The Revolving Loan Agent agrees not to assert and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or otherwise claim the benefit of, any marshalling, appraisal, valuation or other similar right that may otherwise be available under applicable law with respect to the Term Loan Priority Collateral or any other similar rights a junior secured creditor may have under applicable law.

Section 10. Miscellaneous.

10.1 Conflicts. In the event of any conflict between the provisions of this Agreement and the provisions of the Revolving Loan Documents or the Term Loan Documents, the provisions of this Agreement shall govern.

10.2 Continuing Nature of this Agreement; Severability. This Agreement shall continue to be effective until the Discharge of Revolving Loan Debt shall have occurred or the final payment in full in cash of the Term Loan Debt and the termination and release by each Term Loan Secured Party of any Liens to secure the Term Loan Debt. This is a continuing agreement of lien subordination and the Revolving Loan Secured Parties may continue, at any time and without notice to the Term Loan Agent or any other Term Loan Secured Party, to extend credit and other financial accommodations and lend monies to or for the benefit of any Grantor constituting Revolving Loan Debt in reliance hereof. The Term Loan Agent, for itself and on behalf of the Term Loan Secured Parties, hereby waives any right it may have under applicable law to revoke this Agreement or any of the provisions of this Agreement. The Revolving Loan Agent, for itself and on behalf of the Revolving Loan Secured Parties, hereby waives any right it may have under applicable law to revoke this Agreement or any of the provisions of this Agreement. The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency or Liquidation Proceeding. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall not invalidate the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

10.3 When Discharge of Debt Deemed to Not Have Occurred.

(a) If substantially contemporaneously with the Discharge of Revolving Loan Debt, Borrowers refinances indebtedness outstanding under the Revolving Loan Documents in a manner which does not contravene the terms of Section 10.4(b) hereof, then after written notice to Term Loan Agent, (i) the indebtedness and other obligations arising pursuant to such refinancing of the then outstanding indebtedness under the Revolving Loan Documents shall automatically be treated as Revolving Loan Debt for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Collateral set forth herein, (ii) the credit agreement and the other loan documents evidencing such new indebtedness shall automatically be treated as the Revolving Loan Agreement and the Revolving Loan Documents for all purposes of this Agreement and (iii) the administrative agent under the new Revolving Loan Agreement shall be deemed to be the Revolving Loan Agent for all purposes of this Agreement. Upon receipt of notice of such refinancing (including the identity of the new Revolving Loan Agent), the Term Loan Agent shall promptly enter into such documents and agreements (including amendments or supplements to this Agreement) as Borrowers or the new

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Revolving Loan Agent may reasonably request in order to provide to the new Revolving Loan Agent the rights of the Revolving Loan Agent contemplated hereby.

(b) If substantially contemporaneously with the Discharge of Term Loan Debt, Borrowers refinances indebtedness outstanding under the Term Loan Documents in a manner which does not contravene the terms of Section 10.4(b) hereof, then after written notice to Term Loan Agent, (i) the indebtedness and other obligations arising pursuant to such refinancing of the then outstanding indebtedness under the Term Loan Documents shall automatically be treated as Term Loan Debt for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Collateral set forth herein, (ii) the credit agreement and the other loan documents evidencing such new indebtedness shall automatically be treated as the Term Loan Agreement and the Term Loan Documents for all purposes of this Agreement and (iii) the administrative agent under the new Term Loan Agreement shall be deemed to be the Term Loan Agent for all purposes of this Agreement. Upon receipt of notice of such refinancing (including the identity of the new Term Loan Agent), the Term Loan Agent shall promptly enter into such documents and agreements (including amendments or supplements to this Agreement) as Borrowers or the new Term Loan Agent may reasonably request in order to provide to the new Term Loan Agent the rights of the Term Loan Agent contemplated hereby.

10.4 Amendments; Waivers.

(a) No amendment, modification or waiver of any of the provisions of this Agreement by the Term Loan Agent or the Revolving Loan Agent shall be deemed to be made unless the same shall be in writing signed on behalf of the party making the same or its authorized agent and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of the parties making such waiver or the obligations of the other parties to such party in any other respect or at any other time.

(b) No Agent shall agree to any amendment, modification, refinancing, waiver or supplement to the Revolving Loan Documents or the Term Loan Documents, as the case may be, that

(i) increases the Revolving Loan Debt to an amount in excess of the Maximum Priority Revolving Loan Debt, or the Term Loan Debt to an amount in excess of the Maximum Priority Term Loan Debt;

(ii) increases the interest rate (including by changing the pricing grid, imposing or increasing a rate floor or otherwise) or any scheduled recurring fee by more than 3.00% in the aggregate during the term of this Agreement or increases or adds any one time fee (including any one-time amendment, waiver, prepayment and success fees, if any) which aggregate more than 3.00% per annum;

(iii) directly prohibits or restricts the payment of principal of, interest on, or other amounts payable with respect to the Revolving Loan Debt or the Term Loan Debt, except for any such prohibitions or restrictions expressly provided for in this Agreement, the Term Loan Agreement and the Revolving Loan Agreement (each as in effect on the date hereof); or

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(iv) subordinates the Liens of such Agent to liens in favor or any other Person in connection with an Insolvency or Liquidation Proceeding as provided in this Agreement.

(c) Term Loan Agent nor any Term Loan Lender shall agree to any amendment, modification, refinancing, waiver or supplement to the Term Loan Documents, that alters (other than to extend) the amortization schedule, the terms and conditions of the mandatory prepayments (the conditions of or amounts of) of the Term Loan Debt set forth in Section 2.2 of the Term Loan Agreement (including any component thereof), the annual amount of the regularly scheduled principal payments or the maturity date for the Term Loan Debt (in each case, as in effect on the date hereof).

(d) Revolving Loan Agent nor any Revolving Loan Lender shall agree to any amendment, modification, refinancing, waiver or supplement to the Revolving Loan Documents, that alters the terms and conditions of the mandatory prepayments (the conditions of or amounts of) of the Revolving Loan Debt set forth in Sections 2.4(d), 9.5(b), the last proviso of 9.7(b)(ii), 9.7(b)(iii)(D) and 9.9(h)(ii) of the Revolving Loan Agreement (in each case, as in effect on the date hereof).

10.5 Subrogation.

(a) The Term Loan Agent, for itself and on behalf of the Term Loan Secured Parties, hereby agrees not to assert any rights of subrogation it may acquire as a result of any payment hereunder until the Discharge of Revolving Loan Debt has occurred.

(b) The Revolving Loan Agent, for itself and on behalf of the Revolving Loan Secured Parties, hereby agrees not to assert any rights of subrogation it may acquire as a result of any payment hereunder until the Discharge of Term Loan Debt has occurred.

10.6 Consent to Jurisdiction; Waivers. The parties hereto consent to the jurisdiction of any state or federal court located in New York, New York, and consent that all service of process may be made by registered mail directed to such party as provided in Section 10.7 hereof for such party. Service so made shall be deemed to be completed three (3) days after the same shall be posted as aforesaid. The parties hereto waive any objection to any action instituted hereunder based on forum non conveniens, and any objection to the venue of any action instituted hereunder. Each of the parties hereto waives any right it may have to trial by jury in respect of any litigation based on, or arising out of, under or in connection with this Agreement or any other Loan Document, or any course of conduct, course of dealing, verbal or written statement or action of any party hereto.

10.7 Notices. All notices to the Term Loan Secured Parties and the Revolving Loan Secured Parties permitted or required under this Agreement may be sent to the Term Loan Agent and the Revolving Loan Agent, respectively. Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, electronically mailed or sent by courier service, facsimile transmission or U.S. mail and shall be deemed to have been given when delivered in person or by courier service, upon receipt of a facsimile transmission or electronic mail or four (4) Business Days after deposit in the U.S. mail (registered or certified, with postage prepaid and properly

39

addressed). For the purposes hereof, the addresses of the parties hereto shall be as set forth below, or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties.

Term Loan Agent:	The Bank of New York Mellon
	600 East Las Colinas Blvd.
	Suite 1300
	Irving, TX 75039
	Attention: Melinda Valentine -Vice President
	Telephone No.: 972-401-8500
	Telecopy No.: 972-401-8555
with copy to (which shall not constitute notice):	McGuire, Craddock & Strother, P.C.
	2501 N. Harowood
	Suite 1800
	Dallas, Texas 75201
	Attention: Jonathan Thalheimer
	Telephone No.: 214.954-6855
	Telecopy No.: 214-954-6868
	Email: jthalheimer@mcslaw.com
with copy to (which shall	Proskauer Rose LLP
not constitute notice):	One International Place
	Boston, MA 02110
	Attention: Peter Antoszyk, Esq.
	Telephone No.: 617-526-9749
	Telecopy No.: 617-526-9899
with copy to (which shall	DDJ Capital Management, LLC
not constitute notice):	130 Turner Street
	Building 3, Suite 600
	Waltham, MA 02453
	Attention:
	Telephone No.:
	Telecopy No.:

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Revolving Loan Agent:	Wells Fargo Bank, National Association
	12 East 49th Street
	New York, NY 10017
	Attention: Portfolio Administrator - Latrobe
	Telephone No.: 212-840-2000
	Telecopy No.: 212-545-4283
Each Grantor:	Latrobe Steel Company
	2626 Ligonier Street
	P.O. Box 31
	Latrobe, PA 15650
	Attention: Dale B. Mikus
	Telephone No.: 724-532-6306
	Telecopy No.: 724-532-6362
with copy to (which shall not constitute notice):	Weil Gotshal & Manges LLP
	767 Fifth Avenue
	New York, New York 10153
	Attention: Andrew Colao
	Telephone No.: (212) 310-8830
	Telecopy No.: (212) 310-8007

10.8 Consent to Jurisdiction; Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK IN NEW YORK COUNTY AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT,

10.9 Governing Law. The validity, construction and effect of this Intercreditor Agreement shall be governed by the internal laws of the State of New York but excluding any principles of conflict of laws or any other rule of law that would result in the application of the law of any jurisdiction other than the laws of the State of New York.

10.10 Binding on Successors and Assigns. This Agreement shall be binding upon the Revolving Loan Agent, the other Revolving Loan Secured Parties, the Term Loan Agent and the other Term Loan Secured Parties, and their respective successors and assigns.

10.11 Section Titles; Time Periods. The section titles contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of this Agreement.

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10.12 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be an original and all of which shall together constitute one and the same document.

10.13 Authorization. By its signature, each Person executing this Agreement on behalf of a party hereto represents and warrants to the other parties hereto that it is duly authorized to execute this Agreement.

10.14 No Third Party Beneficiaries. This Agreement and the rights and benefits hereof shall inure to the benefit of each of the parties hereto and their respective successors and assigns and shall inure to the benefit of each of the holders of Revolving Loan Debt and Term Loan Debt. No other Person (including without limitation, any Borrower, Guarantor or any of their respective creditors) shall have or be entitled to assert rights or benefits hereunder.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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

TERM LOAN AGENT

The Band of New York Mellon, as Term Loan Agent

By:

Name:

Title:

[Intercreditor Agreement]

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

REVOLVING LOAN AGENT

WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Revolving Loan Agent

By:

Name:

Title:

[Intercreditor Agreement]

EXHIBIT A

TO

INTERCREDITOR AGREEMENT

Term Loan Priority Collateral

The term “Term Loan Priority Collateral” shall mean all of the following property now owned or at any time hereafter acquired by any Grantor, in which such Grantor now has or at any time in the future may acquire any right, title or interests:

(a) all Equipment;

(b) all owned real property and Fixtures;

(c) all Pledged Stock;

(d) all Intellectual Property;

(e) all Term Loan Priority Accounts;

(f) all Chattel Paper (including all Tangible Chattel Paper and Electronic Chattel Paper) arising in connection with or directly related to any of the Term Loan Priority Collateral described in clauses (a) through (e) above;

(g) all Instruments (including any Promissory Notes) arising in connection with or directly related to any of the Term Loan Priority Collateral described in clauses (a) through (e) above;

(h) all Documents arising in connection with or directly related to any of the Term Loan Priority Collateral described in clauses (a) through (e) above;

(i) all Letters of Credit, Letter of Credit Rights, banker’s acceptances and similar instruments arising in connection with or directly related to any of the Term Loan Priority Collateral described in clauses (a) through (e) above;

(j) all Supporting Obligations arising in connection with or directly related to any of the Term Loan Priority Collateral described in clauses (a) through (e) above;

(k) all Investment Property (including securities, whether certificated or uncertificated, securities accounts, security entitlements, commodity contracts or commodity accounts) and all monies, credit balances, deposits and other property in each case arising in connection with or directly related to any of the Term Loan Priority Collateral described in clauses (a) through (e) above; and

(l) all products and Proceeds of the foregoing, in any form, including insurance proceeds and all claims against third parties for loss or damage to or destruction of or other involuntary conversion of any kind of nature of any or all of the Term Loan Priority Collateral.

For purposes of this Exhibit A, the following terms shall have the meanings given to them below:

The (a) terms “Chattel Paper,” “Documents,” “Electronic Chattel Paper,” “Equipment,” “Fixtures,” “Instrument,” “Investment Property,” “Letter of Credit Rights,” “Promissory Note,” “Supporting Obligation,” “Tangible Chattel Paper,” shall have their meanings as set forth in Article 9 of the UCC, (b) term “Letters of Credit” shall its meaning as set forth in defined in Article 5 of the UCC, and (c) term “Term Loan Priority Account” shall have its meaning as set forth in the Agreement.

“Copyright Licenses” shall mean any and all agreements providing for the granting of any right in or to Copyrights (whether such Grantor is licensee or licensor thereunder).

“Copyrights” shall mean all United States, and foreign copyrights, including but not limited to copyrights in software and databases, and all Mask Works (as defined under 17 U.S.C. 901 of the U.S. Copyright Act), whether registered or unregistered, and, with respect to any and all of the foregoing, including but not limited to: (i) all registrations and applications therefor, (ii) all extensions and renewals thereof, (iii) all rights corresponding thereto throughout the world, (iv) all rights to sue for past, present and future infringements thereof, and (v) all Proceeds of the foregoing, including, without limitation, licenses, royalties, income, payments, claims, damages and proceeds of suit.

“Intellectual Property” shall mean, collectively, the Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the Trademarks, the Trademark Licenses, the Trade Secrets, and the Trade Secret Licenses.

“Patent Licenses” shall mean all agreements providing for the granting of any right in or to Patents (whether such Grantor is licensee or licensor thereunder).

“Patents” shall mean all United States and foreign patents and certificates of invention, or similar industrial property rights, and applications for any of the foregoing, including but not limited to: (i) all registrations and applications referred to in Schedule A of the Patent Security Agreement which is part of the Term Loan Documents, (ii) all reissues, divisions, continuations, continuations-in-part, extensions, renewals, and reexaminations thereof, (iii) all rights corresponding thereto throughout the world, (iv) all inventions and improvements described therein, (v) all rights to sue for past, present and future infringements thereof, (vi) all licenses, claims, damages, and proceeds of suit arising therefrom, and (vii) all Proceeds of the foregoing, including, without limitation, licenses, royalties, income, payments, claims, damages, and proceeds of suit.

“Pledged Stock” shall mean the shares of Capital Stock (as defined in the Term Loan Agreement) of any Grantor (other than Parent) or any Subsidiary of any Grantor.

“Proceeds” shall mean: all “proceeds” as defined in Article 9 of the UCC, and in any event, shall include, without limitation whatever is receivable or received when Term Loan Priority Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary.

“Trademark Licenses” shall mean any and all agreements providing for the granting of any right in or to Trademarks (whether such Grantor is licensee or licensor thereunder).

“Trademarks” shall mean all United States, and foreign trademarks, trade names, corporate names, company names, business names, fictitious business names, Internet domain names, service marks, certification marks, collective marks, logos, other source or business identifiers,

designs and general intangibles of a like nature, all registrations and applications for any of the foregoing including, including but not limited to: (i) all registrations and applications referred to in Schedule A of the Trademark Security Agreement which is part of the Term Loan Documents, (ii) all extensions or renewals of any of the foregoing, (iii) all of the goodwill of the business connected with the use of and symbolized by the foregoing, (iv) the right to sue for past, present and future infringement or dilution of any of the foregoing or for any injury to goodwill, and (v) all Proceeds of the foregoing, including, without limitation, licenses, royalties, income, payments, claims, damages, and proceeds of suit.

“Trade Secret Licenses” shall mean any and all agreements providing for the granting of any right in or to Trade Secrets (whether such Grantor is licensee or licensor thereunder).

“Trade Secrets” shall mean trade secrets, confidential information, know-how, manufacturing, system process, techniques, designs, prototypes, enhancements, improvements, work-in progress, and research and development information.

EX-10.5

Exhibit 10.5

LOAN AND SECURITY AGREEMENT

by and among

LATROBE STEEL COMPANY

OH&R SPECIAL STEELS COMPANY

SPECIALTY STEEL SUPPLY, INC.

as Borrowers,

TOOLROCK HOLDING, INC.

as Guarantor,

THE LENDERS FROM TIME TO TIME PARTY HERETO,

and

THE BANK OF NEW YORK MELLON

as Agent

Dated: July 30, 2010

TABLE OF CONTENTS

		Page
SECTION 1. DEFINITIONS			1
SECTION 2. TERM LOAN			25
2.1	Term Loan		25
2.2	Mandatory Prepayments		25
2.3	Optional Prepayments		28
2.4	Redemption Premium		29
2.5	Joint and Several Liability of Borrowers		29
SECTION 3. INTEREST AND FEES			31
3.1	Interest		31
3.2	Fees		32
3.3	Changes in Laws and Increased Costs of Loans		32
SECTION 4. CONDITIONS PRECEDENT			33
4.1	Conditions Precedent to the Issuance of the Term Loan		33
SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST			36
5.1	Grant of Security Interest		36
5.2	Perfection of Security Interests		37
5.3	Exclusions from Collateral		41
SECTION 6. COLLECTION AND ADMINISTRATION			41
6.1	Borrowers’ Term Loan Account		41
6.2	Intentionally Deleted		42
6.3	Collection of Accounts		42
6.4	Payments		43
6.5	Taxes		43
6.6	Intentionally Deleted		47
6.7	Use of Proceeds		47
6.8	Appointment of Administrative Borrower as Agent for Requesting the Term Loan and Receipts of Loans and Statements		47
6.9	Pro Rata Treatment		48
6.10	Sharing of Payments, Etc.		48
6.11	Intentionally Deleted		48
6.12	Obligations Several; Independent Nature of Lenders’ Rights		49
6.13	Intentionally Deleted		49
6.14	Promissory Notes		49
SECTION 7. COLLATERAL REPORTING AND COVENANTS			49
7.1	Collateral Reporting		49
7.2	Accounts Covenants		50
7.3	Inventory Covenants		51
7.4	Equipment and Real Property Covenants		52
7.5	Power of Attorney		52
7.6	Right to Cure		53
7.7	Access to Premises		54
SECTION 8. REPRESENTATIONS AND WARRANTIES			54
8.1	Corporate Existence, Power and Authority		54

8.2	Name; State of Organization; Chief Executive Office; Collateral Locations		55
8.3	Financial Statements; No Material Adverse Change		55
8.4	Priority of Liens; Title to Properties		56
8.5	Tax Returns		56
8.6	Litigation		56
8.7	Compliance with Other Agreements and Applicable Laws		56
8.8	Environmental Compliance		57
8.9	Employee Benefits		58
8.10	Bank Accounts		59
8.11	Intellectual Property		59
8.12	Subsidiaries; Affiliates; Capitalization; Solvency		60
8.13	Labor Disputes		61
8.14	Restrictions on Subsidiaries		62
8.15	Material Contracts		62
8.16	Payable Practices		62
8.17	No Material Adverse Change		62
8.18	Interrelated Business		62
8.19	Accuracy and Completeness of Information		62
8.20	Survival of Warranties; Cumulative		62
SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS		63
9.1	Maintenance of Existence		63
9.2	New Collateral Locations		64
9.3	Compliance with Laws, Regulations, Etc.		64
9.4	Payment of Taxes and Claims		65
9.5	Insurance		65
9.6	Financial Statements and Other Information		66
9.7	Sale of Assets, Consolidation, Merger, Dissolution, Etc.		68
9.8	Encumbrances		71
9.9	Indebtedness		73
9.10	Loans, Investments, Etc.		78
9.11	Dividends and Redemptions		79
9.12	Transactions with Affiliates		80
9.13	Compliance with ERISA		81
9.14	End of Fiscal Years; Fiscal Quarters		82
9.15	Change in Business		82
9.16	Limitation of Restrictions Affecting Subsidiaries		82
9.17	Fixed Charge Coverage Ratio		83
9.18	Capital Expenditures		84
9.19	Minimum Excess Availability		84
9.20	Intentionally Deleted		84
9.21	No Layering		84
9.22	Foreign Assets Control Regulations, Etc.		84
9.23	After Acquired Real Property		84
9.24	Costs and Expenses		85
9.25	Post Closing		86

(ii)

9.26	Further Assurances	86
9.27	Collateral Access Agreements	86
SECTION 10. EVENTS OF DEFAULT AND REMEDIES		87
10.1	Events of Default	87
10.2	Remedies	88
SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW		92
11.1	Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver	92
11.2	Waiver of Notices	93
11.3	Amendments and Waivers	93
11.4	Waiver of Counterclaims	95
11.5	Indemnification	95
11.6	Currency Indemnity	96
SECTION 12. THE AGENT		96
12.1	Appointment, Powers and Immunities	96
12.2	Reliance by Agent	98
12.3	Events of Default	98
12.4	Intentionally Deleted	98
12.5	Indemnification	98
12.6	Non-Reliance on Agent and Other Lenders	99
12.7	Failure to Act	99
12.8	Intentionally Deleted	99
12.9	Concerning the Collateral and the Related Financing Agreements	99
12.10	Field Audit, Examination Reports and other Information; Disclaimer by Lenders	100
12.11	Collateral Matters	100
12.12	Agency for Perfection	102
12.13	Successor Agent	102
12.14	Other Agent Designations	102
SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS		103
13.1	Term	103
13.2	Interpretative Provisions	104
13.3	Notices	106
13.4	Partial Invalidity	107
13.5	Confidentiality	108
13.6	Successors	109
13.7	Assignments; Participations	109
13.8	Entire Agreement	111
13.9	USA Patriot Act	111
13.10	Counterparts, Etc.	111
13.11	Intercreditor Agreement	112

(iii)

INDEX

TO

EXHIBITS AND SCHEDULES

Exhibit A	Form of Assignment and Acceptance
Exhibit B	Perfection Certificate
Exhibit C	Form of Compliance Certificate
Exhibit D	Commitments
Exhibit E	Form of Note
Exhibit F	Form of VIM Intercreditor Joinder
Exhibit G	Form of Solvency Certificate
Schedule 1.98	Permitted Holders
Schedule 1.132	VIM Equipment
Schedule 8.2	Addresses for Accounts
Schedule 8.4	Priority of Liens
Schedule 8.5	Tax Returns
Schedule 8.6	Litigation
Schedule 8.8	Environmental Compliance
Schedule 8.9(d)	Post-Employment Health and Welfare Benefits
Schedule 8.10	Bank Accounts
Schedule 8.11	Intellectual Property
Schedule 8.12	Subsidiaries; Affiliates; Capitalization; Solvency
Schedule 8.13	Labor Disputes
Schedule 9.7	Assets Permitted to be Sold
Schedule 9.8(k)	Certain Equipment Subject to Liens

(iv)

Schedule 9.9	Indebtedness
Schedule 9.10	Loans, Investments, Etc.

(v)

LOAN AND SECURITY AGREEMENT

This Loan and Security Agreement (this “Agreement”) dated July 30, 2010 is entered into by and among Latrobe Steel Company, a Pennsylvania corporation (“Latrobe”), OH&R Special Steels Company, a Delaware corporation (“OH&R”), and Specialty Steel Supply, Inc., a Texas corporation (“SSS” together with Latrobe and OH&R, each individually a “Borrower” and collectively, “Borrowers” as hereinafter further defined), Toolrock Holding, Inc., a Delaware corporation (“Parent,” sometimes individually referred to herein as a “Guarantor” and collectively, “Guarantors” as hereinafter further defined), the parties hereto from time to time as lenders, whether by execution of this Agreement or an Assignment and Acceptance (each individually, a “Lender” and collectively, “Lenders” as hereinafter further defined), and The Bank of New York Mellon, in its capacity as agent for Lenders (in such capacity, “Agent” as hereinafter further defined).

W I T N E S S E T H:

WHEREAS, Borrowers and Guarantors have requested that Agent and Lenders enter into financing arrangements with Borrowers pursuant to which Lenders shall make a single loan to Borrowers; and

WHEREAS, each Lender agrees (severally and not jointly) to make a portion of such loan to Borrowers on a pro rata basis according to its Commitment (as defined below) on the terms and conditions set forth herein and Agent is willing to act as agent for Lenders on the terms and conditions set forth herein and the other Financing Agreements (as defined below);

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, hereto agree as follows:

SECTION 1. DEFINITIONS

For purposes of this Agreement, the following terms shall have the respective meanings given to them below:

1.1 “Accounts” shall mean, as to each Borrower and Guarantor, all present and future rights of such Borrower and Guarantor to payment of a monetary obligation, whether or not earned by performance, which is not evidenced by chattel paper or an instrument, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a secondary obligation incurred or to be incurred, or (d) arising out of the use of a credit or charge card or information contained on or for use with the card.

1.2 “Accrued Management Fees” shall mean $362,500, which represents the aggregate amount of outstanding, accrued and unpaid management fees owing to Sponsors and any of their Affiliates as of the Closing Date.

1.3 “Adjusted Eurodollar Rate” shall mean, with respect to each Interest Period for the Term Loan, the rate per annum determined by dividing (a) the London Interbank Offered

Rate for such Interest Period by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof, “Reserve Percentage” shall mean for any day, that percentage (expressed as a decimal) which is in effect from time to time under Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as such regulation may be amended from time to time or any successor regulation, as the maximum reserve requirement (including, without limitation, any basic, supplemental, emergency, special, or marginal reserves) applicable with respect to Eurocurrency liabilities as that term is defined in Regulation D (or against any other category of liabilities that includes deposits by reference to which the interest rate of the Term Loan is determined), whether or not any Lender has any Eurocurrency liabilities subject to such reserve requirement at that time. The Term Loan shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credits for proration, exceptions or offsets that may be available from time to time to a Lender. The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Percentage.

1.4 “Administrative Borrower” shall mean Latrobe, in its capacity as Administrative Borrower on behalf of itself and the other Borrowers pursuant to Section 6.8 hereof and it successors and assigns in such capacity.

1.5 “Affiliate” shall mean, with respect to a specified Person, any other Person which directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes (a) any Person which beneficially owns or holds ten (10%) percent or more of any class of Voting Stock of such Person or other equity interests in such Person, (b) any Person of which such Person beneficially owns or holds ten (10%) percent or more of any class of Voting Stock or in which such Person beneficially owns or holds ten (10%) percent or more of the equity interests and (c) any director or executive officer of such Person. For the purposes of this definition, the term “control” (including with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by agreement or otherwise.

1.6 “Agent” shall mean The Bank of New York Mellon, in its capacity as agent on behalf of Lenders pursuant to the terms hereof and any replacement or successor agent hereunder.

1.7 “Agreement” shall have the meaning set forth in the recitals hereof.

1.8 “Agent Payment Account” shall mean account no. 8900415460 of Agent at The Bank of New York Mellon, ABA Number: 021000018, Account Name: BNYAS Agent Services Clearing Account, Payment Details: Latrobe Steel or such other account of Agent as Agent may from time to time designate to Administrative Borrower as the Agent Payment Account for purposes of this Agreement and the other Financing Agreements.

1.9 “Applicable Margin” shall mean 13.50% per annum.

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1.10 “Appraised Value Threshold” shall have the meaning set forth in Section 9.27 hereof.

1.11 “Assignment and Acceptance” shall mean an Assignment and Acceptance substantially in the form of Exhibit A attached hereto (with blanks appropriately completed) delivered to Agent in connection with an assignment of a Lender’s interest hereunder in accordance with the provisions of Section 13.7 hereof.

1.12 “Bank Product Provider” shall have the meaning assigned thereto in the Revolving Credit Agreement.

1.13 “Blocked Accounts” shall have the meaning set forth in Section 6.3 hereof.

1.14 “Borrowers” shall mean, collectively, the following (together with their respective successors and assigns): (a) Latrobe Steel Company, a Pennsylvania corporation; (b) OH&R Special Steels Company, a Delaware corporation; (c) Specialty Steel Supply, Inc., a Texas corporation, and (d) any other Person that at any time after the date hereof becomes a Borrower; each sometimes being referred to herein individually as a “Borrower.”

1.15 “Borrowing Base” shall have the meaning assigned thereto in the Revolving Credit Agreement.

1.16 “Borrowing Base Certificate” shall have the meaning assigned thereto in the Revolving Credit Agreement.

1.17 “Business Day” shall mean any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required to close under the laws of the State of New York, and a day on which Agent is open for the transaction of business, except that if a determination of a Business Day shall relate to the Term Loan, the term Business Day shall also exclude any day on which banks are closed for dealings in dollar deposits in the London interbank market or other applicable Eurodollar Rate market.

1.18 “Capital Expenditure Reserve” shall have the meaning assigned thereto in the Revolving Credit Agreement.

1.19 “Capital Expenditures” means all payments or accruals (including Capital Lease Obligations) for any fixed assets or improvements or for replacements, substitutions or additions thereto, that have a useful life of more than one year and that are required to be capitalized under GAAP.

1.20 “Capital Leases” shall mean, as applied to any Person, any lease of (or any agreement conveying the right to use) any property (whether real, personal or mixed) by such Person as lessee which in accordance with GAAP, is required to be reflected as a liability on the balance sheet of such Person.

1.21 “Capital Stock” shall mean, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of such Person’s capital stock or partnership, limited liability company or other equity interests at any time outstanding, and

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any and all rights, warrants or options exchangeable for or convertible into such capital stock or other interests (but excluding any debt security that is exchangeable for or convertible into such capital stock).

1.22 “Cash Equivalents” shall mean, at any time, (a) any evidence of Indebtedness with a maturity date of ninety (90) days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof; provided, that, the full faith and credit of the United States of America is pledged in support thereof; (b) certificates of deposit or bankers’ acceptances with a maturity of ninety (90) days or less of any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $1,000,000,000; (c) commercial paper (including variable rate demand notes) with a maturity of ninety (90) days or less issued by a corporation (except an Affiliate of any Borrower or Guarantor) organized under the laws of any State of the United States of America or the District of Columbia and rated at least A-1 by Standard & Poor’s Ratings Service, a division of The McGraw-Hill Companies, Inc. or at least P-1 by Moody’s Investors Service, Inc.; (d) repurchase obligations with a term of not more than thirty (30) days for underlying securities of the types described in clause (a) above entered into with any financial institution having combined capital and surplus and undivided profits of not less than $1,000,000,000; (e) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by any governmental agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within ninety (90) days or less from the date of acquisition; provided, that, the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985; and (f) investments in money market funds and mutual funds which invest substantially all of their assets in securities of the types described in clauses (a) through (e) above.

1.23 “Change of Control” shall mean (a) after a Qualified Public Offering, the acquisition by any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act), except for one or more Permitted Holders and Permitted Holder Affiliates of beneficial ownership (as determined in accordance with Rules 13d-3 and 13d-5 under the Exchange Act, except that a person will be deemed to have beneficial ownership of all shares that such person has the right to acquire, whether such right is exercisable immediately or only after a passage of time), directly or indirectly, of more than thirty-five (35%) percent of the voting power of the total outstanding Voting Stock (on a fully diluted basis) of Parent or the Board of Directors of Parent; (b) during any period of two (2) consecutive years, individuals who at the beginning of such period constituted the Board of Directors of Parent (together with any new directors who have been appointed by any Permitted Holder and Permitted Holder Affiliates, or whose nomination for election by the stockholders of Parent, as the case may be, was approved by a vote of at least fifty (50%) percent of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of Parent then still in office; (c) prior to a Qualified Public Offering, the failure of the Permitted Holders and Permitted Holder Affiliates to own, collectively, directly or indirectly more than fifty (50%) percent of the voting power of the total outstanding Voting Stock of Parent or fifty (50%) percent of the Capital Stock of Parent representing all economic interests of the Parent; (d) the failure of

4

Parent to own directly or indirectly one hundred (100%) percent of the voting power of the total outstanding Voting Stock of any Borrower or Guarantor other than Parent (exclusive of director qualifying shares and other equity interests required by law to be held by an Affiliate); or (e) the occurrence of any “change in control” (or similar term) as defined in the Revolving Credit Documents.

1.24 “Closing Date” means July 30, 2010.

1.25 “Code” shall mean the Internal Revenue Code of 1986, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all applicable regulations and interpretations thereunder or related thereto.

1.26 “Collateral” shall have the meaning set forth in Section 5 hereof.

1.27 “Collateral Access Agreement” shall mean an agreement in writing, in form and substance reasonably satisfactory to the Required Lenders, from any lessor of premises to any Borrower or Guarantor, or any other person to whom any Collateral is consigned or who has custody, control or possession of any such Collateral or is otherwise the owner or operator of any premises on which any of such Collateral is located, in favor of Agent with respect to the Collateral at such premises or otherwise in the custody, control or possession of such lessor, consignee or other person.

1.28 “Commitments” shall mean with respect to the Term Loan, as to each Lender, the principal amount set forth next to such Lender’s name on Exhibit D hereto.

1.29 “Consolidated Net Income” shall mean, with respect to any Person, for any period, the aggregate of the net income (loss) of such Person and its Subsidiaries, on a consolidated basis, for such period, all as determined in accordance with GAAP; provided, that, (a) the net income of any Person that is not a majority-owned Subsidiary shall be included only to the extent of the amount of dividends or distributions paid or payable to such Person or a majority-owned Subsidiary of such Person; and (b) the net income (if positive) of any majority-owned Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such majority-owned Subsidiary to such Person or to any other majority-owned Subsidiary of such Person is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such majority-owned Subsidiary shall be excluded.

1.30 “Control Notice” shall mean a written notice delivered pursuant to a Deposit Account Control Agreement instructing the depository bank to comply with instructions originated by Revolving Agent (or Agent, if applicable pursuant to the Intercreditor Agreement) with respect to the deposit account that is covered thereby without further consent of any Borrower or any Guarantor.

1.31 “Controlling Parent” shall mean Toolrock Investment, LLC, a Delaware limited liability company, and its successors or assigns or any newly formed entity (formed pursuant to and in accordance with Section 9.10(k) hereof) that owns the majority of the Capital Stock of Parent.

5

1.32 “DDJ Lenders” shall mean funds and/or accounts managed and/or advised by DDJ Capital Management, LLC and with respect to the portion of the Term Loan held by each such fund and /or account, DDJ Capital Management LLC has the contractual authority to direct any action required of any such Lender under the terms of this Agreement.

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

1.34 “Deposit Account Control Agreement” shall mean an agreement in writing, in form and substance reasonably satisfactory to the Required Lenders by and among Revolving Agent, Agent, the Borrower or Guarantor with respect to a deposit account at any bank and the bank at which such deposit account is at any time maintained, which provides, among other things, that such bank will comply with instructions originated by the Revolving Agent (or Agent, if applicable pursuant to the terms of the Intercreditor Agreement) after delivery of a Control Notice or in connection with a deposit account specifically and exclusively use to hold deposits that are required to be delivered to the Agent or applied to repay the Term Loan pursuant to Section 2.2, such bank will comply with the instructions originated by the Agent after delivery of a Control Notice.

1.35 “EBITDA” shall mean, as to any Person, with respect to any period, an amount equal to: (a) the Consolidated Net Income of such Person and its Subsidiaries for such period, plus (b) the sum of, in each case to the extent included in the calculation of such Consolidated Net Income, but without duplication: (i) Interest Expense (net of interest income); (ii) the provision for and payment of (without duplication) federal, state, local and foreign income tax; (iii) depreciation expense; (iv) amortization expense (including non-cash amortization of debt discount or deferred transaction and financing costs); (v) letter of credit fees payable pursuant to Section 3.2(a) of the Revolving Credit Agreement; (vi) to the extent covered by insurance under which the insurer has been properly notified and has not denied or contested coverage, expenses with respect to liability or casualty events or business interruption to the extent such Person and its Subsidiaries have been reimbursed in cash by such insurer during the same period; (vii) the aggregate amount of all other non-cash items including, non-cash charges related to stock compensation expense, non-cash adjustments in respect of purchase price accounting and non-cash deductions attributable to minority equity interests of such Person and its Subsidiaries (other than any non-cash charge that results in an accrual of a reserve for cash charges in any future period); and (viii) non-recurring cash items incurred during such period as determined in accordance with GAAP in an aggregate amount not to exceed $1,000,000 during any consecutive twelve (12) month period, which include, (A) extraordinary non recurring one time charges in accordance with GAAP and extraordinary non-recurring one time cash expenses and (B) earn-outs and similar contingent payments in connection with investments permitted under Section 9.10 hereof; less (c) the sum of, in each case to the extent included in the calculation of such Consolidated Net Income, but without duplication: (i) extraordinary gains and non-recurring gains; (ii) non-cash gains (excluding any such non-cash gain to the extent it represents the reversal of an accrual or reserve for potential cash item in any prior period); (iii) gains on asset sales (other than asset sales in the ordinary course of business); and (iv) any net after-tax income from the early extinguishment of debt or hedging obligations or other derivative instruments.

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1.36 “Eligible Transferee” shall mean (a) any Lender; (b) the parent company of any Lender and/or any Affiliate of such Lender which is at least fifty (50%) percent owned by such Lender or its parent company; (c) any person (whether a corporation, partnership, trust or otherwise) that is engaged in the business of making, purchasing, holding or otherwise investing in loans in the ordinary course of its business and is administered or managed by a Lender or with respect to any Lender that is a fund which invests in loans, any other fund that invests in loans and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor, and in each case is approved by Agent (acting at the direction of the Required Lenders); and (d) any other commercial bank, financial institution or “accredited investor” (as defined in Regulation D under the Securities Act of 1933) approved by Agent (acting at the direction of the Required Lenders), provided, that, so long as no Default or Event of Default shall have occurred and be continuing, Administrative Borrower shall have the right to approve assignments to Eligible Transferees described in clause (d) above (which approval shall not be unreasonably withheld, conditioned or delayed and shall be deemed to be granted by the Administrative Borrower if the Administrative Borrower has not responded to a written request to approve such assignment within five Business Days of the date of such request; except if such assignment occurs upon the merger, consolidation, sale or other disposition of all or any portion of Lender’s business, loan portfolio or other assets, in which case no approval of Administrative Borrower shall be required) and provided, that, (i) neither any Borrower nor any Guarantor or any Affiliate of any Borrower or Guarantor shall qualify as an Eligible Transferee, and (ii) no Person to whom any Indebtedness which is in any way subordinated in right of payment to any other Indebtedness of any Borrower or Guarantor shall qualify as an Eligible Transferee, except as Agent (acting at the direction of the Required Lenders) may otherwise specifically agree.

1.37 “Environmental Laws” shall mean all foreign, Federal, State and local laws (including common law), legislation, rules, regulations, ordinances, codes, licenses, permits (including any conditions imposed therein), authorizations, binding judicial or administrative decisions (including, orders, written guidances, written directives, policy statements or opinions), binding injunctions or binding agreements between any Borrower or Guarantor and any Governmental Authority (including those agreements as to which the applicable Borrower is challenging the binding nature of any such agreement), (a) relating to pollution and the protection, preservation or restoration of the environment (including air, water vapor, surface water, ground water, drinking water, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or to human health or safety, (b) relating to the exposure to, or the use, storage, recycling, treatment, generation, manufacture, processing, distribution, transportation, handling, labeling, production, release or disposal of Hazardous Materials, or (c) relating to all laws with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials. The term “Environmental Laws” includes, without limitation, (i) the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and

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Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, and (ii) applicable state counterparts to such laws.

1.38 “Equipment” shall mean, as to each Borrower and Guarantor, all of such Borrower’s and Guarantor’s now owned and hereafter acquired equipment, wherever located, including machinery, data processing and computer equipment (whether owned or licensed and including embedded software), vehicles, tools, furniture, fixtures, all attachments, accessions and property now or hereafter affixed thereto or used in connection therewith, and substitutions and replacements thereof, wherever located.

1.39 “Equity/Debt Threshold Amount” shall mean, on any date of determination, an amount equal to the first $15,000,000 of the Net Cash Proceeds of the sale or issuance by and Borrower or Guarantor of Capital Stock minus (x) without duplication, the aggregate principal amount of any Indebtedness incurred in accordance with Section 9.9(f) after the Closing Date and on or prior to such date of determination and (y) the aggregate amount of Net Cash Proceeds of equity issuances by any Borrower or Guarantor after the Closing Date and on or prior to such date.

1.40 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, together with all applicable regulations thereunder or related thereto.

1.41 “ERISA Affiliate” shall mean any person required to be aggregated with any Borrower, any Guarantor or any of its or their respective Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.

1.42 “ERISA Event” shall mean (a) any “reportable event,” as defined in Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a Pension Plan for which the thirty (30) day notice has not been waived in regulations by the Pension Benefit Guaranty Corporation; (b) the adoption of any amendment to a Pension Plan that could reasonably be expected to require the provision of security pursuant to Section 401(a)(29) or 412(a) of the Code or pursuant to ERISA; (c) a complete or partial withdrawal by any Borrower, Guarantor or any ERISA Affiliate from a Multiemployer Plan or a cessation of operations which is treated as such a withdrawal or notification that a Multiemployer Plan is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit Guaranty Corporation to terminate a Pension Plan; (e) the receipt of any notice relating to the institution by the Pension Benefit Guaranty Corporation of proceeding for, or an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA, for the termination of, or the appointment of a trustee to administer, any Pension Plan; (f) the assessment of any liability under Title IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower, Guarantor or any ERISA Affiliate in excess of $1,000,000; (g) the filing pursuant to Section 412 of the Code or Section 303 of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (h) the failure to meet the minimum funding standard of Section 412 of the Code with respect to any Pension Plan (whether or not waived in accordance with Section

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412(d) of the Code) or the failure to make by its due date a required installment amount under Section 412(m) of the Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (i) the assertion of a claim (other than routine claims for benefits) against any Plan, or the assets thereof, or against any Borrower, Guarantor or any of their respective ERISA Affiliates in connection with any Plan; (j) receipt from the Internal Revenue Service of notice of the failure of any Pension Plan (or any other Plan intended to be qualified under Section 401(a) of the Code) to qualify under Section 401(a) of the Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Code; or (k) the occurrence of a non-exempt prohibited transaction (within the meaning of Section 4975 of the Code or Section 406 of ERISA) which could reasonably be expected to result in liability of an amount to any Borrower.

1.43 “Event of Default” shall have the meaning specified in Section 10.1 hereof.

1.44 “Excess Availability” shall have the meaning assigned thereto in the Revolving Credit Agreement as in effect on the date hereof.

1.45 “Excess Cash Flow” means, for any period, the excess (if any) of an amount equal to: (A) EBITDA of the Parent and its Subsidiaries, minus (B) the sum of (i) the cash portion of Capital Expenditures made by the Parent and its Subsidiaries to the extent permitted to be made under this Agreement, (ii) income taxes paid by the Parent and its Subsidiaries in cash, (iii) Interest Expenses paid in cash by the Parent and its Subsidiaries to the extent permitted to be paid under this Agreement, (iv) principal, fees and other payment obligations paid by the Parent and its Subsidiaries with respect to Indebtedness other than (x) principal paid in respect of the Obligations (including in connection with a refinancing of any Indebtedness) to the extent permitted to be made under this Agreement and to the extent paid during such period and (y) principal payments in respect of the Revolving Obligations (including in connection with a refinancing of any such Indebtedness) to the extent permitted to be made under this Agreement and to the extent paid during such period (unless such payment is made in connection with a mandatory prepayment pursuant to the Revolving Credit Agreement), (v) cash payments paid under Capital Leases during such period, (vi) cash contributions for pensions and OPEB obligations in excess of the annually non-cash expensed amounts reflected in Parent’s and its Subsidiaries’ income statement, and (vii) the aggregate amount of Capital Expenditures committed to be made in the next twelve (12) months under legally binding agreements by Parent and its Subsidiaries in an aggregate amount not to exceed $2,000,000 to the extent such committed Capital Expenditures are permitted to be made under this Agreement.

1.46 “Excess Cash Flow Prepayment” shall mean any mandatory prepayment in respect of the outstanding principal amount of the Term Loan from Excess Cash Flow made pursuant to Section 2.2(a) hereof.

1.47 “Excess Cash Flow Prepayment Conditions” shall mean, each of the following conditions precedent to making an Excess Cash Flow Prepayment: (a) within one hundred twenty (120) days after the end of any fiscal year of Borrowers and Guarantors (commencing with the fiscal year ending September 30, 2011), Agent shall have received from the chief financial officer of Parent, a certificate, in the form of Exhibit G attached to the Revolving Credit Agreement as in effect on the date hereof, setting forth the calculation of the Excess Cash Flow

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for such fiscal year, (b) only one such Excess Cash Flow Prepayment is permitted to be made with respect to any such fiscal year and such payment shall be made within thirty (30) days after the receipt by Revolving Agent of the audited consolidated financial statements of Parent and its Subsidiaries for such fiscal year as required by and in accordance with Section 9.6(a)(iii) of the Revolving Credit Agreement as in effect on the date hereof (the “Excess Cash Flow Prepayment Period”), (c) after giving effect to any Excess Cash Flow Prepayment, the average Excess Availability for the consecutive thirty (30) calendar day period ending on the day prior to such payment shall be equal to or greater than $30,000,000, (d) on the date of any such Excess Cash Flow Prepayment and after giving effect thereto, Excess Availability shall be equal to or greater than $30,000,000, (e) Agent shall have received a Pro Forma Compliance Certificate (as defined in the Revolving Credit Agreement as in effect on the date hereof) demonstrating that, upon giving effect on a Pro Forma Basis (as defined in the Revolving Credit Agreement as in effect on the date hereof) to such Excess Cash Flow Prepayment, (i) the Fixed Charge Coverage Ratio (as defined in the Revolving Credit Agreement as in effect on the date hereof) for Parent and its Subsidiaries is equal to or greater than 1.00 to 1.00 and (ii) Excess Availability shall be equal to greater than $30,000,000 for each of the first thirty (30) days after giving effect to such payment, and (f) on the date of any Excess Cash Flow Prepayment and after giving effect thereto, no Default or Event of Default (each as defined in the Revolving Credit Agreement as in effect on the date hereof) shall have occurred and be continuing under the Revolving Credit Agreement as in effect on the date hereof.

1.48 “Excess Cash Flow Prepayment Period” shall have the meaning provided for such term in the definition of “Excess Cash Flow Prepayment Conditions”.

1.49 “Exchange Act” shall mean the Securities Exchange Act of 1934, together with all rules, regulations and interpretations thereunder or related thereto.

1.50 “Exchange Rate” shall mean the prevailing spot rate of exchange of Agent for the purpose of conversion of one currency to another, at or around 11:00 a.m. New York City time, on the date on which any such conversion of currency is to be made under this Agreement.

1.51 “Existing Lenders” shall mean the purchasers party to the Securities Purchase Agreement among the Parent, Borrowers, Sankaty Advisors, LLC, as collateral agent, and the purchasers party thereto dated as of December 8, 2006, as amended by that certain Waiver and Amendment dated as of December, 2007, that Second Amendment dated as of March 6, 2008, that certain Third Amendment dated as of January, 2009, and that certain Waiver and Fourth Amendment dated as of March 17, 2010.

1.52 “Existing Note Purchase Agreement” has the meaning given to such term in Section 6.7.

1.53 “Extraordinary Receipts” means any cash payments received by any Borrower or its Subsidiaries not in the ordinary course of business consisting of (a) proceeds of judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action relating to First Priority Term Loan Collateral, (b) indemnity payments received with respect to First Priority Term Loan Collateral, (c) any purchase price adjustment (other than a working capital adjustment) received in connection with the disposition of or any acquisition agreement,

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relating to First Priority Term Loan Collateral or (d) proceeds with respect to any casualty loss or condemnation of any First Priority Term Loan Collateral (other than insurance proceeds of Equipment which is subject to purchase money security interests or liens permitted by Section 9.8 to the extent of the Indebtedness secured by such purchase money security interests or other liens).

1.54 “FATCA” shall mean Sections 1471 through 1474 of the Code and any Treasury regulations, judicial interpretations and published administrative guidance in respect thereof.

1.55 “Fee Letters” shall mean (i) the letter agreement, dated of even date herewith, by and among Borrowers, Guarantor and Agent, setting forth certain fees payable by Borrowers to Agent for the account of Lenders, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced and (ii) that certain Fee Schedule by and between Agent and Borrower dated July 7, 2010, setting forth certain fees and expenses payable by Borrowers to Agent as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.56 “Financing Agreements” shall mean, collectively, this Agreement and all notes, guarantees, security agreements, Mortgages, deposit account control agreements, investment property control agreements, intercreditor agreements and all other agreements, documents and instruments now or at any time hereafter executed and/or delivered by any Borrower or Guarantor in connection with this Agreement; provided, that, in no event shall the term Financing Agreements be deemed to include any Hedge Agreement.

1.57 “First Priority Term Loan Collateral” shall have the meaning given to such term in the Intercreditor Agreement as of the date hereof.

1.58 “Fixed Charge Coverage Ratio” shall mean, with respect to any date of determination, the ratio of (a) the amount equal to (i) EBITDA of any Person and its Subsidiaries on a consolidated basis, as of the end of a fiscal month for the immediately preceding twelve (12) consecutive fiscal months for which Agent has received financial statements pursuant to the terms of Section 9.6 hereof, less (ii) the actual amount of Capital Expenditures of such Person and its Subsidiaries during such period and, less (iii) all taxes paid by such person and its Subsidiaries in cash during such period, less (iv) all dividends, distributions, repurchases and redemptions in respect of Capital Stock of Parent paid by such Person and its Subsidiaries during such period in cash (other than dividends, distributions, repurchases and redemptions paid after the date hereof, the payment of which is made with the initial proceeds of any Qualified Public Offering), less (v) management, consulting and advisory fees and related expenses paid during such period in cash in compliance with Section 9.12 (other than the fees permitted to be paid under Section 9.12(b)(iii)(B)) hereof, provided, that, such fees and expenses are not included in the calculation of EBITDA, plus (vi) Capital Expenditures which are funded by (A) proceeds of Indebtedness permitted under Section 9.9(b) hereof, and (B) other forms of cash reimbursement in connection with (x) the VIM/VAR furnace projects or (y) certain other programs to the extent consented to by the Required Lenders, plus (vii) the actual amount of tax refunds received in cash by such Person and its Subsidiaries during such period (other than the tax refund of $3,402,347 received by Latrobe on July 12, 2010) to (b) Fixed Charges of such Person and its Subsidiaries, on a consolidated basis, for such period.

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1.59 “Fixed Charges” shall mean, as to any Person and its Subsidiaries with respect to any period, the sum of, without duplication, (a) all cash Interest Expense during such period, plus (b) all regularly scheduled (as determined at the beginning of the respective period) principal payments of Indebtedness incurred, paid or assumed for borrowed money and Indebtedness with respect to Capital Leases (and without duplicating items in (a) and (b) of this definition, the interest component with respect to Indebtedness under Capital Leases) during such period, plus (c) all PIK Interest added to the principal amount of the Term Loan during such period.

1.60 “Foreign Lender” shall mean any Lender that is organized under the laws of a jurisdiction other than that in which a Borrower is resident for tax purposes. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

1.61 “Foreign Subsidiary” shall mean a Subsidiary of Parent that is organized or incorporated under the laws of any jurisdiction outside of the United States of America; sometimes being referred to herein collectively as “Foreign Subsidiaries.” For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

1.62 “Funding Bank” shall have the meaning given to such term in Section 3.3 hereof.

1.63 “GAAP” shall mean generally accepted accounting principles in the United States of America as in effect from time to time as set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board which are applicable to the circumstances as of the date of determination consistently applied, except as otherwise agreed by Agent, and except that, for purposes of Sections 9.17 and 9.18 hereof, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the preparation of the most recent audited financial statements delivered to Agent prior to the date hereof, subject, however, in the case of determination of compliance with the financial covenants in Section 9.17 and 9.18 hereof, to the provisions of Section 13.2(h) hereof.

1.64 “Governmental Authority” shall mean any nation or government, any state, province, or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

1.65 “Guarantors” shall mean, collectively, the following (together with their respective successors and assigns): (a) Toolrock Holding, Inc., a Delaware corporation; and (b) any other Person that at any time after the date hereof becomes party to a guarantee in favor of Agent or any Lender or otherwise liable on or with respect to the Obligations or who is the owner of any property which is security for the Obligations (other than Borrowers); each sometimes being referred to herein individually as a “Guarantor.” Latrobe Specialty Steels Europe, Inc., a Delaware corporation, shall not be included as a Guarantor hereunder.

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1.66 “Hazardous Materials” shall mean any hazardous or toxic substances, materials or wastes, including petroleum and petroleum by-products, flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, polychlorinated biphenyls, pesticides or herbicides and including any other substances, materials or wastes that are or become regulated under any Environmental Law (including any that are or become classified as hazardous or toxic under any Environmental Law).

1.67 “Hedge Agreement” shall mean an agreement between any Borrower or Guarantor and any financial institution, as a counterparty, that is a swap agreement as such term is defined in 11 U.S.C. Section 101, and including any rate swap agreement, basis swap, forward rate agreement, commodity swap, interest rate option, forward foreign exchange agreement, spot foreign exchange agreement, rate cap agreement rate, floor agreement, rate collar agreement, currency swap agreement, cross-currency rate swap agreement, currency option, any other similar agreement (including any option to enter into any of the foregoing or a master agreement for any of the foregoing together with all supplements thereto) for the purpose of protecting against or managing exposure to fluctuations in interest or exchange rates, currency valuations or commodity prices; sometimes being collectively referred to herein as “Hedge Agreements.”

1.68 “Indebtedness” shall mean, with respect to any Person, any liability, whether or not contingent, (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof) or evidenced by bonds, notes, debentures or similar instruments; (b) representing the balance deferred and unpaid of the purchase price of any property or services (other than an account payable to a trade creditor (whether or not an Affiliate) incurred in the ordinary course of business of such Person and payable in accordance with customary trade practices); (c) all payment obligations as lessee relating to rental payments and any other regularly scheduled and periodic payments required by the terms of leases which have been, or should be, in accordance with GAAP recorded as Capital Leases; (d) any contractual obligation, contingent or otherwise, of such Person to pay or be liable for the payment of any indebtedness described in this definition of another Person, including, without limitation, any such indebtedness, directly or indirectly guaranteed, or any agreement to purchase, repurchase, or otherwise acquire such indebtedness, obligation or liability or any security therefor, or to provide funds for the payment or discharge thereof, or to maintain solvency, assets, level of income, or other financial condition; (e) all obligations with respect to redeemable stock and redemption or repurchase obligations under any Capital Stock or other equity securities issued by such Person; (f) all reimbursement obligations and other liabilities of such Person with respect to surety bonds (whether bid, performance or otherwise), letters of credit, banker’s acceptances, drafts or similar documents or instruments issued for such Person’s account; (g) all indebtedness of such Person in respect of indebtedness of another Person for borrowed money or indebtedness of another Person otherwise described in this definition which is secured by any consensual lien, security interest, collateral assignment, conditional sale, mortgage, deed of trust, or other encumbrance on any asset of such Person, whether or not such obligations, liabilities or indebtedness are assumed by or are a personal liability of such Person, all as of such time; provided, that, for the purposes hereof, to the extent such Indebtedness referred to in this clause (g) is non-recourse to such Person, the amount of such Indebtedness shall not be deemed to exceed the lesser of (i) the principal amount of such Indebtedness or (ii) the value of the asset(s) securing such Indebtedness; (h) all obligations, liabilities and indebtedness of such Person (marked to market) arising under swap agreements, cap agreements

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and collar agreements and other agreements or arrangements designed to protect such person against fluctuations in interest rates or currency or commodity values or other Hedge Agreement; (i) all past due obligations owed by such Person under License Agreements with respect to non-refundable, advance or minimum guarantee royalty payments; (j) indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer to the extent such Person is liable therefor as a result of such Person’s ownership interest in such entity, except to the extent that the terms of such indebtedness expressly provide that such Person is not liable therefor or such Person has no liability therefor as a matter of law; (k) under all obligations arising from sales by such Person of (i) accounts or general intangibles for money due or to become due, (ii) other receivables whether pursuant to a purchase facility or otherwise and together with any obligation of such Person to pay any discount, interest, fees, indemnities, penalties, recourse, expenses or other amounts in connection therewith, other than in connection with the disposition of the business operations of such Person relating thereto or a disposition of defaulted receivables for collection and not as a financing arrangement, (l) the principal portion of all rental obligations of such Person under any synthetic lease or similar off-balance sheet financing where such transaction is considered to be borrowed money for tax purposes but is classified as an operating lease in accordance with GAAP, (m) all obligations of such Person issued or assumed as the deferred purchase price of property or services purchased by such Person which are due six (6) months or more from the date after such property is acquired or such services are completed, and including, without limitation, customary indemnification, adjustment of purchase price or similar obligations, earn-outs or other similar obligations, in each case, incurred in connection with an investment permitted pursuant to Section 9.10 or sales of assets permitted pursuant to Section 9.7 hereof (but excluding trade debt and accrued expenses incurred in the ordinary course of business on normal trade terms and not overdue by more than ninety (90) days) which would appear as liabilities on a balance sheet of such Person in accordance with GAAP, and (n) all obligations of such Person under take-or-pay or similar arrangements or under commodities agreements.

1.69 “Intellectual Property” shall mean, as to each Borrower and Guarantor, such Borrower’s and Guarantor’s now owned and hereafter arising or acquired: patents, patent rights, patent applications, copyrights, works which are the subject matter of copyrights, copyright applications, copyright registrations, trademarks, servicemarks, trade names, trade styles, trademark and service mark applications, and licenses and rights to use any of the foregoing and all applications, registrations and recordings relating to any of the foregoing as may be filed in the United States Copyright Office, the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof, any political subdivision thereof or in any other country or jurisdiction, together with all rights and privileges arising under applicable law with respect to any Borrower’s or Guarantor’s use of any of the foregoing; all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing; all rights to sue for past, present and future infringement of any of the foregoing; inventions, trade secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys, reports, manuals, and operating standards; goodwill (including any goodwill associated with any trademark or servicemark, or the license of any trademark or servicemark); customer and other lists in whatever form maintained; trade secret rights, copyright rights, rights in works of authorship, domain names and domain name registration; software and contract rights relating to computer software programs, in whatever form created or maintained.

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1.70 “Intercreditor Agreement” shall mean the Intercreditor Agreement dated as of the date hereof by and between Agent and the Revolving Agent, as the same may be amended, modified, supplemented, extended, renewed, restated or replaced pursuant to the terms thereof.

1.71 “Interest Expense” shall mean, for any period, as to any Person, as determined in accordance with GAAP, the total interest expense of such Person and its Subsidiaries on a consolidated basis, whether paid or accrued during such period but without duplication (including the interest component of Capital Leases for such period), including, without limitation, discounts in connection with the sale of any Accounts that are sold for purposes other than collection, but excluding interest paid in property other than cash and any other interest expense not payable in cash.

1.72 “Interest Period” shall mean a period of approximately one (1) month, three (3) months, or six (6) months duration as Administrative Borrower may elect, the exact duration to be determined in accordance with the customary practice in the applicable Eurodollar Rate market.

1.73 “Interest Rate” shall mean a rate per annum equal to the then Applicable Margin plus the Adjusted Eurodollar Rate. Notwithstanding anything to the contrary contained herein, Agent shall, at the direction of the Required Lenders, increase the Applicable Margin by two (2%) percent per annum, either (A) for the period on and after the date of termination hereof until such time as all Obligations are indefeasibly paid and satisfied in full in immediately available funds, or (B) for the period from and after the date of the occurrence of an Event of Default, but only for so long as such Event of Default is continuing.

1.74 “Inventory” shall mean, as to each Borrower and Guarantor, all of such Borrower’s and Guarantor’s now owned and hereafter existing or acquired goods, wherever located, which (a) are leased by such Borrower or Guarantor as lessor; (b) are held by such Borrower or Guarantor for sale or lease or to be furnished under a contract of service; (c) are furnished by such Borrower or Guarantor under a contract of service; or (d) consist of raw materials, work in process, finished goods or materials used or consumed in its business.

1.75 “Inventory Appraisal” shall have the meaning set forth in Section 7.3 hereof.

1.76 “Investment Property Control Agreement” shall mean an agreement in writing, in form and substance reasonably satisfactory to the Required Lenders, by and among Revolving Agent, Agent, any Borrower or Guarantor (as the case may be) and any securities intermediary, commodity intermediary or other person who has custody, control or possession of any investment property of such Borrower or Guarantor acknowledging that such securities intermediary, commodity intermediary or other person has custody, control or possession of such investment property on behalf of Revolving Agent (or Agent, if applicable under the terms of the Intercreditor Agreement), that it will comply with entitlement orders originated by Revolving Agent (or Agent, if applicable under the terms of the Intercreditor Agreement) with respect to such investment property, or other instructions of Revolving Agent (or Agent, as the case may be pursuant to the terms of the Intercreditor Agreement), and has such other terms and conditions as Agent (acting at the direction of the Required Lenders) may reasonably require.

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1.77 “Lenders” shall mean the financial institutions who are signatories hereto as Lenders and other persons made a party to this Agreement as a Lender in accordance with Section 13.7 hereof, and their respective successors and assigns; each sometimes being referred to herein individually as a “Lender.”

1.78 “License Agreements” shall have the meaning set forth in Section 8.11 hereof.

1.79 “London Interbank Offered Rate” shall mean, for any Interest Period, the rate of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the greater of (a) 1.50% and (b) the rate appearing on that page of the Wall Street Journal as the London interbank offered rate for deposits in U.S. Dollars at approximately 11:00 A.M. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided, that, if more than one rate is specified on such page for such comparable period, the applicable rate shall be the arithmetic mean of all such rates. If, for any reason, such rate is not available, the term “London Interbank Offered Rate” shall mean, for such Interest Period, the rate of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) at which Agent is offered deposits for Dollars for a period approximately equal to such Interest Period in the London interbank market at approximately 11:00 A.M. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period.

1.80 “Management Agreements” means, collectively, (i) the Monitoring and Oversight Agreement, dated as of December 8, 2006, by and among Parent, Latrobe and Hicks Holdings Operating, LLC, a Delaware limited liability company; and (ii) the Monitoring and Oversight Agreement, dated as of December 8, 2006, by and among Parent, Latrobe and Watermill Management Company, LLC, a Delaware limited partnership, in each case as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

1.81 “Material Adverse Effect” shall mean a material adverse effect on (a) the financial condition, business, assets, properties, performance or operations of the Borrowers, taken as a whole; (b) the legality, validity or enforceability of this Agreement or any of the other Financing Agreements; (c) the legality, validity, enforceability, perfection or priority of the security interests and liens of Agent upon the Collateral; (d) the Collateral or its value; (e) the ability of any Borrower to repay the Obligations or of the Borrowers, taken as a whole, to perform its obligations under this Agreement or any of the other Financing Agreements as and when to be performed; or (f) the ability of Agent or any Lender to enforce the Obligations or realize upon the Collateral or otherwise with respect to the rights and remedies of Agent and Lenders under this Agreement or any of the other Financing Agreements.

1.82 “Material Contract” shall mean any contract or other agreement (other than the Financing Agreements), whether written or oral, to which any Borrower or Guarantor is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto would have a Material Adverse Effect.

1.83 “Maturity Date” shall have the meaning set forth in Section 13.1 hereof.

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1.84 “Maximum Credit” shall have the meaning given to such term in the Revolving Credit Agreement.

1.85 “Mortgages” shall mean, individually and collectively, each of the following (as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced): (a) the Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated of even date herewith, by Latrobe in favor of Agent with respect to the Real Property and related assets of such Borrower located in Venago County, Pennsylvania, (b) the Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated of even date herewith, by Latrobe in favor of Agent with respect to the Real Property and related assets of such Borrower located in Westmoreland County, Pennsylvania, (c) the Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated of even date herewith, by OH&R in favor of Agent with respect to the Real Property and related assets of such Borrower located in Worcester County, Massachusetts, (d) the Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated of even date herewith, by Latrobe in favor of Agent with respect to the Real Property and related assets of such Borrower located in Fulton County, Ohio, (e) the Open-End Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated of even date herewith, by OH&R in favor of Agent with respect to the Real Property and related assets of such Borrower located in Robertson County, Tennessee, and (f) the Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated of even date herewith, by Latrobe in favor of Agent with respect to the Real Property and related assets of such Borrower located in Westmoreland County, Pennsylvania.

1.86 “Multiemployer Plan” shall mean a “multi-employer plan” as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the immediately preceding six (6) years that any Borrower, Guarantor or any ERISA Affiliate contributed to or was obligated to contribute to or with respect to which any Borrower, Guarantor or any ERISA Affiliate may incur any liability or obligation (whether contingent or otherwise).

1.87 “Net Cash Proceeds” means:

(a) with respect to (x) any sale or disposition by any Borrower or Guarantor of property or assets and (y) any Extraordinary Receipts, the amount of cash proceeds actually received (directly or indirectly) from time to time (whether as initial consideration or through the payment of deferred consideration) by or on behalf of Parent or a Subsidiary of Parent other than from any Borrower or Guarantor, in connection therewith after deducting therefrom only (i) the amount of any Indebtedness secured by any liens permitted hereunder on any asset (other than (A) Indebtedness owing to Agent or any Lender under this Agreement or the Fee Letters and (B) Indebtedness assumed by the purchaser of such asset) that is required to be repaid in connection with such sale or disposition, (ii) reasonable fees, commissions, and expenses (including, reasonable attorneys’ fees, accountants’ fees, investment banking fees, sales commissions, survey costs, insurance premiums and deductibles, related search and recording charges, transfer taxes, deed or mortgage recording taxes and any cash reserve for adjustment in respect of the sale price of such asset established in accordance with GAAP, including liabilities related to environmental matters or against any indemnification obligations associated with such transaction, other customary expenses and brokerage, consultant and other customary fees)

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related thereto to be paid by Parent or such Subsidiary of Parent in connection with such event or transaction; provided, any such fee payable hereunder to an Affiliate of Parent or a Subsidiary of Parent shall not exceed the amount permitted under Section 9.12(b)(iii), (iii) taxes paid or payable to any taxing authorities by Parent or such Subsidiary of Parent in connection with such event or transaction, in each case to the extent, but only to the extent, that the amounts so deducted are actually paid or payable in the fiscal year in which such event or transaction occurs and are properly attributable to such event or transaction, and (iv) any amounts held in escrow or other holdbacks in connection with such event or transaction; and

(b) with respect to the issuance by any Borrower or Guarantor of any shares of its Capital Stock other than to any other Borrower or Guarantor, the aggregate amount of cash actually received (directly or indirectly) from time to time (whether as initial consideration or through the payment or disposition of deferred consideration) by or on behalf of such Borrower or Guarantor in connection with such issuance, after deducting therefrom only (i) reasonable fees, commissions, and expenses (including, reasonable attorneys’ fees, accountants’ fees, investment banking fees, sales commissions, other customary expenses and brokerage, consultant and other customary fees) related thereto and required to be paid by such Borrower or Guarantor in connection with such issuance or receipt of the proceeds thereof; provided, that, any such fee payable hereunder to an Affiliate of Parent or a Subsidiary of Parent shall not exceed the amount permitted under Section 9.12(b)(iii) herein; provided, further, that, any fees permitted pursuant to Section 9.12(b)(iii) herein shall only be deducted in the event that no Default or Event of Default exists at such time unless otherwise consented to by Agent in writing, (ii) taxes paid or payable to any taxing authorities by Parent or such Subsidiary in connection with such issuance or receipt, in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash proceeds, actually paid or payable and such proceeds are properly attributable to such transaction, and (iii) any amounts held in escrow or other holdbacks in connection with such issuance.

1.88 “OH&R” shall have the meaning given to such term in the Recitals hereto.

1.89 “Obligations” shall mean the Term Loan and all other obligations, liabilities and indebtedness of every kind, nature and description owing by any or all of Borrowers to Agent or any Lender, including principal, interest, charges, fees, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under this Agreement or any of the other Financing Agreements, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of this Agreement or after the commencement of any case with respect to such Borrower under the United States Bankruptcy Code or any similar statute (including the payment of interest and other amounts which would accrue and become due but for the commencement of such case, whether or not such amounts are allowed or allowable in whole or in part in such case), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, or secured or unsecured.

1.90 “Other Taxes” shall have the meaning given to such term in Section 6.5 hereof.

1.91 “PA Designated Policy” shall have the meaning given to such term in Section 4.1(h) hereof.

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1.92 “PA Designated Property” shall have the meaning given to such term in Section 4.1(h) hereof.

1.93 “Parent” shall mean Toolrock Holding, Inc., a Delaware corporation, and its successors and assigns.

1.94 “Participant” shall mean any financial institution that acquires and holds a participation in the interest of any Lender in the Term Loan in conformity with the provisions of Section 13.7 hereof governing participations.

1.95 “Pension Plan” shall mean a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code, which any Borrower, Guarantor or their ERISA Affiliates (a) sponsors, maintains, or to which any Borrower, Guarantor or ERISA Affiliate makes, is making, or is obligated to make contributions, or (b) has incurred or could reasonably be expected to incur any liability (whether contingent or otherwise) including under Section 4069 of ERISA, other than a Multiemployer Plan.

1.96 “Perfection Certificate” shall mean, collectively, the Perfection Certificates of Borrowers and Guarantors constituting Exhibit B hereto.

1.97 “Permitted Additional Capital Expenditure” shall mean a Capital Expenditure (in excess of the amount of Capital Expenditures permitted to be made pursuant to Section 9.18 hereof) in respect of which all of the following conditions have been satisfied: (a) Agent shall have received at least ten (10) Business Days’ (or such lesser period of notice as Required Lenders may from time to time agree) but no more than thirty (30) Business Days’ prior notice of any Borrower’s or Guarantor’s intention to directly or indirectly, making or committing to make, whether through purchase, capital leases or otherwise, Capital Expenditures, monthly cash flow projections prepared in good faith based upon assumptions believed by such Borrower or Guarantor to be reasonable at the time made, for the period commencing on the first day of the month in which the first installment with respect to a particular project is to be made and ending on the later of (x) the last day of the month in which the making of the final installment with respect to such project is to be made and (y) a date that is twelve (12) months after the first day of the month in which the first installment with respect to such project is to be made, showing, on a pro forma basis after giving effect to such Capital Expenditures, among other things, that the Fixed Charge Coverage Ratio is at least 1.00 to 1.00 at all times during such period and Excess Availability (after giving effect to any of Capital Expenditure Reserve established pursuant to clause (b) below in respect of that applicable Capital Expenditure), at all times during such period is not less than 15% of the Maximum Credit, and (b) after giving effect to the establishment of such Capital Expenditure Reserve by Revolving Agent, on a pro forma basis, Excess Availability shall be not less than an amount equal to 15% of the Maximum Credit.

1.98 “Permitted Holders” shall mean the persons listed on Schedule 1.98.

1.99 “Permitted Holder Affiliate” shall mean, with respect to a Permitted Holder, any other Person which directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with such Permitted Holder, and without limiting the generality of the foregoing, includes (a) any Person which beneficially owns or holds thirty

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(30%) percent or more of any class of Voting Stock of such Person or other equity interests in such Person, (b) any Person of which such Person beneficially owns or holds thirty (30%) percent or more of any class of Voting Stock or in which such Person beneficially owns or holds thirty (30%) percent or more of the equity interests and (c) any director or executive officer of such Person. For the purposes of this definition, the term “control” (including with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by agreement or otherwise.

1.100 “Person” or “person” shall mean any individual, sole proprietorship, partnership, corporation (including any corporation which elects subchapter S status under the Code), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock corporation, trust, joint venture or other entity or any government or any agency or instrumentality or political subdivision thereof.

1.101 “PIK Interest” shall have the meaning assigned thereto in Section 3.1(d) of this Agreement.

1.102 “Plan” shall mean an employee benefit plan (as defined in Section 3(3) of ERISA) which any Borrower, Guarantor or their ERISA Affiliates sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a Multiemployer Plan has made contributions at any time during the immediately preceding six (6) plan years or with respect to which any Borrower, Guarantor or their ERISA Affiliates may incur liability or any obligation.

1.103 “Pro Forma Basis” shall mean for purposes of calculating the financial covenant set forth in Section 9.17 hereof in connection with any event or transaction, or proposed event or transactions, such event or transaction and all related events and transactions shall be deemed to have occurred as of the first day of the most recent three (3) or twelve (12) month period (as required pursuant to the terms of this Agreement) preceding the date of such event or transaction for which Agent has received financial statements pursuant to Section 9.6 hereof.

1.104 “Pro Forma Compliance Certificate” shall mean, with respect to any event or transaction, or proposed event or transaction, a certificate of the chief financial officer, vice president of finance, treasurer or controller of Administrative Borrower or Parent containing reasonably detailed calculations of the financial covenant set forth in Sections 9.17, 9.18 and 9.19 hereof as of the most recent fiscal month end for which Agent has received financial statements pursuant to Section 9.6 hereof and certifying that the other conditions hereunder to the applicable event or transaction are satisfied, after giving effect to the applicable event or transaction on a Pro Forma Basis.

1.105 “Pro Rata Share” shall mean with respect to the Term Loan and all other matters (including, without limitation, the indemnification obligations arising under Section 11.5 hereof), at any time, as to any Lender, the fraction (expressed as a percentage) the numerator of which shall be the outstanding principal amount of such Lender’s portion of the Term Loan and the denominator shall be the aggregate principal amount outstanding of the Term Loan at such time.

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1.106 “Qualified Public Offering” shall mean any bona fide, firm commitment, underwritten offering to the public by (a) Controlling Parent or (b) Parent or any of its Subsidiaries, of the Capital Stock of Controlling Parent or Parent or any of its Subsidiaries pursuant to an effective registration statement under the Securities Act of 1933, as then in effect, or any comparable statement under any similar federal statute then in force.

1.107 “Real Property” shall mean all now owned and hereafter acquired real property of each Borrower and Guarantor, together with all buildings, structures, and other improvements located thereon and all licenses, easements and appurtenances relating thereto, wherever located, including the real property and related assets more particularly described in the Mortgages.

1.108 “Receivables” shall mean all of the following now owned or hereafter arising or acquired property of each Borrower and Guarantor: (a) all Accounts; (b) all interest, fees, late charges, penalties, collection fees and other amounts due or to become due or otherwise payable in connection with any Account; (c) all payment intangibles of such Borrower or Guarantor; (d) letters of credit, indemnities, guarantees, security or other deposits and proceeds thereof issued payable to any Borrower or Guarantor or otherwise in favor of or delivered to any Borrower or Guarantor in connection with any Account; or (e) all other accounts, contract rights, chattel paper, instruments, notes, general intangibles and other forms of obligations owing to any Borrower or Guarantor, whether from the sale and lease of goods or other property, licensing of any property (including Intellectual Property or other general intangibles), rendition of services or from loans or advances by any Borrower or Guarantor or to or for the benefit of any third person (including loans or advances to any Affiliates or Subsidiaries of any Borrower or Guarantor) or otherwise associated with any Accounts, Inventory or general intangibles of any Borrower or Guarantor (including, without limitation, choses in action, causes of action, tax refunds, tax refund claims, any funds which may become payable to any Borrower or Guarantor in connection with the termination of any Plan or other employee benefit plan and any other amounts payable to any Borrower or Guarantor from any Plan or other employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, casualty or any similar types of insurance and any proceeds thereof and proceeds of insurance covering the lives of employees on which any Borrower or Guarantor is a beneficiary).

1.109 “Records” shall mean, as to each Borrower and Guarantor, all of such Borrower’s and Guarantor’s present and future books of account of every kind or nature, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda, credit files and other data relating to the Collateral or any account debtor, together with the tapes, disks, diskettes and other data and software storage media and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of any Borrower or Guarantor with respect to the foregoing maintained with or by any other person).

1.110 “Redemption Premium” means at any time with respect to the Term Loan being redeemed or prepaid in whole or in part pursuant to Section 2.2(d) and Section 2.3 (including without limitation after an Event of Default or acceleration), an amount equal to the percentage set forth opposite the appropriate period of the aggregate principal amount of such Term Loan being redeemed or prepaid at such time:

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Period	Percentage
July 30, 2010 to and including July 30, 2011		3.0	%
July 31, 2011 to and including July 30, 2012		2.0	%
July 31, 2012 to and including July 30, 2013		1.0	%
July 31, 2013 and thereafter		0.0	%

1.111 “Register” shall have the meaning set forth in Section 13.7 hereof.

1.112 “Required Lenders” shall mean, at any time, those Lenders whose Pro Rata Shares aggregate more than fifty (50%) percent of the aggregate of the then outstanding principal amount of the Term Loan.

1.113 “Responsible Officer” shall mean the president, chief executive officer, chief financial officer, vice president of finance, treasurer or controller of Administrative Borrower or Parent.

1.114 “Revolving Agent” shall mean Well Fargo Bank, National Association, successor by merger to Wachovia Bank, National Association, in its individual capacity, and its successors and assigns.

1.115 “Revolving Credit Agreement” shall mean that certain Loan and Security Agreement dated as of March 6, 2008 by and among the Borrowers, Parent, and parties thereto from time to time as lenders, the Revolving Agent, Wells Fargo Foothill, LLC, as Syndication Agent, and LaSalle Business Credit, LLC , PNC Bank, National Association, and RZB Finance LLC, each as a Co-Documentation Agent as amended, and as may be further amended, amended and restated, supplemented or otherwise modified, refinanced or replaced from time to time in accordance with the terms hereof and the Intercreditor Agreement.

1.116 “Revolving Credit Documents” shall mean the “Financing Agreements”, or any similar term, as defined in the Revolving Credit Agreement.

1.117 “Revolving Loan Priority Collateral” shall have the meaning given to such term in the Intercreditor Agreement.

1.118 “Revolving Lenders” shall mean the lenders party to the Revolving Credit Agreement as lenders from time to time pursuant to the terms therein.

1.119 “Revolving Obligations” shall mean the “Obligations” as such term is defined in the Revolving Credit Agreement.

1.120 “Secured Parties” shall mean, collectively, (a) Agent, and (b) the Lenders; provided, that, such parties are sometimes referred to herein individually as a “Secured Party.”

1.121 “Solvent” shall mean, at any time with respect to any Person as of any date of determination, (a) the amount of the “fair saleable value” of the assets of such Person will, as of

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such date, exceed (i) the value of all “liabilities of such person, including contingent and other liabilities,” as of such date, as such quoted terms are generally determined in accordance with applicable federal laws governing determinations of the insolvency of debtors, and (ii) the amount that will be required to pay the probable liabilities of such person on its existing debts (including contingent liabilities) as such debts become absolute and matured, (b) such Person will not have, as of such date, an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged following such date, and (c) such Person will be able to pay its liabilities, including contingent and other liabilities, as they mature. For purposes of this definition, “not have an unreasonably small amount of capital for the operation of the businesses in which it is engaged or proposed to be engaged” and “able to pay its liabilities, including contingent and other liabilities, as they mature” means that such person will be able to generate enough cash from operations, assets dispositions or refinancing, or a combination thereof, to meet its obligations as they become due.

1.122 “Sponsor” shall mean, individually and collectively, (a) HHEP-Latrobe, L.P. or (b) Watermill-Toolrock Partners, L.P.

1.123 “Sponsor Portfolio Company” shall mean any Person that is an Affiliate of Borrowers or Guarantors solely due to the fact that such Person is controlled, directly or indirectly, by Sponsor and which does not otherwise have any managerial control over the business of any Borrower or Guarantor in any capacity

1.124 “Subsidiary” or “subsidiary” shall mean, with respect to any Person, any corporation, limited liability company, limited liability partnership or other limited or general partnership, trust, association or other business entity of which an aggregate of at least a majority of the outstanding Capital Stock or other interests entitled to vote in the election of the board of directors of such corporation (irrespective of whether, at the time, Capital Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency), managers, trustees or other controlling persons, or an equivalent controlling interest therein, of such Person is, at the time, directly or indirectly, owned by such Person and/or one or more subsidiaries of such Person. For purposes of Sections 8.8, 9.6, 9.7, 9.8, 9.9 and 9.10, the term “Subsidiary” shall not include any Foreign Subsidiary and Latrobe Specialty Steels Europe, Inc.

1.125 “Taxes” shall have the meaning given to such term in Section 6.5 hereof.

1.126 “Term Loan” shall mean the loans in an aggregate principal amount of $50,000,000 made by the Lenders to the Borrowers on the Closing Date pursuant to Section 2.1.

1.127 “Transaction Services Agreements” shall mean, collectively, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced: (a) the Transaction Services Agreement, dated as of March 6, 2008, by and among Latrobe, Parent and Hicks Holdings Operating LLC and (b) the Transaction Services Agreement, dated as of March 6, 2008, by and among Latrobe, Parent and Watermill Management Company, LLC.

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1.128 “UCC” shall mean the Uniform Commercial Code as in effect in the State of New York, and any successor statute, as in effect from time to time (except that terms used herein which are not otherwise defined herein and defined in the Uniform Commercial Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as Agent (acting at the direction of the Required Lenders) may otherwise determine).

1.129 “US Dollar Equivalent” shall mean at any time (a) as to any amount denominated in US Dollars, the amount thereof at such time, and (b) as to any amount denominated in any other currency, the equivalent amount in US Dollars calculated by Agent in good faith at such time using the Exchange Rate in effect on the Business Day of determination.

1.130 “US Dollars,” “US$” and “$” shall each mean lawful currency of the United States of America.

1.131 “VIM Agreement” shall mean the Technology Investment Agreement, dated December 10, 2008, by and between the United States of America, acting through DET 1 AF Research Laboratory, and Latrobe (doing business as Latrobe Specialty Steel Company) concerning the Title III vacuum induction melting vacuum arc re-melting furnace capacity program, as may be amended, modified, supplemented, extended, renewed, restated or replaced from time to time.

1.132 “VIM Equipment” shall mean the equipment attached as Schedule 1.132 owned by Latrobe.

1.133 “VIM Intercreditor Joinder” shall mean the Joinder Agreement in the form attached hereto as Exhibit F by and among Agent, Revolving Agent, the United States of America, acting through DET 1 AF Research Laboratory, and Latrobe, to the Lien Subordination Agreement, dated as of January 22, 2009, as may be amended, modified, supplemented, extended, renewed, restated or replaced, from time to time pursuant to the terms thereof.

1.134 “VIM Security Agreement” shall mean the Security Agreement, dated as of January 22, 2009, by and between Latrobe and the United States of America, as may be amended, modified, supplemented, extended, renewed, restated or replaced, from time to time.

1.135 “Voting Stock” shall mean with respect to any Person, (a) one (1) or more classes of Capital Stock of such Person having general voting powers to elect at least a majority of the board of directors, managers or trustees of such Person, irrespective of whether at the time Capital Stock of any other class or classes have or might have voting power by reason of the happening of any contingency, and (b) any Capital Stock of such Person convertible or exchangeable without restriction at the option of the holder thereof into Capital Stock of such Person described in clause (a) of this definition.

1.136 “Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the then outstanding principal amount of such Indebtedness into (b) the total of the product obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required

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payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one twelfth) that will elapse between such date and the making of such payment.

SECTION 2. TERM LOAN

2.1 Term Loan. Subject to and upon the terms and conditions contained herein, each Lender severally (and not jointly) agrees to lend to Borrowers on the Closing Date the aggregate amount of the Commitment of such Lender. Amounts borrowed under this Section 2.1 and repaid or prepaid may not be reborrowed. The principal of the Term Loan shall be repaid on the following dates and in the following amounts:

Date	Installment Amount
December 31, 2010	$	625,000
March 31, 2011	$	625,000
June 30, 2011	$	625,000
September 30, 2011	$	625,000
December 31, 2011	$	1,250,000
March 31, 2012	$	1,250,000
June 30, 2012	$	1,250,000
September 30, 2012	$	1,250,000
December 31, 2012	$	1,250,000
March 31, 2013	$	1,250,000
June 30, 2013	$	1,250,000

The outstanding unpaid principal amount of the Term Loan and all accrued and unpaid interest thereon shall be due and payable on the earlier of (i) the Maturity Date, and (ii) the date of the acceleration of the Term Loan in accordance with the terms of Section 10.2(c). All principal of, interest on, and other amounts payable in respect of the Term Loan shall constitute Obligations.

2.2 Mandatory Prepayments.

Subject to the terms of the Intercreditor Agreement and to the extent such amount or any portion thereof is not required to be applied to repay obligations under the Revolving Credit Agreement as in effect on the date hereof:

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(a) As promptly as reasonably practicable, but in any event within five (5) Business Days (or ten (10) Business Days to the extent such Excess Cash Flow is deposited by Borrowers in an account with Agent (or a bank or other depositary institution reasonably acceptable to Required Lenders), which account shall be subject to a Deposit Account Control Agreement and constitute First Priority Term Loan Collateral) after annual financial statements have been delivered pursuant to Section 9.6(a)(iii) and the related Pro Forma Compliance Certificate has been delivered pursuant to Section 9.6(a)(i) with respect to any fiscal year, commencing with the fiscal year ended September 30, 2011, in each case, only to the extent that each of the Excess Cash Flow Prepayment Conditions (provided such Excess Cash Flow Prepayment Conditions shall only be applicable if the Revolving Obligations are outstanding) has been satisfied in the determination of the Revolving Agent, the Borrowers shall cause to be prepaid an aggregate principal amount of the Term Loan equal to (i) 50% of Excess Cash Flow minus (ii) the sum of all payments of principal of the Term Loan during such fiscal year, if any, covered by such financial statements. In the event that the Borrowers satisfy all of the Excess Cash Flow Prepayment Conditions other than attaining the Excess Availability thresholds, then Borrowers may make and Lenders may accept an Excess Cash Flow Prepayment in an amount not to exceed (i) thirty-five (35%) percent of Excess Cash Flow for any such fiscal year minus (ii) the sum of all payments of principal of the Term Loan during the fiscal year so long as (1) after giving effect to such Excess Cash Flow Prepayment, the average Excess Availability for the consecutive thirty (30) calendar day period ending on the day prior to such payment shall be equal to or greater than $25,000,000, (2) on the date of such Excess Cash Flow Prepayment and after giving effect thereto, Excess Availability shall be equal to or greater than $25,000,000 and (3) Agent shall have received a Pro Forma Compliance Certificate demonstrating that, upon giving effect on a Pro Forma Basis to such Excess Cash Flow Prepayment, Excess Availability shall be equal to or greater than $25,000,000 for each of the first thirty (30) days after giving effect to such payment. Notwithstanding anything to the contrary herein, in the event that any Excess Cash Flow Prepayment in respect of a fiscal year is not permitted to be made due to the failure of the Borrowers to satisfy any of the Excess Availability thresholds set forth in the Excess Cash Flow Prepayment Conditions and any of the Revolving Obligations are outstanding, such Excess Cash Flow Prepayment may be made and accepted after the applicable Excess Cash Flow Prepayment Period expires but prior to start of the next fiscal year, provided, that, all of the following conditions are satisfied at the time of any such payment, as determined by Revolving Agent, (A) after giving effect to any such Excess Cash Flow Prepayment, the average Excess Availability for the consecutive ninety (90) calendar day period ending on the day prior to such payment is equal to or greater than $30,000,000, (B) on the date of any such Excess Cash Flow Prepayment and after giving effect thereto, the Excess Availability is equal to or greater than $30,000,000, (C) Agent shall have received a Pro Forma Compliance Certificate (as defined in the Revolving Credit Agreement) demonstrating that, upon giving effect on a Pro Forma Basis (as defined in the Revolving Credit Agreement) to such Excess Cash Flow Prepayment (1) the Fixed Charge Coverage Ratio (as defined in the Revolving Credit Agreement) for Parent and its Subsidiaries is equal to or greater than 1.00 to 1.00 and (2) Excess Availability shall be equal to or greater than $30,000,000 for each of the first thirty (30) days after giving effect to such payment, and (D) on the date of any such Excess Cash Flow Prepayment and after giving effect thereto, no Default or Event of Default (each as defined in the Revolving Credit Agreement) shall have occurred and be continuing under the Revolving Credit Agreement. Notwithstanding anything to the contrary herein, to the extent the Revolving Obligations are outstanding and a

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payment under this Section 2.2(a) is not made due to the failure of the Borrowers to satisfy the Excess Cash Flow Prepayment Conditions, it shall not constitute an Event of Default.

(b) As promptly as reasonably practicable, but in any event within five (5) Business Days (or ten (10) Business Days to the extent such Net Cash Proceeds are deposited by Borrowers in an account with Agent (or a bank or other depositary institution reasonably acceptable to Required Lenders), which account shall be subject to a Deposit Account Control Agreement and constitute First Priority Term Loan Collateral) following the receipt of Net Cash Proceeds of the sale or issuance by any Borrower or Guarantor of Capital Stock pursuant to Section 9.7(b)(ii) in excess of the Equity/Debt Threshold Amount, the Borrowers shall cause 50% of the Net Cash Proceeds of such sale or issuance to be applied to prepay the outstanding principal amount of the Term Loan. Notwithstanding anything to the contrary herein, if the Revolving Obligations are outstanding, the Borrowers shall not be obligated to make the mandatory prepayment set forth in this subsection (b) after the occurrence and during the continuance of a Default arising under Sections 10.1(a)(i), 10.1(a)(ii) (caused by the failure to comply with Section 9.3, 10.1(g) or 10.1(i)) or an Event of Default.

(c) As promptly as reasonably practicable, but in any event within five (5) Business Days (or ten (10) Business Days in the event such Net Cash Proceeds are immediately deposited by Borrowers in an account in accordance with the provisions of clause (iii) hereunder) of the date of receipt by any Borrower or Guarantor of Net Cash Proceeds with respect to any Extraordinary Receipts, Borrowers shall cause 100% of such Net Cash Proceeds to be applied to prepay the outstanding principal amount of the Term Loan; provided that other than such Net Cash Proceeds of a casualty loss with respect to property insurance or a condemnation event (unless otherwise agreed to by the Required Lenders), Borrowers may in lieu of such prepayment apply such Net Cash Proceeds to the costs of replacement of the assets that are the subject of such Extraordinary Receipt or the costs of purchase or construction of other assets useful in the business of Borrowers and Guarantors so long as (i) Borrowers shall have given Agent prior written notice of Borrowers’ intention to apply such Extraordinary Receipt to the costs of replacement of the properties or assets that are the subject of such Extraordinary Receipts or the cost of purchase or construction of other assets useful in the business of Borrowers and Guarantors and that would constitute First Priority Term Loan Collateral, (ii) no Default or Event of Default shall have occurred and be continuing or would result from such replacement, purchase, or construction, (iii) immediately following receipt of such Net Cash Proceeds and prior to such replacement, purchase, or construction, the applicable Net Cash Proceeds in excess of $500,000 shall have been deposited and maintained by Borrowers or Guarantors in an account with Agent (or a bank or other depositary institution reasonably acceptable to Required Lenders), which account shall be subject to a Deposit Account Control Agreement and constitute First Priority Term Loan Collateral, (iv) the Borrowers or Guarantor complete (or enter into a legally binding agreement to complete) such replacement, purchase, or construction within 365 days after the initial receipt of such Net Cash Proceeds, and (v) the amount of such Net Cash Proceeds applied to such replacement, purchase, or construction shall not exceed $5,000,000 over the term of this Agreement, unless and to the extent that such 365 day period shall have expired without such replacement, purchase or construction (or commitment to replace, purchase or construct) being made or completed, in which case, any unutilized amounts remaining shall immediately be applied to prepay the outstanding principal amount of the Term Loan. Nothing in the foregoing

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shall be construed to constitute consent by Agent or by any Lender to any transaction not expressly permitted or prohibited by the terms this Agreement.

(d) As promptly as reasonably practicable, but in any event within five (5) Business Days (or ten (10) Business Days to the extent such Net Cash Proceeds are immediately deposited by Borrowers in an account in accordance with the provisions of clause (iii) hereunder) of the date of receipt by any Borrower or Guarantor of $500,000 or more of aggregate Net Cash Proceeds with respect to any and all sales or dispositions of assets constituting First Priority Term Loan Collateral (other than any such transactions permitted by Sections 9.7(b)(i),(ii), (iii) and (iv)), the Borrowers shall cause 100% of the Net Cash Proceeds of such sale or disposition to be applied to prepay the outstanding principal amount of the Term Loan, together with the applicable Redemption Premium, if any; provided that, so long as (i) Borrowers shall have given Agent prior written notice of Borrowers’ intention to apply such Net Cash Proceeds to the costs of replacement of the properties or assets that are the subject of such sale or disposition or the costs of purchase or construction of other assets useful in the business of Borrowers or Guarantors and that would constitute First Priority Term Loan Collateral, (ii) no Default or Event of Default shall have occurred and be continuing or would result from such replacement, purchase, or construction, (iii) immediately following receipt of such Net Cash Proceeds and prior to such replacement, purchase, or construction, the applicable Net Cash Proceeds shall be deposited and maintained by Borrowers in an account with Agent (or a bank or other depositary institution reasonably acceptable to Required Lenders), which account shall be subject to a Deposit Account Control Agreement and constitute First Priority Term Loan Collateral, (iv) the Borrowers or Guarantors complete (or enter into a legally binding agreement to complete) such replacement, purchase, or construction within 365 days after the initial receipt of such Net Cash Proceeds, and (v) the amount of Net Cash Proceeds applied to such replacement, purchase, or construction shall not exceed $5,000,000 in any calendar year, then Borrowers may in lieu of such prepayment apply such Net Cash Proceeds to the costs of replacement of the assets that are the subject of such sale or disposition or the costs of purchase or construction of other assets useful in the business of the Borrowers or Guarantors unless and to the extent that such 365 day period shall have expired without such replacement, purchase, or construction (or commitment to replace, purchase or construct) being made or completed, in which case, any unutilized amounts remaining shall be applied to prepay the outstanding principal amount of the Term Loan, together with the applicable Redemption Premium, if any.

2.3 Optional Prepayments.

(a) The Borrowers may, upon delivery of a prepayment notice to the Agent, at any time voluntarily prepay the Term Loan, in whole or in part, at par plus any applicable Redemption Premium; provided, that, (1) such notice must be received by the Agent not later than 12:00 noon (New York, New York time) three (3) Business Days prior to any date of such prepayment of the Term Loan; and (2) any prepayment of the Term Loan shall be in a principal amount of at least $2,000,000 or a whole multiple of $200,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment. The Agent will promptly notify each Lender of its receipt of each such notice and of the amount of such Lender’s Pro Rata Share of such prepayment. If such notice is given by the Administrative Borrower, the Borrowers shall make such prepayment and the payment amount specified in such notice shall be due and payable on

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the date specified therein (unless such prepayment is in connection with a refinancing or acquisition, in which case such prepayment notice shall be revocable if such refinancing or acquisition is not consummated). Each prepayment of the Term Loan pursuant to this Section 2.3 shall be paid to the Lenders in accordance with their respective Pro Rata Share.

2.4 Redemption Premium. For avoidance of doubt, any payment of principal of the Term Loan, whether mandatory or optional (including without limitation after an Event of Default or acceleration), shall be subject to the applicable Redemption Premium at the time of such payment, unless such payment is being made pursuant to any of Section 2.1, Section 2.2(a), Section 2.2(b) or Section 2.2(c), in which case the Redemption Premium shall not apply.

2.5 Joint and Several Liability of Borrowers.

(a) Notwithstanding anything in this Agreement or any other Financing Agreements to the contrary, each Borrower, jointly and severally, in consideration of the financial accommodations to be provided by the Agent and Lenders under this Agreement and the other Financing Agreements, for the mutual benefit, directly and indirectly, of each Borrower and in consideration of the undertakings of the other Borrowers to accept joint and several liability for the Obligations, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers, with respect to the payment and performance of all of the Obligations, it being the intention of the parties hereto that all of the Obligations shall be the joint and several obligations of each Borrower without preferences or distinction among them. Borrowers shall be liable for all amounts due to Agent and Lenders under this Agreement, regardless of which Borrower actually receives the proceeds of the Term Loan hereunder or the amount of such Term Loan received or the manner in which Agent or any Lender accounts for such Term Loan on its books and records. The Obligations of Borrowers with respect to any portion of the Term Loan made to one of them, and the Obligations arising as a result of the joint and several liability of one of the Borrowers hereunder, with respect to any portion of the Term Loan made to the other of the Borrowers hereunder, shall be separate and distinct obligations, but all such other Obligations shall be primary obligations of all Borrowers.

(b) If and to the extent that any Borrower shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of the Obligations in accordance with the terms thereof, then in each such event, the other Borrowers will make such payment with respect to, or perform, such Obligation.

(c) Except as otherwise expressly provided herein, to the extent permitted by law, each Borrower (in its capacity as a joint and several obligor in respect of the obligations of the other Borrower) hereby waives notice of acceptance of its joint and several liability, notice of occurrence of any Event of Default (except to the extent notice is expressly required to be given pursuant to the terms of this Agreement), or of any demand for any payment under this Agreement or the other Financing Agreements, notice of any action at any time taken or omitted by Agent or any Lender under or in respect of any of the obligations hereunder, any requirement of diligence and, generally, all demands, notices and other formalities of every kind in connection with this Agreement and the other Financing Agreements. Each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of

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any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by Agent or any Lender at any time or times in respect of any default by the other Borrowers in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by Agent or any Lender in respect of any of the obligations hereunder, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of such obligations or the addition, substitution or release, in whole or in part, of the other Borrowers. Without limiting the generality of the foregoing, each Borrower (in its capacity as a joint and several obligor in respect of the obligations of the other Borrower) assents to any other action or delay in acting or any failure to act on the part of Agent or any Lender, including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder which might, but for the provisions of this Section 2.5 hereof, afford grounds for terminating, discharging or relieving such Borrower, in whole or in part, from any of its obligations under this Section 2.5, it being the intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied, the obligations of such Borrower under this Section 2.5 shall not be discharged except by performance and then only to the extent of such performance. The obligations of each Borrower under this Section 2.5 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any Borrower or a Lender. The joint and several liability of the Borrowers hereunder shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any other change whatsoever in the name, membership, constitution or place of formation of any Borrower or any of the Lenders.

(d) The provisions of this Section 2.5 are made for the benefit of the Agent and the Lenders and their respective successors and assigns, and subject to Section 12.3 hereof, may be enforced by them from time to time against any Borrower as often as occasion therefor may arise and without requirement on the part of Agent or any Lender first to marshal any of its claims or to exercise any of its rights against the other Borrowers or to exhaust any remedies available to it against the other Borrowers or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy. The provisions of this Section 2.5 shall remain in effect until all the Obligations shall have been paid in full or otherwise fully satisfied (other than indemnities and contingent Obligations which have not yet accrued). If at any time, any payment, or any part thereof, made in respect of any of the Obligations is rescinded or must otherwise be restored or returned by Agent or any Lender upon the insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the provisions of this Section 2.5 hereof will forthwith be reinstated and in effect as though such payment had not been made.

(e) Notwithstanding any provision to the contrary contained herein or in any of the other Financing Agreements, to the extent the obligations of a Borrower shall be adjudicated to be invalid or unenforceable for any reason (including, without limitation, because of any applicable state or federal law relating to fraudulent conveyances or transfers) then the obligations of such Borrower hereunder shall be limited to the maximum amount that is permissible under applicable law (whether federal or state and including, without limitation, the Bankruptcy Code of the United States).

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(f) With respect to the Obligations arising as a result of the joint and several liability of Borrowers hereunder with respect to the Term Loan made to the other Borrowers hereunder, each of Borrowers waives, until the Obligations shall have been paid in full (other than indemnities and contingent Obligations which have not yet accrued) and this Agreement shall have been terminated, any right to enforce any right of subrogation or any remedy which Agent or any Lender now has or may hereafter have against any Borrower, any endorser or any guarantor of all or any part of the Obligations, and any benefit of, and any right to participate in, any security or collateral given to Agent or any Lender. Any claim which any Borrower may have against any other Borrower with respect to any payments to Agent or Lenders hereunder or under any of the other Financing Agreements are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations. Upon the occurrence of any Event of Default and for so long as the same is continuing, Agent and Lenders may proceed directly and at once, without notice (to the extent notice is waivable under applicable law), against (i) with respect to Obligations of Borrowers, either or both of them or (ii) with respect to Obligations of any Borrower, to collect and recover the full amount, or any portion of the applicable Obligations, without first proceeding against the other applicable Borrowers or any other Person, or against any security or collateral for the Obligations. Each Borrower consents and agrees that Agent and Lenders shall be under no obligation to marshal any assets in favor of Borrower(s) or against or in payment of any or all of the Obligations.

SECTION 3. INTEREST AND FEES

3.1 Interest.

(a) Borrowers shall pay to Agent, for the benefit of Lenders, interest on the outstanding principal amount of the Term Loan at the Interest Rate. All interest accruing hereunder on and after the date of any Event of Default or termination hereof shall be payable on demand.

(b) Unless otherwise requested by Administrative Borrower, in accordance with the terms of this Agreement, the Administrative Borrower shall be deemed to have elected a three (3) month Interest Period for the Term Loan. Administrative Borrower may from time to time elect a new Interest Period to be applicable to the Term Loan after the termination of the prior Interest Period. Such request from Administrative Borrower shall specify the Interest Period to be applicable to the Term Loan. Subject to the terms and conditions contained herein, so long as the Agent receives (3) Business Days prior to the expiration of the preceding Interest Period written notice of such election, the new Interest Period with respect to the Term Loan shall commence on the day on which the preceding Interest Period applicable thereto expires, provided, that, (1) no Event of Default shall have occurred and be continuing, (2) no party hereto shall have sent any notice of termination of this Agreement, and (3) Agent and each Lender shall have determined that the Interest Period or Adjusted Eurodollar Rate can be readily determined as of the date of the request by such Borrower.

(c) Intentionally Omitted.

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(d) Interest shall be payable by Borrowers to Agent in cash, for the account of Agent and Lenders as applicable, monthly in arrears not later than the first Business Day of each calendar month; provided that the Administrative Borrower may elect at its option by delivery of at least 5 Business Days prior notice to the Agent by Administrative Borrower of such election, to pay interest due hereunder in an amount equal to 1.0% per annum in kind, on each interest payment date by capitalizing such interest and adding the same to the then outstanding principal amount of the Term Loan (such capitalized interest, collectively, shall be referred to as “PIK Interest”). Once capitalized, PIK Interest shall constitute principal under the Term Loan for all purposes of this Agreement. Interest shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed. In no event shall charges constituting interest payable by Borrowers to Agent and Lenders exceed the maximum amount or the rate permitted under any applicable law or regulation, and if any such part or provision of this Agreement is in contravention of any such law or regulation, such part or provision shall be deemed amended to conform thereto.

3.2 Fees. Borrowers shall pay to Agent the other fees and amounts set forth in the Fee Letters in the amounts and at the times specified therein or as has otherwise been agreed by or on behalf of Borrowers and Agent.

3.3 Changes in Laws and Increased Costs of Loans.

(a) If after the date hereof, either (i) any change in, or in the interpretation of, any law or regulation is introduced, including, without limitation, with respect to reserve requirements, applicable to any Lender or any banking or financial institution from whom any Lender borrows funds or obtains credit (a “Funding Bank”), or (ii) a Funding Bank or any Lender complies with any future guideline or request from any central bank or other Governmental Authority or (iii) a Funding Bank, any Lender determines that the adoption after the date hereof of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof has or would have the effect described below, or a Funding Bank, any Lender complies with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, and in the case of any event set forth in this clause (iii), such adoption, change or compliance has or would have the direct or indirect effect of reducing the rate of return on any Lender’s capital as a consequence of its obligations hereunder to a level below that which such Lender could have achieved but for such adoption, change or compliance (taking into consideration the Funding Bank’s or Lender’s policies with respect to capital adequacy) by an amount deemed by such Lender to be material, and the result of any of the foregoing events described in clauses (i), (ii) or (iii) is or results in an increase in the cost to any Lender of maintaining such Lender’s portion of the Term Loan (other than any increased cost described in Section 6.5), then Borrowers and Guarantors shall from time to time upon demand by Agent pay to Agent additional amounts sufficient to indemnify such Lender against such increased cost on an after-tax basis (without duplication of any amounts received by Agent or Lenders in connection with Section 6.5 hereof) (after taking into account applicable deductions and credits in respect of the amount indemnified). A certificate as to the amount of such increased cost shall be submitted to Administrative Borrower by Agent or the applicable Lender and shall be conclusive, absent

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manifest error. In the event of a conflict between this Section 3.3(a) and Section 6.5 the terms and provisions of Section 6.5 shall control and govern.

(b) Borrowers and Guarantors shall indemnify Agent and each Lender and to hold Agent and each Lender harmless from any loss or expense which Agent or such Lender may sustain or incur as a consequence of (i) default by any Borrower in making a borrowing of, or extension of the Term Loan after such Borrower (or Administrative Borrower on behalf of such Borrower) has given a notice requesting the same in accordance with the provisions of this Agreement, (ii) default by any Borrower in making any prepayment of the Term Loan after such Borrower has given a notice thereof in accordance with the provisions of this Agreement, and (iii) the making of a prepayment of the Term Loan on a day which is not the last day of an Interest Period with respect thereto. With respect to the Term Loan, such indemnification may include an amount equal to the excess, if any, of (A) the amount of interest which would have accrued on the amount so prepaid, or not extended, for the period from the date of such prepayment or of such failure to extend to the last day of the applicable Interest Period in each case at the applicable rate of interest for such Term Loan provided for herein over (B) the amount of interest (as determined by such Agent or such Lender) which would have accrued to Agent or such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank Eurodollar market. This covenant shall survive the termination or non-renewal of this Agreement and the payment of the Obligations.

SECTION 4. CONDITIONS PRECEDENT

4.1 Conditions Precedent to the Issuance of the Term Loan. The obligation of Lenders to make the Term Loan hereunder is subject to the satisfaction of, or waiver of, immediately prior to or concurrently with the making of such Term Loan of each of the following conditions precedent:

(a) Required Lenders shall have received, in form and substance satisfactory to the Required Lenders, all releases, terminations and such other documents as the Required Lenders may reasonably request to evidence and effectuate the termination by the Existing Lenders of their respective financing arrangements with Borrowers and Guarantors and the termination and release by it or them, as the case may be, of any interest in and to any assets and properties of each Borrower and Guarantor, duly authorized, executed and delivered by it or each of them, including, but not limited to, (i) UCC termination statements for all UCC financing statements previously filed by it or any of them or their predecessors, as secured party and any Borrower or Guarantor, as debtor; and (ii) satisfactions and discharges of any mortgages, deeds of trust or deeds to secure debt by any Borrower or Guarantor in favor of it or any of them, in form acceptable for recording with the appropriate Governmental Authority;

(b) all requisite corporate action and proceedings in connection with this Agreement and the other Financing Agreements shall be reasonably satisfactory in form and substance to the Required Lenders, and the Required Lenders shall have received all information and copies of all documents, including records of requisite corporate action and proceedings which the Required Lenders may have reasonably requested in connection therewith, such documents where requested by the Required Lenders or their counsel to be certified by appropriate corporate officers or Governmental Authority (and including a copy of the certificate

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of incorporation or formation of each Borrower and Guarantor certified by the applicable Secretary of State (or equivalent Governmental Authority) which shall set forth the same complete corporate name of such Borrower or Guarantor as is set forth herein and such document as shall set forth the organizational identification number of each Borrower or Guarantor, if one is issued in its jurisdiction of incorporation);

(c) Required Lenders shall have received, in form and substance reasonably satisfactory to the Required Lenders, all consents, waivers, acknowledgments and other agreements from third persons (other than Collateral Access Agreements, Deposit Account Control Agreements and Investment Property Control Agreements) which the Required Lenders may deem reasonably necessary or desirable, including those reasonably necessary to permit, protect and perfect the Agent’s security interests in and liens upon the Collateral or to effectuate the provisions or purposes of this Agreement and the other Financing Agreements;

(d) the Excess Availability, as of the Closing Date, shall be not less than $35,000,000 after giving effect to the borrowing of the Term Loan to be made on the Closing Date;

(e) Required Lenders shall have received evidence, in form and substance reasonably satisfactory to the Required Lenders, that Agent has a valid perfected first priority security interest in all of the First Priority Term Loan Collateral (except as to priority, subject to the liens permitted under Sections 9.8(b) hereof, Section 9.8(c) and 9.8(r) hereof, to the extent that such liens have priority over the liens of Agent under applicable law and except for such items of Collateral as the Required Lenders may determine not to perfect the Agent’s security interest in based on the de minimus value thereof relative to the cost of such perfection;

(f) Required Lenders shall have received, in form and substance reasonably satisfactory to the Required Lenders, the Intercreditor Agreement, duly authorized, executed and delivered by Revolving Agent;

(g) Required Lenders shall have received and reviewed lien and judgment search results for the location of each Borrower and Guarantor (determined in accordance with the Uniform Commercial Code of the applicable jurisdiction and any other applicable law) and all counties in which assets of Borrowers and Guarantors are located where the value of such assets exceeds $100,000 for distribution locations and $400,000 for manufacturing locations, which search results shall be in form and substance reasonably satisfactory to the Required Lenders;

(h) Required Lenders shall have received, in form and substance reasonably satisfactory to the Required Lenders, a valid and effective title insurance policy (or binding pro forma mortgage policy or commitment to issue title insurance policies marked to evidence the form of such policies to be delivered with respect to the Mortgage) issued by a company and agent reasonably acceptable to the Required Lenders: (i) insuring the priority, amount and sufficiency of the Mortgages, (ii) insuring against matters that would be disclosed by surveys and (iii) containing any legally available endorsements, assurances or affirmative coverage reasonably requested by the Required Lenders for protection of their interests; provided, however, that with respect to the policy (the “PA Designated Policy”) issued for the

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mortgaged property referred to in Commitment No. 10-0637 issued by Chicago Title Insurance Company (the “PA Designated Property”), such policy shall retain the standard survey exception, but shall be amended by endorsement after the survey referenced in Section 9.25(c) has been completed and approved by the title company;

(i) Proskauer Rose LLP, on behalf of the Required Lenders, shall have received originals of the shares of the stock certificates representing all of the issued and outstanding certificated shares of the Capital Stock of each Borrower and Guarantor (other than Parent) and owned by any Borrower or Guarantor, in each case together with stock powers duly executed in blank with respect thereto;

(j) Required Lenders shall have received evidence of insurance and loss payee endorsements required hereunder and under the other Financing Agreements, in form and substance reasonably satisfactory to the Required Lenders, and certificates of insurance policies and/or endorsements naming Agent as loss payee;

(k) Required Lenders shall have received, each in form and substance reasonably satisfactory to the Required Lenders, audited consolidated financial statements for Parent and its Subsidiaries, for the fiscal years 2007, 2008, and 2009, interim unaudited consolidated financial statements of Parent and its Subsidiaries for each monthly period ended since the last audited financial statements available and the projections for the fiscal years 2010 through 2014 referred to in Section 8.3;

(l) Required Lenders shall have received, in form and substance reasonably satisfactory to the Required Lenders, such opinion letters of counsel to Borrowers and Guarantors with respect to the Financing Agreements and such other matters as the Required Lenders may reasonably request;

(m) Required Lenders shall have received, a solvency certificate in the form of Exhibit G hereto with respect to Parent and its Subsidiaries taken as a whole;

(n) the other Financing Agreements and all instruments and documents hereunder and thereunder shall have been duly executed and delivered to Agent, in form and substance reasonably satisfactory to the Required Lenders;

(o) the Required Lenders shall have completed all business, financial and legal due diligence with results satisfactory to Agent, the Required Lenders and their counsel;

(p) no Default or Event of Default shall exist under this Agreement or the Revolving Credit Agreement;

(q) all representations and warranties contained herein and in the other Financing Agreements shall be true and correct;

(r) no law, regulation, order, judgment or decree of any Governmental Authority shall exist, and no action, suit, investigation, litigation or proceeding shall be pending or threatened in any court or before any arbitrator or Governmental Authority, which purports to

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enjoin, prohibit, restrain or otherwise affect the making of the Term Loan or would reasonably be expected to have Material Adverse Effect;

(s) the Parent and its Subsidiaries shall have paid the Accrued Management Fees; and

(t) the Parent and its Subsidiaries shall have paid all taxes, charges, and other accounts payables due and payable on or prior to the Closing Date consistent with the Borrowers’ past practice unless such payment is contested in good faith.

Notwithstanding anything to the contrary in this Section 4, execution of this Agreement by the Lenders shall be deemed to be confirmation to the Agent from such Lender that the conditions precedent have been satisfied and the Agent shall be entitled to rely on such confirmation. Further notwithstanding anything to the contrary in this Section 4, with respect to the conditions precedent set forth herein, the Agent shall not be responsible for determining the satisfaction of such conditions precedent.

SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST

5.1 Grant of Security Interest. To secure payment and performance of all Obligations, each Borrower and Guarantor hereby grants to Agent, for itself and the benefit of Secured Parties, a continuing security interest in, a lien upon, and a right of set off against, and hereby assigns to Agent, for itself and the benefit of Secured Parties, as security, all personal and real property and fixtures, and interests in property and fixtures, of each Borrower and Guarantor, whether now owned or hereafter acquired or existing, and wherever located (together with all other collateral security for the Obligations at any time granted to or held or acquired by Agent or any Lender, collectively, the “Collateral”), including all of each Borrower’s and Guarantor’s right, title and interest in and to the following:

(a) all Accounts;

(b) all general intangibles, including, without limitation, all Intellectual Property;

(c) all goods, including, without limitation, Inventory and Equipment;

(d) all owned Real Property and fixtures;

(e) all chattel paper, including, without limitation, all tangible and electronic chattel paper;

(f) all instruments, including, without limitation, all promissory notes;

(g) all documents;

(h) all deposit accounts;

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(i) all letters of credit, banker’s acceptances and similar instruments and including all letter-of-credit rights;

(j) all supporting obligations and all present and future liens, security interests, rights, remedies, title and interest in, to and in respect of Receivables and other Collateral, including (i) rights and remedies under or relating to guaranties, contracts of suretyship, letters of credit and credit and other insurance related to the Collateral, (ii) rights of stoppage in transit, replevin, repossession, reclamation and other rights and remedies of an unpaid vendor, lien or secured party, (iii) goods described in invoices, documents, contracts or instruments with respect to, or otherwise representing or evidencing, Receivables or other Collateral, including returned, repossessed and reclaimed goods, and (iv) deposits by and property of account debtors or other persons securing the obligations of account debtors;

(k) all (i) investment property (including securities, whether certificated or uncertificated, securities accounts, security entitlements, commodity contracts or commodity accounts) and (ii) monies, credit balances, deposits and other property of any Borrower or Guarantor now or hereafter held or received by or in transit to Agent, any Lender or its Affiliates or at any other depository or other institution from or for the account of any Borrower or Guarantor, whether for safekeeping, pledge, custody, transmission, collection or otherwise;

(l) all commercial tort claims, including, without limitation, those identified in the Perfection Certificate;

(m) to the extent not otherwise described above, all Receivables;

(n) all Records; and

(o) all products and proceeds of the foregoing, in any form, including insurance proceeds and all claims against third parties for loss or damage to or destruction of or other involuntary conversion of any kind or nature of any or all of the other Collateral.

5.2 Perfection of Security Interests.

(a) Each Borrower and Guarantor irrevocably and unconditionally authorizes Agent (or its agent) to file at any time and from time to time such financing statements with respect to the Collateral naming Agent or its designee as the secured party and such Borrower or Guarantor as debtor, as Agent (acting at the direction of the Required Lenders) may reasonably require, and including any other information with respect to such Borrower or Guarantor or otherwise required by part 5 of Article 9 of the Uniform Commercial Code of such jurisdiction as Agent (acting at the direction of the Required Lenders) may reasonably determine, together with any amendment and continuations with respect thereto, which authorization shall apply to all financing statements filed on or after the date hereof. Each Borrower and Guarantor hereby authorizes Agent to adopt on behalf of such Borrower and Guarantor any symbol required for authenticating any electronic filing. In the event that the description of the collateral in any financing statement naming Agent or its designee as the secured party and any Borrower or Guarantor as debtor includes assets and properties of such Borrower or Guarantor that do not at any time constitute Collateral, whether hereunder, under any of the other Financing Agreements

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or otherwise, the filing of such financing statement shall nonetheless be deemed authorized by such Borrower or Guarantor to the extent of the Collateral included in such description and it shall not render the financing statement ineffective as to any of the Collateral or otherwise affect the financing statement as it applies to any of the Collateral. So long as any Obligations are outstanding, without the Required Lenders’ prior consent, in no event shall any Borrower or Guarantor at any time file, or permit or cause to be filed, any correction statement or termination statement with respect to any financing statement (or amendment or continuation with respect thereto) naming Agent or its designee as secured party and such Borrower or Guarantor as debtor.

(b) Each Borrower and Guarantor does not have any chattel paper (whether tangible or electronic) or instruments as of the date hereof, except as set forth in the Perfection Certificate. In the event that any Borrower or Guarantor shall be entitled to or shall receive any chattel paper or instrument for obligations in excess of $2,000,000 in any one case or $2,000,000 in the aggregate that constitutes Collateral after the date hereof, the applicable Borrower or Guarantor shall promptly notify Agent thereof in writing. Promptly upon the receipt thereof by or on behalf of any Borrower or Guarantor (including by any agent or representative), such Borrower or Guarantor shall deliver, or cause to be delivered to Agent, all tangible chattel paper and instruments that such Borrower or Guarantor has or may at any time acquire, accompanied by such instruments of transfer or assignment duly executed in blank as Agent (acting at the direction of the Required Lenders) may from time to time reasonably specify, in each case except as Agent (acting at the direction of the Required Lenders) may otherwise agree. At Agent’s option, each Borrower and Guarantor shall, or Agent may at any time an Event of Default exists on behalf of any Borrower or Guarantor, cause the original of any such instrument or chattel paper to be conspicuously marked in a form and manner reasonably acceptable to the Required Lenders with the following legend referring to chattel paper or instruments as applicable: “This [chattel paper][instrument] is subject to the security interest of The Bank of New York Mellon and any sale, transfer, assignment or encumbrance of this [chattel paper][instrument] violates the rights of such secured party.”

(c) In the event that any Borrower or Guarantor shall at any time hold or acquire an interest in any electronic chattel paper or any “transferable record” (as such term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction), such Borrower or Guarantor shall promptly notify Agent thereof in writing. Promptly upon Agent’s (acting at the direction of the Required Lenders) request, such Borrower or Guarantor shall take, or cause to be taken, such actions as Agent (acting at the direction of the Required Lenders) may reasonably request to give Agent control of such electronic chattel paper under Section 9-105 of the UCC and control of such transferable record under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such jurisdiction.

(d) Each Borrower and Guarantor does not have any deposit accounts as of the date hereof, except as set forth in the Perfection Certificate. Borrowers and Guarantors shall not, directly or indirectly, after the date hereof open, establish or maintain any deposit account unless each of the following conditions is satisfied: (i) Agent shall have received not less than five (5) Business Days prior written notice of the intention of any Borrower or

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Guarantor to open or establish such account which notice shall specify in reasonable detail and specificity reasonably acceptable to the Required Lenders the name of the account, the owner of the account, the name and address of the bank at which such account is to be opened or established, the individual at such bank with whom such Borrower or Guarantor is dealing and the purpose of the account, (ii) the bank where such account is opened or maintained shall be reasonably acceptable to the Required Lenders, and (iii) on or before the opening of such deposit account, such Borrower or Guarantor shall deliver to Agent a Deposit Account Control Agreement with respect to such deposit account duly authorized, executed and delivered by such Borrower or Guarantor and the bank at which such deposit account is opened and maintained. The terms of this subsection (d) shall not apply to deposit accounts specifically and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Borrower’s or Guarantor’s salaried employees in the ordinary course of business.

(e) No Borrower or Guarantor owns or holds, directly or indirectly, beneficially or as record owner or both, any investment property, as of the date hereof, or has any investment account, securities account, commodity account or other similar account with any bank or other financial institution or other securities intermediary or commodity intermediary as of the date hereof, in each case except as set forth in the Perfection Certificate.

(i) In the event that any Borrower or Guarantor shall be entitled to or shall at any time after the date hereof hold or acquire any certificated securities constituting Collateral, such Borrower or Guarantor shall promptly endorse, assign and deliver the same to Agent, accompanied by such instruments of transfer or assignment duly executed in blank as Agent (acting at the direction of the Required Lenders) may from time to time reasonably specify. If any securities, now or hereafter acquired by any Borrower or Guarantor are uncertificated and are issued to such Borrower or Guarantor or its nominee directly by the issuer thereof, such Borrower or Guarantor shall immediately notify Agent thereof and shall as Agent (acting at the direction of the Required Lenders) may reasonably specify, either (A) cause the issuer to agree to comply with instructions from Agent as to such securities, without further consent of any Borrower or Guarantor or such nominee, or (B) arrange for Agent to become the registered owner of such securities.

(ii) Borrowers and Guarantors shall not, directly or indirectly, after the date hereof open, establish or maintain any investment account, securities account, commodity account or any other similar account (other than a deposit account) with any securities intermediary or commodity intermediary unless each of the following conditions is satisfied: (A) Agent shall have received not less than five (5) Business Days prior written notice of the intention of such Borrower or Guarantor to open or establish such account which notice shall specify in reasonable detail and specificity reasonably acceptable to the Required Lenders the name of the account, the owner of the account, the name and address of the securities intermediary or commodity intermediary at which such account is to be opened or established, the individual at such intermediary with whom such Borrower or Guarantor is dealing and the purpose of the account, (B) the securities intermediary or commodity intermediary (as the case may be) where such account is opened or maintained shall be acceptable to the Required Lenders, and (C) on or before the opening of such investment account, securities account or other similar account with a securities intermediary or commodity intermediary, such Borrower or Guarantor shall as Agent (acting at the direction of the Required Lenders) may specify either

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(i) execute and deliver, and cause to be executed and delivered to Agent, an Investment Property Control Agreement with respect thereto duly authorized, executed and delivered by such Borrower or Guarantor and such securities intermediary or commodity intermediary or (ii) arrange for Agent to become the entitlement holder with respect to such investment property on terms and conditions reasonably acceptable to the Required Lenders.

(f) Borrowers and Guarantors are not the beneficiary or otherwise entitled to any right to payment under any letter of credit, banker’s acceptance or similar instrument as of the date hereof, except as set forth in the Perfection Certificate. In the event that any Borrower or Guarantor shall be entitled to or shall receive any right to payment under any letter of credit, banker’s acceptance or any similar instrument, whether as beneficiary thereof or otherwise after the date hereof (except with respect to any letter of credit, banker’s acceptance or similar instrument in support of a financed Capital Expenditure permitted under Section 9.18 hereof) involving an amount in excess of $1,000,000 in any one case or $2,000,000 in the aggregate that constitute Collateral, such Borrower or Guarantor shall promptly notify Agent thereof in writing. Such Borrower or Guarantor shall immediately, as Agent (acting at the direction of the Required Lenders) may specify, (i) deliver, or cause to be delivered to Agent, with respect to any such letter of credit, banker’s acceptance or similar instrument, the written agreement of the issuer and any other nominated person obligated to make any payment in respect thereof (including any confirming or negotiating bank), in form and substance reasonably satisfactory to the Required Lenders, consenting to the assignment of the proceeds of the letter of credit to Agent by such Borrower or Guarantor and agreeing to make all payments thereon directly to Agent or as Agent (acting at the direction of the Required Lenders) may otherwise direct or (ii) cause Agent to become, at Borrowers’ expense, the transferee beneficiary of the letter of credit, banker’s acceptance or similar instrument (as the case may be).

(g) Borrowers and Guarantors do not have any commercial tort claims as of the date hereof, except as set forth in the Perfection Certificate. In the event that any Borrower or Guarantor shall at any time after the date hereof have any commercial tort claims involving a claim in excess of $2,000,000 (or commercial tort claims in the aggregate in excess of $5,000,000), that arise in connection with or are related to any other Collateral, such Borrower or Guarantor shall promptly notify Agent thereof in writing, which notice shall (i) set forth in reasonable detail the basis for and nature of such commercial tort claim and (ii) include the express grant by such Borrower or Guarantor to Agent of a security interest in such commercial tort claim (and the proceeds thereof). In the event that such notice does not include such grant of a security interest, the sending thereof by such Borrower or Guarantor to Agent shall be deemed to constitute such grant to Agent. Upon the sending of such notice, any commercial tort claim described therein shall constitute part of the Collateral and shall be deemed included therein. Without limiting the authorization of Agent provided in Section 5.2(a) hereof or otherwise arising by the execution by such Borrower or Guarantor of this Agreement or any of the other Financing Agreements, Agent is hereby irrevocably authorized from time to time and at any time to file such financing statements naming Agent or its designee as secured party and such Borrower or Guarantor as debtor, or any amendments to any financing statements, covering any such commercial tort claim as Collateral. In addition, each Borrower and Guarantor shall promptly upon Agent’s (acting at the direction of the Required Lenders) request, execute and deliver, or cause to be executed and delivered, to Agent such other agreements, documents and

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instruments as Agent (acting at the direction of the Required Lenders) may reasonably require in connection with such commercial tort claim.

(h) Borrowers and Guarantors do not have any goods, documents of title or other Collateral having an aggregate value in excess of $1,000,000 (which as to documents of title for this purpose shall be deemed to refer to the value of the goods covered by such document of title) in the custody, control or possession of a third party as of or after the date hereof, except as set forth in the Perfection Certificate and except for goods located in the United States in transit to a location of a Borrower or Guarantor permitted herein in the ordinary course of business of such Borrower or Guarantor in the possession of the carrier transporting such goods. In the event that any goods, documents of title or other Collateral are at any time after the date hereof having a value in excess of $250,000 in any one case in the custody, control or possession of any other person not referred to in the Perfection Certificate or such carriers, Borrowers and Guarantors shall promptly notify Agent thereof in writing.

(i) Borrowers and Guarantors shall take any other actions reasonably requested by Agent (acting at the direction of the Required Lenders) from time to time to cause the attachment, perfection and priority of, and the ability of Agent to enforce, the security interest of Agent in any and all of the Collateral, including, without limitation, (i) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the UCC or other applicable law, to the extent, if any, that any Borrower’s or Guarantor’s signature thereon is required therefor, (ii) causing Agent’s name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of Agent to enforce, the security interest of Agent in such Collateral, (iii) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of Agent to enforce, the security interest of Agent in such Collateral, (iv) obtaining the consents and approvals of any Governmental Authority or third party, including, without limitation, any consent of any licensor, lessor or other person obligated on Collateral, and taking all actions required by any earlier versions of the UCC or by other law, as applicable in any relevant jurisdiction.

5.3 Exclusions from Collateral. Notwithstanding anything to the contrary contained in Section 5.1 above, the types or items of Collateral described in such Section shall not include the Capital Stock of any existing or hereafter organized or acquired direct or indirect Foreign Subsidiary that is a “controlled foreign corporation” (as such term is defined in Section 957(a) of the Code or a successor provision thereof) in excess of sixty-five (65%) percent of all the issued and outstanding shares of Capital Stock of such Subsidiary entitled to vote (within the meaning of Treasury Regulation Section 1.956-2).

SECTION 6. COLLECTION AND ADMINISTRATION

6.1 Borrowers’ Term Loan Account. Agent shall maintain one or more loan account(s) on its books in which shall be recorded (a) the Term Loan and other Obligations and the Collateral, (b) all payments made by or on behalf of any Borrower or Guarantor and (c) all other appropriate debits and credits as provided in this Agreement, including fees, charges, costs,

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expenses and interest. All entries in the loan account(s) shall be made in accordance with Agent’s customary practices as in effect from time to time.

6.2 Intentionally Deleted.

6.3 Collection of Accounts.

(a) Borrowers and Guarantors shall establish and maintain, at their expense, blocked accounts or lockboxes and related blocked accounts (in either case, “Blocked Accounts”), as Agent (acting at the direction of the Required Lenders) may reasonably specify, with such banks as are reasonably acceptable to the Required Lenders into which (i) Borrowers and Guarantors shall promptly deposit and direct their respective account debtors to directly remit all payments on Receivables and all payments constituting proceeds of Inventory in the identical form in which such payments are made, whether by cash, check or other manner, or (ii) Borrowers and Guarantors shall promptly deposit all payments on all Collateral (other than Receivables) in the identical form in which such payments are made, whether by cash, check or other manner. Within sixty (60) Business Days after the Closing Date, Borrowers and Guarantors shall each deliver, or cause to be delivered to Agent, a Deposit Account Control Agreement duly authorized, executed and delivered by each bank where a Blocked Account is maintained as provided in Section 5.2 hereof. Upon the occurrence and during the continuance of an Event of Default, Agent or Revolving Agent, as applicable, may deliver a Control Notice to the depository bank at which the Blocked Account is maintained. Each Borrower and Guarantor agrees that after the occurrence and during the continuance of an Event of Default all payments made to such Blocked Accounts or other funds received and collected by Revolving Agent or any Revolving Lender, whether in respect of the Receivables, as proceeds of Inventory or other Collateral or otherwise shall be treated as payments to Revolving Agent and Revolving Lenders in respect of the Revolving Obligations and therefore shall constitute the property of Revolving Agent and Revolving Lenders to the extent of the then outstanding Revolving Obligations; provided, that, after the payment in full of the Indebtedness under the Revolving Credit Agreement (except for contingent indemnification obligations) and after the occurrence and during the continuance of an Event of Default, all payments made to such Blocked Accounts or other funds received and collected by Agent or any Lender, whether in respect of the Receivables, as proceeds of Inventory or other Collateral or otherwise shall be treated as payments to Agent and Lenders in respect of the Obligations and therefore shall constitute the property of Agent and Lenders to the extent of the then outstanding Obligations.

(b) Each Borrower and Guarantor and their respective employees, agents and Subsidiaries shall, acting as trustee for Agent, receive, as the property of Agent, any monies, checks, notes, drafts or any other payment relating to and/or proceeds of Accounts or other Collateral which come into their possession or under their control and immediately upon receipt thereof, shall deposit or cause the same to be deposited in the Blocked Accounts, or remit the same or cause the same to be remitted, in kind, to Agent. Borrowers agree to reimburse Agent on demand for any amounts owed or paid to any bank or other financial institution at which a Blocked Account or any other deposit account or investment account is established or any other bank, financial institution or other person involved in the transfer of funds to or from the Blocked Accounts arising out of Agent’s payments to or indemnification of such bank, financial institution or other person other than resulting from the gross negligence or willful misconduct of

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Agent. The obligations of Borrowers to reimburse Agent for such amounts pursuant to this Section 6.3 shall survive the termination of this Agreement.

6.4 Payments.

(a) All Obligations shall be payable to the Agent Payment Account as provided in Section 13.1 hereof or such other place as Agent may designate in writing to Administrative Borrower from time to time.

(b) Subject to the other terms and conditions contained herein, Agent shall apply payments received or collected from any Borrower or Guarantor or for the account of any Borrower or Guarantor (including the monetary proceeds of collections or of realization upon any Collateral) as follows: first, to the payment in full of any fees, indemnities or expense reimbursements then due to Agent from any Borrower or Guarantor; second, ratably, to the payment in full of any fees, indemnities, or expense reimbursements then due to Lenders from any Borrower or Guarantor; third, ratably, to the payment in full of interest due in respect of the Term Loan; fourth, to the payment in full of principal in respect of the Term Loan; fifth, to pay or prepay any other Obligations whether or not then due, in such order and manner as Administrative Borrower requests; and seventh, to the extent any proceeds remain, to the Administrative Borrower or such other Person that may be legally entitled thereto.

(c) At Agent’s option, all principal, interest, fees, costs, expenses and other charges provided for in this Agreement or the other Financing Agreements may be charged directly to the loan account(s) of any Borrower maintained by Agent. If after receipt of any payment of, or proceeds of Collateral applied to the payment of, any of the Obligations, Agent, or any Lender is required to surrender or return such payment or proceeds to any Person for any reason, then the Obligations intended to be satisfied by such payment or proceeds shall be reinstated and continue and this Agreement shall continue in full force and effect as if such payment or proceeds had not been received by Agent or such Lender. Borrowers and Guarantors shall be liable to pay to Agent, and do hereby indemnify and hold Agent and Lenders harmless for the amount of any payments or proceeds surrendered or returned. This Section 6.4 shall remain effective notwithstanding any contrary action which may be taken by Agent or any Lender in reliance upon such payment or proceeds. This Section 6.4 shall survive the payment of the Obligations and the termination of this Agreement.

6.5 Taxes.

(a) Any and all payments by or on account of any of the Obligations shall be made free and clear of and without deduction or withholding for or on account of, any setoff, counterclaim, defense, duties, taxes, levies, imposts, fees, deductions, charges, withholdings, liabilities, restrictions or conditions of any kind, excluding (i) in the case of each Lender, and Agent (A) taxes measured by the income of, and franchise taxes (or similar taxes) imposed on, such Lender or the Agent (as the case may be) by the jurisdiction (or any political subdivision thereof) under the laws of which such Lender or Agent (as the case may be) is organized or in which such Lender’s or the Agent’s principal lending office is located or, in the case of each Lender, in which its applicable lending office is located, (B) any branch profits tax imposed by the United States of America, and (C) any withholding taxes payable either with respect to

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payments under the Financing Agreements under laws (including any statute, treaty or regulation) in effect on the date hereof (or, in the case of an Eligible Transferee, the date of the Assignment and Acceptance) applicable to such Lender or Agent (as the case may be) or as a result of such Lender’s or Agent’s failure or inability to comply with Section 6.5(h) hereof, provided, that withholding taxes payable as a result of any change in such laws occurring after the date hereof (or the date of such Assignment and Acceptance) shall not be excluded pursuant to this clause (i)(C); (ii) in the case of each Lender, taxes measured by its income, and franchise taxes (or other similar taxes) imposed on it as a result of a present or former connection between such Lender and the jurisdiction of the Governmental Authority imposing such tax or any taxing authority thereof or therein (other than a connection arising solely from such Lender having executed, delivered or performed its obligations or received payment under, or enforced its rights or remedies under this Agreement or any Financing Agreement); and (iii) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 13.6 hereof) any withholding tax that either would be imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto or designates a new lending office or is attributable to such Foreign Lender’s failure or inability (other than as a result of a change in law subsequent to the date of it becomes a Lender) to comply with Section 6.5(g) hereof, except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or Assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 6.5(b) below; (iv) any taxes imposed on any “withholdable payment” payable to such recipient to satisfy the applicable requirements as set forth in FATCA after December 31, 2012, and (v) any interest, additions to taxes or penalties with respect to any of the foregoing excluded taxes in (i) through (iv) (all such non-excluded taxes, levies, imposts, fees, deductions, charges, withholdings and liabilities being hereinafter referred to as “Taxes”).

(b) If any Taxes shall be required by law to be deducted from or in respect of any sum payable in respect of the Obligations to any Lender or Agent (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 6.5), such Lender or Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the relevant Borrower or Guarantor shall make such deductions, (iii) the relevant Borrower or Guarantor shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable law and (iv) within ten (10) days after the date of such payment (or, if receipts or evidence are not available within ten (10) days, as soon as possible thereafter), the Borrower shall furnish to the Agent for its account or for the account of any Lender (as the case may be) the original or a certified copy of a receipt evidencing payment thereof, or in the event that the same is not available using commercially reasonable business efforts, such other written proof of payment thereof that is reasonably satisfactory to the Agent.

(c) In addition, each Borrower and Guarantor agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies of the United States or any political subdivision thereof or any applicable foreign jurisdiction, and all liabilities with respect thereto, in each case arising from any payment made hereunder or under any of the other Financing Agreements or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any of the other Financing Agreements

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excluding, however, such amounts imposed as a result of assignment other than an assignment pursuant to Section 6.5(j) hereof (collectively, “Other Taxes”).

(d) Each Borrower and Guarantor shall indemnify, jointly and severally, each Lender and Agent for the full amount of Taxes and Other Taxes (including any Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this Section 6.5) paid by such Lender or Agent (as the case may be) and any liability (including for penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within thirty (30) days from the date such Lender or Agent (as the case may be) makes written demand therefor. A certificate as to the amount of such payment or liability delivered to Administrative Borrower by a Lender or by Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(e) As soon as practicable after any payment of Taxes or Other Taxes by any Borrower or Guarantor, such Borrower or Guarantor shall furnish to Agent, at its address referred to herein, a copy (or if reasonably available, a certified copy) of a receipt evidencing payment thereof.

(f) Without prejudice to the survival of any other agreements of any Borrower or Guarantor hereunder or under any of the other Financing Agreements, the agreements and obligations of such Borrower or Guarantor contained in this Section 6.5 shall survive the termination of this Agreement and the payment in full of the Obligations.

(g) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the Code, or any treaty to which the United States is a party, with respect to payments hereunder or under any of the other Financing Agreements shall deliver to Administrative Borrower (with a copy to Agent), at the time or times prescribed by applicable law or as reasonably requested by Administrative Borrower or Agent (in such number of copies as is reasonably requested by the recipient), whichever of the following is applicable: (i) duly completed copies of U.S. Internal Revenue Service Form W 8BEN, Form W-8EXP or W-8IMY (with the appropriate attachments thereto), as appropriate, claiming exemption from, or a reduction to, withholding tax under an income tax treaty or the Code, or any successor form, (ii) duly completed copies of Internal Revenue Service Form W 8ECI claiming exemption from withholding because the income is effectively connection with a U.S. trade or business, or any successor form, (iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Sections 871(h) or 881(c) of the Code, (A) a certificate of the Lender to the effect that such Lender is not a (1) “bank” within the meaning of Section 881(c)(3)(A) of the Code, (2) “10 percent shareholder” of a Borrower within the meaning of Section 881(c)(3)(B) of the Code or (3) “controlled foreign corporation” described and Section 881(c)(3)(C) of the Code and (B) duly completed copies of the relevant form described in clause (i) claiming exemption from withholding under the portfolio interest exemption, or any successor form or (iv) any other applicable form, certificate or document prescribed by applicable law as a basis for claiming exemption from or a reduction in United States withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit a Borrower to determine the withholding or deduction required to be made. Unless Administrative Borrower and Agent have received, prior to the date that any payment is due pursuant to this Agreement or

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any Financing Agreement, forms or other documents satisfactory to them indicating that payments hereunder or under any of the other Financing Agreements to or for a Foreign Lender are not subject to United States withholding tax or are subject to such tax at a rate reduced by an applicable tax treaty, Borrowers or Agent shall withhold amounts required to be withheld by applicable requirements of law from such payments to or for a Foreign Lender at the applicable statutory rate.

(h) Any Lender that is a “United States person,” as defined in Section 7701(a)(30) of the Code shall deliver to Administrative Borrower (in such number of copies as shall be requested by the recipient) on the date the earlier of the first date on which payment is required to be made to such Lender under this Agreement or within five (5) Business Days of the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrower) duly completed copies of IRS Form W 9, or any successor form that such Lender is entitled to provide at such time in order to comply with United States backup withholding requirements, if required to avoid the application of backup withholding under the Code.

(i) If a payment made to a Lender under any Financing Agreement would be subject to United States federal withholding Tax imposed by FATCA if such Lender fails to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Administrative Borrower and the Agent (1) a certification signed by a Responsible Officer of such Lender, and (2) other documentation reasonably requested by the Administrative Borrower and the Agent sufficient for the Agent and the Administrative Borrower to comply with their obligations under FATCA and to determine that such Lender has complied with such applicable reporting requirements.

(j) Any Lender claiming any additional amounts payable pursuant to this Section 6.5 hereof shall use its reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its applicable lending office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that would be payable or may thereafter accrue and would not, in the sole determination of such Lender, be otherwise disadvantageous to such Lender; provided, that nothing in this Section 6.5(j) shall affect or postpone any of the Obligations of the Borrower or the rights of such Lender pursuant to Section 6.5(b) or otherwise. The Borrower agrees to pay all reasonable costs and expenses incurred by any Lender or Agent in connection with any change pursuant to this Section 6.5(j).

(k) If Agent or any Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrowers or with respect to which the Borrowers have paid additional amounts pursuant to this Section 6.5, it shall pay to the Administrative Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 6.5 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of Agent or such Lender, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrowers, upon the request of Agent, or such Lender, agree to repay the

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amount paid over to the Borrowers (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to Agent or such Lender in the event Agent or such Lender is required to repay such refund to such Governmental Authority. This subsection shall not be construed to require Agent or any Lender to make available its tax returns (or any other information relating to its taxes) to the Borrowers or any other Person.

6.6 Intentionally Deleted.

6.7 Use of Proceeds. Borrowers shall use the proceeds of the Term Loan hereunder only for: (a) the payment in full of Administrative Borrower’s existing Indebtedness pursuant to the Securities Purchase Agreement dated as of December 8, 2006 by and among the Administrative Borrower and Sankaty Advisors, LLC, as agent and the other parties thereto, as amended (the “Existing Note Purchase Agreement”) including all accrued and unpaid interest, fees and other payment obligations thereunder, (b) the payment in full of the Accrued Management Fees, (c) costs, expenses and fees in connection with the preparation, negotiation, execution and delivery of this Agreement and the other Financing Agreements, (d) the payment of the broker’s fee due to Challenger Capital Group Ltd. in an amount equal to $787,500, (e) the payment of the fees permitted under Section 9.12(b)(iii)(B) and (f) to the extent there is any excess proceeds after the application of the proceeds pursuant to clauses (a), (b) and (c) above, the remaining proceeds may be used for general operating, working capital and other proper corporate purposes of any such Borrower not otherwise prohibited by the terms hereof (including permitted investments, payment of dividends and repayment of certain Indebtedness, in each case, to the extent expressly permitted in this Agreement). None of the proceeds will be used, directly or indirectly, for the purpose of purchasing or carrying any margin security or for the purposes of reducing or retiring any indebtedness which was originally incurred to purchase or carry any margin security or for any other purpose which might cause the Term Loan to be considered a “purpose credit” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, as amended.

6.8 Appointment of Administrative Borrower as Agent for Requesting the Term Loan and Receipts of Loans and Statements.

(a) Each Borrower hereby irrevocably appoints and constitutes Administrative Borrower as its agent and attorney-in-fact to request and receive the proceeds of the Term Loan pursuant to this Agreement and the other Financing Agreements from Agent or any Lender in the name or on behalf of such Borrower.

(b) Administrative Borrower hereby accepts the appointment by Borrowers to act as the agent and attorney-in-fact of Borrowers pursuant to this Section 6.8. Administrative Borrower shall ensure that the disbursement of the proceeds of the Term Loan to each Borrower requested by or paid to or for the account of Parent, shall be paid to or for the account of such Borrower.

(c) Each Borrower and other Guarantor hereby irrevocably appoints and constitutes Administrative Borrower as its agent to receive statements on account and all other notices from Agent and Lenders with respect to the Obligations or otherwise under or in connection with this Agreement and the other Financing Agreements.

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(d) Any notice, election, representation, warranty, agreement or undertaking by or on behalf of any other Borrower or any Guarantor by Administrative Borrower shall be deemed for all purposes to have been made by such Borrower or Guarantor, as the case may be, and shall be binding upon and enforceable against such Borrower or Guarantor to the same extent as if made directly by such Borrower or Guarantor.

(e) No purported termination of the appointment of Administrative Borrower as agent as aforesaid shall be effective, except after ten (10) days’ prior written notice to Agent.

6.9 Pro Rata Treatment. Except to the extent otherwise provided in this Agreement or as otherwise agreed by the applicable Lenders: (a) the making of the Term Loan shall be made among the Lenders based on their respective Pro Rata Shares of the Term Loan and (b) each payment on account of any Obligations to or for the account of one or more of Lenders in respect of any Obligations due on a particular day shall be allocated among the Lenders entitled to such payments based on their respective Pro Rata Shares of the outstanding principal amount of the Term Loan and shall be distributed accordingly.

6.10 Sharing of Payments, Etc.

(a) If any Lender (including Agent) shall obtain from any Borrower or Guarantor payment of any principal of or interest on the Term Loan owing to it or payment of any other amount under this Agreement or any of the other Financing Agreements through the exercise of any right of setoff, banker’s lien or counterclaim or similar right or otherwise (other than from Agent as provided herein), and, as a result of such payment, such Lender shall have received more than its Pro Rata Share of the principal of the Term Loan or more than its share of such other amounts then due hereunder or thereunder by any Borrower or Guarantor to such Lender than the percentage thereof received by any other Lender, it shall promptly pay to Agent, for the benefit of Lenders, the amount of such excess and make such other adjustments from time to time as shall be equitable, to the end that all Lenders shall share the benefit of such excess payment (net of any expenses that may be incurred by such Lender in obtaining or preserving such excess payment) in accordance with their respective Pro Rata Shares or as otherwise agreed by Lenders. To such end all Lenders shall make appropriate adjustments among themselves (by the resale of participation sold or otherwise) if such payment is rescinded or must otherwise be restored.

(b) Nothing contained herein shall require any Lender to exercise any right of setoff, banker’s lien, counterclaims or similar rights or shall affect the right of any Lender to exercise, and retain the benefits of exercising, any such right with respect to any other Indebtedness or obligation of any Borrower or Guarantor. If, under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section applies, such Lender shall, to the extent practicable, assign such rights to Agent for the benefit of Lenders and, in any event, exercise its rights in respect of such secured claim in a manner consistent with the rights of Lenders entitled under this Section to share in the benefits of any recovery on such secured claim.

6.11 Intentionally Deleted.

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6.12 Obligations Several; Independent Nature of Lenders’ Rights. The obligation of each Lender hereunder is several, and no Lender shall be responsible for the obligation or commitment of any other Lender hereunder. Nothing contained in this Agreement or any of the other Financing Agreements and no action taken by the Lenders pursuant hereto or thereto shall be deemed to constitute the Lenders to be a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and subject to Section 12.3 hereof, each Lender shall be entitled to protect and enforce its rights arising out of this Agreement and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose.

6.13 Intentionally Deleted.

6.14 Promissory Notes. Each Lender may at any time request that the portion of the Term Loan made by it be evidenced by a promissory note. In such event, Borrowers shall execute and deliver to such Lender a promissory note, substantially in the form of Exhibit E hereto, payable to the order of such Lender. Thereafter, that portion of the Term Loan evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 13.7) be represented by one or more promissory notes in such form payable to the order of the payee named therein.

SECTION 7. COLLATERAL REPORTING AND COVENANTS

7.1 Collateral Reporting.

(a) Prior to the payment in full of the Revolving Obligations, Borrowers shall deliver to Agent copies of any documents or any other deliverables required to be delivered to the Revolving Agent pursuant to Section 7.1 of the Revolving Credit Agreement substantially simultaneously upon delivering such documents or other deliverables to the Revolving Agent. On and after the payment in full of the Revolving Obligations, Borrowers shall provide Agent with the following documents in a form reasonably satisfactory to the Required Lenders:

(i) Agent (acting at the direction of the Required Lenders) may request such documents more frequently at any time a Default or Event of Default shall have occurred and be continuing, (A) summary inventory reports by location and category (and including the amounts of consigned Inventory accepted on consignment by Borrowers and amounts of inventory consigned to third parties by Borrowers, and the value of Inventory held by processors), (B) summary agings of accounts receivable together with schedules of sales made, credits issued and cash received, (C) summary agings of accounts payable (and including information indicating the amounts owing to owners and lessors of leased premises, warehouses, processors and other third parties from time to time in possession of any Collateral), and (D) a cash report in form satisfactory to Agent indicating the amount of cash (and the deposit accounts in which such cash is held) of Borrowers as of the end of preceding week or day, as applicable, and

(ii) such other reports as to the Collateral as Agent or Required Lenders shall reasonably request from time to time with respect to such information not

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otherwise specified above (and if such request is for a report to be on a periodic basis after the initial request therefor, such frequency to be agreed to by Administrative Borrower and Agent); and

(iii) at any time a Default or Event of Default shall have occurred and be continuing, on a monthly basis (but in any event within five (5) Business Days after the end of a month), (A) a report setting forth a rolling thirteen (13) week cash flow forecast reflecting such information for the month immediately following the last month reflected in such immediately prior report and (B) a report, duly completed and executed by a Responsible Officer, which specifies all material changes to or deviations from any of the projected information for the immediately preceding month set forth in any budget previously delivered to Agent, compared to the actual results for such periods (including any deviations, plan to date, from projected information to actual results as of the day of delivery of such report).

(b) All of the documents, reports and schedules provided by or on behalf of any Borrower to Agent hereunder for Accounts payable in any currency other than US Dollars shall set forth the US Dollar Equivalent for the amount of the Eligible Account included in any such documents, reports or schedules. For purposes hereof, Agent may, at its option, provide to Administrative Borrower, at least five (5) Business Days prior to the date any such documents, reports or schedules are required to be provided by Borrowers to Agent hereunder, the Exchange Rates required to set forth the US Dollar Equivalent in such documents, reports and schedules and in the event Agent does not do so, Borrowers shall use such rates of exchange with respect to the applicable currencies as Borrowers use for such purpose in the ordinary course of business consistent with current practices as of the date hereof and shall identify such rates of exchange in any such documents, reports and schedules.

7.2 Accounts Covenants.

(a) Borrowers shall provide Agent substantially simultaneously with the delivery to the Revolving Agent of any notification of (to the extent not otherwise reflected in the most recent Borrowing Base Certificate provided to Revolving Agent): (i) any material delay in any Borrower’s performance of any of its material obligations to any account debtor or the assertion of any material claims, offsets, defenses or counterclaims by any account debtor, or any material disputes with account debtors, in each case, known to any Responsible Officer, or any settlement, adjustment or compromise thereof, (ii) all material adverse information actually known to any Responsible Officer relating to the financial condition of any account debtor with respect to the Accounts of any Borrower or Guarantor and (iii) any event or circumstance which, to the best of any Responsible Officer’s knowledge, would cause the Revolving Agent to consider any then existing Accounts as no longer constituting Eligible Accounts. So long as no Event of Default exists or has occurred and is continuing, Borrowers and Guarantors shall settle, adjust or compromise any claim, offset, counterclaim or dispute with any account debtor. At any time that an Event of Default exists or has occurred and is continuing, Agent shall, at its option, have the exclusive right to settle, adjust or compromise any claim, offset, counterclaim or dispute with account debtors or grant any credits, discounts or allowances.

(b) With respect to each Account: (i) the amounts shown on any invoice delivered to Agent or schedule thereof delivered to Agent shall be true and complete in all

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material respects, (ii) no payments shall be made thereon except to a Blocked Account, (iii) no credit, discount, allowance or extension or agreement for any of the foregoing shall be granted to any account debtor except as reported to Revolving Agent in accordance with the Revolving Credit Documents and except for credits, discounts, allowances or extensions made or given in the ordinary course of the applicable Borrower’s business in accordance with practices and policies previously or hereafter disclosed to Agent, (iv) there shall be no setoffs, deductions, contras, defenses, counterclaims or disputes existing or asserted with respect to Accounts of any Borrower except as reported to Revolving Agent in a Borrowing Base Certificate, (v) none of the transactions giving rise thereto will violate any applicable foreign, Federal, State or local laws or regulations, all documentation relating thereto will be legally sufficient under such laws and regulations and all such documentation will be legally enforceable in accordance with its terms.

(c) After the payment in full of the Revolving Obligations, at any time when an Event of Default is continuing, Agent (upon a determination of Required Lenders that such verification is necessary or desirable), shall have the right, at the direction of the Required Lenders, to verify the validity, amount or any other matter relating to any Receivables or other Collateral, by mail, telephone, facsimile transmission or otherwise, in Agent’s name or in the name of a nominee of Agent.

7.3 Inventory Covenants. With respect to the Inventory: (a) consistent with its current practices, each Borrower and Guarantor shall at all times maintain inventory records reasonably satisfactory to the Required Lenders, keeping correct and accurate records itemizing and describing the kind, type, quality and quantity of Inventory, such Borrower’s or Guarantor’s cost therefor and withdrawals therefrom and additions thereto; (b) Borrowers and Guarantors shall conduct a physical count of the Inventory at least once each year but at any time or times as Agent (acting at the direction of the Required Lenders) may request after an Event of Default has occurred and is continuing, and promptly following such physical inventory shall supply Agent with a report in the form and with such specificity as may be reasonably satisfactory to the Required Lenders concerning such physical count; (c) Borrowers and Guarantors shall not remove any Inventory from the locations set forth or permitted herein, without the prior written consent of the Required Lenders, except for sales of Inventory in the ordinary course of its business or as otherwise expressly permitted herein and except to move Inventory directly from one location set forth or permitted herein to another such location and except for Inventory shipped from the manufacturer thereof to such Borrower or Guarantor which is in transit to the locations set forth or permitted herein; (d) (x) prior to the payment in full of the Revolving Obligations, Borrowers shall deliver to Agent copies of written appraisal as to the Inventory delivered to the Revolving Agent pursuant to the terms of the Revolving Credit Documents substantially simultaneously upon delivering such appraisal to the Revolving Agent and (y) on and after the payment in full of the Revolving Obligations, if an Event of Default has occurred and is continuing, upon Agent’s (acting at the direction of the Required Lenders) request, Borrowers shall deliver or cause to be delivered, at their expense, not more than two (2) written appraisals as to the Inventory in form, scope and methodology reasonably acceptable to the Required Lenders and by an appraiser reasonably acceptable to the Required Lenders, addressed to Agent and Lenders and upon which Agent and Lenders are expressly permitted to rely (each such appraisal being referred to as an “Inventory Appraisal”), in any twelve (12) month period; (e) Borrowers and Guarantors shall produce, use, store and maintain the Inventory with all reasonable care and caution and in accordance with applicable standards of any insurance and in

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conformity with applicable laws (including the requirements of the Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations and orders related thereto); (f) none of the Inventory or other Collateral constitutes farm products or the proceeds thereof; (g) as between Agent and Lenders, on the one hand, and Borrowers and Guarantors, on the other hand, each Borrower and Guarantor assumes all responsibility and liability arising from or relating to the production, use, sale or other disposition of the Inventory; (h) Borrowers and Guarantors shall not sell Inventory to any customer on approval, or any other basis which entitles the customer to return or may obligate any Borrower or Guarantor to repurchase such Inventory except for the right of return given to customers of such Borrower or Guarantor in the ordinary course of the business of such Borrower or Guarantor in accordance with the then current policies of such Borrower or Guarantor; (i) Borrowers and Guarantors shall keep the Inventory in good and marketable condition; and (j) Borrowers and Guarantors may acquire or accept any Inventory on consignment or approval so long as such Inventory is specifically identified on a report provided or to be provided by Administrative Borrower to Agent pursuant to Section 7.1 hereof on and after the payment in full of the Revolving Obligations.

7.4 Equipment and Real Property Covenants. With respect to the Equipment and Real Property: (a) upon Agent’s (acting at the direction of the Required Lenders) reasonable request, Borrowers and Guarantors shall, at their expense, at any time or times as Agent (acting at the direction of the Required Lenders) may reasonably request after an Event of Default has occurred and is continuing, deliver or cause to be delivered to Agent written appraisals as to the Real Property in form, scope and methodology acceptable to the Required Lenders and by an appraiser acceptable to the Required Lenders, addressed to Agent and Lenders and upon which Agent and Lenders are expressly permitted to rely; (b) Borrowers and Guarantors shall keep the Equipment in good order, repair, running and marketable condition (ordinary wear and tear excepted); (c) Borrowers and Guarantors shall use the Equipment and Real Property with all reasonable care and caution and in accordance with applicable standards of any insurance and in conformity with all applicable laws; (d) the Equipment is and shall be used in the business of Borrowers and Guarantors and not for personal, family, household or farming use; (e) Borrowers and Guarantors shall not remove any Equipment from the locations set forth or permitted herein, except to the extent necessary to have any Equipment repaired or maintained in the ordinary course of its business or to move Equipment directly from one location set forth or permitted herein to another such location and except for the movement of motor vehicles used by or for the benefit of such Borrower or Guarantor in the ordinary course of business; (f) the Equipment is now and shall remain personal property and Borrowers and Guarantors shall not permit any of the Equipment to be or become a part of or affixed to real property; and (g) each Borrower and Guarantor assumes all responsibility and liability arising from the use of the Equipment and Real Property.

7.5 Power of Attorney. Each Borrower and Guarantor hereby irrevocably designates and appoints Agent (and all persons designated by Agent) as such Borrower’s and Guarantor’s true and lawful attorney-in-fact, and authorizes Agent, in such Borrower’s, Guarantor’s or Agent’s name, to: (a) at any time an Event of Default has occurred and is continuing (i) demand payment on Receivables or other Collateral, (ii) enforce payment of Receivables by legal proceedings or otherwise, (iii) exercise all of such Borrower’s or Guarantor’s rights and remedies to collect any Receivable or other Collateral, (iv) sell or assign any Receivable upon such terms, for such amount and at such time or times as the Agent (acting at the direction of the Required

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Lenders) deems advisable, (v) settle, adjust, compromise, extend or renew an Account, (vi) discharge and release any Receivable, (vii) prepare, file and sign such Borrower’s or Guarantor’s name on any proof of claim in bankruptcy or other similar document against an account debtor or other obligor in respect of any Receivables or other Collateral, (viii) notify the post office authorities to change the address for delivery of remittances from account debtors or other obligors in respect of Receivables or other proceeds of Collateral to an address designated by Agent, and open and dispose of all mail addressed to such Borrower or Guarantor and handle and store all mail relating to the Collateral; and (ix) do all acts and things which are necessary, in Agent’s good faith determination, to fulfill such Borrower’s or Guarantor’s obligations under this Agreement and the other Financing Agreements and (b) at any time after an Event of Default has occurred and is continuing to (i) take control in any manner of any item of payment in respect of Receivables or constituting Collateral or otherwise received in or for deposit in the Blocked Accounts or otherwise received by Agent or any Lender as Collateral, (ii) have access to any lockbox or postal box into which remittances from account debtors or other obligors in respect of Receivables or other proceeds of Collateral are sent or received while an Event of Default exists or has occurred and is continuing, (iii) take control of any item of payment constituting Collateral that is received by Agent or any Lender in accordance with the terms hereof, (iv) endorse such Borrower’s or Guarantor’s name upon any items of payment in respect of Receivables or constituting Collateral or otherwise received by Agent and any Lender and deposit the same in Agent’s account for application to the Obligations, (v) endorse such Borrower’s or Guarantor’s name upon any chattel paper, document, instrument, invoice, or similar document or agreement relating to any Receivable or any goods pertaining thereto or any other Collateral, including any warehouse or other receipts, or bills of lading and other negotiable or non-negotiable documents, (vi) clear Inventory the purchase of which was financed with a letter of credit through U.S. Customs or foreign export control authorities in such Borrower’s or Guarantor’s name, Agent’s name or the name of Agent’s designee, and to sign and deliver to customs officials powers of attorney in such Borrower’s or Guarantor’s name for such purpose, and to complete in such Borrower’s or Guarantor’s or Agent’s name, any order, sale or transaction, obtain the necessary documents in connection therewith and collect the proceeds thereof, and (vii) sign such Borrower’s or Guarantor’s name on any verification of Receivables and notices thereof to account debtors or any secondary obligors or other obligors in respect thereof. Each Borrower and Guarantor hereby releases Agent and Lenders and their respective officers, employees and designees from any liabilities arising from any act or acts under this power of attorney and in furtherance thereof, whether of omission or commission, except as a result of Agent’s or any Lender’s own gross negligence or willful misconduct as determined pursuant to a final non-appealable order of a court of competent jurisdiction.

7.6 Right to Cure. Agent (acting at the direction of the Required Lenders) may at any time after an Event of Default has occurred and is continuing, at its option, upon reasonable prior notice to Administrative Borrower: (a) cure any default by any Borrower or Guarantor under any material agreement with a third party if (i) such Borrower or Guarantor is not disputing such default or are not proceeding to cure the same and (ii) the failure to cure could reasonably be expected to materially and adversely affect the Collateral, its value or the ability of Agent to collect, sell or otherwise dispose of the Collateral or the rights and remedies of Agent or any Lender therein or the ability of any Borrower or Guarantor to perform its obligations hereunder or under any of the other Financing Agreements, (b) pay or bond on appeal any final judgment

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entered against any Borrower or Guarantor if (i) such Borrower is not appealing the same and (ii) the failure to pay or bond such judgment could reasonably be expected to materially and adversely affect the Collateral, (c) discharge taxes, liens, security interests or other encumbrances at any time levied on or existing with respect to the Collateral and pay any amount, incur any expense or perform any act which, in Agent’s (acting at the direction of the Required Lenders) reasonable judgment, is necessary or appropriate to preserve, protect, insure or maintain the Collateral and the rights of Agent and Lenders with respect thereto. Agent (acting at the direction of the Required Lenders) may add any amounts so expended to the Obligations and charge any Borrower’s account therefor, such amounts to be repayable by Borrowers on demand. Agent and Lenders shall be under no obligation to effect such cure, payment or bonding and shall not, by doing so, be deemed to have assumed any obligation or liability of any Borrower or Guarantor. Any payment made or other action taken by Agent or any Lender under this Section shall be without prejudice to any right to assert an Event of Default hereunder and to proceed accordingly.

7.7 Access to Premises. From time to time as requested by Agent (acting at the direction of the Required Lenders), at the cost and expense of Borrowers, (a) Agent or its designee shall have complete access to all of each Borrower’s and Guarantor’s premises during normal business hours and after one (1) day’s prior notice to Administrative Borrower, or at any time and without notice to Administrative Borrower if an Event of Default exists or has occurred and is continuing, for the purposes of inspecting, verifying and auditing the Collateral and all of each Borrower’s and Guarantor’s books and records, including the Records, and (b) each Borrower and Guarantor shall promptly furnish to Agent such copies of such books and records or extracts therefrom as Agent (acting at the direction of the Required Lenders) may reasonably request, and Agent or any Lender or Agent’s designee may use during normal business hours such of any Borrower’s and Guarantor’s personnel, equipment, supplies and premises as may be reasonably necessary for the foregoing and if an Event of Default exists or has occurred and is continuing for the collection of Receivables and realization of other Collateral. Agent shall not conduct more than (i) one (1) field examination with respect to the Collateral in any twelve (12) month period at the expense of Borrowers so long as no Event of Default shall have occurred and be continuing and Excess Availability shall be greater than or equal to the amount equal to twenty (20%) percent of the Maximum Credit, and (ii) two (2) field examinations with respect to the Collateral in any twelve (12) month period at the expense of Borrowers in the event that either Excess Availability shall be less than the amount equal to twenty (20%) percent of the Maximum Credit or an Event of Default has occurred and is continuing.

SECTION 8. REPRESENTATIONS AND WARRANTIES

Each Borrower and Guarantor hereby represents and warrants to Agent and Lenders the following (which shall survive the execution and delivery of this Agreement):

8.1 Corporate Existence, Power and Authority. Each Borrower and Guarantor is a corporation, limited liability company, limited partnership or trust duly organized and in good standing under the laws of its jurisdiction of organization and is duly qualified as a foreign corporation, limited partnership or trust and in good standing in all states or other jurisdictions where the nature and extent of the business transacted by it or the ownership of assets makes such qualification necessary, except for those jurisdictions in which the failure to so qualify has

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not or would not reasonably be expected to have a Material Adverse Effect. The execution, delivery and performance of this Agreement, the other Financing Agreements and the transactions contemplated hereunder and thereunder (a) are all within each Borrower’s and Guarantor’s corporate or limited liability company or limited partnership powers, (b) have been duly authorized, (c) are not in contravention of applicable laws in any material respect or the terms of any Borrower’s or Guarantor’s certificate of incorporation, certificate of formation, bylaws, operating agreement, limited partnership agreement, or other organizational documentation, or any indenture, agreement or undertaking to which any Borrower or Guarantor is a party or by which any Borrower or Guarantor or its property are bound and (d) will not result in the creation or imposition of, or require or give rise to any obligation to grant, any lien, security interest, charge or other encumbrance upon any property of any Borrower or Guarantor except as permitted thereunder or hereunder. This Agreement and the other Financing Agreements to which any Borrower or Guarantor is a party constitute legal, valid and binding obligations of such Borrower and Guarantor enforceable in accordance with their respective terms.

8.2 Name; State of Organization; Chief Executive Office; Collateral Locations.

(a) The exact legal name of each Borrower and Guarantor is as set forth on the signature page of this Agreement and in the Perfection Certificate. No Borrower or Guarantor has, during the five years prior to the date of this Agreement, been known by or used any other corporate or fictitious name or been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person, or acquired any of its property or assets out of the ordinary course of business, except as set forth in the Perfection Certificate.

(b) Each Borrower and Guarantor is an organization of the type and organized in the jurisdiction set forth in the Perfection Certificate. The Perfection Certificate accurately sets forth the organizational identification number of each Borrower and Guarantor or accurately states that such Borrower or Guarantor has none and accurately sets forth the federal employer identification number of each Borrower and Guarantor.

(c) The chief executive office and mailing address of each Borrower and Guarantor and each Borrower’s and Guarantor’s Records concerning Accounts are located only at the address identified as such in Schedule 8.2 and its only other places of business and the only other locations of Collateral, if any, are the addresses set forth in Schedule 8.2, subject to the rights of any Borrower or Guarantor to establish new locations in accordance with Section 9.2 below. Schedule 8.2 correctly identifies any of such locations which are not owned by a Borrower or Guarantor and sets forth the owners and/or operators thereof.

8.3 Financial Statements; No Material Adverse Change. All financial statements relating to any Borrower or Guarantor which have been or may hereafter be delivered by any Borrower or Guarantor to Agent and Lenders have been prepared in accordance with GAAP (except as to any interim financial statements, to the extent such statements are subject to normal year-end adjustments and do not include any notes) and fairly present in all material respects the financial condition and the results of operation of such Borrower and Guarantor as at the dates and for the periods set forth therein. Except as disclosed in any interim financial statements furnished by Borrowers and Guarantors to Agent prior to the date of this Agreement, there has

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been no act, condition or event which has had or is reasonably likely to have a Material Adverse Effect since the date of the most recent audited financial statements of any Borrower or Guarantor furnished by any Borrower or Guarantor to Agent prior to the date of this Agreement. The projections dated April 2010 for the fiscal years ending 2010 through 2014 that have been delivered to the Required Lenders or any projections hereafter delivered to Agent have been prepared in light of the past operations of the businesses of Borrowers and Guarantors and are based upon estimates and assumptions stated therein, all of which Borrowers and Guarantors have determined to be reasonable and fair in light of the then current conditions and current facts and reflect the good faith and reasonable estimates of Borrowers and Guarantors of the future financial performance of Parent and its Subsidiaries and of the other information projected therein for the periods set forth therein, it being understood that actual results may vary from such forecasts and that such variations may be material.

8.4 Priority of Liens; Title to Properties. The security interests and liens granted to Agent under this Agreement and the other Financing Agreements constitute valid and perfected first priority liens and security interests in and upon the Collateral subject only to the liens indicated on Schedule 8.4 and the other liens permitted under Section 9.8 hereof. Each Borrower and Guarantor has good and marketable fee simple title to or valid leasehold interests in all of its Real Property and good, valid and merchantable title to all of its other properties and assets subject to no liens, mortgages, pledges, security interests, encumbrances or charges of any kind, except those granted to Agent and such others as are specifically listed on Schedule 8.4 or permitted under Section 9.8 hereof.

8.5 Tax Returns. Each Borrower and Guarantor has filed, or caused to be filed, in a timely manner all income and other material tax returns, reports and declarations which are required to be filed by it. All information in such tax returns, reports and declarations is complete and accurate in all material respects. Each Borrower and Guarantor has paid or caused to be paid all federal and other material taxes due and payable or claimed due and payable in any assessment received by it, except taxes the validity of which are being contested in good faith by appropriate proceedings reasonably diligently pursued and available to such Borrower or Guarantor and with respect to which adequate reserves have been set aside on its books. Adequate provision has been made for the payment of all accrued and unpaid Federal, State, county, local, foreign and other taxes whether or not yet due and payable and whether or not disputed. Each of the foregoing clauses in this Section 8.5 is subject to the ongoing audits as indicated on Schedule 8.5.

8.6 Litigation. Except as set forth on Schedule 8.6, (a) there is no investigation by any Governmental Authority pending, or to the best of any Borrower’s or Guarantor’s knowledge threatened, against or affecting any Borrower or Guarantor, its or their assets or business and (b) there is no action, suit, proceeding or claim by any Person pending, or to the best of any Borrower’s or Guarantor’s knowledge threatened, against any Borrower or Guarantor or its or their assets or goodwill, or against or affecting any transactions contemplated by this Agreement, in each case under clauses (a) and (b), which if adversely determined against such Borrower or Guarantor has or could reasonably be expected to have a Material Adverse Effect.

8.7 Compliance with Other Agreements and Applicable Laws.

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(a) Borrowers and Guarantors are not in default in any respect under, or in violation in any respect of the terms of, any agreement, contract, instrument, lease or other commitment to which it is a party or by which it or any of its assets are bound, except where such default or violation could not be reasonably expected to have a Material Adverse Effect. Borrowers and Guarantors are in compliance with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority relating to their respective businesses, including, without limitation, those set forth in or promulgated pursuant to the Occupational Safety and Health Act of 1970, as amended, the Fair Labor Standards Act of 1938, as amended, ERISA, and the Code, in each case except where the failure to comply has not or could not be reasonably expected to have a Material Adverse Effect.

(b) Borrowers and Guarantors have obtained all permits, licenses, approvals, consents, certificates, orders or authorizations of any Governmental Authority required for the lawful conduct of its business (the “Permits”) except where the failure to obtain could not be reasonably expected to have a Material Adverse Effect. All of the Permits are valid and subsisting and in full force and effect. There are no actions, claims or proceedings pending or to the best of any Borrower’s or Guarantor’s knowledge, threatened, that seek the revocation, cancellation, suspension or modification of any of the Permits where any of the same would have a Material Adverse Effect.

8.8 Environmental Compliance.

(a) Except as set forth on Schedule 8.8, Borrowers, Guarantors and any Subsidiary of any Borrower or Guarantor have not used, stored, recycled, treated, generated, manufactured, processed, distributed, transported, handled, produced, released, spilled, discharged or disposed of any Hazardous Materials, on, at, from or, to the best of any Borrower’s, Guarantor’s or their Subsidiaries’ knowledge, off its premises (whether currently owned, leased or operated by it or, during such Borrower’s, Guarantor’s or Subsidiaries ownership, lease or operation thereof, formerly owned, leased or operated by it) in any manner which at any time violates any applicable Environmental Law or Permit where such violation has or could reasonably be expected to result in a loss or liability in excess of $2,500,000 (excluding losses or liabilities with respect to the Real Property in Sheffield, UK) or have a Material Adverse Effect, and the operations of Borrowers and Guarantors comply and have at all times complied and any Subsidiary of any Borrower or Guarantor comply and have at all times complied with all Environmental Laws and all Permits where the failure to so comply has or could reasonably be expected to result in a loss or liability in excess of $2,500,000 (excluding losses or liabilities with respect to the Real Property in Sheffield, UK) or have a Material Adverse Effect.

(b) Except as set forth on Schedule 8.8, there has been no investigation by any Governmental Authority or any proceeding, written complaint, order, directive, claim, citation or notice by any Governmental Authority or any other person against any Borrower, Guarantor or respective Subsidiary nor is any pending or to the best of any Borrower’s, Guarantor’s or their Subsidiaries’ knowledge threatened, with respect to any non compliance with, violation of or liability under any Environmental Law, the release, spill or discharge of any Hazardous Material, or the use, storage, recycling, treatment, generation, manufacturing, processing, distribution, transportation, handling, production or disposal of any Hazardous

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Materials which could reasonably be expected to result in a loss or liability in excess of $2,500,000 (excluding losses or liabilities with respect to the Real Property in Sheffield, UK) or have a Material Adverse Effect.

(c) Except as set forth on Schedule 8.8, to the best of Borrowers’, Guarantors’ or their Subsidiaries’ knowledge, there has been no release, spill or discharge of any Hazardous Materials or the use, storage, recycling, treatment, generation, manufacturing, processing, distribution, transportation, handling, production or disposal of any Hazardous Materials which could reasonably be expected to give rise to liability under any Environmental Law, which either individually or in the aggregate, has or could reasonably be expected to result in a loss or liability in excess of $2,500,000 (excluding losses or liabilities with respect to the Real Property in Sheffield, UK) or have a Material Adverse Effect.

(d) Except as set forth on Schedule 8.8, Borrowers, Guarantors and their Subsidiaries have all Permits required to be obtained or filed in connection with the operations of Borrowers, Guarantors and their respective Subsidiaries under any Environmental Law and all of such licenses, certificates, approvals or similar authorizations and other Permits are valid and in full force and effect, in each case except as has or could reasonably be expected result in a loss or liability in excess of $2,500,000 (excluding losses or liabilities with respect to the Real Property in Sheffield, UK) or to have a Material Adverse Effect.

(e) To their knowledge, Borrowers, Guarantors and their Subsidiaries have provided to Agent all material environmental reports, assessments, audits, studies, investigations and, as otherwise disclosed in Schedule 8.8 in response to subsections (a) through (d) above, other written environmental information in its custody, possession or control related to the operations or premises (whether currently or formerly owned, leased or operated) of Borrower, Guarantor and their respective Subsidiaries.

8.9 Employee Benefits.

(a) Each Plan is in compliance with the applicable provisions of ERISA, the Code and other Federal or State law, except for non-compliance which has not or could not reasonably be expected to have a Material Adverse Effect. Each Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue Service and to the best of any Borrower’s or Guarantor’s knowledge, nothing has occurred which would prevent, or cause the loss of, such qualification, which could reasonably be expected to have a Material Adverse Affect. Each Borrower and its ERISA Affiliates have made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

(b) There are no pending, or to the best of any Borrower’s or Guarantor’s knowledge, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan, which if adversely determined against such Borrower or Guarantor has or could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan, which could reasonably be expected to have a Material Adverse Affect.

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(c) (i) No ERISA Event has occurred or is reasonably expected to occur that has or could reasonably be expected to result in liability or any obligation for any Borrower or ERISA Affiliate in the aggregate amount in excess of $5,000,000; (ii) based on the latest valuation of each Pension Plan and on the actuarial methods and assumptions employed for such valuation (determined in accordance with the assumptions used for funding such Pension Plan pursuant to Section 412 of the Code), the aggregate current value of accumulated benefit liabilities of such Pension Plan under Section 4001(a)(16) of ERISA does not exceed the aggregate current value of the assets of such Pension Plan in a manner that has or could reasonably be expected to have a Material Adverse Affect (an “Unfunded Pension Liability”); (iii) each Borrower and Guarantor, and their ERISA Affiliates, have not incurred and do not reasonably expect to incur, any liability that has or could reasonably be expected to have a Material Adverse Effect under Title IV of ERISA with respect to any Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) each Borrower and Guarantor, and their ERISA Affiliates, have not incurred and do not reasonably expect to incur, any liability that has or could reasonably be expected to have a Material Adverse Effect (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; (v) each Borrower and Guarantor, and their ERISA Affiliates, have not engaged in a transaction that would be subject to Section 4069 or 4212(c) of ERISA except as could not reasonably be expected to result in a Material Adverse Effect; (vi) within the last six (6) years, no Pension Plan has been terminated, whether or not in a “standard termination” as that term is used in Section 4041 of ERISA, nor has any Pension Plan (determined at any time within the last six years) with an Unfunded Pension Liability been transferred outside of the “controlled group” (within the meaning of Section 4001(a)(14) of ERISA) of any Borrower, Guarantor or any of their respective ERISA Affiliates except as could not reasonably be expected to result in a Material Adverse Effect; (vii) using actuarial assumptions and computation methods consistent with subpart I of subtitle E of Title IV of ERISA, the aggregate liabilities of any Borrower or any of its ERISA Affiliates to all Multiemployer Plans in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each such Multiemployer Plan, have not resulted in, and could not reasonably be expected to result in, a Material Adverse Effect; and (viii) none of the Borrowers, Guarantor or their ERISA Affiliates has received any written notification that any Multiemployer Plan is in reorganization or has been terminated within the meaning of Title IV of ERISA, or has knowledge that any Multiemployer Plan is reasonably expected to be in reorganization or to be terminated.

(d) Except as set forth in Schedule 8.9(d), except to the extent required under Section 4980B of the Code, no Plan provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of any Borrower or any of its ERISA Affiliates.

8.10 Bank Accounts. All of the deposit accounts, investment accounts or other accounts in the name of or used by any Borrower or Guarantor maintained at any bank or other financial institution are set forth on Schedule 8.10, subject to the right of each Borrower and Guarantor to establish new accounts in accordance with Section 5.2 hereof.

8.11 Intellectual Property. Each Borrower and Guarantor owns or licenses or otherwise has the right to use all material Intellectual Property necessary for the operation of its

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business as presently conducted or proposed to be conducted. As of the date hereof, Borrowers and Guarantors do not have any material Intellectual Property registered, or subject to pending applications, in the United States Patent and Trademark Office or any similar office or agency in the United States, any State thereof, any political subdivision thereof or in any other country, other than those described in Schedule 8.11 and has not granted any licenses with respect thereto other than as set forth in Schedule 8.11. To the knowledge of each Borrower or Guarantor, no event has occurred which permits or would permit after notice or passage of time or both, the revocation, suspension or termination of such rights to the extent that the revocation, suspension or termination of such rights would reasonably be expected to have a Material Adverse Effect. To the knowledge of each Borrower or Guarantor, no slogan or other advertising device, product, process, method, substance or other Intellectual Property or goods bearing or using any Intellectual Property presently contemplated to be sold by or employed by any Borrower or Guarantor infringes any patent, trademark, servicemark, tradename, copyright, license or other Intellectual Property owned by any other Person presently and no claim or litigation is pending or threatened against or affecting any Borrower or Guarantor contesting its right to sell or use any such Intellectual Property. Schedule 8.11 sets forth all of the material agreements or other arrangements of any Borrower or Guarantor pursuant to which such Borrower or Guarantor has a license or other right to use any trademarks, logos, designs, representations or other Intellectual Property owned by another person as in effect on the date hereof and Schedule 8.11 sets forth the dates of the expiration of such agreements or other arrangements of such Borrower or Guarantor as in effect on the date hereof (collectively, together with such agreements or other arrangements as may be entered into by any Borrower or Guarantor after the date hereof, collectively, the “License Agreements” and individually, a “License Agreement”). To the knowledge of each Borrower and Guarantor, no Intellectual Property now used by any Borrower or Guarantor which is owned by another person, or owned by such Borrower or Guarantor subject to any security interest, lien, collateral assignment, pledge or other encumbrance in favor of any person other than Agent, is or shall be affixed to any Eligible Inventory, except (a) to the extent permitted under the terms of any license agreement listed on Schedule 8.11 or (b) to the extent the sale of any such Eligible Inventory to which such Intellectual Property is affixed is permitted to be sold by such Borrower or Guarantor under applicable law (including the United States Copyright Act of 1976).

8.12 Subsidiaries; Affiliates; Capitalization; Solvency.

(a) As of the date hereof, each Borrower and Guarantor does not have any direct or indirect Subsidiaries or Affiliates and is not engaged in any joint venture or partnership except as set forth in Schedule 8.12 and Sponsor Portfolio Companies.

(b) Each Borrower and Guarantor is the record and beneficial owner of all of the issued and outstanding shares of Capital Stock of each of the Subsidiaries listed on Schedule 8.12 as being owned by such Borrower or Guarantor and there are no proxies, irrevocable or otherwise, with respect to such shares and no equity securities of any of the Subsidiaries are or may become required to be issued by reason of any options, warrants, rights to subscribe to, calls or commitments of any kind or nature and there are no contracts, commitments, understandings or arrangements by which any Subsidiary is or may become bound to issue additional shares of its Capital Stock or securities convertible into or exchangeable for such shares.

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(c) The issued and outstanding shares of Capital Stock of each Borrower and Guarantor as of the date hereof are directly and beneficially owned and held by the persons indicated in Schedule 8.12 (except with respect to those shareholders of Parent which own less than ten (10%) percent of the Capital Stock of Parent), and in each case all of such shares have been duly authorized and are fully paid and non-assessable, free and clear of all claims, liens, pledges and encumbrances of any kind, except as disclosed in writing to Agent prior to the date hereof.

(d) Borrowers, taken as a whole, are Solvent and will continue to be Solvent after the creation of the Obligations, the security interests of Agent and the other transactions contemplated hereunder.

8.13 Labor Disputes.

(a) Set forth on Schedule 8.13 is a list (including dates of termination) of all collective bargaining or similar agreements between or applicable to each Borrower and Guarantor and any union, labor organization or other bargaining agent in respect of the employees of any Borrower or Guarantor on the date hereof.

(b) Except as could not be reasonably expected to have a Material Adverse Effect there is (i) no significant unfair labor practice complaint pending against any Borrower or Guarantor or, to the best of any Borrower’s or Guarantor’s knowledge, threatened against it, before the National Labor Relations Board, and no significant grievance or significant arbitration proceeding arising out of or under any collective bargaining agreement is pending on the date hereof against any Borrower or Guarantor or, to best of any Borrower’s or Guarantor’s knowledge, threatened against it, (ii) no significant strike, significant picketing activities, labor dispute, slowdown, lockout, or stoppage is pending against any Borrower or Guarantor or, to the best of any Borrower’s or Guarantor’s knowledge, threatened against any Borrower or Guarantor; and (iii) to the best of Borrower’s or Guarantor’s knowledge, no significant organizational campaign in progress with respect to any employees of Borrower or Guarantor.

(c) Except as could not be reasonably expected to have a Material Adverse Effect, (i) Borrower and Guarantor are, to the best of their knowledge, and in their good faith judgment, in material compliance with all applicable statutes and regulations respecting labor, employment, fair employment practices, work place safety and health, terms and conditions of employment, wages and hours; (ii) neither Borrower nor Guarantor is delinquent, in their good faith judgment, in any payments to any employee for any wages, salaries, commissions, or bonuses due with respect to any services performed for it to the date hereof; (iii) to the best of the Borrowers’ and Guarantors’ knowledge, none of the employment policies or practices of any Borrower or Guarantor is currently being audited or investigated by any Governmental Authority; (iv) neither Borrower nor Guarantor is subject to any judgment, consent decree, compliance order or administrative order or private settlement contract in respect of any labor or employment matters that would affect any Borrower’s or any Guarantor’s future operations; and (v) to the best of their knowledge, and in their good faith judgment, each Borrower and Guarantor are in material compliance with the requirements of the Immigration Reform Control Act of 1986.

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8.14 Restrictions on Subsidiaries. Except for restrictions (a) contained in this Agreement or any other agreement with respect to Indebtedness of any Borrower or Guarantor permitted hereunder as in effect on the date hereof or (b) permitted pursuant to Section 9.16 hereof, there are no contractual or consensual restrictions on any Borrower or Guarantor or any of its Subsidiaries which prohibit or otherwise restrict (i) the transfer of cash or other assets (A) between any Borrower or Guarantor and any of its or their Subsidiaries or (B) between any Subsidiaries of any Borrower or Guarantor or (ii) the ability of any Borrower or Guarantor or any of its or their Subsidiaries to incur Indebtedness or grant security interests to Agent or any Lender in the Collateral.

8.15 Material Contracts. As of the date hereof, Borrowers and Guarantors are not parties to any Material Contracts.

8.16 Payable Practices. Each Borrower and Guarantor have not made any material change in the historical accounts payable practices from those in effect immediately prior to the date hereof.

8.17 No Material Adverse Change. There has been no material adverse change in the business, assets, financial condition or results of operations of Parent and its Subsidiaries (taken as a whole) since the date of the most recent financial statements with respect thereto submitted to Agent prior to the date hereof.

8.18 Interrelated Business. The Borrowers and Guarantors make up a related organization of various entities constituting a single economic and business enterprise such that all Borrowers and Guarantors share an identity of certain interests with any benefit received by any one of the Borrowers or Guarantors benefiting all others. Each Borrower purchases or sells certain goods to or from the other, and provides administrative, marketing, human resources, and management services to or for the benefit of the other. The Borrowers and Guarantors have certain common officers and directors, and generally, do not provide consolidating financial statements to creditors.

8.19 Accuracy and Completeness of Information. All information furnished by or on behalf of any Borrower or Guarantor in writing to Agent or any Lender in connection with this Agreement or any of the other Financing Agreements or any transaction contemplated hereby or thereby, including all information on the Perfection Certificate and schedules to this Agreement are true and correct in all material respects on the date as of which such information is dated or certified and does not omit any material fact necessary in order to make such information not misleading. No event or circumstance has occurred which has had or could reasonably be expected to have a Material Adverse Affect, which has not been fully and accurately disclosed to Agent in writing prior to the date hereof.

8.20 Survival of Warranties; Cumulative. All representations and warranties contained in this Agreement or any of the other Financing Agreements shall survive the execution and delivery of this Agreement and shall be conclusively presumed to have been relied on by Agent and Lenders regardless of any investigation made or information possessed by Agent or any Lender. The representations and warranties set forth herein shall be cumulative and in addition to any other representations or warranties which any Borrower or Guarantor shall

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now or hereafter give, or cause to be given, to Agent or any Lender in any other Financing Agreement.

SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS

9.1 Maintenance of Existence.

(a) Each Borrower and Guarantor shall at all times preserve, renew and keep in full force and effect (i) its corporate or limited liability company or limited partnership existence, (ii) its rights and franchises with respect thereto, and (iii) maintain in full force and effect all licenses, trademarks, tradenames, approvals, authorizations, leases, contracts and Permits necessary to carry on the business as presently conducted, except in each such (A) as to any Guarantor other than Parent as permitted in Section 9.7 hereto or otherwise permitted hereunder or under any of the other Financing Agreements and (B) in the cases of clauses (i) and (ii) where the failure to so maintain could not reasonably be expected to have a Material Adverse Effect.

(b) No Borrower or Guarantor shall change its name unless each of the following conditions is satisfied: (i) Agent shall have received not less than ten (10) days (or at such later time as Agent (acting at the direction of the Required Lenders) may agree) prior written notice from Administrative Borrower of such proposed change in its corporate name, which notice shall accurately set forth the new name; and (ii) Agent shall have received a copy of the amendment to the Certificate of Incorporation of such Borrower or Guarantor providing for the name change certified by the Secretary of State of the jurisdiction of incorporation or organization of such Borrower or Guarantor as soon as it is available.

(c) No Borrower or Guarantor shall change its chief executive office or its mailing address or organizational identification number (or if it does not have one, shall not acquire one) unless Agent shall have received not less than fifteen (15) days’ prior written notice from Administrative Borrower of such proposed change, which notice shall set forth such information with respect thereto as Agent (acting at the direction of the Required Lenders) may require and Agent shall have received such agreements as Agent (acting at the direction of the Required Lenders) may reasonably require in connection therewith. No Borrower or Guarantor shall change its type of organization, jurisdiction of organization or other legal structure, except that a Borrower, Guarantor or Subsidiary may convert (either directly or by way of merger) into a corporation, limited liability company or limited partnership or other form of legal entity acceptable to the Required Lenders, provided, that, each of the following conditions is satisfied: (i) Agent shall have received not less than fifteen (15) days (or such shorter time as Agent (acting at the direction of the Required Lenders) may agree) prior written notice from Administrative Borrower of such proposed change, which notice shall accurately set forth a description of the new form, (ii) Agent shall have received such agreements, documents, and instruments as Agent (acting at the direction of the Required Lenders) may deem reasonably necessary or desirable in connection therewith, (iii) such change shall not adversely affect the security interests and liens of Agent in the assets of such Borrower or Guarantor or the ability of Agent to enforce any of its rights or remedies with respect to such Borrower or Guarantor, and (iv) as of the date of such conversion, and after giving effect thereto, no Event of Default shall have occurred and is continuing.

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9.2 New Collateral Locations. Each Borrower and Guarantor may only open any new location where Collateral is located within the continental United States provided such Borrower or Guarantor (a) gives Agent fifteen (15) days prior written notice of the intended opening of any such new location and (b) upon Agent’s (acting at the direction of the Required Lenders) request, such Borrower or Guarantor executes and delivers, or causes to be executed and delivered, to Agent such agreements, documents, and instruments required by Section 5 hereof; provided that the Borrowers and Guarantors may maintain Inventory at locations outside the continental United States, but only to the extent that, at any time, the aggregate amount of such Inventory, plus the aggregate amount outstanding of all investments permitted to be made under Section 9.10(i) shall not exceed the amounts of investment permitted to be made under Section 9.10(i).

9.3 Compliance with Laws, Regulations, Etc.

(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary to, at all times, comply in all respects with all laws, rules, regulations, licenses, approvals, orders, Environmental Laws and Permits applicable to it and duly observe all requirements of any foreign, Federal, State or local Governmental Authority where the failure to do so has or could reasonably be expected to have a Material Adverse Effect.

(b) Borrowers and Guarantors shall give written notice to Agent as soon as practicable upon any Borrower’s or Guarantor’s receipt of any written notice of, or any Borrower’s or Guarantor’s otherwise obtaining knowledge of, (i) the occurrence of any event involving or (ii) any investigation, proceeding, action, suit, demand written complaint, order, directive, claim, citation or notice with respect to:(A) any material non-compliance with, violation of or liability under any Environmental Law or (B) the release, spill or discharge, of any Hazardous Material or the use, storage, recycling, treatment, generation, manufacturing, processing, distribution, transportation, handling, labeling, production or disposal or presence of Hazardous Materials except as to this clause (B) other than in the ordinary course of business and other than as permitted under any applicable Environmental Law or Permit, or which would require notification to a Governmental Authority under any Environmental Law, and in each case, related to, in connection with or arising out of any Borrower, Guarantor, respective Subsidiary or their operations or properties. Copies of all final environmental surveys, audits, assessments, feasibility studies and results of remedial investigations conducted by Borrower, Guarantor or respective Subsidiary or at the direction of any Borrower, Guarantor or respective Subsidiary with respect to such occurrence, investigation, proceedings, actions, suits, demands, written complaint, order, directive, claim, citation or notice shall be furnished, or caused to be furnished, as soon as practicable, by such Borrower or Guarantor to Agent. Each Borrower, Guarantor and respective Subsidiary shall take action as soon as commercially reasonable, to respond to the events described in clauses (A) and (B) above and shall regularly report to Agent on such response.

(c) Without limiting the generality of the foregoing, whenever Agent or Required Lenders reasonably determine that there is material non-compliance or violation, or any condition which requires any action by or on behalf of any Borrower or Guarantor in order to avoid any non compliance, violation or liability, with or under any Environmental Law except with respect to such non-compliance, violation or liability that could not reasonably be expected to have a Material Adverse Effect, Borrowers shall, at Agent’s (acting at the direction of the

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Required Lenders) reasonable request and Borrowers’ expense: (i) cause an independent environmental consultant reasonably acceptable to the Required Lenders to conduct an assessment or tests of such condition, non-compliance, violation or alleged condition, non compliance or violation (including sampling and analysis, if necessary) and deliver to Agent a written report as to such condition, non-compliance or violation setting forth the results of such assessment or tests, recommendations and a proposed plan for responding to any environmental concerns described therein, and an estimate of the costs thereof and (ii) provide to Agent a supplemental report proposed by such consultant whenever the scope of such condition, non-compliance or violation, or such Borrower’s or Guarantor’s response thereto or the estimated costs thereof, shall change in any material respect. Any report or investigation submitted to an appropriate Governmental Authority that is charged to oversee the correction of such non-compliance, violation or condition shall be reasonably acceptable to Agent (acting at the direction of the Required Lenders) and Lenders.

(d) Each Borrower and Guarantor shall indemnify and hold harmless Agent and Lenders and their respective directors, officers, employees, agents, invitees, representatives, successors and assigns, from and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys’ fees and expenses) directly or indirectly arising out of or attributable to any non-compliance with or violation of Environmental Law, the environmental condition of any premises (whether currently or formerly owned, leased or operated) of Borrower, Guarantor or respective Subsidiary, the release, threatened release, spill, discharge, or the use, storage, recycling, treatment, generation, manufacturing, processing, distribution, transportation, handling, labeling, production or disposal or presence of Hazardous Materials on, at or from any premises of Borrower (whether currently or formerly owned, leased or operated by Borrower) or resulting from Borrower’s, Guarantor’s or any Subsidiary’s conduct, including the costs of any required or necessary investigation, repair, cleanup or other remedial work with respect to any property of any Borrower, Guarantor or respective Subsidiary and the preparation and implementation of any closure, remedial or other required plans, except to the extent such losses, claims, damages, liabilities, costs and expenses are caused by the gross negligence or willful misconduct of Agent or any Lender as determined pursuant to a final non-appealable order of a court of competent jurisdiction. All representations, warranties, covenants and indemnifications in this Section 9.3 shall survive the payment of the Obligations and the termination of this Agreement.

9.4 Payment of Taxes and Claims. Each Borrower and Guarantor shall, and shall cause any Subsidiary to, duly pay and discharge all material taxes, assessments, contributions and governmental charges upon or against it or its properties or assets, except for taxes the validity of which are being contested in good faith by appropriate proceedings reasonably diligently pursued and available to such Borrower, Guarantor or Subsidiary, as the case may be, and with respect to which adequate reserves have been set aside on its books to the extent required by GAAP.

9.5 Insurance.

(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary to, at all times, maintain with financially sound and reputable insurers insurance with respect to the Collateral against loss or damage and all other insurance of the kinds and in the amounts

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customarily insured against or carried by corporations of established reputation engaged in the same or similar businesses and similarly situated. Any insurance policies obtained by Borrowers and Guarantors after the date hereof shall be substantially similar in all material respects as to form, amount and insurer to the insurance policies maintained by each Borrower and Guarantor on the date hereof, and to the extent not, shall be reasonably satisfactory to the Required Lenders as to form, amount and insurer. Borrowers and Guarantors shall furnish certificates, policies or endorsements to Agent as Agent or Required Lenders shall reasonably require as proof of such insurance, and, if any Borrower or Guarantor fails to do so within five (5) Business Days of Agent’s (acting at the direction of the Required Lenders) request, Agent is authorized, but not required, to obtain such insurance at the expense of Borrowers. All policies shall provide for at least thirty (30) days prior written notice to Agent of any cancellation or reduction of coverage and that Agent may act as attorney for each Borrower and Guarantor in obtaining, and at any time an Event of Default exists or has occurred and is continuing, adjusting, settling, amending and canceling such insurance. Borrowers and Guarantors shall cause Agent to be named as a loss payee and an additional insured (but without any liability for any premiums) under such insurance policies and Borrowers and Guarantors shall obtain non-contributory lender’s loss payable endorsements to all insurance policies in form and substance reasonably satisfactory to the Required Lenders. Such lender’s loss payable endorsements shall specify that the proceeds of such insurance shall be payable to Agent, and shall further specify that Agent and Lenders shall be paid regardless of any act or omission by any Borrower, Guarantor or any of its or their Affiliates.

(b) Any insurance proceeds with respect to First Priority Term Loan Collateral (other than such proceeds that constitute Extraordinary Receipts which shall be applied in accordance with the terms of Section 2.2(c)) received by Agent at any time (other than insurance proceeds of Equipment which is subject to purchase money security interests or liens permitted by Section 9.8 hereof, in which case Agent shall, to the extent it receives such insurance proceeds, remit same, up to the amount of the Indebtedness secured by such purchase money security interests or other liens to the applicable Borrower) (i) after the occurrence and during the continuance of an Event of Default, shall be applied to payment of the Obligations in accordance with the terms of Section 6.4(b) hereof and (ii) at any other time, shall be remitted by Agent to Administrative Borrower.

9.6 Financial Statements and Other Information.

(a) Each Borrower and Guarantor shall, and shall cause any Subsidiary to, keep proper books and records in which true and complete entries shall be made of all dealings or transactions of or in relation to the Collateral and the business of such Borrower, Guarantor and its Subsidiaries in accordance with GAAP. Borrowers and Guarantors shall promptly furnish to Agent and Lenders all such financial and other information as Agent shall reasonably request relating to the Collateral and the assets, business and operations of Borrowers and Guarantors. Without limiting the foregoing, Borrowers shall furnish or cause to be furnished to Agent, the following:

(i) within thirty (30) days after the end of each fiscal month, monthly unaudited consolidated financial statements (including in each case balance sheets, statements of income and loss, and statements of cash flow), all in reasonable detail, fairly

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presenting in all material respects the financial position and the results of the operations of Parent and its Subsidiaries as of the end of and through such fiscal month, certified to be correct in all material respects by the chief financial officer of Parent, subject to normal year-end adjustments and accompanied by a compliance certificate substantially in the form of Exhibit C hereto, along with a schedule in form reasonably satisfactory to the Required Lenders of the calculations used in determining, as of the end of such month, whether Borrowers and Guarantors were in compliance with the covenants set forth in Sections 9.17, 9.18, and 9.19 hereof for such month, and

(ii) in the event that Parent and its Subsidiaries are for any reason required by the Securities and Exchange Commission to file quarterly financial statements, within forty-five (45) days after the end of each fiscal quarter, unaudited consolidated financial statements of Parent and its Subsidiaries (including in each case balance sheets, statements of income and loss, and statements of cash flow), and the accompanying notes thereto, all in reasonable detail, fairly presenting in all material respects the financial position and the results of the operations of Parent and its Subsidiaries as of the end of and for such fiscal quarter, and

(iii) within one hundred twenty (120) days after the end of each fiscal year, audited consolidated financial statements of Parent and its Subsidiaries (including in each case balance sheets, statements of income and loss, and statements of cash flow), and the accompanying notes thereto, all in reasonable detail, fairly presenting in all material respects the financial position and the results of the operations of Parent and its Subsidiaries as of the end of and for such fiscal year, together with the unqualified opinion of independent certified public accountants with respect to the audited consolidated financial statements, which accountants shall be an independent accounting firm of national stature selected by Administrative Borrower and otherwise acceptable to the Required Lenders if such accountant is not of national stature, that such audited consolidated financial statements have been prepared in accordance with GAAP, and present fairly in all material respects the results of operations and financial condition of Parent and its Subsidiaries as of the end of and for the fiscal year then ended, and

(iv) at such time as available, but in no event later than thirty (30) days after the end of each fiscal year (commencing with the fiscal year of Borrowers ending September 30, 2010), projected consolidated financial statements and consolidating financial statements (including in each case, forecasted balance sheets and statements of income and loss, and statements of cash flow) of Parent and its Subsidiaries for the next fiscal year, all in reasonable detail, and in a format consistent with the projections delivered by Borrowers to Agent prior to the date hereof (or otherwise in form reasonably acceptable to the Required Lenders), together with such supporting information as Agent (acting at the direction of the Required Lenders) may reasonably request. Such projected financial statements shall be prepared on a monthly basis for the next succeeding year. Such projections shall represent the reasonable best estimate by Borrowers and Guarantors of the future financial performance of Parent and its Subsidiaries for the periods set forth therein and shall have been prepared on the basis of the assumptions set forth therein which Borrowers and Guarantors believe are fair and reasonable as of the date of preparation in light of current and reasonably foreseeable business conditions (it being understood that actual results may differ from those set forth in such projected financial statements). Borrowers (or Administrative Borrower on behalf of Borrowers) shall provide to Agent, as Agent (acting at the direction of the Required Lenders) may require,

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updates with respect to such projections at any time a Default or Event of Default exists or has occurred and is continuing, and

(v) concurrently with the delivery of the financial statements referred to in Section 9.6(a)(i) hereof, (a) information for such month and year-to-date period reflecting actual performance compared to plan and a comparison of such information in such financial statements to information for the same period in the immediately preceding year, and (b) a management discussion and analysis in substantially the same format and with the same scope of information as provided to Agent prior to the date hereof.

(b) Borrowers and Guarantors shall promptly notify Agent in writing of the details of (i) any loss, damage, investigation, action, suit, proceeding or claim relating to Collateral having a value of more than $500,000 or which if adversely determined would result in a Material Adverse Effect, (ii) any Material Contract being terminated or amended in such a manner that is adverse to the Borrowers, Agent or Lenders or any new Material Contract entered into (in which event Borrowers and Guarantors shall provide Agent with a copy of such Material Contract), (iii) any order, judgment or decree equal to or in excess of $500,000 shall have been entered against any Borrower or Guarantor any of its or their properties or assets, (iv) any notification of a material violation of laws or regulations received by any Borrower or Guarantor, (v) any ERISA Event, and (vi) the occurrence of any Default or Event of Default.

(c) Promptly after the sending or filing thereof, Borrowers shall send to Agent copies of (i) all reports which Parent or any of its Subsidiaries sends to its security holders generally, (ii) all material reports and registration statements which Parent or any of its Subsidiaries files with the Securities Exchange Commission, any national or foreign securities exchange or the National Association of Securities Dealers, Inc. and (iii) all other statements concerning material changes or developments in the business of a Borrower or Guarantor made available by any Borrower or Guarantor to the public that are not otherwise required to be delivered to Agent pursuant to this Agreement.

(d) Borrowers and Guarantors shall furnish or cause to be furnished to Agent such budgets, forecasts, projections and other information respecting the Collateral and the business of Borrowers and Guarantors, as Agent (acting at the direction of the Required Lenders) may, from time to time, reasonably request. Agent is hereby authorized to deliver a copy of any financial statement or any other information relating to the business of Borrowers and Guarantors to any court or other Governmental Authority or to any Lender or Participant or prospective Lender or Participant or any Affiliate of any Lender or Participant subject to Section 13.5 hereof. Any documents, schedules, invoices or other papers delivered to Agent or any Lender may be destroyed or otherwise disposed of by Agent or such Lender.

9.7 Sale of Assets, Consolidation, Merger, Dissolution, Etc. Each Borrower and Guarantor shall not, and shall not permit any Subsidiary to, directly or indirectly,

(a) merge into or with or consolidate with any other Person or permit any other Person to merge into or with or consolidate with it except that (i) any Borrower may merge or consolidate with any other Borrower, provided, that, each of the following conditions is satisfied: (A) Agent shall have received prompt written notice of any such merger or

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consolidation and (B) as of the effective date of the merger or consolidation and after giving effect thereto, no Event of Default shall have occurred and be continuing, and (ii) any wholly-owned Subsidiary of Parent (other than a Borrower) may merge or consolidate with any other wholly-owned Subsidiary of Parent (other than any Borrower), provided, that, each of the following conditions is satisfied: (A) Agent shall have received not less than ten (10) Business Days’ prior written notice of the intention of such Subsidiaries to so merge or consolidate, which notice shall set forth in reasonable detail satisfactory to the Required Lenders, the persons that are merging or consolidating, which person will be the surviving entity, the locations of the assets of the persons that are merging or consolidating, and the material agreements and documents relating to such merger or consolidation, (B) Agent shall have received such other information with respect to such merger or consolidation as Agent (acting at the direction of the Required Lenders) may reasonably request, (C) as of the effective date of the merger or consolidation and after giving effect thereto, no Event of Default shall have occurred and be continuing, (D) Agent shall have received, true, correct and complete copies of all agreements, documents and instruments relating to such merger or consolidation, including, but not limited to, the certificate or certificates of merger to be filed with each appropriate Secretary of State (with a copy as filed promptly after such filing), (E) the surviving corporation shall expressly confirm, ratify and assume the Obligations and the Financing Agreements to which it is a party in writing, in form and substance satisfactory to the Required Lenders, and Borrowers and Guarantors shall execute and deliver such other agreements, documents and instruments as Agent (acting at the direction of the Required Lenders) may request in connection therewith;

(b) sell, issue, assign, lease, license, transfer, abandon or otherwise dispose of any Capital Stock or Indebtedness to any other Person or any of its assets to any other Person, except for

(i) sales of Inventory in the ordinary course of business,

(ii) the issuance and sale by any Borrower or Guarantor of Capital Stock of such Borrower or Guarantor after the date hereof, including a pursuant to a Qualified Public Offering; provided, that, (A) Agent shall have received not less than ten (10) Business Days’ prior written notice of such issuance and sale by such Borrower or Guarantor, which notice shall specify the parties to whom such shares are to be sold, the terms of such sale, the total amount which it is anticipated will be realized from the issuance and sale of such stock and the Net Cash Proceeds which it is anticipated will be received by such Borrower or Guarantor from such sale, (B) such Borrower or Guarantor shall not be required to pay any cash dividends or repurchase or redeem such Capital Stock or make any other payments in respect thereof prior to the date that is 60 days after the Maturity Date if the Obligations have paid and satisfied in full by such date, except as otherwise permitted in Section 9.11 hereof, and (C) the terms of such Capital Stock issued by a Borrower or Guarantor (other than Parent), and the terms and conditions of the purchase and sale thereof, shall not include any terms that include any limitation on the right of any Borrower to request or receive Loans or Letters of Credit (each such term as defined in the Revolving Credit Agreement) or the right of any Borrower and Guarantor to amend or modify any of the terms and conditions of this Agreement or any of the other Financing Agreements or otherwise in any way relate to or adversely affect the arrangements of Borrowers and Guarantors with Agent and Lenders or are more restrictive or

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burdensome to any Borrower or Guarantor than the terms of any Capital Stock in effect on the date hereof,

(iii) the issuance of Capital Stock of any Borrower or Guarantor consisting of common stock pursuant to an employee stock option or grant or similar equity plan or 401(k) plans of such Borrower or Guarantor for the benefit of its employees, directors and consultants, provided, that, in no event shall such Borrower or Guarantor be required to issue, or shall such Borrower or Guarantor issue, Capital Stock pursuant to such stock plans or 401(k) plans which would result in a Change of Control or other Event of Default,

(iv) the assets set forth on Schedule 9.7,

(v) the abandonment of Intellectual Property that is, in the reasonable judgment of Parent, no longer valuable in any material respect or economically practicable to maintain or useful in the conduct of the business of Borrowers and Guarantors, taken as a whole,

(vi) the sale or other disposition of assets of any Borrower or Guarantor (including Equipment (including worn-out or obsolete Equipment or Equipment no longer used or useful in the business of any Borrower or Guarantor) other than Accounts, Inventory, Capital Stock of any Subsidiary of Parent, and Intellectual Property (other than Intellectual Property that is embedded and/or integrated with the disposition of such other assets otherwise permitted under this clause (vi)), so long as such sales or dispositions are (i) in an aggregate amount not to exceed $7,500,000 per each calendar year, (ii) for fair market value and (iii) after giving effect to such disposition no Default or Event of Default shall have occurred and be continuing, and

(c) wind up, liquidate or dissolve except that any Guarantor (other than Parent) may wind up, liquidate and dissolve, provided, that, each of the following conditions is satisfied, (i) the winding up, liquidation and dissolution of such Guarantor shall not violate any law or any order or decree of any court or other Governmental Authority in any material respect and shall not conflict with or result in the breach of, or constitute a default under, any indenture, mortgage, deed of trust, or any other agreement or instrument to which any Borrower or Guarantor is a party or may be bound, (ii) such winding up, liquidation or dissolution shall be done in accordance with the requirements of all applicable laws and regulations, (iii) effective upon such winding up, liquidation or dissolution, all of the assets and properties of such Guarantor shall be duly and validly transferred and assigned to a Borrower or Guarantor, free and clear of any liens, restrictions or encumbrances other than the security interest and liens of Agent (and Agent shall have received such evidence thereof as Agent (acting at the direction of the Required Lenders) may reasonably require) and liens permitted hereunder and Agent shall have received such deeds, assignments or other agreements as Agent (acting at the direction of the Required Lenders) may reasonably request to evidence and confirm the transfer of such assets of such Guarantor to a Borrower, (iv) Agent shall have received all documents and agreements that any Borrower or Guarantor has filed with any Governmental Authority or as are otherwise required to effectuate such winding up, liquidation or dissolution, (v) no Borrower or Guarantor shall assume any Indebtedness, obligations or liabilities as a result of such winding up, liquidation or dissolution, or otherwise become liable in respect of any obligations or liabilities

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of the entity that is winding up, liquidating or dissolving, unless such Indebtedness is otherwise expressly permitted hereunder, (vi) Agent shall have received not less than ten (10) Business Days prior written notice of the intention of such Guarantor to wind up, liquidate or dissolve, and (vii) as of the date of such winding up, liquidation or dissolution and after giving effect thereto, no Event of Default shall have occurred and be continuing; or

(d) enter into a binding agreement to do any of the foregoing.

9.8 Encumbrances. Each Borrower and Guarantor shall not, and shall not permit any Subsidiary to, create, incur, assume or suffer to exist any security interest, mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on any of its assets or properties, including the Collateral, or file or permit the filing of, or (upon actual notice thereof) permit to remain in effect, any financing statement or other similar notice of any security interest or lien with respect to any such assets or properties, except:

(a) the security interests and liens of Agent for itself and the benefit of Secured Parties and the rights of setoff of Secured Parties provided for herein under the other Financing Agreements or under applicable law;

(b) liens securing the payment of taxes, assessments or other governmental charges or levies either not yet overdue or the validity of which are being contested in good faith by appropriate proceedings reasonably diligently pursued and available to such Borrower, or Guarantor or Subsidiary, as the case may be and with respect to which adequate reserves have been set aside on its books;

(c) non-consensual statutory liens (other than liens securing the payment of taxes) arising in the ordinary course of such Borrower’s, Guarantor’s or Subsidiary’s business to the extent: (i) such liens secure Indebtedness which is not overdue or (ii) such liens secure Indebtedness relating to claims or liabilities which are fully insured and being defended at the sole cost and expense and at the sole risk of the insurer or being contested in good faith by appropriate proceedings diligently pursued and available to such Borrower, Guarantor or such Subsidiary, in each case prior to the commencement of foreclosure or other similar proceedings and with respect to which adequate reserves have been set aside on its books;

(d) zoning restrictions, easements, licenses, covenants and other restrictions affecting the use of Real Property which do not interfere in any material respect with the use of such Real Property or ordinary conduct of the business of such Borrower, Guarantor or such Subsidiary as presently conducted thereon or materially impair the value of the Real Property which may be subject thereto;

(e) purchase money security interests in Equipment (including Capital Leases) and purchase money mortgages on Real Property to secure Indebtedness permitted under Section 9.9(b) hereof and any Refinancing Indebtedness thereof;

(f) pledges and deposits of cash by any Borrower or Guarantor after the date hereof in the ordinary course of business in connection with workers’ compensation,

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unemployment insurance and other types of social security benefits consistent with the current practices of such Borrower or Guarantor as of the date hereof;

(g) pledges and deposits of cash by any Borrower or Guarantor after the date hereof to secure the performance (and reimbursement obligations with respect to letters of credit securing the performance) of tenders, bids, leases, trade contracts (other than for the repayment of Indebtedness), statutory obligations and other similar obligations in each case in the ordinary course of business consistent with the current practices of such Borrower or Guarantor as of the date hereof; provided, that, in connection with any performance bonds issued by a surety or other person, the issuer of such bond shall have waived in writing any rights in or to, or other interest in, any of the Collateral in an agreement, in form and substance reasonably satisfactory to the Required Lenders;

(h) liens arising from (i) operating leases and the precautionary UCC financing statement filings in respect thereof and (ii) equipment or other materials which are not owned by any Borrower or Guarantor located on the premises of such Borrower or Guarantor (but not in connection with, or as part of, the financing thereof) from time to time in the ordinary course of business and consistent with current practices of such Borrower or Guarantor and the precautionary UCC financing statement filings in respect thereof;

(i) Intentionally Deleted;

(j) the security interests and liens in favor of the Revolving Agent, in and on the assets and properties of Borrowers and Guarantors to secure the Indebtedness permitted under Section 9.9(e) and (g) hereof (and any Refinancing Indebtedness thereof); provided, that, such security interests and liens in favor of the Revolving Agent with respect to the First Priority Term Loan Collateral are junior and subordinate to the security interests and liens on the First Priority Term Loan Collateral granted by Borrowers and Guarantors in favor of Agent as set forth in the Intercreditor Agreement;

(k) liens on the Equipment listed on Schedule 9.8(k) attached hereto in favor of the Director of Development of the State of Ohio;

(l) leases or subleases of Real Property granted by any Borrower or Guarantor or Subsidiary in the ordinary course of business and consistent with past practice to any Person so long as any such leases or subleases are subordinate in all respects to the security interests and liens granted to Agent and do not interfere in any material respect with the ordinary conduct of the business of such Borrower or Guarantor or materially impair the value or marketability of the Real Property subject thereto;

(m) liens to secure Indebtedness of Borrowers and Guarantors permitted under Section 9.9(i) hereof to finance their insurance premiums on the insurance policies maintained by Borrowers and Guarantors, provided, that, (i) such liens shall only encumber the cash surrender value of such insurance and (ii) such liens shall not in any manner affect the ability of Agent to obtain or receive payment of proceeds of insurance with respect to any of the Collateral;

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(n) liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

(o) judgments and other similar liens arising in connection with court proceedings that do not constitute an Event of Default, provided, that, (i) such liens are being contested in good faith and by appropriate proceedings diligently pursued, (ii) adequate reserves or other appropriate provision, if any, as are required by GAAP have been made therefor, and (iii) a stay of enforcement of any such liens is in effect;

(p) pledges and deposits of cash by any Borrower, Guarantor or Subsidiary to secure the performance of tenders, bids, leases, trade contracts (other than for the repayment of Indebtedness), statutory obligations , surety, stay, customs and appeal bonds, and liability for premiums to insurance carriers, in each case in the ordinary course of business of such Borrower, Guarantor or Subsidiary as of the date hereof;

(q) statutory and contractual liens of landlords or any interest or title of a lessor or sublessor under any lease of real property not prohibited hereby;

(r) the security interests and liens set forth on Schedule 8.4; and

(s) liens incurred in the ordinary course of business of Borrowers and Guarantors securing liabilities that do not exceed $500,000 in the aggregate; provided, that, as of the date of incurring such liens and after giving effect thereto, no Event of Default shall have occurred and be continuing; and

(t) the security interests in and liens upon the VIM Equipment to secure the Indebtedness or other obligations owing by Latrobe or any other Borrower to the United States of America arising under the VIM Agreement, as permitted under Section 9.9(r) hereof.

9.9 Indebtedness. Each Borrower and Guarantor shall not, and shall not permit any Subsidiary to, incur, create, assume, become or be liable in any manner with respect to, or permit to exist, any Indebtedness, or guarantee, assume, endorse, or otherwise become responsible for (directly or indirectly), the Indebtedness of any other Person, except:

(a) the Obligations;

(b) purchase money Indebtedness (including Capital Leases) arising after the date hereof to the extent secured by purchase money security interests in Equipment (including Capital Leases) and purchase money mortgages on Real Property, which in the aggregate, do not exceed $4,000,000 at any time outstanding so long as such security interests and mortgages do not apply to any property of such Borrower, Guarantor or Subsidiary other than the Equipment or Real Property so acquired, and the Indebtedness secured thereby does not exceed the cost of the Equipment or Real Property so acquired, as the case may be;

(c) guarantees by any Borrower or Guarantor of the Obligations of the other Borrowers or Guarantors in favor of Agent for the benefit of Lenders and the other Secured Parties;

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(d) the Indebtedness of any Borrower or Guarantor to any other Borrower or Guarantor arising after the date hereof pursuant to loans by any Borrower or Guarantor permitted under Section 9.10(h) hereof;

(e) Indebtedness of any Borrower or Guarantor entered into in the ordinary course of business pursuant to a Hedge Agreement; provided, that, (i) such arrangements are not for speculative purposes, and (ii) such Indebtedness shall be unsecured, except to the extent such Indebtedness constitutes part of the obligations arising under or pursuant to Hedge Agreements with a Bank Product Provider that are secured under the terms of the Revolving Credit Documents;

(f) unsecured Indebtedness of any Borrower or Guarantor arising after the date hereof to any third person (but not to any other Borrower or Guarantor), provided, that, each of the following conditions is satisfied: (i) such Indebtedness shall not include terms and conditions (x) with respect to any Borrower or Guarantor that are more burdensome or restrictive in any material respect than those contained in this Agreement, taken as a whole, and (y) that permit or require such Indebtedness upon the happening of any event to become convertible into or exchangeable for Capital Stock (or requiring the issuance of Capital Stock or “equity kickers” in connection with the incurrence of such Indebtedness) at any time prior to the payment in full in cash of the Obligations, and such Indebtedness shall be subject and subordinate in right of payment to the right of Agent and Lenders to receive the prior indefeasible payment and satisfaction in full payment of all of the Obligations pursuant to the terms of an intercreditor agreement between Agent and such third party, in form and substance reasonably satisfactory to the Required Lenders, (ii) Agent shall have received not less than five (5) days prior written notice (or such lesser period of notice as Agent (acting at the direction of the Required Lenders) may from time to time agree) of the intention of such Borrower or Guarantor to incur such Indebtedness, which notice shall set forth in reasonable detail reasonably satisfactory to the Required Lenders the amount of such Indebtedness, the person or persons to whom such Indebtedness will be owed, the interest rate, the schedule of repayments and maturity date with respect thereto and such other information as Agent (acting at the direction of the Required Lenders) may reasonably request with respect thereto within three (3) Business Days of receiving such notice, (iii) Agent shall have received true, correct and complete copies of all agreements, documents and instruments evidencing or otherwise related to such Indebtedness, (iv) after the payment in full of the Revolving Obligations, except as Agent (acting at the direction of the Required Lenders) may otherwise agree in writing, at any time that an Event of Default exists, all of the proceeds of the loans or other accommodations giving rise to such Indebtedness shall be paid to Agent for application to the Obligations in accordance with Section 6.4 hereof, (v) in no event shall the aggregate principal amount of such Indebtedness incurred during the term of this Agreement exceed the Equity/Debt Threshold Amount before or after giving effect to such incurrence, (vi) as of the date of incurring such Indebtedness and after giving effect thereto, no Default or Event of Default shall have occurred, (vii) such Borrower and Guarantor shall not, directly or indirectly, (A) without the Required Lenders’ consent, amend, modify, alter or change the terms of such Indebtedness or any agreement, document or instrument related thereto in a manner that adversely affects Borrowers, Guarantors, Agent or Lenders in any material respect, or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness (except pursuant to regularly scheduled payments of interest permitted herein), or set aside or otherwise deposit or invest any sums for such purpose, (viii) Borrowers

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and Guarantors shall furnish to Agent all notices or demands in connection with such Indebtedness either received by any Borrower or Guarantor or on its behalf promptly after the receipt thereof, or sent by any Borrower or Guarantor or on its behalf concurrently with the sending thereof, as the case may be, and (ix) the Required Lenders shall be reasonably satisfied with (A) the interest rate payable with respect to such Indebtedness to the extent such interest rate is greater by more than five (5%) percent of the interest rate applicable to the Term Loan hereunder as of such date of the incurrence of such Indebtedness or the cash pay portion of such interest rate is greater than ten percent (10%), (B) the schedule of repayments and (C) the maturity date with respect to such Indebtedness;

(g) Indebtedness of the Borrowers and the Guarantors evidenced by the Revolving Credit Documents subject to the Intercreditor Agreement,

(h) unsecured Indebtedness of Borrowers and Guarantors to an insurance company arising pursuant to loans used for the payment of insurance premiums payable on insurance policies maintained by Borrowers and Guarantors; provided, that, (i) upon Agent’s (acting at the direction of the Required Lenders) request, Agent shall have received true, correct and complete copies of all material agreements, documents and instruments evidencing or otherwise related to such Indebtedness, and (ii) Administrative Borrower shall furnish to Agent all material notices or demands in connection with such Indebtedness either received by any Borrower or Guarantor on its behalf after the receipt thereof, or sent by any Borrower or Guarantor or on its behalf, concurrently with the sending thereof, as the case may be;

(i) Indebtedness of a Borrower or Guarantor arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, that, such Indebtedness is extinguished within five (5) Business Days of incurrence;

(j) contingent Indebtedness of a Borrower or Guarantor arising pursuant to a performance, bid or surety bond in the ordinary course of business provided, that, (i) upon Agent’s (acting at the direction of the Required Lenders) request, Agent shall have received true, correct and complete copies of all material agreements, documents or instruments evidencing or otherwise related to such Indebtedness, as duly authorized, executed and delivered by the parties thereto, (ii) if the face amount of such bond exceeds $250,000, Agent shall have received not less than five (5) days prior written notice of the intention of such Borrower or Guarantor to incur such Indebtedness and (iii) such Indebtedness does not exceed $500,000 in the aggregate at any time outstanding, provided, that, such Indebtedness may exceed $500,000 to the extent that such excess amount is collateralized in full with cash collateral or a letter of credit that is otherwise permitted by the terms of this Agreement;

(k) unsecured Indebtedness in respect of workers’ compensation claims and self insurance obligations, and other similar obligations in the ordinary course of business;

(l) unsecured Indebtedness resulting from agreements to provide for working capital adjustments of purchase price, earnouts or other similar obligations incurred in connection with investments permitted under Section 9.10, provided, that, such Indebtedness

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shall be on terms and conditions reasonably acceptable to the Required Lenders (including, without limitation, with respect to payment and subordination) and shall be subject and subordinate in right of payment to the right of Agent and Lenders to receive the prior payment and satisfaction in full payment of all of the Obligations pursuant to the terms of a subordination agreement between Agent and such third party, in form and substance reasonably satisfactory to the Required Lenders;

(m) unsecured guaranties in the ordinary course of business of Indebtedness of the Borrowers or the Guarantors otherwise permitted under the terms of this Section 9.9;

(n) the Indebtedness set forth on Schedule 9.9;

(o) Indebtedness of any Borrower or Guarantor arising after the date hereof issued in exchange for, or the proceeds of which are used to extend, refinance, replace or substitute for Indebtedness permitted under Section 9.9(b), (f), (g), or (n) hereof (the “Refinancing Indebtedness”); provided, that, as to any such Refinancing Indebtedness, each of the following conditions is satisfied: (i) Agent shall have received not less than ten (10) Business Days’ prior written notice of the intention to incur such Indebtedness, which notice shall set forth in reasonable detail reasonably satisfactory to the Required Lenders, the amount of such Indebtedness, the schedule of repayments and maturity date with respect thereto and such other information with respect thereto as Agent (acting at the direction of the Required Lenders) may reasonably request, (ii) promptly upon Agent’s (acting at the direction of the Required Lenders) request, Agent shall have received true, correct and complete copies of all material agreements, documents and instruments evidencing or otherwise related to such Indebtedness, as duly authorized, executed and delivered by the parties thereto, (iii) the Refinancing Indebtedness shall have a Weighted Average Life to Maturity and a final maturity equal to or greater than the Weighted Average Life to Maturity and the final maturity, respectively, of the Indebtedness being extended, refinanced, replaced, or substituted for, (iv) the Refinancing Indebtedness shall rank in right of payment no more senior than, and be at least subordinated (if subordinated) to, the Obligations as the Indebtedness being extended, refinanced, replaced or substituted for (other than with respect to Refinancing Indebtedness of an Indebtedness incurred pursuant to Section 9.9(g) hereof, which Refinancing Indebtedness may be of a type permitted in Section 9.9(g) hereof), (v) the Refinancing Indebtedness shall not include terms and conditions with respect to any Borrower or Guarantor which are more burdensome or restrictive in any material respect than those contained in this Agreement, taken as a whole and (vi) the Refinancing Indebtedness shall be at rates and with fees or other charges that are commercially reasonable and otherwise consistent with the Indebtedness being refinanced as specifically permitted in this Section 9.9, (vii) as of the date of incurring such Indebtedness and after giving effect thereto, no Event of Default shall have occurred and be continuing, (viii) the principal amount of such Refinancing Indebtedness shall not exceed the principal amount of the Indebtedness so extended, refinanced, replaced or substituted for (plus the amount of reasonable refinancing fees and expenses, prepayment fees and accrued interest incurred in connection therewith outstanding on the date of such event), (ix) if secured, the Refinancing Indebtedness shall be secured by substantially the same assets as the Indebtedness to be refinanced (other than with respect to Refinancing Indebtedness of an Indebtedness incurred pursuant to Section 9.9(g) hereof, which may be secured by the same Collateral as the Indebtedness permitted in Section 9.9(g) hereof and subject

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to the Intercreditor Agreement), provided, that, such security interests (if any) with respect to the Refinancing Indebtedness shall have a priority no more senior than, and be at least as subordinated, if subordinated (on terms and conditions substantially similar to the subordination provisions applicable to the Indebtedness so extended, refinanced, replaced or substituted for or as is otherwise reasonably acceptable to the Required Lenders) as the security interest with respect to the Indebtedness so extended, refinanced, replaced or substituted for, and (x) Borrowers and Guarantors may only make payments of principal, interest and fees, if any, in respect of such Indebtedness to the extent such payments would have been permitted hereunder in respect of the Indebtedness so extended, refinanced, replaced or substituted for;

(p) guarantees with respect to Indebtedness permitted under this Section 9.9;

(q) obligations of any Borrower or Guarantor under License Agreements with respect to non-refundable, advance or minimum guarantee royalty payments in an aggregate amount in any fiscal year not to exceed $1,000,000; and

(r) Indebtedness of Latrobe to the United States of America (and/or the cost share amount granted by Latrobe by the United States of America) evidenced by and pursuant to the VIM Agreement as in effect on the date hereof, provided, that, each of the following conditions is satisfied:

(i) the aggregate amount of such Indebtedness shall not exceed $16,606,000;

(ii) Agent shall have received a copy of the VIM Agreement;

(iii) Agent shall have received, each in form and substance satisfactory to the Required Lenders, true, correct and complete copies of all agreements, documents and instruments evidencing or otherwise related to such Indebtedness and the liens related thereto, including, but not limited to, the VIM Agreement, the VIM Security Agreement and any UCC financing statements filed by the United States of America in connection therewith;

(iv) Latrobe shall not, directly or indirectly, (A) amend, modify, alter or change in any material respect any terms of such Indebtedness or any agreement, document or instrument related thereto in a manner that adversely affects Latrobe in any material respect, or (B) redeem, retire, defease, purchase or otherwise acquire such Indebtedness or set aside or otherwise deposit or invest any sums for such purpose other than upon the demand for repayment of the United States of America pursuant to its rights under the VIM Agreement as in effect on the Closing Date;

(v) Latrobe shall furnish to Agent all notices or demands in connection with such Indebtedness either received by Latrobe or on its behalf, promptly after receipt thereof, or sent by Latrobe or on its behalf, concurrently with the sending thereof, as the case may be; and

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(s) in addition to Indebtedness otherwise permitted under this Section 9.9, unsecured Indebtedness in an aggregate principal amount at any time outstanding not to exceed $2,000,000.

9.10 Loans, Investments, Etc. Each Borrower and Guarantor shall not, and shall not permit any Subsidiary to, directly or indirectly, make any loans or advance money or property to any person, or invest in (by capital contribution, dividend or otherwise) or purchase or repurchase the Capital Stock or Indebtedness or all or a substantial part of the assets or property of any person, or acquire any Subsidiaries, or enter into a binding agreement to do any of the foregoing, except:

(a) the endorsement of instruments for collection or deposit in the ordinary course of business;

(b) Intentionally Deleted;

(c) investments in cash or Cash Equivalents; provided, that, (i) at any time an Event of Default shall be continuing, Parent and its Subsidiaries may from time to time in the ordinary course of business consistent with their current practices as of the date hereof make deposits of cash or other immediately available funds in operating demand deposit accounts used for disbursements to the extent required to provide funds for amounts drawn or anticipated to be drawn shortly on such accounts and such funds may be held in Cash Equivalents consisting of overnight investments until so drawn (so long as such funds and Cash Equivalents are not held more than three (3) Business Days from the date of the initial deposit thereof) and (ii) the terms and conditions of Section 5.2 hereof shall have been satisfied with respect to the deposit account, investment account or other account in which such cash or Cash Equivalents are held;

(d) the existing equity investments of each Borrower and Guarantor as of the date hereof in its Subsidiaries, provided, that, no Borrower or Guarantor shall have any further obligations or liabilities to make any capital contributions or other additional investments or other payments to or in or for the benefit of any of such Subsidiaries;

(e) Intentionally Deleted;

(f) stock or obligations issued to any Borrower or Guarantor by any Person (or the representative of such Person) in respect of Indebtedness of such Person owing to such Borrower or Guarantor in connection with the insolvency, bankruptcy, receivership or reorganization of such Person or a composition or readjustment of the debts of such Person; provided, that, the original of any such stock or instrument evidencing such obligations shall be promptly delivered to Agent, upon Agent’s (acting at the direction of the Required Lenders) request, together with such stock power, assignment or endorsement by such Borrower or Guarantor as Agent (acting at the direction of the Required Lenders) may request;

(g) obligations of account debtors to any Borrower or Guarantor arising from Accounts which are past due evidenced by a promissory note made by such account debtor payable to such Borrower or Guarantor; provided, that, promptly upon the receipt of the original of any such promissory note by such Borrower or Guarantor, such promissory note shall be

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endorsed to the order of Agent by such Borrower or Guarantor and promptly delivered to Agent as so endorsed;

(h) loans, advances or other investments by a Borrower or Guarantor to or in a Borrower or Guarantor, or by a Subsidiary that is not a Borrower or Guarantor in any other Subsidiary that is not a Borrower or Guarantor, after the date hereof; provided, that, as to any such loans, advances or other investments, each of the following conditions is satisfied: (1) such Indebtedness is permitted hereunder, and (2) as of the date of any such loan, advance or other investment and after giving effect thereto, no Event of Default shall have occurred and be continuing;

(i) loans, advances or other investments by any Borrower or Guarantor to any Subsidiary that is not a Borrower or Guarantor; provided, that, as to any such loans or advances, each of the following conditions is satisfied: (1) the principal amount of all such loans, advances and other investments outstanding at anytime shall not exceed $10,000,000 in the aggregate during the term of this Agreement, (2) as of the date of any such loan, advance or other investment and after giving effect thereto, Excess Availability shall be not less than an amount equal to 15% of the Maximum Credit then in effect, (3) as of the date of any such loan, advance or other investment and after giving effect thereto, no Event of Default shall have occurred and be continuing and (4) to the extent that any such Subsidiary is a Foreign Subsidiary and the Agent does not have the requisite pledge of the Capital Stock of such Foreign Subsidiary to the extent required hereunder, the principal amount of all such outstanding loans, advances and other investments in all such unpledged Foreign Subsidiaries shall not exceed $3,000,000 in the aggregate during the term of this Agreement;

(j) the loans and advances set forth on Schedule 9.10;

(k) the formation of Controlling Parent (other than Toolrock Investment, LLC) in connection with the consummation of a Qualified Public Offering so long as each of the following conditions is satisfied: (i) Agent shall have received not less than ten (10) Business Days prior written notice of such formation, (ii) such Controlling Parent shall have no operating assets and (iii) as of the date of any such formation and after giving effect thereto, no Event of Default shall have occurred and be continuing;

(l) all Capital Expenditures permitted under Section 9.18 hereof; and

(m) investments not otherwise permitted herein; provided, that, (i) the aggregate outstanding amount of all such investments shall not exceed $2,000,000 at any time and (ii) as of the date of any such investment and after giving effect thereto, no Event of Default shall have occurred and be continuing.

9.11 Dividends and Redemptions. Each Borrower and Guarantor shall not, directly or indirectly, declare or pay any dividends on account of any shares of class of any Capital Stock of such Borrower or Guarantor now or hereafter outstanding, or set aside or otherwise deposit or invest any sums for such purpose, or redeem, retire, defease, purchase or otherwise acquire any shares of any class of Capital Stock (or set aside or otherwise deposit or invest any sums for such purpose) for any consideration or apply or set apart any sum, or make

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any other distribution (by reduction of capital or otherwise) in respect of any such shares or enter into a binding agreement to do any of the foregoing, except, that:

(a) any Borrower or Guarantor may declare and pay such dividends or redeem, retire, defease, purchase or otherwise acquire any shares of any class of Capital Stock for consideration in the form of shares of common stock (so long as after giving effect thereto no Change of Control or other Event of Default shall exist or occur);

(b) Borrowers and Guarantors may pay dividends to the extent permitted in Section 9.12 below;

(c) any Subsidiary of a Borrower or Guarantor may pay dividends to a Borrower or a Guarantor; and

(d) Borrowers and Guarantors may repurchase Capital Stock held by employees, officers or directors pursuant to any employee stock ownership plan thereof upon the termination, retirement or death of any such employee in accordance with the provisions of such plan as in effect on the date hereof (as such plan may be amended in a manner that does not adversely affect Borrowers, Guarantors, Agent or Lenders in any material respect), provided, that, as to any such repurchase, each of the following conditions is satisfied: (i) as of the date of the payment for such repurchase and after giving effect thereto, no Event of Default shall have occurred and be continuing, (ii) such repurchase shall be paid with funds legally available therefor, (iii) such repurchase shall not violate any law or regulation or the terms of any indenture, agreement or undertaking to which such Borrower or Guarantor is a party or by which such Borrower or Guarantor or its or their property are bound, and (iv) the aggregate amount of all payments for such repurchases in any calendar year shall not exceed $2,500,000 (or such other larger amount as Agent (acting at the direction of the Required Lenders) may agree).

(e) Intentionally Deleted.

9.12 Transactions with Affiliates. Each Borrower and Guarantor shall not, directly or indirectly (in each case, other than transactions between any Borrower or Guarantor and any other Borrower or Guarantor which is not prohibited by the terms of this Agreement and the making of payments pursuant to Section 9.11 hereof):

(a) purchase, acquire or lease any property from, or sell, transfer or lease any property to, any officer, director or other Affiliate of such Borrower or Guarantor, except pursuant to the reasonable requirements of such Borrower’s or Guarantor’s business (as the case may be) and upon fair and reasonable terms no less favorable to such Borrower or Guarantor than such Borrower or Guarantor could obtain in a comparable arm’s length transaction with an unaffiliated person; or

(b) make any payments (whether by dividend, loan or otherwise) of management, consulting or other fees for management or similar services, or of any Indebtedness owing to any officer, employee, shareholder, director or any other Affiliate of such Borrower or Guarantor, except

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(i) reasonable compensation to officers, employees and directors for services rendered to such Borrower or Guarantor in the ordinary course of business,

(ii) Borrowers and Guarantors may pay (1) a yearly management fee and other fees (such “other fees” do not include the fees referred to in clauses (iii) and (v) below) to the Sponsors or any Affiliate thereof in the aggregate annual amount not to exceed One Million Five Hundred Thousand Dollars ($1,500,000) in any fiscal year; provided that such annual maximum amount shall be increased to Two Million Dollars ($2,000,000) if Parent and its Subsidiaries EBITDA on a Consolidated basis for the prior fiscal year is at least $40,000,000, in each case, so long as on the date of any such payment and after giving effect thereto, no Event of Default shall have occurred or be continuing, and (2) to the extent that any management fee referred to in clause (1) above accrued but was unpaid in any calendar year, the amount of such accrued and unpaid management fee may be paid to Sponsors or any Affiliate thereof in the following calendar year (or in any other calendar year in which Sponsors or any Affiliate thereof are permitted to receive such payment), in the case of this clause so long as on the date of the payment of such accrued and unpaid management fee and after giving effect thereto, (a) Excess Availability shall be not less than an amount equal to 15% of the Maximum Credit then in effect and (b) no Event of Default shall have occurred or be continuing, and

(iii) Borrowers and Guarantors may pay the fees payable to the Sponsors or any Affiliate thereof pursuant to the terms of the Transaction Services Agreements in an amount not to exceed (A) 2% of the Transaction Value of any Subsequent Transaction (each as defined in the Transaction Services Agreement as in effect on the date hereof), but shall not exceed $2,500,000 in the aggregate at anytime during the term of this Agreement and (B) on or before February 15, 2011, up to 2% of the principal amount of the Term Loan in connection with this Agreement provided no Default or Event of Default has occurred or would result after giving effect thereto;

(iv) payments by any such Borrower or Guarantor to Parent for actual and necessary reasonable out-of-pocket legal and accounting, insurance, marketing, payroll and similar types of services paid for by Parent on behalf of such Borrower or Guarantor, in the ordinary course of their respective businesses or as the same may be directly attributable to such Borrower or Guarantor and for the payment of taxes by or on behalf of Parent; and

(v) payments to Affiliates in connection with consulting services provided in connection with investments permitted under Section 9.10 and the Qualified Public Offering pursuant to the reasonable requirements of such Borrower’s or Guarantor’s business (as the case may be), so long as such services are provided upon fair and reasonable terms no less favorable to such Borrower or Guarantor than such Borrower or Guarantor could obtain in a comparable arm’s length transaction with an unaffiliated person.

9.13 Compliance with ERISA. Each Borrower and Guarantor shall, and shall cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal and State law; (b) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; (c) not terminate any Pension Plan so as to incur any liability to the Pension Benefit Guaranty Corporation; (d) not allow or suffer to exist any prohibited transaction

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involving any Plan or any trust created thereunder which would subject such Borrower, Guarantor or such ERISA Affiliate to a material tax or other liability on prohibited transactions imposed under Section 4975 of the Code or ERISA; (e) make all required contributions to any Plan which it is obligated to pay under Section 302 of ERISA, Section 412 of the Code or the terms of such Plan; (f) not allow or suffer to exist any accumulated funding deficiency, whether or not waived, with respect to any such Pension Plan; (g) not engage in a transaction that could be subject to Section 4069 or 4212(c) of ERISA; (h) not allow or suffer to exist any occurrence of a reportable event or any other event or condition which presents a material risk of termination by the Pension Benefit Guaranty Corporation of any Plan that is a single employer plan, which termination could result in any material liability to the Pension Benefit Guaranty Corporation, except to the extent that any of the above could not, either individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect; or (i) furnish to the Agent (x) within 10 Business Days after any Responsible Officer of any Borrower, Guarantor or any of their ERISA Affiliates knows or reasonably should have known that, any ERISA Event or other material event with respect to any Plan has occurred that, alone or together with any other ERISA Event could reasonably be expected to result in a material liability of any Borrower or any of its ERISA Affiliates, a statement of the chief financial officer of the Borrower setting forth details as to such ERISA Event and the action, if any, that the Borrower propose to take with respect thereto, and (y) upon request by the Agent, copies of (i) annual report (Form 5500 Series) filed by any Borrower or any ERISA Affiliate with the Employee Benefits Security Administration with respect to each Plan; (ii) the most recent actuarial valuation report for each Pension Plan; (iii) all notices received by any Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor or any governmental agency concerning an ERISA Event; and (iv) such other information, documents or governmental reports or filings relating to any Employee Benefit Plan as the Agent shall reasonably request.

9.14 End of Fiscal Years; Fiscal Quarters. Each Borrower and Guarantor shall, for financial reporting purposes, cause its, and each of its Subsidiaries’ (a) fiscal years to end on September 30^th of each year and (b) fiscal quarters to end on December 31^st , March 30^th, June 30^th, and September 30^th of each year.

9.15 Change in Business. Each Borrower and Guarantor shall not engage in any business other than the business of such Borrower or Guarantor on the date hereof and any business reasonably related, ancillary or complimentary to the business in which such Borrower or Guarantor is engaged on the date hereof.

9.16 Limitation of Restrictions Affecting Subsidiaries. Each Borrower and Guarantor shall not, directly, or indirectly, create or otherwise cause or suffer to exist any encumbrance or restriction which prohibits or limits the ability of any Subsidiary of such Borrower or Guarantor to (a) pay dividends or make other distributions or pay any Indebtedness owed to such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor; (b) make loans or advances to such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor, (c) transfer any of its properties or assets to such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor; or (d) create, incur, assume or suffer to exist any lien upon any of its Collateral, other than encumbrances and restrictions arising under (i) applicable law, (ii) this Agreement and the other Financing Agreements, the Revolving Credit Documents or any agreement governing any other Indebtedness permitted hereby provided that, with respect

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to any agreement governing such other Indebtedness, the provisions relating to such encumbrance or restriction are no less favorable to the Parent and its Subsidiaries in any material respect, taken as a whole, than the provisions contained in this Agreement as in effect on the date hereof, (iii) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor, (iv) the documents relating to Indebtedness permitted by Section 9.9(g) hereof and the documents relating to the Refinancing Indebtedness, (v) customary restrictions on dispositions of real property interests found in reciprocal easement agreements of such Borrower or Guarantor or any Subsidiary of such Borrower or Guarantor, (vi) any agreement relating to permitted Indebtedness incurred by a Subsidiary of such Borrower or Guarantor prior to the date on which such Subsidiary was acquired by such Borrower or such Guarantor and outstanding on such acquisition date, and (vii) the extension or continuation of contractual obligations in existence on the date hereof; provided, that, any such encumbrances or restrictions contained in such extension or continuation are no less favorable to Agent and Lenders than those encumbrances and restrictions under or pursuant to the contractual obligations so extended or continued.

9.17 Fixed Charge Coverage Ratio. As of the last day of each fiscal quarter of the Borrowers, commencing with such fiscal quarter ending December 31, 2010, that Parent and its Subsidiaries shall maintain, on a consolidated basis, a Fixed Charge Coverage Ratio of not less than the ratio set forth below for each respective period set forth below most recently ended for which Agent has received financial statements for Parent and its Subsidiaries:

Period	Fixed Charge Coverage Ratio
for the twelve (12) consecutive month period ending December 31, 2010	1.00:1.00
for the twelve (12) consecutive month period ending March 31, 2011	1.00:1.00
for the twelve (12) consecutive month period ending June 30, 2011	1.00:1.00
for the twelve (12) consecutive month period ending September 30, 2011	1.25:1.00
for the twelve (12) consecutive month period ending December 31, 2011	1.25:1.00
for the twelve (12) consecutive month period ending March 31, 2012	1.25:1.00
for the twelve (12) consecutive month period ending June 30, 2012	1.25:1.00
for the twelve (12) consecutive month period ending September 30, 2012 and as of the end of each fiscal quarter thereafter (calculated on a trailing twelve (12) month consecutive basis)	1.50:1.00

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9.18 Capital Expenditures. Parent and its Subsidiaries shall not, directly or indirectly, make or commit to make, whether through purchase, capital leases or otherwise, Capital Expenditures (a) in an aggregate amount in excess of $12,000,000 in fiscal year 2010 and (b) in each fiscal year after 2010, an aggregate amount in excess of $15,000,000; provided, that, the maximum amount of Capital Expenditures which may be made by Parent and its Subsidiaries in a particular fiscal year under clauses (a) or (b) above shall be increased by (i) the difference (if any) between the amount of all Capital Expenditures made in the previous fiscal year and the maximum permitted amount for such year, up to a maximum carry-over amount of $3,000,000, plus (ii) the amount of any Permitted Additional Capital Expenditure(s).

9.19 Minimum Excess Availability. Borrowers shall not permit Excess Availability at any time to be less than $5,000,000.

9.20 Intentionally Deleted.

9.21 No Layering. Borrowers and Guarantors shall not, and shall not permit any Subsidiary to (i) create or incur any Indebtedness that is subordinated or junior in right of payment to any other Indebtedness of Borrowers or Guarantors, unless such Indebtedness is also subordinated or junior in right of payment, in the same manner and to the same extent, to the Obligations, and (ii) have outstanding, create or incur any Indebtedness owing to any other Borrower, Guarantor or Subsidiary or employee of any Borrower, Guarantor or Subsidiary unless such Indebtedness is expressly subordinated to the Obligations in a manner and on terms satisfactory to the Required Lenders.

9.22 Foreign Assets Control Regulations, Etc. None of the requesting or borrowing of the Term Loan or the use of the proceeds of any thereof will violate the Trading With the Enemy Act (50 USC §1 et seq., as amended) (the “Trading With the Enemy Act”) or any of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) (the “Foreign Assets Control Regulations”) or any enabling legislation or executive order relating thereto (including, but not limited to (a) Executive order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive Order”) and (b) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56). None of Borrowers or any of their Subsidiaries or other Affiliates is or will become a “blocked person” as described in the Executive Order, the Trading with the Enemy Act or the Foreign Assets Control Regulations or engages or will engage in any dealings or transactions, or be otherwise associated, with any such “blocked person”.

9.23 After Acquired Real Property. If any Borrower or Guarantor hereafter acquires any Real Property, fixtures or any other property that is of the kind or nature described in the Mortgages and such Real Property, fixtures or other property is adjacent to, contiguous with or necessary or related to or used in connection with any Real Property then subject to a Mortgage, or if such Real Property is not adjacent to, contiguous with or related to or used in connection with such Real Property, then if such Real Property, fixtures or other property at any

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location (or series of adjacent, contiguous or related locations, and regardless of the number of parcels) has a fair market value in an amount equal to or greater than $2,000,000 (or if an Event of Default exists, then regardless of the fair market value of such assets), without limiting any other rights of Agent or any Lender, or duties or obligations of any Borrower or Guarantor, promptly upon Agent’s (acting at the direction of the Required Lenders) request, and, if applicable, in the event that the Revolving Agent requires such Borrower or Guarantor to execute and deliver a mortgage, deed of trust or deed to secure debt with respect to any such Real Property, such Borrower or Guarantor shall also execute and deliver to Agent a mortgage, deed of trust or deed to secure debt, as Agent (acting at the direction of the Required Lenders) may determine, in form and substance substantially similar to the Mortgages and as to any provisions relating to specific state laws satisfactory to the Required Lenders and in form appropriate for recording in the real estate records of the jurisdiction in which such Real Property or other property is located granting to Agent a first lien and mortgage on and security interest in such Real Property, fixtures or other property (except as such Borrower or Guarantor would otherwise be permitted to incur under the Mortgages or as otherwise consented to in writing by the Required Lenders) and such other agreements, documents and instruments as the Required Lenders may require in connection therewith.

9.24 Costs and Expenses. Borrowers and Guarantors shall pay to Agent on demand all reasonable documented costs, expenses, filing fees and taxes paid or payable in connection with the preparation, negotiation, execution, delivery, recording, syndication, administration, collection, liquidation, enforcement and defense of the Obligations, Agent’s rights in the Collateral, this Agreement, the other Financing Agreements and all other documents related hereto or thereto, including any amendments, supplements or consents which may hereafter be contemplated (whether or not executed) or entered into in respect hereof and thereof, including: (a) all costs and expenses of filing or recording (including Uniform Commercial Code financing statement filing taxes and fees, documentary taxes, intangibles taxes and mortgage recording taxes and fees, if applicable); (b) costs and expenses and fees for insurance premiums, environmental audits, title insurance premiums, surveys, assessments, engineering reports and inspections, appraisal fees and search fees, background checks, costs and expenses of remitting loan proceeds, collecting checks and other items of payment, and establishing and maintaining the Blocked Accounts, together with Agent’s customary charges and fees with respect thereto; (c) costs and expenses of preserving and protecting the Collateral; (d) costs and expenses paid or incurred in connection with obtaining payment of the Obligations, enforcing the security interests and liens of Agent, selling or otherwise realizing upon the Collateral, and otherwise enforcing the provisions of this Agreement and the other Financing Agreements or defending any claims made or threatened against Agent or any Lender arising out of the transactions contemplated hereby and thereby (including preparations for and consultations concerning any such matters); (e) all out-of-pocket expenses and costs heretofore and from time to time hereafter incurred by Agent during the course of periodic field examinations of the Collateral and such Borrower’s or Guarantor’s operations, plus a per diem charge at Agent’s then standard rate for Agent’s examiners in the field and office (which rate as of the date hereof is $1,000 per person per day); and (f) the reasonable documented fees and disbursements of one primary counsel and one local counsel in each applicable jurisdiction (including legal assistants) to Agent in connection with any of the foregoing and in addition, at any time an Event of Default exists or has occurred and is continuing, the reasonable documented fees and disbursements of one

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counsel (including legal assistants) to Lenders in connection with matters described in clauses (d) or (e) above.

9.25 Post Closing.

(a) Within ninety (90) days after the Closing Date, Agent shall have received, and Borrowers and Guarantors shall have provided commercially reasonable cooperation, including access to its properties, for the preparation of, (i) Phase I environmental assessments of the Real Property to be subject to the Mortgages, in accordance with “all appropriate inquiries” set forth under Section 101(35)(B) of the Comprehensive Environmental Response, Compensation, and Liability Act and the ASTM E 1527-05 “Standard Practice for Environmental Site Assessments,” and (ii) “desktop reviews” of the real property leased by Borrowers, Guarantors or their Subsidiaries, and in each case, conducted by an independent environmental engineering firm acceptable to the Required Lenders, and in form, scope and methodology satisfactory to the Required Lenders, and the results of which shall be reasonably satisfactory to the Required Lenders or any unsatisfactory condition identified in such results shall be addressed, corrected or resolved by Borrower or Guarantor as required by and in accordance with Section 9.3 herein;

(b) Borrowers shall use commercially reasonable efforts to have the VIM Intercreditor Joinder executed and delivered by each party thereto;

(c) Within one hundred twenty (120) days after the Closing Date, Agent shall have received a survey with respect to the PA Designated Property sufficient for Chicago Title Insurance Company to issue an endorsement to the Latrobe Policy, amending such policy to delete the survey exception therein, and Chicago Title Insurance Company shall have issued such endorsement or a pro forma endorsement therefor.

9.26 Further Assurances. At the reasonable request of Agent at any time and from time to time, Borrowers and Guarantors shall, at their expense, duly execute and deliver, or cause to be duly executed and delivered, such further agreements, documents and instruments, and do or cause to be done such further acts as may be reasonably necessary or proper to evidence, perfect, maintain and enforce the security interests and the priority thereof in the Collateral and to otherwise effectuate the provisions or purposes of this Agreement or any of the other Financing Agreements.

9.27 Collateral Access Agreements. Borrowers and Guarantors shall provide Agent with access to such owned or leased real property by virtue of Collateral Access Agreements and Mortgages with respect to property, plant and Equipment of the Borrowers and Guarantors with an aggregate appraised value equal to at least 110% of the outstanding principal amount of the Term Loan (such amount shall be referred to herein as the “Appraised Value Threshold”). If at any time during the term of this Agreement, the Agent does not have access to owned or leased real property by virtue of Collateral Access Agreements or Mortgages, which satisfies the minimum Appraised Value Threshold, Borrowers and Guarantors shall promptly execute and deliver, or cause to be executed and delivered, Collateral Access Agreements or Mortgages as applicable for (i) such additional owned or leased real property of any Borrower or

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Guarantor necessary to satisfy the Appraised Value Threshold or (ii) all owned and leased real property of the Borrowers and the Guarantors.

SECTION 10. EVENTS OF DEFAULT AND REMEDIES

10.1 Events of Default. The occurrence or existence of any one or more of the following events are referred to herein individually as an “Event of Default,” and collectively as “Events of Default”:

(a) (i) any Borrower fails to make any principal payment hereunder when due or fails to pay interest, fees or any of the other Obligations within three (3) Business Days after the due date thereof, or (ii) any Borrower or Guarantor fails to perform any of the covenants contained in Sections 9.1(b), 9.1(c), 9.2, 9.3, 9.4, 9.13, 9.14, and 9.16 of this Agreement and such failure shall continue for thirty (30) days; provided, that, such thirty (30) day period shall not apply in the case of any failure to observe any such covenant which is not capable of being cured or (iii) any Borrower or Guarantor fails to perform any of the terms, covenants, conditions or provisions contained in this Agreement or any of the other Financing Agreements other than those described in Sections 10.1(a)(i) and 10.1(a)(ii) above;

(b) any representation, warranty or statement of fact made by any Borrower or Guarantor to Agent in this Agreement, the other Financing Agreements or any other written agreement, schedule, confirmatory assignment or otherwise shall when made or deemed made be false or misleading in any material respect;

(c) any Guarantor revokes or terminates or purports to revoke or terminate or fails to perform any of the terms, covenants, conditions or provisions of any guarantee, endorsement or other agreement of such party in favor of Agent or any Lender;

(d) any judgment for the payment of money is rendered against any Borrower or Guarantor in excess of $2,000,000 in any one case or in excess of $2,000,000 in the aggregate (to the extent not covered by independent third party insurance where the insurer has not declined or disputed coverage) and shall remain undischarged or unvacated for a period in excess of sixty (60) days or execution shall at any time not be effectively stayed, or any judgment other than for the payment of money, or injunction, attachment, garnishment or execution is rendered against any Borrower or Guarantor or any of the Collateral having a value in excess of $2,000,000;

(e) any Borrower or Guarantor, dissolves or suspends or discontinues doing business other than as permitted in Section 9.7 hereof;

(f) any Borrower or Guarantor makes an assignment for the benefit of creditors;

(g) a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter

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in effect (whether at law or in equity) is filed against any Borrower or Guarantor or all or any part of its properties and such petition or application is not dismissed within sixty (60) days after the date of its filing or any Borrower or Guarantor shall file any answer admitting or not contesting such petition or application or indicates its consent to, acquiescence in or approval of, any such action or proceeding or the relief requested is granted sooner;

(h) a case or proceeding under the bankruptcy laws of the United States of America now or hereafter in effect or under any insolvency, reorganization, receivership, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction now or hereafter in effect (whether at a law or equity) is filed by any Borrower or Guarantor or for all or any part of its property;

(i) (A) any default in respect of any Indebtedness of any Borrower or Guarantor, (including the Indebtedness evidenced by the Revolving Credit Agreement, but excluding Indebtedness owing to Agent and Lenders hereunder), in any case in an amount in excess of $2,000,000, which default continues for more than the applicable cure period, if any, with respect thereto or (B) any default by any Borrower or Guarantor under any Material Contract, which default could reasonably be expected to have a Material Adverse Effect; in and/or, in each case, is not waived in writing by the other parties thereto;

(j) any material provision hereof or of any of the other Financing Agreements shall for any reason cease to be valid, binding and enforceable with respect to any Borrower or Guarantor in accordance with its terms, or any Borrower or Guarantor shall challenge the enforceability hereof or thereof, or shall assert in writing, or take any action or fail to take any action based on the assertion that any provision hereof or of any of the other Financing Agreements has ceased to be or is otherwise not valid, binding or enforceable in accordance with its terms, or any security interest provided for herein or in any of the other Financing Agreements shall cease to be a valid and perfected first priority security interest in any of the Collateral purported to be subject thereto having a value in excess of $500,000 in the aggregate (except as otherwise permitted herein or therein);

(k) an ERISA Event shall occur which, individually or in the aggregate with any other ERISA Event, results in or could reasonably be expected to result in a Material Adverse Effect;

(l) any Change of Control; or

(m) there shall be an event of default under any of the other Financing Agreements.

10.2 Remedies.

(a) At any time an Event of Default exists or has occurred and is continuing, Agent and Lenders shall have all rights and remedies provided in this Agreement, the other Financing Agreements, the UCC and other applicable law, all of which rights and remedies may be exercised without notice to or consent by any Borrower or Guarantor, except as such notice or consent is expressly provided for hereunder or required by applicable law. All rights,

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remedies and powers granted to Agent and Lenders hereunder, under any of the other Financing Agreements, the UCC or other applicable law, are cumulative, not exclusive and enforceable, in the Required Lenders’ discretion, alternatively, successively, or concurrently on any one or more occasions, and shall include, without limitation, the right to apply to a court of equity for an injunction to restrain a breach or threatened breach by any Borrower or Guarantor of this Agreement or any of the other Financing Agreements. Subject to Section 12 hereof, Agent (at the direction of the Required Lenders) may, at any time or times, proceed directly against any Borrower or Guarantor to collect the Obligations without prior recourse to the Collateral.

(b) Without limiting the generality of the foregoing, at any time an Event of Default exists or has occurred and is continuing, Agent (acting at the direction of the Required Lenders) may, upon notice to Administrative Borrower, accelerate the payment of all Obligations (including the Redemption Premium, if applicable) and demand immediate payment thereof to Agent for itself and the benefit of Lenders (provided, that, upon the occurrence of any Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations (including the Redemption Premium, if applicable) shall automatically become immediately due and payable).

(c) Without limiting the foregoing, at any time an Event of Default exists or has occurred and is continuing, the Agent (acting at the direction of the Required Lenders) may, in its discretion (i) with or without judicial process or the aid or assistance of others, enter upon any premises on or in which any of the Collateral may be located and take possession of the Collateral or complete processing, manufacturing and repair of all or any portion of the Collateral, (ii) require any Borrower or Guarantor, at Borrowers’ expense, to assemble and make available to Agent any part or all of the Collateral at any place and time designated by Agent, (iii) collect, foreclose, receive, appropriate, setoff and realize upon any and all Collateral, (iv) remove any or all of the Collateral from any premises on or in which the same may be located for the purpose of effecting the sale, foreclosure or other disposition thereof or for any other purpose, (v) sell, lease, transfer, assign, deliver or otherwise dispose of any and all Collateral (including entering into contracts with respect thereto, public or private sales at any exchange, broker’s board, at any office of Agent or elsewhere) at such prices or terms as Agent (acting at the direction of the Required Lenders) may deem reasonable, for cash, upon credit or for future delivery, with the Agent (acting at the direction of the Required Lenders) having the right to purchase the whole or any part of the Collateral at any such public sale, all of the foregoing being free from any right or equity of redemption of any Borrower or Guarantor, which right or equity of redemption is hereby expressly waived and released by Borrowers and Guarantors and/or (vi) terminate this Agreement. If any of the Collateral is sold or leased by Agent upon credit terms or for future delivery, the Obligations shall not be reduced as a result thereof until payment therefor is finally collected by Agent. If notice of disposition of Collateral is required by law, ten (10) days’ prior notice by Agent to Administrative Borrower designating the time and place of any public sale or the time after which any private sale or other intended disposition of Collateral is to be made, shall be deemed to be reasonable notice thereof and to the extent permitted by applicable law, Borrowers and Guarantors waive any other notice. In the event Agent institutes an action to recover any Collateral or seeks recovery of any Collateral by way of prejudgment remedy, each Borrower and Guarantor waives the posting of any bond which might otherwise be required.

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(d) At any time or times that an Event of Default exists or has occurred and is continuing, the Agent (acting at the direction of the Required Lenders) may, in its discretion, enforce the rights of any Borrower or Guarantor against any account debtor, secondary obligor or other obligor in respect of any of the Accounts or other Receivables. Without limiting the generality of the foregoing, the Agent (acting at the direction of the Required Lenders) may, in its good faith discretion, at such time or times (i) notify any or all account debtors, secondary obligors or other obligors in respect thereof that the Receivables have been assigned to Agent and that Agent has a security interest therein and Agent (acting at the direction of the Required Lenders) may direct any or all account debtors, secondary obligors and other obligors to make payment of Receivables directly to Agent, (ii) extend the time of payment of, compromise, settle or adjust for cash, credit, return of merchandise or otherwise, and upon any terms or conditions, any and all Receivables or other obligations included in the Collateral and thereby discharge or release the account debtor or any secondary obligors or other obligors in respect thereof without affecting any of the Obligations, (iii) demand, collect or enforce payment of any Receivables or such other obligations, but without any duty to do so, and Agent and Lenders shall not be liable for any failure to collect or enforce the payment thereof nor for the negligence of its agents or attorneys with respect thereto and (iv) take whatever other action Agent (acting at the direction of the Required Lenders) may deem necessary or desirable for the protection of its interests and the interests of Lenders. At any time that an Event of Default exists or has occurred and is continuing, at Agent’s (acting at the direction of the Required Lenders) request, all invoices and statements sent to any account debtor shall state that the Accounts and such other obligations have been assigned to Agent and are payable directly and only to Agent and Borrowers and Guarantors shall deliver to Agent such originals of documents evidencing the sale and delivery of goods or the performance of services giving rise to any Accounts as Agent (acting at the direction of the Required Lenders) may require. In the event any account debtor returns Inventory when an Event of Default exists or has occurred and is continuing, Borrowers shall, upon Agent’s (acting at the direction of the Required Lenders) request, hold the returned Inventory in trust for Agent, segregate all returned Inventory from all of its other property, dispose of the returned Inventory solely according to Agent’s instructions, and not issue any credits, discounts or allowances with respect thereto without Agent’s prior written consent.

(e) To the extent that applicable law imposes duties on Agent or any Lender to exercise remedies in a commercially reasonable manner (which duties cannot be waived under such law), each Borrower and Guarantor acknowledges and agrees that it is not commercially unreasonable for Agent or any Lender (i) to fail to incur expenses reasonably deemed significant by Agent or any Lender to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain consents of any Governmental Authority or other third party for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against account debtors, secondary obligors or other persons obligated on Collateral or to remove liens or encumbrances on or any adverse claims against Collateral, (iv) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or

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media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other persons, whether or not in the same business as any Borrower or Guarantor, for expressions of interest in acquiring all or any portion of the Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, (xi) to purchase insurance or credit enhancements to insure Agent or Lenders against risks of loss, collection or disposition of Collateral or to provide to Agent or Lenders a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist Agent in the collection or disposition of any of the Collateral. Each Borrower and Guarantor acknowledges that the purpose of this Section is to provide non-exhaustive indications of what actions or omissions by Agent or any Lender would not be commercially unreasonable in the exercise by Agent or any Lender of remedies against the Collateral and that other actions or omissions by Agent or any Lender shall not be deemed commercially unreasonable solely on account of not being indicated in this Section. Without limitation of the foregoing, nothing contained in this Section shall be construed to grant any rights to any Borrower or Guarantor or to impose any duties on Agent or Lenders that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section.

(f) For the purpose of enabling Agent to exercise the rights and remedies hereunder, each Borrower and Guarantor hereby grants to Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable at any time an Event of Default shall have occurred and for so long as the same is continuing) without payment of royalty or other compensation to any Borrower or Guarantor, to use, assign, license or sublicense any of the trademarks, service-marks, trade names, business names, trade styles, designs, logos and other source of business identifiers and other Intellectual Property and general intangibles now owned or hereafter acquired by any Borrower or Guarantor, wherever the same maybe located, including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof.

(g) At any time an Event of Default exists or has occurred and is continuing, Agent (acting at the direction of the Required Lenders) may apply the Net Cash Proceeds of Collateral actually received by Agent from any sale, lease, foreclosure or other disposition of the Collateral to payment of the Obligations, in whole or in part and in accordance with the terms hereof, whether or not then due or may hold such proceeds as cash collateral for the Obligations. Borrowers and Guarantors shall remain liable to Agent and Lenders for the payment of any deficiency with interest at the highest rate provided for herein and all costs and expenses of collection or enforcement, including attorneys’ fees and expenses.

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SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW

11.1 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.

(a) The validity, interpretation and enforcement of this Agreement and the other Financing Agreements (except as otherwise provided therein) and any dispute arising out of the relationship between the parties hereto, whether in contract, tort, equity or otherwise, shall be governed by the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

(b) Borrowers, Guarantors, Agent, and each Lender, each irrevocably consent and submit to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County and the United States District Court for the Southern District of New York, whichever Agent (acting at the direction of the Required Lenders) may elect, and waive any objection based on venue or forum non conveniens with respect to any action instituted therein arising under this Agreement or any of the other Financing Agreements or in any way connected with or related or incidental to the dealings of the parties hereto in respect of this Agreement or any of the other Financing Agreements or the transactions related hereto or thereto, in each case whether now existing or hereafter arising, and whether in contract, tort, equity or otherwise, and agree that any dispute with respect to any such matters shall be heard only in the courts described above (except that Agent and Lenders shall have the right to bring any action or proceeding against any Borrower or Guarantor or its or their property in the courts of any other jurisdiction which Agent deems necessary or appropriate in order to realize on the Collateral or to otherwise enforce its rights against any Borrower or Guarantor or its or their property).

(c) Each Borrower and Guarantor hereby waives personal service of any and all process upon it and consents that all such service of process may be made by certified mail (return receipt requested) directed to its address set forth herein and service so made shall be deemed to be completed five (5) days after the same shall have been so deposited in the U.S. mails, or, at Agent’s option, by service upon any Borrower or Guarantor (or Administrative Borrower on behalf of such Borrower or Guarantor) in any other manner provided under the rules of any such courts. Within thirty (30) days after such service, such Borrower or Guarantor shall appear in answer to such process, failing which such Borrower or Guarantor shall be deemed in default and judgment may be entered by Agent against such Borrower or Guarantor for the amount of the claim and other relief requested.

(d) BORROWERS, GUARANTORS, AGENT, AND LENDERS EACH HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN

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CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWERS, GUARANTORS, AGENT, AND LENDERS EACH HEREBY AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY BORROWER, ANY GUARANTOR, AGENT, OR ANY LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

(e) Agent and Secured Parties shall not have any liability to any Borrower or Guarantor (whether in tort, contract, equity or otherwise) for losses suffered by such Borrower or Guarantor in connection with, arising out of, or in any way related to the transactions or relationships contemplated by this Agreement, or any act, omission or event occurring in connection herewith, unless it is determined by a final and non-appealable judgment or court order binding on Agent, and such Lender, that the losses were the result of acts or omissions constituting gross negligence or willful misconduct. Each Borrower and Guarantor: (i) certifies that neither Agent, any Lender, nor any representative, agent or attorney acting for or on behalf of Agent or any Lender has represented, expressly or otherwise, that Agent and Lenders would not, in the event of litigation, seek to enforce any of the waivers provided for in this Agreement or any of the other Financing Agreements and (ii) acknowledges that in entering into this Agreement and the other Financing Agreements, Agent and Lenders are relying upon, among other things, the waivers and certifications set forth in this Section 11.1 and elsewhere herein and therein.

11.2 Waiver of Notices. Each Borrower and Guarantor hereby expressly waives demand, presentment, protest and notice of protest and notice of dishonor with respect to any and all instruments and chattel paper, included in or evidencing any of the Obligations or the Collateral, and any and all other demands and notices of any kind or nature whatsoever with respect to the Obligations, the Collateral and this Agreement, except such as are expressly provided for herein. No notice to or demand on any Borrower or Guarantor which Agent or any Lender may elect to give shall entitle such Borrower or Guarantor to any other or further notice or demand in the same, similar or other circumstances.

11.3 Amendments and Waivers.

(a) Neither this Agreement nor any other Financing Agreement nor any terms hereof or thereof may be amended, waived, discharged or terminated unless such amendment, waiver, discharge or termination is in writing signed by Agent and the Required Lenders or, at Agent’s option, by Agent with the authorization or consent of the Required Lenders, and as to amendments, waivers, discharges or terminations to any of the Financing Agreements (other than with respect to any provision of Section 12 hereof), by any Borrower and such amendment, waiver, discharger or termination shall be effective and binding as to all Lenders only in the specific instance and for the specific purpose for which given; except, that, no such amendment, waiver, discharge or termination shall:

(i) reduce the interest rate or any fees or extend the time of payment of principal, interest or any fees or reduce the principal amount of the Term Loan

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without the consent of each Lender directly affected thereby (other than the waiver of any default interest),

(ii) release all or substantially all Collateral (except as expressly required hereunder or under any of the other Financing Agreements or applicable law and except as permitted under Section 12.11(b) hereof), or alter the order of application of proceeds set forth in Section 6.4 without the consent of Agent and all of Lenders,

(iii) change the definition of Required Lenders, without the consent of Agent and all Lenders,

(iv) consent to the assignment or transfer by any Borrower or Guarantor of any of their rights and obligations under this Agreement, without the consent of Agent and all of Lenders,

(v) amend, modify or waive any terms of this Section 11.3, without the consent of Agent and all of Lenders, or

(vi) increase the Commitment of any Lender over the amount thereof then in effect or provided hereunder, in each case without the consent of the Lender affected thereby.

(b) Agent and Lenders shall not, by any act, delay, omission or otherwise be deemed to have expressly or impliedly waived any of its or their rights, powers and/or remedies unless such waiver shall be in writing and signed as provided herein. Any such waiver shall be enforceable only to the extent specifically set forth therein. A waiver by Agent or any Lender of any right, power and/or remedy on any one occasion shall not be construed as a bar to or waiver of any such right, power and/or remedy which Agent or any Lender would otherwise have on any future occasion, whether similar in kind or otherwise.

Notwithstanding anything to the contrary contained in Section 11.3(a) above, (i) in connection with any amendment, waiver, discharge or termination, in the event that any Lender whose consent thereto is required shall fail to consent or fail to consent in a timely manner (such Lender being referred to herein as a “Non-Consenting Lender”), but the consent of any other Lenders to such amendment, waiver, discharge or termination that is required are obtained, if any, or (ii) if any Lender claims any additional amounts payable pursuant to Section 6.5 (such Lender being referred to herein as an “Increased Cost Lender” and any Non-Consenting Lender or Increased Cost Lender being referred to herein as an “Affected Lender”), then Administrative Borrower shall have the right upon notice to Agent, but not the obligation, at any time thereafter, and upon the exercise by Administrative Borrower of such right, such Affected Lender shall have the obligation, to sell, assign and transfer to such Eligible Transferee as Administrative Borrower may specify (which shall be satisfactory to the Required Lenders), the portion of the Term Loan of such Affected Lender and all rights and interests of such Affected Lender pursuant thereto. Agent shall provide the Affected Lender with prior written notice of Administrative Borrower’s intent to exercise its right under this Section, which notice shall specify the date on which such purchase and sale shall occur. Such purchase and sale shall be pursuant to the terms of an Assignment and Acceptance (whether or not executed by the

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Affected Lender), except that on the date of such purchase and sale, such Eligible Transferee shall pay to the Affected Lender (except as such Eligible Transferee and such Affected Lender may otherwise agree) the amount equal to: (i) the principal amount of the portion of the Term Loan held by the Affected Lender outstanding as of the close of business on the business day immediately preceding the effective date of such purchase and sale, plus (ii) amounts accrued and unpaid in respect of interest and fees payable to the Affected Lender to the effective date of the purchase (but in no event shall the Affected Lender be deemed entitled to any early termination fee). Such purchase and sale shall be effective on the date of the payment of such amount to the Affected Lender.

(c) The consent of Agent shall be required for any amendment, waiver or consent affecting the rights or duties of Agent hereunder or under any of the other Financing Agreements. Notwithstanding anything to the contrary contained in Section 11.3(a) above, (i) in the event that the Required Lenders shall agree that any items otherwise required to be delivered to Agent as a condition of the Term Loan hereunder may be delivered after the date hereof, the Required Lenders may, in their discretion, agree to extend the date for delivery of such items or take such other action as the Required Lenders may deem appropriate as a result of the failure to receive such items as the Required Lenders may determine or may waive any Event of Default as a result of the failure to receive such items, in each case without the consent of Agent and (ii) the Required Lenders may consent to any change in the type of organization, jurisdiction of organization or other legal structure of any Borrower, Guarantor or any of their Subsidiaries and amend the terms hereof or of any of the other Financing Agreements as may be necessary or desirable to reflect any such change, in each case without the approval of Agent.

11.4 Waiver of Counterclaims. Each Borrower and Guarantor waives all rights to interpose any claims, deductions, setoffs or counterclaims of any nature (other then compulsory counterclaims) in any action or proceeding with respect to this Agreement, the Obligations, the Collateral or any matter arising therefrom or relating hereto or thereto.

11.5 Indemnification. Each Borrower and Guarantor shall, jointly and severally, indemnify and hold Agent, and each Lender and their respective officers, directors, agents, employees, advisors and counsel and their respective Affiliates (each such person being an “Indemnitee”), harmless from and against any and all losses, claims, damages, liabilities, costs or expenses (including reasonable attorneys’ fees and expenses) imposed on, incurred by or asserted against any of them in connection with any litigation, investigation, claim or proceeding commenced or threatened related to the negotiation, preparation, execution, delivery, enforcement, performance or administration of this Agreement, any other Financing Agreements, or any undertaking or proceeding related to any of the transactions contemplated hereby or any act, omission, event or transaction related or attendant thereto (but without duplication to any indemnification obligations pursuant to Section 6.5 herein), including amounts paid in settlement, court costs, and the reasonable documented fees and expenses of one primary counsel and one local counsel in each applicable jurisdiction except that Borrowers and Guarantors shall not have any obligation under this Section 11.5 to indemnify an Indemnitee with respect to a matter covered hereby resulting from the gross negligence or willful misconduct of such Indemnitee as determined pursuant to a final, non-appealable order of a court of competent jurisdiction (but without limiting the obligations of Borrowers or Guarantors as to any other Indemnitee). To the extent that the undertaking to indemnify, pay and hold harmless set forth in

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this Section 11.5 may be unenforceable because it violates any law or public policy, Borrowers and Guarantors shall pay the maximum portion which it is permitted to pay under applicable law to Agent and Lenders in satisfaction of indemnified matters under this Section 11.5. To the extent permitted by applicable law, no Borrower or Guarantor shall assert, and each Borrower and Guarantor hereby waives, any claim against any Indemnitee, on any theory of liability for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any of the other Financing Agreements or any undertaking or transaction contemplated hereby. No Indemnitee referred to above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or any of the other Financing Agreements or the transaction contemplated hereby or thereby. All amounts due under this Section 11.5 shall be payable upon demand. The foregoing indemnity shall survive the payment of the Obligations and the termination or non-renewal of this Agreement.

11.6 Currency Indemnity. If, for the purposes of obtaining judgment in any court in any jurisdiction with respect to this Agreement or any of the other Financing Agreements, it becomes necessary to convert into the currency of such jurisdiction (the “Judgment Currency”) any amount due under this Agreement or under any of the other Financing Agreements in any currency other than the Judgment Currency (the “Currency Due”), then conversion shall be made at the Exchange Rate at which such Agent is able, on the relevant date, to purchase the Currency Due with the Judgment Currency prevailing on the Business Day before the day on which judgment is given. In the event that there is a change in the rate of Exchange Rate prevailing between the Business Day before the day on which the judgment is given and the date of receipt by such Agent of the amount due, Borrowers will, on the date of receipt by such Agent, pay such additional amounts, if any, or be entitled to receive reimbursement of such amount, if any, as may be necessary to ensure that the amount received by such Agent on such date is the amount in the Judgment Currency which when converted at the rate of exchange prevailing on the date of receipt by such Agent is the amount then due under this Agreement or such other of the Financing Agreements in the Currency Due. If the amount of the Currency Due which such Agent is able to purchase is less than the amount of the Currency Due originally due to it, Borrowers and Guarantors shall, indemnify and save Agent and each Lender harmless from and against loss or damage arising as a result of such deficiency. The indemnity contained herein shall constitute an obligation separate and independent from the other obligations contained in this Agreement and the other Financing Agreements, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by any Agent from time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due under this Agreement or any of the other Financing Agreements or under any judgment or order.

SECTION 12. THE AGENT

12.1 Appointment, Powers and Immunities. Each Secured Party irrevocably designates, appoints and authorizes The Bank of New York Mellon to act as Agent hereunder and under the other Financing Agreements with such powers as are specifically delegated to

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Agent by the terms of this Agreement and of the other Financing Agreements, together with such other powers as are reasonably incidental thereto. Notwithstanding any terms hereof or in the other Financing Agreements, the Agent’s duties hereunder and under any other Financing Agreements are administrative only and it may, but shall not be required under any circumstances to exercise discretion in the performance of its duties hereunder or under the other Financing Agreements. Agent (a) shall have no duties or responsibilities except those expressly set forth in this Agreement and in the other Financing Agreements, and shall not by reason of this Agreement or any other Financing Agreement be a trustee or fiduciary for any Secured Party, without limiting the generality of the foregoing, the use of the term “agent” in this Agreement or the other Financing Agreements with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law; instead, such term us used merely as a matter of market custom and is intended to create or reflect only an administrative relationship between independent contracting parties; (b) shall not be responsible to Secured Parties for any recitals, statements, representations or warranties contained in this Agreement or in any of the other Financing Agreements, or in any certificate or other document referred to or provided for in, or received by any of them under, this Agreement or any other Financing Agreement, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Financing Agreement or any other document referred to or provided for herein or therein or for any failure by any Borrower or any Guarantor or any other Person to perform any of its obligations hereunder or thereunder; (c) shall not be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or the exercise of any of its rights or powers; (d) not be responsible or liable for any failure or delay in the performance of its obligations under this Agreement or any other Financing Agreements arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; earthquakes; fire; flood; terrorism; wars and other military disturbances; sabotage; epidemics; riots; business interruptions; loss or malfunctions of utilities, computer (hardware or software) or communication services; accidents; labor disputes; acts of civil or military authority and governmental action; (e) shall not be required to qualify in any jurisdiction in which it is not presently qualified; (f) shall not be responsible for (i) perfecting, maintaining, monitoring, preserving or protecting the security interest or lien granted under this Agreement or other Financing Agreements, (ii) the filing, re-filing, recording, re-recording or continuing of any document, financing statement, mortgage, assignment, notice, instrument of further assurance or other instrument in any public office at any time or times or (iii) providing, maintaining, monitoring or preserving insurance on or the payment of taxes with respect to any of the Collateral and (g) shall not be responsible to Secured Parties for any action taken or omitted to be taken by it hereunder or under any other Financing Agreement or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction. Agent may employ agents and attorneys in fact and shall not be responsible for the negligence or misconduct of any such agents or attorneys in fact selected by it in good faith. Agent may deem and treat the payee of any note as the holder thereof for all purposes hereof unless and until the assignment thereof pursuant to an agreement (if and to the extent permitted herein) in form and substance satisfactory to the Required Lenders shall have been delivered to and acknowledged by Agent. To the extent permitted by applicable law, no Lender shall assert, and each Lender hereby

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waives, any claim against Agent, on any theory of liability for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any of the other Financing Agreements or any undertaking or transaction contemplated hereby.

12.2 Reliance by Agent. Agent shall be entitled to rely upon any certification, notice or other communication (including any thereof by telephone, telecopy, telex, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by Agent. Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or thereunder in accordance with instructions given by the Required Lenders or all of Lenders as is required in such circumstance, and such instructions of such Agents and any action taken or failure to act pursuant thereto shall be binding on all Lenders.

12.3 Events of Default.

(a) Agent shall not be deemed to have knowledge or notice of the occurrence of a Default or an Event of Default or other failure of a condition precedent to the Term Loan hereunder, unless and until Agent has received written notice from a Lender, or Borrower specifying such Event of Default or any unfulfilled condition precedent, and stating that such notice is a “Notice of Default or Failure of Condition”. In the event that Agent receives such a Notice of Default or Failure of Condition, Agent shall give prompt notice thereof to the Lenders. Agent shall (subject to Section 12.7) take such action with respect to any such Event of Default or failure of condition precedent as shall be directed by the Required Lenders to the extent provided for herein; provided, that, unless and until Agent shall have received such directions, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to or by reason of such Event of Default or failure of condition precedent, as it shall deem advisable in the best interest of Lenders.

(b) Except with the prior written consent of Agent, no Secured Party may assert or exercise any enforcement right or remedy in respect of the Term Loan or any other Obligation, as against any Borrower or Guarantor or any of the Collateral or other property of any Borrower or Guarantor or otherwise under any of the Financing Agreements.

12.4 Intentionally Deleted.

12.5 Indemnification. Lenders agree to indemnify Agent, in accordance with their Pro Rata Shares, for any and all claims of any kind and nature whatsoever that may be imposed on, incurred by or asserted against Agent (including by any Lender) arising out of or by reason of any investigation in or in any way relating to or arising out of this Agreement or any other Financing Agreement or any other documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby (including the costs and expenses that Agent is obligated to pay hereunder) or the enforcement of any of the terms hereof or thereof or of any such other documents, provided, that, no Lender shall be liable for any of the foregoing to the extent it arises from the gross negligence or willful misconduct of the party to be indemnified as determined by a final non-appealable judgment of a court of competent jurisdiction. The

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foregoing indemnity shall survive the payment of the Obligations and the termination or non-renewal of this Agreement.

12.6 Non-Reliance on Agent and Other Lenders. Each Secured Party agrees that it has, independently and without reliance on Agent or any other Secured Party, and based on such documents and information as it has deemed appropriate, made its own credit analysis of Borrowers and Guarantors and has made its own decision to enter into this Agreement and that it will, independently and without reliance upon Agent or any other Secured Party, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement or any of the other Financing Agreements. Agent shall not be required to keep itself informed as to the performance or observance by any Borrower or Guarantor of any term or provision of this Agreement or any of the other Financing Agreements or any other document referred to or provided for herein or therein or to inspect the properties or books of any Borrower or Guarantor. Agent will use reasonable efforts to provide Lenders with any information received by Agent from any Borrower or Guarantor which is required to be provided to Lenders or deemed to be requested by Lenders hereunder and with a copy of any Notice of Default or Failure of Condition received by Agent from any Borrower or any Lender; provided, that, Agent shall not be liable to any Lender for any failure to do so, except to the extent that such failure is attributable to Agent’s own gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction. Except for notices, reports and other documents expressly required to be furnished to Lenders by Agent or deemed requested by Lenders hereunder, Agent shall not have any duty or responsibility to provide any Lender with any other credit or other information concerning the affairs, financial condition or business of any Borrower or Guarantor that may come into the possession of Agent.

12.7 Failure to Act. Except for action expressly required of Agent hereunder and under the other Financing Agreements, Agent shall in all cases be fully justified in failing or refusing to act hereunder and thereunder unless it shall receive further assurances to its satisfaction from Lenders of their indemnification obligations under Section 12.5 hereof against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.

12.8 Intentionally Deleted.

12.9 Concerning the Collateral and the Related Financing Agreements.

(a) Each Secured Party authorizes and directs Agent to enter into this Agreement and the other Financing Agreements. Each Secured Party agrees that any action taken by Agent or Required Lenders (or such greater percentage as may be required hereunder) in accordance with the terms of this Agreement or the other Financing Agreements and the exercise by Agent or Required Lenders of their respective powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all Secured Parties.

(b) Without limiting the generality of the foregoing, each Lender (i) consents to the subordination of Agent’s liens in and on Revolving Debt Priority Collateral as

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provided for in the Intercreditor Agreement, (ii) authorizes and directs Agent to enter into on behalf of such Lender and such Lender will be bound (as a Lender) by the terms and conditions of the Intercreditor Agreement, (iii) agrees that it will be bound by and take no actions contrary to the provisions of the Intercreditor Agreement.

12.10 Field Audit, Examination Reports and other Information; Disclaimer by Lenders. By signing this Agreement, each Lender:

(a) is deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report and report with respect to the Borrowing Base received by Agent (each field audit or examination report and report with respect to the Borrowing Base being referred to herein as a “Report” and collectively, “Reports”), appraisals with respect to the Collateral and financial statements with respect to Parent and its Subsidiaries received by Agent;

(b) expressly agrees and acknowledges that Agent (i) does not make any representation or warranty as to the accuracy of any Report, appraisal or financial statement or (ii) shall not be liable for any information contained in any Report, appraisal or financial statement;

(c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or any other party performing any audit or examination will inspect only specific information regarding Borrowers and Guarantors and will rely significantly upon Borrowers’ and Guarantors’ books and records, as well as on representations of Borrowers’ and Guarantors’ personnel; and

(d) agrees to keep all Reports confidential and strictly for its internal use in accordance with the terms of Section 13.5 hereof, and not to distribute or use any Report in any other manner.

12.11 Collateral Matters.

(a) Lenders hereby irrevocably authorize Agent, at its option and in its discretion to release any security interest in, mortgage or lien upon, any of the Collateral (i) upon the payment and satisfaction of all of the Obligations (other than indemnities and contingent Obligations which have not yet accrued) and delivery of cash collateral to the extent required under Section 13.1 below, or (ii) constituting property being sold or disposed of if Administrative Borrower or any Borrower or Guarantor certifies to Agent that the sale or disposition is made in compliance with Section 9.7 hereof (and Agent may rely conclusively on any such certificate, without further inquiry), or (iii) constituting property in which any Borrower or Guarantor did not own an interest at the time the security interest, mortgage or lien was granted or at any time thereafter, if Administrative Borrower or any Borrower or Guarantor certifies to Agent that the sale or disposition is made in compliance with Section 9.7 hereof (and Agent may rely conclusively on any such certificate, without further inquiry), or (iv) having a value in the aggregate in any twelve (12) month period of less than $10,000,000, if Administrative Borrower or any Borrower or Guarantor certifies to Agent that the sale or disposition is made in compliance with Section 9.7 hereof (and Agent may rely conclusively on

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any such certificate, without further inquiry), and to the extent Agent (acting at the direction of the Required Lenders) may release its security interest in and lien upon any such Collateral pursuant to the sale or other disposition thereof, such sale or other disposition shall be deemed consented to by Lenders, or (v) if required or permitted under the terms of any of the other Financing Agreements, including any intercreditor agreements, if Administrative Borrower or any Borrower or Guarantor certifies to Agent that the sale or disposition is made in compliance with Section 9.7 hereof (and Agent may rely conclusively on any such certificate, without further inquiry), or (vi) subject to Section 11.3(a)(iv), approved, authorized or ratified in writing by Required Lenders. Except as provided above, Agent will not release any security interest in, mortgage or lien upon, any of the Collateral without the prior written authorization of all of Lenders. Upon request by Agent at any time, Lenders will promptly confirm in writing Agent’s authority to release particular types or items of Collateral pursuant to this Section 12.11.

(b) Without any manner limiting Agent’s authority to act without any specific or further authorization or consent by the Required Lenders, each Lender agrees to confirm in writing, upon request by Agent, the authority to release Collateral conferred upon Agent under this Section 12.11. Agent shall (and is hereby irrevocably authorized by Lenders to) execute such documents as may be necessary to evidence the release of the security interest, mortgage or liens granted to Agent upon any Collateral to the extent set forth above; provided, that, (i) Agent shall not be required to execute any such document on terms which, in Agent’s opinion, would expose Agent to liability or create any obligations or entail any consequence other than the release of such security interest, mortgage or liens without recourse or warranty and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any security interest, mortgage or lien upon (or obligations of any Borrower or Guarantor in respect of) the Collateral retained by such Borrower or Guarantor.

(c) Agent shall have no obligation whatsoever to any Secured Party or any other Person to investigate, confirm or assure that the Collateral exists or is owned by any Borrower or Guarantor or is cared for, protected or insured or has been encumbered, or that any particular items of Collateral meet the eligibility criteria applicable in respect of the Term Loan hereunder, or whether any particular reserves are appropriate, or that the liens and security interests granted to Agent pursuant hereto or any of the Financing Agreements or otherwise have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent in this Agreement or in any of the other Financing Agreements, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, subject to the other terms and conditions contained herein, Agent may act in any manner it may deem appropriate, in its discretion, given Agent’s own interest in the Collateral as a Secured Party and that Agent shall have no duty or liability whatsoever to any other Secured Party.

(d) Any releases shall be at Borrower’s expense and shall be without representation, warranty, by Agent, or recourse to Agent, whether express, implied or statutory.

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12.12 Agency for Perfection. Each Secured Party hereby appoints Agent and each other Secured Party as agent and bailee for the purpose of perfecting the security interests in and liens upon the Collateral of Agent in assets which, in accordance with Article 9 of the UCC can be perfected only by possession (or where the security interest of a secured party with possession has priority over the security interest of another secured party) and Agent and each Secured Party hereby acknowledges that it holds possession of any such Collateral for the benefit of Agent as secured party. Should any Secured Party obtain possession of any such Collateral, such Secured Party shall notify Agent thereof, and, promptly upon Agent’s (acting at the direction of the Required Lenders) request therefor shall deliver such Collateral to Agent or in accordance with Agent’s instructions.

12.13 Successor Agent. Agent may resign as Agent upon thirty (30) days’ notice to Lenders and Parent, and Agent shall resign upon the request of the Required Lenders; provided that a substitute Agent has been appointed in accordance with the terms of this Section 12.13. If Agent resigns under this Agreement, the Required Lenders shall appoint from among the Lenders a successor agent for Lenders which successor agent shall be subject to the approval of Administrative Borrower if no Default or Event of Default shall have occurred and be continuing, provided, that, (a) such approval shall not be unreasonably withheld, conditioned or delayed and (b) unless Agent shall have received written notice from Administrative Borrower that Administrative Borrower does not approve such successor agent within three (3) Business Days after receipt by Administrative Borrower of the notice from Agent that it is resigning, Administrative Borrower shall be deemed to have given such approval. If no successor agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with Lenders and Parent, a successor agent from among Lenders. Upon the acceptance by the Lender so selected of its appointment as successor agent hereunder, such successor agent shall succeed to all of the rights, powers and duties of the retiring Agent and the term “Agent” as used herein and in the other Financing Agreements shall mean such successor agent and the retiring Agent’s appointment, powers and duties as Agent shall be terminated. After any retiring Agent’s resignation hereunder as Agent, the provisions of this Section 12 shall inure to its benefit as to any actions taken or omitted by it while it was Agent under this Agreement. If no successor agent has accepted appointment as Agent by the date which is thirty (30) days after the date of a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nonetheless thereupon become effective and Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.

12.14 Other Agent Designations. Agent (acting at the direction of the Required Lenders) may at any time and from time to time determine that a Lender may, in addition, be a “Co-Agent,” “Syndication Agent,” “Documentation Agent” or similar designation hereunder and enter into an agreement with such Lender to have it so identified for purposes of this Agreement. Any such designation shall be effective upon written notice by Agent to Administrative Borrower of any such designation. Any Lender that is so designated as a Co-Agent, Syndication Agent, Documentation Agent or such similar designation by Agent shall have no right, power, obligation, liability, responsibility or duty under this Agreement or any of the other Financing Agreements other than those applicable to all Lenders as such. Without limiting the foregoing, the Lenders so identified shall not have or be deemed to have any fiduciary relationship with any Lender and no Lender shall be deemed to have relied, nor shall any Lender rely, on a Lender so

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identified as a Co-Agent, Syndication Agent, Documentation Agent or such similar designation in deciding to enter into this Agreement or in taking or not taking action hereunder.

SECTION 13. TERM OF AGREEMENT; MISCELLANEOUS

13.1 Term.

(a) This Agreement and the other Financing Agreements shall become effective as of the date set forth on the first page hereof and shall continue in full force and effect for a term ending on September 6, 2013 (the “Maturity Date”), unless sooner terminated pursuant to the terms hereof. In addition, Borrowers may terminate this Agreement at any time upon five (5) days prior written notice to Agent (which notice shall be irrevocable) and Agent (at the direction of Required Lenders) shall, terminate this Agreement at any time an Event of Default exists or has occurred and is continuing. Upon the Maturity Date or any other effective date of termination of the Financing Agreements, Borrowers shall pay to Agent all outstanding and unpaid Obligations and shall furnish cash collateral to Agent (or at Agent’s option, a letter of credit issued for the account of Borrowers and at Borrowers’ expense, in form and substance satisfactory to the Required Lenders, by an issuer acceptable to the Required Lenders and payable to Agent as beneficiary) in such amounts as Agent (acting at the direction of the Required Lenders) determines are reasonably necessary to secure Agent and Lenders from loss, cost, damage or expense, including reasonable documented attorneys’ fees and expenses, in connection with any contingent Obligations, including checks or other payments provisionally credited to the Obligations and/or as to which Agent or any Lender has not yet received final and indefeasible payment (and including any contingent liability of Agent to any bank at which deposit accounts of Borrowers and Guarantors are maintained under any Deposit Account Control Agreement). Such payments in respect of the Obligations and cash collateral shall be remitted by wire transfer in Federal funds to the Agent Payment Account or such other bank account of Agent, as Agent may, in its discretion, designate in writing to Administrative Borrower for such purpose. Interest shall be due until and including the next Business Day, if the amounts so paid by Borrowers to the Agent Payment Account or other bank account designated by Agent are received in such bank account later than 2:00 p.m.

(b) The termination of this Agreement or any of the other Financing Agreements shall not relieve or discharge any Borrower or Guarantor of its respective duties, obligations and covenants under this Agreement or any of the other Financing Agreements until all Obligations (other than indemnities and contingent Obligations which have not yet accrued) have been fully and finally discharged and paid, and Agent’s continuing security interest in the Collateral and the rights and remedies of Agent and Lenders hereunder, under the other Financing Agreements and applicable law, shall remain in effect until all such Obligations have been fully and finally discharged and paid, other than the contingent Obligations for which Agent has received cash collateral, or at its option, a letter of credit, in accordance with Section 13.1(a) above. Accordingly, each Borrower and Guarantor waives any rights it may have under the UCC to demand the filing of termination statements with respect to the Collateral and Agent shall not be required to send such termination statements to Borrowers or Guarantors, or to file them with any filing office, unless and until this Agreement shall have been terminated in accordance with its terms and all Obligations (other than indemnities and contingent Obligations which have not yet accrued) paid and satisfied in full in immediately available funds.

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13.2 Interpretative Provisions.

(a) All terms used herein which are defined in Article 1, Article 8 or Article 9 of the UCC shall have the meanings given therein unless otherwise defined in this Agreement.

(b) All references to the plural herein shall also mean the singular and to the singular shall also mean the plural unless the context otherwise requires.

(c) All references to any Borrower, Guarantor, Agent and Lenders pursuant to the definitions set forth in the recitals hereto, or to any other person herein, shall include their respective successors and assigns.

(d) The words “hereof,” “herein,” “hereunder,” “this Agreement” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not any particular provision of this Agreement and as this Agreement now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced. Unless otherwise expressly indicated herein, references in this Agreement to an Exhibit, Schedule, Article, Section, clause or sub-clause refer to the appropriate Exhibit or Schedule to, or Article, Section, clause or sub-clause in this Agreement.

(e) The word “including” when used in this Agreement shall mean “including, without limitation” and the word “will” when used in this Agreement shall be construed to have the same meaning and effect as the word “shall.”

(f) An Event of Default shall exist or continue or be continuing until such Event of Default is waived in accordance with Section 11.3 or is cured. Reference herein to a Default or Event of Default that “exists” shall only include a Default or Event of Default, as the case may be, that has not been waived in accordance with the terms hereof or cured, so that such Default or Event of Default, as the case may be, shall cease to exist and shall not be deemed to be continuing if it has been so waived or cured.

(g) All references to the term “good faith” used herein when applicable to Agent or any Lender shall mean, notwithstanding anything to the contrary contained herein or in the UCC, honesty in fact in the conduct or transaction concerned and observance of reasonable commercial standards of fair dealing based on how a lender with similar rights providing a credit facility of the type set forth herein would act in similar circumstances at the time with the information then available to it. All references to the term “reasonably” or “reasonable” as applied to any conduct or determination by Agent shall be based on how a third party administrative agent with similar rights providing a credit facility of the type set forth herein would act in similar circumstances.

(h) All references to the terms “fiscal year” or “fiscal quarter” or “fiscal month” shall mean the fiscal year or fiscal quarter or fiscal month, as the case may be, of the Borrowers.

(i) Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial

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statements required to be delivered hereunder shall be prepared in accordance with GAAP applied on a basis consistent with the most recent audited consolidated financial statements of Parent delivered to the Lenders; provided, that, in the event of any change in GAAP after the date hereof that affects the covenants in Section 9 hereof, Administrative Borrower may by notice to Agent, or Agent may, and at the request of Required Lenders shall, by notice to Administrative Borrower require that such covenants be calculated in accordance with GAAP as in effect, and as applied by Parent and its Subsidiaries, immediately before the applicable change in GAAP became effective, until either the notice from the applicable party is withdrawn or such covenant is amended in a manner satisfactory to Administrative Borrower, Agent and the Required Lenders. Administrative Borrower shall deliver to Agent and upon Agent’s (acting at the direction of the Required Lenders) request, to each Lender at the same time as the delivery of any financial statements given in accordance with the provisions of Section 9.6 hereof (i) a description in reasonable detail of any material change in the application of accounting principles employed in the preparation of such financial statements from those applied in the most recently preceding monthly, quarterly or annual financial statements and (ii) a reasonable estimate of the effect on the financial statements on account of such changes in application. Notwithstanding the above, all calculations of the financial covenants in Section 9 shall be made on a Pro Forma Basis. Notwithstanding anything to the contrary contained in GAAP or any interpretations or other pronouncements by the Financial Accounting Standards Board or otherwise, the term “unqualified opinion” as used herein to refer to opinions or reports provided by accountants shall mean an opinion or report that is unqualified and also does not include any explanation, supplemental comment or other comment concerning the ability of the applicable person to continue as a going concern or the scope of the audit.

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

(k) Unless otherwise expressly provided herein, (i) references herein to any agreement, document or instrument shall be deemed to include all subsequent amendments, modifications, supplements, extensions, renewals, restatements or replacements with respect thereto, but only to the extent the same are not prohibited by the terms hereof or of any other Financing Agreement, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, recodifying, supplementing or interpreting the statute or regulation.

(l) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

(m) Unless otherwise indicated herein, all references to time of day refer to Eastern Standard Time or Eastern daylight saving time, as in effect in New York City on such day. For purposes of the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to and including”; provided, that, with respect to a computation of fees or interest payable to Agent or any Lender, such period shall in any event consist of at least one full day.

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

(o) This Agreement and the other Financing Agreements are the result of negotiations among and have been reviewed by counsel to Agent and the other parties, and are the products of all parties. Accordingly, this Agreement and the other Financing Agreements shall not be construed against Agent or Lenders merely because of Agent’s or any Lender’s involvement in their preparation.

13.3 Notices.

(a) All notices, requests and demands hereunder shall be in writing and deemed to have been given or made: if delivered in person, immediately upon delivery; if by facsimile transmission, immediately upon sending and upon confirmation of receipt; if by nationally recognized overnight courier service with instructions to deliver the next Business Day, one (1) Business Day after sending; and if by certified mail, return receipt requested, five (5) days after mailing. Notices delivered through electronic communications shall be effective to the extent set forth in Section 13.3(b) below. All notices, requests and demands upon the parties are to be given to the following addresses (or to such other address as any party may designate by notice in accordance with this Section 13.3):

If to any Borrower or Guarantor:	Latrobe Steel Company 2626 Ligonier Street P.O. Box 31 Latrobe, Pennsylvania 15650 Attention: Dale B. Mikus Telephone No.: (724) 532-6306 Telecopy No.: (724) 532-6362 E-mail: Dale.Mikus@latrobesteel.com
with a copy to:	Weil Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attention: Andrew Colao Telephone No.: (212) 310-8830 Telecopy No.: (212) 310-8007 E-mail: andrew.colao@weil.com

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If to Agent:	The Bank of New York Mellon 600 E. Las Colinas Blvd. Suite 1300 Irving, TX 75039 Attention: Melinda Valentine/Vice President Telephone No. 972.401.8500 Telecopy No. 972.401.8555
with a copy to (which shall not constitute notice):	McGuire, Craddock & Strother, P.C. 2501 N. Harwood Suite 1800 Dallas, Texas 75201 Attention: Jonathan Thalheimer Telephone: (214) 954-6855 Telecopy: (214) 954-6868 Email: jthalheimer@mcslaw.com
with a copy to (which shall not constitute notice):	Proskauer Rose LLP One International Place Boston, MA 02110 Attention: Peter J. Antoszyk Telephone No.: (617) 526.9749 Telecopy No.: (617) 526.9899 E-mail: PAntoszyk@proskauer.com

(b) Notices and other communications to Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by Agent or as otherwise determined by Agent, provided, that, the foregoing shall not apply to notices to any Lender pursuant to Section 2 hereof if such Lender has notified Agent that it is incapable of receiving notices under such Section by electronic communication. Unless Agent otherwise requires, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided, that, if such notice or other communication is not given during the normal business hours of the recipient, such notice shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communications is available and identifying the website address therefor.

13.4 Partial Invalidity. If any provision of this Agreement is held to be invalid or unenforceable, such invalidity or unenforceability shall not invalidate this Agreement as a whole, but this Agreement shall be construed as though it did not contain the particular provision held to be invalid or unenforceable and the rights and obligations of the parties shall be construed and enforced only to such extent as shall be permitted by applicable law.

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13.5 Confidentiality.

(a) Agent and each Lender shall use all reasonable efforts to keep confidential, in accordance with its customary procedures for handling confidential information and safe and sound lending practices, any non-public information supplied to it by any Borrower pursuant to this Agreement which is clearly and conspicuously marked as confidential at the time such information is furnished by such Borrower to Agent, such Lender, provided, that, nothing contained herein shall limit the disclosure of any such information: (i) to the extent required by statute, rule, regulation, subpoena or court order, (ii) to bank examiners and other regulators, auditors and/or accountants of Agent or such Lender, (iii) to any Lender or Participant (or prospective Lender or Participant) or to any Affiliate of any Lender so long as such Lender, Participant (or prospective Lender or Participant), or Affiliate shall have been instructed to treat such information as confidential in accordance with this Section 13.5, or (iv) to counsel for Agent, any Lender or Participant (or prospective Lender or Participant).

(b) In the event that Agent or any Lender receives a request or demand to disclose any confidential information pursuant to any subpoena or court order, Agent or such Lender, as the case may be, agrees (i) to the extent permitted by applicable law or if permitted by applicable law, to the extent Agent or such Lender determines in good faith that it will not create any risk of liability to Agent or such Lender, Agent or such Lender will promptly notify Administrative Borrower of such request so that Administrative Borrower may seek a protective order or other appropriate relief or remedy and (ii) if disclosure of such information is required, disclose such information and, subject to reimbursement by Borrowers of Agent’s or such Lender’s expenses, cooperate with Administrative Borrower in the reasonable efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to such portion of the disclosed information which Administrative Borrower so designates, to the extent permitted by applicable law or if permitted by applicable law, to the extent Agent or such Lender determines in good faith that it will not create any risk of liability to Agent or such Lender.

(c) In no event shall this Section 13.5 or any other provision of this Agreement, any of the other Financing Agreements or applicable law be deemed: (i) to apply to or restrict disclosure of information that has been or is made public by any Borrower, Guarantor or any third party or otherwise becomes generally available to the public other than as a result of a disclosure in violation hereof, (ii) to apply to or restrict disclosure of information that was or becomes available to Agent or any Lender (or any Affiliate of any Lender) on a non-confidential basis from a person other than a Borrower or Guarantor, (iii) to require Agent or any Lender to return any materials furnished by a Borrower or Guarantor to Agent or a Lender or prevent Agent or a Lender from responding to routine informational requests in accordance with the Code of Ethics for the Exchange of Credit Information promulgated by The Robert Morris Associates or other applicable industry standards relating to the exchange of credit information, or (iv) to notify any Person of a request or demand to disclose any confidential information pursuant to any request by any member of the Federal Reserve supervisory staff or otherwise, it being understood that such prior notice is not permitted by the Federal Reserve. The obligations of Agent and Lenders under this Section 13.5 shall supersede and replace the obligations of Agent and Lenders under any confidentiality letter signed prior to the date hereof or any other arrangements concerning the confidentiality of information provided by any Borrower or Guarantor to Agent or any Lender. In addition, Agent and Lenders may disclose information

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relating to this credit facility to Gold Sheets and other publications, with such information to consist of deal terms and other information customarily found in such publications and that the Lenders may otherwise use the corporate name and logo of Borrowers and Guarantors or deal terms in “tombstones” or other advertisements, public statements or marketing materials.

13.6 Successors. This Agreement, the other Financing Agreements and any other document referred to herein or therein shall be binding upon and inure to the benefit of and be enforceable by Agent, Secured Parties, Borrowers, Guarantors and their respective successors and assigns, except that Borrower may not assign its rights under this Agreement, the other Financing Agreements and any other document referred to herein or therein without the prior written consent of Agent and Lenders. Any such purported assignment without such express prior written consent shall be void. No Secured Party may assign its rights and obligations under this Agreement without the prior written consent of Agent, except as provided in Section 13.7 below. The terms and provisions of this Agreement and the other Financing Agreements are for the purpose of defining the relative rights and obligations of Borrowers, Guarantors, Agent and Secured Parties with respect to the transactions contemplated hereby and there shall be no third party beneficiaries of any of the terms and provisions of this Agreement or any of the other Financing Agreements.

13.7 Assignments; Participations.

(a) Each Lender may, with the prior written consent of Agent, assign all or, if less than all, a portion equal to at least $1,000,000 in the aggregate for the assigning Lender, of such rights and obligations under this Agreement to one or more Eligible Transferees (but not including for this purpose any assignments in the form of a participation), each of which assignees shall become a party to this Agreement as a Lender by execution of an Assignment and Acceptance; provided, that, such transfer or assignment will not be effective unless (i) such transfer or assignment has been recorded by Agent on the Register (as defined below), (ii) Agent shall have received for its sole account payment of a processing fee from the assigning Lender or the assignee in the amount of $3,500 and (iii)(x) an Event of Default or any of the defaults set forth under Sections 10.1(a)(i), 10.1(a)(ii) caused by failure to comply with Sections 9.3, 10.1(g) and 10.1(i), without giving effect to the applicable grace periods set forth therein, shall be continuing or (y) after giving effect to such transfer or assignment, DDJ Lenders shall, in the aggregate, hold at least 50.1% (or such lesser percentage as agreed to by the Administrative Borrower in its reasonable discretion) of the outstanding aggregate principal amount of the Term Loan.

(b) Agent shall maintain a register of the names and addresses of Lenders, their Commitments and the principal amount (and stated interest) of the Term Loan (the “Register”). Agent shall also maintain a copy of each Assignment and Acceptance delivered to and accepted by it and shall modify the Register to give effect to each Assignment and Acceptance. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and any Borrowers, Guarantors, Agent and Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by Administrative Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice.

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(c) Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party hereto and to the other Financing Agreements and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and thereunder and the assigning Lender shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement.

(d) By execution and delivery of an Assignment and Acceptance, the assignor and assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, the assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any of the other Financing Agreements or the execution, legality, enforceability, genuineness, sufficiency or value of this Agreement or any of the other Financing Agreements furnished pursuant hereto, (ii) the assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower, Guarantor or any of their Subsidiaries or the performance or observance by any Borrower or Guarantor of any of the Obligations; (iii) such assignee confirms that it has received a copy of this Agreement and the other Financing Agreements, together with such other documents and information it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such assignee will, independently and without reliance upon the assigning Lender, Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Financing Agreements, (v) such assignee appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the other Financing Agreements as are delegated to Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto, and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement and the other Financing Agreements are required to be performed by it as a Lender. Agent and Lenders may furnish any information concerning any Borrower or Guarantor in the possession of Agent or any Lender from time to time to assignees and Participants.

(e) Each Lender may sell participations to one or more banks or other entities in or to all or a portion of its rights and obligations under this Agreement and the other Financing Agreements; provided, that, (i) such Lender’s obligations under this Agreement (including, without limitation, its Commitment hereunder) and the other Financing Agreements shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and Borrowers, Guarantors, the other Lenders and Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and the other Financing Agreements, and (iii) the Participant shall not have any rights under this Agreement or any of the other Financing Agreements (the Participant’s rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the Participant relating

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thereto) and all amounts payable by any Borrower or Guarantor hereunder shall be determined as if such Lender had not sold such participation.

(f) Nothing in this Agreement shall prevent or prohibit any Lender from pledging its portion of the Term Loan hereunder to a Federal Reserve Bank or another lender in support of borrowings made by such Lenders from such Federal Reserve Bank or another lender; provided, that, no such pledge shall release such Lender from any of its obligations hereunder or substitute any such pledgee for such Lender as a party hereto.

(g) Borrowers and Guarantors shall assist Agent or any Lender permitted to sell assignments or participations under this Section 13.7 in whatever manner reasonably necessary in order to enable or effect any such assignment or participation, including (but not limited to) the execution and delivery of any and all agreements, notes and other documents and instruments as shall be requested and the delivery of informational materials, appraisals or other documents for, and the participation of relevant management in meetings and conference calls with, potential Lenders or Participants. Borrowers shall certify the correctness, completeness and accuracy, in all material respects, of all descriptions of Borrowers and Guarantors and their affairs provided, prepared or reviewed by any Borrower or Guarantor that are contained in any selling materials and all other information provided by it and included in such materials.

13.8 Entire Agreement. This Agreement, the other Financing Agreements, any supplements hereto or thereto, and any instruments or documents delivered or to be delivered in connection herewith or therewith represents the entire agreement and understanding concerning the subject matter hereof and thereof between the parties hereto, and supersede all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written. In the event of any inconsistency between the terms of this Agreement and any schedule or exhibit hereto, the terms of this Agreement shall govern.

13.9 USA Patriot Act. Each Lender subject to the USA PATRIOT Act (Title III of Pub.L. 107-56 (signed into law October 26, 2001) (the “Act”) hereby notifies Borrowers and Guarantors that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies each person or corporation who opens an account and/or enters into a business relationship with it, which information includes the name and address of Borrowers and Guarantors and other information that will allow such Lender to identify such person in accordance with the Act and any other applicable law. Borrowers and Guarantors are hereby advised that the Term Loan is subject to satisfactory results of such verification.

13.10 Counterparts, Etc. This Agreement or any of the other Financing Agreements may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Agreement or any of the other Financing Agreements by telefacsimile or other electronic method of transmission shall have the same force and effect as the delivery of an original executed counterpart of this Agreement or any of such other Financing Agreements. Any party delivering an executed counterpart of any such agreement by telefacsimile or other electronic method of transmission shall also deliver an original executed

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counterpart, but the failure to do so shall not affect the validity, enforceability or binding effect of such agreement.

13.11 Intercreditor Agreement. Until such time that the Revolving Obligations have been discharged, notwithstanding anything herein to the contrary, the exercise of any right or remedy by the Agent or the Lenders hereunder with respect to any Collateral and any requirement for Borrowers and Guarantors to deliver, endorse, remit, assign, notate or give control of any Collateral to or in favor of Agent or Lenders is subject to the provisions of the Intercreditor Agreement.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WEREOF, Agent, Lenders, Borrowers and Guarantors have caused these presents to be duly executed as of the day and year first above written.

BORROWERS
LATROBE STEEL COMPANY
By:	/s/ Dale B. Mikus
Name:	Dale B. Mikus
Title:	Vice President
OH&R SPECIAL STEELS COMPANY
By:	/s/ Dale B. Mikus
Name:	Dale B. Mikus
Title:	Vice President
SPECIALTY STEEL SUPPLY, INC.
By:	/s/ Dale B. Mikus
Name:	Dale B. Mikus
Title:	Vice President
GUARANTOR
TOOLROCK HOLDING, INC.
By:	/s/ Dale B. Mikus
Name:	Dale B. Mikus
Title:	Vice President

[Loan and Security Agreement]

AGENT
THE BANK OF NEW YORK MELLON, as Agent
By:	/s/ Michael Randall
Name:	Michael Randall
Title:	Vice President

[Loan and Security Agreement]

LENDERS
CATERPILLAR INC. MASTER RETIREMENT TRUST
By: DDJ Capital Management, LLC, on behalf of Caterpillar Inc. Master Retirement Trust, in its capacity as investment manager
By:	/s/ David J. Breazzano
Name:	David J. Breazzano
Title:	President

[Loan and Security Agreement]

LENDERS
DDJ DISTRESSED AND SPECIAL SITUATIONS FUND, L.P.
By: DDJ/GP Distressed and Special Situations, LLC, its General Partner
By: DDJ Capital Management, LLC, Manager
By:	/s/ David J. Breazzano
Name:	David J. Breazzano
Title:	President

[Loan and Security Agreement]

LENDERS
GMAM INVESTMENT FUNDS TRUST (for the account of the Promark High Yield Bond Fund (Account No. 7MKM))
By: DDJ Capital Management, LLC, on behalf of GMAM Investment Funds Trust (for the account of the Promark High Yield Bond Fund (Account No. 7MKM)), in its capacity as investment manager
By:	/s/ David J. Breazzano
Name:	David J. Breazzano
Title:	President

[Loan and Security Agreement]

LENDERS
HOUSTON MUNICIPAL EMPLOYEES PENSION SYSTEM
By: DDJ Capital Management, LLC, in its capacity as Manager
By:	/s/ David J. Breazzano
Name:	David J. Breazzano
Title:	President

[Loan and Security Agreement]

LENDERS
NATIONAL RAILROAD RETIREMENT INVESTMENT TRUST
By: DDJ Capital Management, LLC, in its capacity as Investment Manager
By:	/s/ David J. Breazzano
Name:	David J. Breazzano
Title:	President

[Loan and Security Agreement]

LENDERS
STICHTING BEWAARDER INTERPOLIS PENSIOENEN GLOBAL HIGH YIELD POOL
By: Syntrus Achmea Asset Management, as asset manager
By: DDJ Capital Management, LLC, as subadvisor
By:	/s/ David J. Breazzano
Name:	David J. Breazzano
Title:	President

[Loan and Security Agreement]

LENDERS
STICHTING PENSIOENFONDS HOOGOVENS
By: DDJ Capital Management, LLC, on behalf of Stichting Pensioenfonds Hoogovens, in its capacity as Manager
By:	/s/ David J. Breazzano
Name:	David J. Breazzano
Title:	President

[Loan and Security Agreement]

LENDERS
STITCHING PENSIOENFONDS METAAL EN TECHNIEK
By: DDJ Capital Management, LLC, in its capacity as manager
By:	/s/ David J. Breazzano
Name:	David J. Breazzano
Title:	President

[Loan and Security Agreement]

LENDERS
STICHTING PENSIOENFONDS VAN DE METALEKTRO (PME)
By: DDJ Capital Management, LLC, in its capacity as Manager
By:	/s/ David J. Breazzano
Name:	David J. Breazzano
Title:	President

[Loan and Security Agreement]

LENDERS
STICHTING PENSIOENFONDS VOOR FYSIOTHERAPEUTEN
By: DDJ Capital Management, LLC, in its capacity as investment manager
By:	/s/ David J. Breazzano
Name:	David J. Breazzano
Title:	President

[Loan and Security Agreement]

LENDERS
J.C. PENNEY CORPORATION, INC. PENSION PLAN TRUST
By: DDJ Capital Management, LLC, on behalf of J.C. Penney Corporation, Inc. Pension Plan Trust, in its capacity as investment manager
By:	/s/ David J. Breazzano
Name:	David J. Breazzano
Title:	President

[Loan and Security Agreement]

LENDERS
GMAM GROUP PENSION TRUST III (for the account of the Promark Alternative High Yield Bond Fund (Account No. 7M2E))
By: State Street Bank and Trust Company, solely in its capacity as Trustee for GMAM Group Pension Trust III, (for the account of the Promark Alternative High Yield Bond Fund (Account No. 7M2E), as directed by DDJ Capital Management, LLC, and not in its individual capacity
By:	/s/ Aaron J. Poulin
Name:	Aaron J. Poulin
Title:	Vice President State Street Bank & Trust Co.

[Loan and Security Agreement]

LENDERS
UAW RETIREE MEDICAL BENEFITS TRUST
By: State Street Bank and Trust Company, solely in its capacity as Trustee for UAW Retiree Medical Benefits Trust, as directed by DDJ Capital Management, LLC, and not in its individual capacity
By:	/s/ William C. Collins
Name:	William C. Collins
Title:	Vice President State Street Bank & Trust Co.

[Loan and Security Agreement}

EXHIBIT A

to

LOAN AND SECURITY AGREEMENT

ASSIGNMENT AND ACCEPTANCE AGREEMENT

This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this “Assignment and Acceptance”) dated as of                     , 20     is made between                      (the “Assignor”) and                      (the “Assignee”).

W I T N E S S E T H:

WHEREAS, The Bank of New York Mellon, in its capacity as agent pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf of the financial institutions which are parties thereto as lenders (together with its successors and assigns, in such capacity, “Agent”), and the financial institutions which are parties to the Loan Agreement as lenders (individually, each a “Lender” and collectively, “Lenders”) have entered into financing arrangements pursuant to which the Lenders have made a Term Loan (as defined in the Loan Agreement) to Latrobe Steel Company, a Pennsylvania corporation (“Latrobe”), Specialty Steel Supply, Inc., a Texas corporation (“SSS”), and OH&R Special Steels Company, a Delaware corporation (“OH&R”, and together with Latrobe and SSS, each individually a “Borrower” and collectively, “Borrowers”) as set forth in the Loan and Security Agreement, dated July 30, 2010, by and among Borrowers, certain of their affiliates, Agent and Lenders (as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the “Loan Agreement”), and the other agreements, documents and instruments referred to therein or at any time executed and/or delivered in connection therewith or related thereto (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the “Financing Agreements”);

WHEREAS, Assignor wishes to assign to Assignee [part of the] [all] rights and obligations of Assignor with respect to the portion of the Term Loan owned by the Assignor under the Loan Agreement in an amount equal to $             (the “Assigned Amount”) on the terms and subject to the conditions set forth herein and Assignee wishes to accept assignment of such rights and to assume such obligations from Assignor on such terms and subject to such conditions;

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows:

1. Assignment and Acceptance.

(a) Subject to the terms and conditions of this Assignment and Acceptance, Assignor hereby sells, transfers and assigns to Assignee, and Assignee hereby purchases, assumes and undertakes from Assignor, without recourse and without representation or warranty

(except as provided in this Assignment and Acceptance) an interest in (i) the Term Loan and (ii) all related rights, benefits, obligations, liabilities and indemnities of the Assignor under and in connection with the Loan Agreement and the other Financing Agreements, so that after giving effect thereto, the Pro Rata Share of Assignee shall be              (    %) percent.

(b) With effect on and after the Effective Date (as defined in Section 5 hereof), Assignee shall be a party to the Loan Agreement and succeed to all of the rights and be obligated to perform all of the obligations of a Lender under the Loan Agreement, including the requirements concerning confidentiality and the payment of indemnification, with a share of the Term Loan in an amount equal to the Assigned Amount. Assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Agreement are required to be performed by it as a Lender. It is the intent of the parties hereto that the Assignor shall relinquish its rights and be released from its obligations under the Loan Agreement to the extent such obligations have been assumed by Assignee; provided, that, Assignor shall not relinquish its rights under Sections 6.4, 6.9, 11.5 and 12.5 of the Loan Agreement to the extent such rights relate to the time prior to the Effective Date.

(c) After giving effect to the assignment and assumption set forth herein, on the Effective Date Assignee’s principal amount of the Term Loan will be $            .

(d) After giving effect to the assignment and assumption set forth herein, on the Effective Date Assignor’s principal amount of the Term Loan will be $             (as such amount may be further reduced by any other assignments by Assignor on or after the date hereof).

2. Payments.

(a) As consideration for the sale, assignment and transfer contemplated in Section 1 hereof, Assignee shall pay to Assignor on the Effective Date in immediately available funds an amount equal to $            , representing Assignee’s Pro Rata Share of the principal amount of the Term Loan.

(b) Assignee shall pay to Agent the processing fee in the amount specified in Section 13.7(a) of the Loan Agreement.

3. Reallocation of Payments. Any interest, fees and other payments accrued to the Effective Date with respect to the Assigned Amount of the Term Loan shall be for the account of Assignor. Any interest, fees and other payments accrued on and after the Effective Date with respect to the Assigned Amount of the Term Loan shall be for the account of Assignee. Each of Assignor and Assignee agrees that it will hold in trust for the other party any interest, fees and other amounts which it may receive to which the other party is entitled pursuant to the preceding sentence and pay to the other party any such amounts which it may receive promptly upon receipt.

4. Independent Credit Decision. Assignee acknowledges that it has received a copy of the Loan Agreement and the Schedules and Exhibits thereto, together with copies of the most recent financial statements of Toolrock Holding, Inc., a Delaware corporation, and its Subsidiaries, and such other documents and information as it has deemed appropriate to make its

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own credit and legal analysis and decision to enter into this Assignment and Acceptance and agrees that it will, independently and without reliance upon Assignor, Agent or any Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit and legal decisions in taking or not taking action under the Loan Agreement.

5. Effective Date Notices.

(a) As between Assignor and Assignee, the effective date for this Assignment and Acceptance shall be             , 20     (the “Effective Date”); provided, that, the following conditions precedent have been satisfied on or before the Effective Date:

(i) this Assignment and Acceptance shall be executed and delivered by Assignor and Assignee;

(ii) the consent of Agent as required for an effective assignment of the Assigned Amount of the Term Loan by Assignor to Assignee shall have been duly obtained and shall be in full force and effect as of the Effective Date;

(iii) written notice of such assignment, together with payment instructions, addresses and related information with respect to Assignee, shall have been given to Administrative Borrower and Agent;

(iv) Assignee shall pay to Assignor all amounts due to Assignor under this Assignment and Acceptance; and

(v) the processing fee referred to in Section 2(b) hereof shall have been paid to Agent.

(b) Promptly following the execution of this Assignment and Acceptance, Assignor shall deliver to Administrative Borrower and Agent for acknowledgment by Agent, a Notice of Assignment in the form attached hereto as Schedule 1.

6. Reserved.

7. Withholding Tax. Assignee (a) represents and warrants to Assignor, Agent and Borrowers that under applicable law and treaties no tax will be required to be withheld by Assignee, Agent or Borrowers with respect to any payments to be made to Assignee hereunder or under any of the Financing Agreements, (b) agrees to furnish (if it is organized under the laws of any jurisdiction other than the United States or any State thereof) to Agent and Borrowers prior to the time that Agent or Borrowers are required to make any payment of principal, interest or fees hereunder, duplicate executed originals of either U.S. Internal Revenue Service Form W-8BEN or W-8ECI, as applicable (wherein Assignee claims entitlement to a complete exemption from U.S. federal income withholding tax on all payments hereunder) and, if applicable, the certificate described in Section 6.5(g)(iii)(A) of the Loan Agreement, and agrees to provide new such forms upon the expiration of any previously delivered form or comparable statements in accordance with applicable U.S. law and regulations and amendments thereto, duly executed and completed by Assignee, and (c) agrees to comply with all applicable U.S. laws and regulations with regard to such withholding tax exemption.

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8. Representations and Warranties.

(a) Assignor represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any security interest, lien, encumbrance or other adverse claim, (ii) it is duly organized and existing and it has the full power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and Acceptance and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Acceptance and to fulfill its obligations hereunder, (iii) no notices to, or consents, authorizations or approvals of, any Person are required (other than any already given or obtained) for its due execution, delivery and performance of this Assignment and Acceptance, and apart from any agreements or undertakings or filings required by the Loan Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution, delivery or performance, and (iv) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of Assignor, enforceable against Assignor in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors’ rights and to general equitable principles.

(b) Assignor makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Agreement or any of the other Financing Agreements or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Agreement or any other instrument or document furnished pursuant thereto. Assignor makes no representation or warranty in connection with, and assumes no responsibility with respect to, the solvency, financial condition or statements of Borrowers, Guarantors or any of their respective Affiliates, or the performance or observance by Borrowers, Guarantors or any other Person, of any of its respective obligations under the Loan Agreement or any other instrument or document furnished in connection therewith.

(c) Assignee represents and warrants that (i) it is duly organized and existing and it has full power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and Acceptance and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Acceptance, and to fulfill its obligations hereunder, (ii) no notices to, or consents, authorizations or approvals of, any Person are required (other than any already given or obtained) for its due execution, delivery and performance of this Assignment and Acceptance, and apart from any agreements or undertakings or filings required by the Loan Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution, delivery or performance; and (iii) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of Assignee, enforceable against Assignee in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors’ rights to general equitable principles.

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9. Further Assurances. Assignor and Assignee each hereby agree to execute and deliver such other instruments, and take such other action, as either party may reasonably request in connection with the transactions contemplated by this Assignment and Acceptance, including the delivery of any notices or other documents or instruments to Borrowers or Agent, which may be required in connection with the assignment and assumption contemplated hereby.

10. Miscellaneous.

(a) Any amendment or waiver of any provision of this Assignment and Acceptance shall be in writing and signed by the parties hereto. No failure or delay by either party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof and any waiver of any breach of the provisions of this Assignment and Acceptance shall be without prejudice to any rights with respect to any other for further breach thereof.

(b) All payments made hereunder shall be made without any set-off or counterclaim.

(c) Assignor and Assignee shall each pay its own costs and expenses incurred in connection with the negotiation, preparation, execution and performance of this Assignment and Acceptance.

(d) This Assignment and Acceptance may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. Assignor and Assignee each irrevocably submits to the non-exclusive jurisdiction of the Supreme Court of the State of New York, New York County and the United States District Court for the Southern District of New York, over any suit, action or proceeding arising out of or relating to this Assignment and Acceptance and irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State or Federal court. Each party to this Assignment and Acceptance hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding.

(f) ASSIGNOR AND ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE LOAN AGREEMENT, ANY OF THE OTHER FINANCING AGREEMENTS OR ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).

IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and Acceptance to be executed and delivered by their duly authorized officers as of the date first above written.

A-5

[ASSIGNOR]

By:

Title: 

[ASSIGNEE]

By:

Title: 

A-6

SCHEDULE 1

NOTICE OF ASSIGNMENT AND ACCEPTANCE

                         ,20    

The Bank of New York Mellon, as Agent

[Address]

Attention:

Re: Latrobe Steel

Ladies and Gentlemen:

The Bank of New York Mellon, in its capacity as agent pursuant to the Loan Agreement (as hereinafter defined) acting for and on behalf of the financial institutions which are parties thereto as lenders (together with its successors and assigns, in such capacity, “Agent”), and the financial institutions which are parties to the Loan Agreement as lenders (individually, each a “Lender” and collectively, “Lenders”) have entered into financing arrangements pursuant to which Agent and Lenders made a Term Loan to Latrobe Steel Company, a Pennsylvania corporation, Specialty Steel Supply, Inc., a Texas corporation and OH&R Special Steels Company, a Delaware corporation (collectively, “Borrowers”) as set forth in the Loan and Security Agreement, dated July 30, 2010, by and among Borrowers, certain of their affiliates, Agent and Lenders (as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, the “Loan Agreement”), and the other agreements, documents and instruments referred to therein or at any time executed and/or delivered in connection therewith or related thereto (all of the foregoing, together with the Loan Agreement, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced, being collectively referred to herein as the “Financing Agreements”). Capitalized terms not otherwise defined herein shall have the respective meanings ascribed thereto in the Loan Agreement.

1. We hereby give you notice of, and request your consent to, the assignment by                      (the “Assignor”) to                      (the “Assignee”) such that after giving effect to the assignment Assignee shall have an interest equal to              (    %) percent of the total Term Loan pursuant to the Assignment and Acceptance Agreement attached hereto (the “Assignment and Acceptance”).

2. Assignee agrees that, upon receiving the consent of Agent to such assignment, Assignee will be bound by the terms of the Loan Agreement as fully and to the same extent as if the Assignee were the Lender originally holding such interest under the Loan Agreement.

3. The following administrative details apply to Assignee:

A-7

(A) Notice address:

Assignee name:	____________________
Address:	____________________
Attention:	____________________
Telephone:	____________________
Telecopier:	____________________

(B) Payment instructions:

Account No.:	____________________
At:	____________________
Reference:	____________________
Attention:	____________________

4. You are entitled to rely upon the representations, warranties and covenants of each of Assignor and Assignee contained in the Assignment and Acceptance.

A-8

IN WITNESS WHEREOF, Assignor and Assignee have caused this Notice of Assignment and Acceptance to be executed by their respective duly authorized officials, officers or agents as of the date first above mentioned.

Very truly yours,

[NAME OF ASSIGNOR]

By:

Title: 

[NAME OF ASSIGNEE]

By:

Title: 

ACKNOWLEDGED AND ASSIGNMENT CONSENTED TO:

THE BANK OF NEW YORK MELLON, as Agent

By:

Title: 

ACKNOWLEDGED:

LATROBE STEEL COMPANY, as Administrative Borrower

By:

Title: 

A-9

EXHIBIT C

TO

LOAN AND SECURITY AGREEMENT

Compliance Certificate

To: The Bank of New York Mellon, as Agent

[Address]

Attention:

Ladies and Gentlemen:

I am a duly elected Responsible Officer of Latrobe Steel Company, a Pennsylvania corporation (“Latrobe”), Specialty Steel Supply, Inc. (“SSS”) and OH&R Special Steels Company, a Delaware corporation (“OH&R”, and together with Latrobe and SSS, each individually a “Borrower” and collectively, “Borrowers”. Capitalized terms used herein without definition shall have the meanings given to such terms in the Loan and Security Agreement, dated July 30, 2010, by and among The Bank of New York Mellon, as agent for the financial institutions party thereto as lenders (together with its successors and assigns, in such capacity, “Agent”) and the financial institutions party thereto as lenders (collectively, “Lenders”), Borrowers and certain of their affiliates and the other parties thereto (as such Loan and Security Agreement is amended, modified or supplemented, from time to time, the “Loan Agreement”).

I hereby certify to you, on behalf of the Borrowers and the Guarantors, and without assuming any personal liability, pursuant to Section 9.6 of the Loan Agreement as follows:

1. I have reviewed the terms of the Loan Agreement, and have made, or have caused to be made under my supervision, a review in reasonable detail of the transactions and the financial condition of Borrowers and Guarantors, during the immediately preceding fiscal month.

2. The review described in Section 1 above did not disclose the existence during or at the end of such fiscal month, and I have no knowledge of the existence and continuance on the date hereof, of any condition or event which constitutes a Default or an Event of Default, except as set forth on Schedule I attached hereto. Described on Schedule I attached hereto are the exceptions, if any, to this Section 2 listing, in detail, the nature of the condition or event, the period during which it has existed and the action which any Borrower or Guarantor has taken, is taking, or proposes to take with respect to such condition or event.

3. Based on the review described in Section 1 above, no Borrower or Guarantor has at any time during or at the end of such fiscal month, except as specifically described on Schedule II attached hereto or as permitted by the Loan Agreement, done any of the following:

(a) Changed its respective corporate name, or transacted business under any trade name, style, or fictitious name, other than those previously described to you or set forth in the Financing Agreements.

(b) Changed the location of its chief executive office, changed its jurisdiction of incorporation, changed its type of organization or changed the location of or disposed of any of its properties or assets (other than as permitted by Section 9.7 of the Loan Agreement), or established any new asset locations.

(c) Materially changed the terms upon which it sells goods (including sales on consignment) or provides services in a manner that is materially adverse to the rights of the Lenders or the Agent under the Financing Agreements, nor has any vendor or trade supplier to any Borrower or Guarantor during or at the end of such period materially adversely changed the terms upon which it supplies goods to any Borrower or Guarantor in each case, except as set forth on Schedule III attached hereto.

4. Attached hereto as Schedule IV are the calculations used in determining, as of the end of such fiscal month or fiscal quarter, as applicable, whether Borrowers and Guarantors are in compliance with the covenants set forth in Sections 9.17, 9.18 and 9.19 of the Loan Agreement for such fiscal month or fiscal quarter, as applicable.

The foregoing certifications are made and delivered this day of             , 20    .

Very truly yours,
	By:
	Title:

2

EXHIBIT D

TO

LOAN AND SECURITY AGREEMENT

Principal Amount of Term Loan

Lender	Term Loan Principal Amount			Percentage
GMAM Group Pension Trust III (for the account of the Promark Alternative High Yield Bond Fund (Account No. 7M2E))	$	[	]		[	]%
GMAM Investment Funds Trust (for the account of the Promark High Yield Bond Fund (Account No. 7MKM))
UAW Retiree Medical Benefits Trust
Stichting Pensioenfonds Hoogovens
Caterpillar Inc. Master Retirement Trust
J.C. Penney Corporation, Inc. Pension Plan Trust
Stichting Bewaarder Interpolis Pensioenen Global High Yield Pool
Stichting Pensioenfonds Metaal En Techniek
Stichting Pensioenfonds van de Metalektro (PME)
National Railroad Retirement Investment Trust
Stichting Pensioenfonds voor Fysiotherapeuten
Houston Municipal Employees Pension System
DDJ Distressed and Special Situations Fund, L.P.
TOTAL:	$	[	]		100.00	%

EXHIBIT E

to

LOAN AND SECURITY AGREEMENT

FORM OF TERM NOTE

TERM NOTE

$             Date:                          , 20    

FOR VALUE RECEIVED, the undersigned (the “Borrowers”), hereby promise to pay to                      (the “Lender”), in accordance with the provisions of the Loan and Security Agreement, dated July 30, 2010 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Loan Agreement;” capitalized terms used, but not defined herein, are used herein as therein defined) the principal amount of                          U.S. Dollars ($            ) among the Borrowers, the Guarantors from time to time party thereto, the Lenders from time to time party thereto, and The Bank of New York Mellon, as Agent (together with its successors and assigns, in such capacity, “Agent”).

This Term Note is payable at such times and in such amounts as provided in the Loan Agreement. The Borrowers promise to pay interest on the unpaid principal amount of the Term Loan from the date such Term Loan is made until such principal amount is paid in full, at such interest rates and at such times as provided in the Loan Agreement. All payments of principal and interest shall be made to Agent for the account of the Lender in U.S. Dollars in immediately available funds at Agent’s office.

This Term Note is one of the promissory notes referred to in Section 6.14 of the Loan Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Term Note is also entitled to the benefits of the Guarantee, dated July [    ], 2010, by Borrowers and Toolrock Holdings, Inc. in favor of Agent, and is secured by the Collateral. The Lender may attach schedules to this Term Note and endorse thereon the date and amount of payments with respect thereto.

The Borrowers, for themselves, their successors and assigns, hereby waive diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Term Note.

[SIGNATURES ON FOLLOWING PAGE]

This Term Note shall be governed by and construed in accordance with the laws of the State of New York.

LATROBE STEEL COMPANY

By:

Name: 

Title:

OH&R SPECIAL STEELS COMPANY

By:

Name:

Title:

SPECIALTY STEEL SUPPLY, INC.

By:

Name:

Title:

SCHEDULE 1.98

to

LOAN AND SECURITY AGREEMENT

Permitted Holders

(a) HHEP-Latrobe, L.P. and any of its Control Investment Affiliates; and

(b) Watermill-Toolrock Partners, L.P. and any of its Control Investment Affiliates.

For purposes of this Schedule 1.98, “Control Investment Affiliate” shall mean, with respect to any Person, any other Person that (a) directly or indirectly, is in control of, is controlled by, or is under common control with, such Person and (b) is organized by such Person primarily for the purpose of making equity or debt investments in one or more companies. For purposes of this definition, “control” of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

SCHEDULE 1.132

to

LOAN AND SECURITY AGREEMENT

VIM Eciuipment

That certain custom-designed 30-ton vacuum induction melting furnace (identified as VIM #2 (tracking #712320)) located at 2626 Ligonier Street, Latrobe, Pennsylvania 15650 used to produce high purity heats in a computer controlled process that liquefy alloys, ridding them of inclusions and optimizing their chemical composition.

SCHEDULE 8.2

to

LOAN AND SECURITY AGREEMENT

Locations

A. Company: Toolrock

Chief Executive Office

2626 Ligonier Street

P.O. Box 31

Latrobe, PA 15650

Location of Books and Records

2626 Ligonier Street

P.O. Box 31

Latrobe, PA 15650

Locations of Inventory, Equipment and Other Assets

None.

B. Company: Latrobe

Chief Executive Office

2626 Ligonier Street

P.O. Box 31

Latrobe, PA 15650

Location of Books and Records

2626 Ligonier Street

P.O. Box 31

Latrobe, PA 15650

Locations of Inventory, Equipment and Other Assets

Division	City/State	Address	Operation
Owned Locations:
Latrobe Steel	Latrobe, PA	2626 Ligonier St., P.O. Box 31, Latrobe, PA 15650	Manufacturing
Latrobe Steel	Franklin, PA	1680 Debence Rd. , Franklin, PA 16323	Manufacturing
Latrobe Steel	Wauseon, OH	14614 County Rd. , Wauseon, OH 43567	Manufacturing

Leased Locations:
Latrobe Steel	Wauseon, OH	14614 County Rd., Wauseon, OH 43567	Warehouse
Latrobe Steel	Sterling Heights, MI	34100 Mound Rd., Sterling Heights, MI 48310	Warehouse
Latrobe Steel	Sheffield, England	Newhall Road, Sheffield S9 2QL, England	Warehouse
Manufacturing (Consignment Locations):
Alcoa Fastening Systems	Fullerton, CA	801 S. Placentia Ave., Fullerton, CA 92831	Customer Location
Dauphin Precision Tool LLC	Millersburg, PA	200 Front Street, Millerburg, PA 17061	Customer Location
Firth Brown Tools Inc.	Cambridge, ON	115 Dundas Street, Cambridge, ON N1R 5T8	Customer Location
Firth Rixson Inc.	Rochester, NY	181 McKee Road, Rochester, NY 14603	Customer Location
Greenfield Industries Inc.	Evans, GA	470 Old Evans Road, Evans, GA 30809	Customer Location
Greenfield Industries Inc.	Clemson, SC	2501 Davis Creek Road, Clemson, SC 29631	Customer Location
Irwin Industrial Tool Co.	Dc Witt, NE	108 South Pear Street, De Witt, NE 68341	Customer Location
Landis Threading Systems	Waynesboro, PA	360 South Church Street, Waynesboro, PA 17268	Customer Location
Niagara Cutter	Reynoldsville, PA	150 South Fifth Street, Reynoldsville, PA 15851	Customer Location
SPS Technologies Inc.	Jenkintown, PA	301 Highland Avenue, Jenkintown, PA 19046	Customer Location
Tivoly Inc.	Derby Line, VT	434 Baxter Avenue, Derby Line, VT 05830	Customer Location
Distribution (Outside Processors):
Trinel	Brook Park, OH	5251 W. 137 St. Brook Park, OH 44142	Vendor Location
Braeburn	Lower Burrell, PA	101 Braeburn St. Lower Burrell, PA 15068	Vendor Location
Universal	Bridgeville, PA	600 Mayer St., Bridgeville, PA 15017	Vendor Location
Latrobe	Latrobe, PA	Po Box 31, Latrobe PA 15650	Vendor Location
Keystone	Titusville, PA	11663 McKinney Street, Titusville, PA 16354	Vendor Location
Hammond & Irving	Auburn, NY	254 North Street, Auburn, NY 13021	Vendor Location
Carpenter	Bridgeville, PA	600 Mayer Street, Bridgeville, PA 15017	Vendor Location

C. Company: OH&R

Chief Executive Office

1551 Vienna Parkway

Vienna, OH 44473

Location of Books and Records

1551 Vienna Parkway

Vienna, OH 44473

Locations of Inventory, Equipment and Other Assets

Division	City/State	Address	Operation
Owned Locations:
	Northborough, MA	2 Beeman Rd., Northborough, MA 01532	Warehouse
	White House, TN	3123 Pleasant Grove Rd., Whitehouse, TN 37188	Warehouse
Leased Locations:
	Marlborough, MA	225 Cedar Hill St., Suite 17, Marlborough, MA 01752	Office
	Chicago, IL	933 East 95th Street, Chicago, IL 60619	Warehouse Office&
	Vienna, OH	1551 Vienna Industrial Pkwy, Vienna, OH 44473	Warehouse
	Blenheim, ON (Canada)	9501 Horton Line, Blenheim, ON NOP IAO	Warehouse
Distribution (Consignment Locations):
Concor Tool	Hayward, WI	9665 N. Concor Rd., Hayward, WI 54843	Customer Location
Precision Steel	Toledo, OH	31 E. Sylvania Ave., Toledo, OH 43612	Customer Location
Hudson Metals	Huntington Beach, CA	7932 Earl Circle, Huntington Beach, CA 92647	Customer Location
Carpenter Powder Prod	Bridgeville, PA	600 Mayer Street, Bridgeville, PA 15017	Customer Location
Manufacturing (Outside Processors):
American Hollow Bar	Erie, PA	1901 Raspberry Street, P.O. Box 228, Erie, PA 16512	Customer Location
Banner	Carol Stream, IL	494 E. Lies Rd., Carol Stream, IL 60188	Customer Location
Bluff City	Maple Heights, OH	5800 Sterling Avenue, Maple Heights, OH 44137	Customer Location
Braeburn	Lower Burrell, PA	101 Braeburn Road, Lower Burrell, PA 15068	Customer Location
Brown-Pacific	Santa Fe Springs, CA	13639 E. Bora Drive, Santa Fe Springs, CA 90670	Customer Location
Carpenter	Reading, PA	101 West Bern Street, Bldg 104, Reading, PA	Customer

Division	City/State	Address	Operation
Technologies		19601	Location
Dearborn	Fryenurg, ME	6 Dearborn Drive, PO Box 126, Fryenurg, ME 04037	Customer Location
Dynamic Machine Works	Billerica, MA	Dynamic Flowform, 12 Suburban Park Drive, Billerica, MA 01821	Customer Location
Haynes International	Arcadia, LA	3786 Second Street, Arcadia, LA 71001	Customer Location
Lehigh Heavy Forge	Bethlehem, PA	275 Emery Street, Bethlehem, PA 18015-2042	Customer Location
Metal Finishing Services	Beaver Falls, PA	4023 4th Avenue, Beaver Falls, PA 15010	Customer Location
Orbit	Middleburg Heights, OH	6840 Lake Abram Drive, Middleburg Heights, OH 44130	Customer Location
Penn State Special Mettals LLC	Koppel, PA	7544 Rt. 18 North, Koppel, PA 16136-0617	Customer Location
Pittsburgh Flat Roll	Pittsburgh, PA	1200 Reedsdale Street, Pittsburgh, PA 15233	Customer Location
Precision Kidd	Aliquippa, PA	One Quality Way, Aliquippa, PA 15001	Customer Location
Republic Special Metals, Inc.	South West Canton, OH	2201 Harrison Avenue, South West Canton, OH 44706	Customer Location
Rex Heat Treat	Landsdale, PA	8th Street and Valley Forge Road, P.O. Box 270, Landsdale, PA 19446	Customer Location
Rome Metals	Rochester, PA	499 Delaware Avenue, Rochester, PA 15074	Customer Location
Shasta	Aliquippa, PA	300 Steel Street, Aliquippa, PA 15001	Customer Location
Timken - Canton	Canton, OH	2401 Gambrinus Road, Canton, OH 44706	Customer Location
Universal Welding	Export, PA	5578 Old William Penn Highway, Export, PA 15632	Customer Location
Wptl 1mm Tank	New Kensington, PA	1010 Industrial Blvd., New Kensingtor, PA 15068	Customer Location
Wptl 1g. Tactic and Wptl SM. Tactic	New Kensington, PA	1010 Industrial Blvd., New Kensington, PA 15068	Customer Location

D. Company: Specialty Steel

Chief Executive Office

19201 Circle Lake Drive

Pinehurst, TX 77362

Location of Books and Records

19201 Circle Lake Drive

Pinehurst, TX 77362

Locations of Inventory, Equipment and Other Assets

Division	City/State	Address	Operation
Leased Locations:
	Houston, TX	16623 Aldine Westfield Road, Houston, TX 77032	Warehouse
	Prichard, AL	3009 and 3019 Hand Avenue, Prichard, AL 36609	Warehouse
	Pinehurst, TX	19201 Circle Lake Drive, Pinehurst, TX 97362	Office/Warehouse
	Vienna, OH	1551 Vienna Industrial Pkwy, Vienna, OH 44473	Warehouse

SCHEDULE 8.4

to

LOAN AND SECURITY AGREEMENT

Permitted Liens

None.

SCHEDULE 8.5

to

LOAN AND SECURITY AGREEMENT

Tax Returns

1. The Internal Revenue Service notified the Company on January 5, 2010 that its federal income tax returns for the period ended September 30, 2007 have been selected for examination. The scope was subsequently expanded to cover periods ended September 30, 2006, September 30, 2008 and September 30, 2009.

SCHEDULE 8.6

to

LOAN AND SECURITY AGREEMENT

Litigation

1. Douglas Hodczak, James Crossan, Thomas Magdic and Joseph Litvik v. Latrobe Specialty Steel Company, United States District Court for the Western District of Pennsylvania Civil Action No. 08-649.

This is a purported collective (class) action case, alleging age-based discrimination in employment by Latrobe. The claim arises from Latrobe’s termination of four employees for violating the Electronic Communications Policy. Latrobe filed dispositive motions, which were denied without prejudice as premature. Latrobe has successfully obtained dismissal of plaintiff’s disparate impact claim through voluntary dismissal, leaving only a purported collective (class) action disparate treatment, age discrimination claim. To date, plaintiffs have taken no steps to conditionally certify a class. Latrobe is currently engaging in discovery and continues to defend the matter aggressively.

SCHEDULE 8.8

to

LOAN AND SECURITY AGREEMENT

Environmental Compliance

Latrobe, PA

1. Past releases and periodic continued releases of leachate to surface waters and soils surrounding the residual waste landfill, as described in the Phase I Environmental Site Assessment, Timken Latrobe Steel Company, Latrobe, PA, prepared by Delta, dated October 31, 2006 (“2006 Latrobe, PA Phase I Report”), at pp. 25, 30-31, 33, 38 and in the Phase I Environmental Site Assessment, Latrobe Specialty Steel Company, Latrobe, PA, dated November 26, 2008 prepared by Delta Consultants (“Delta”) (“2008 Latrobe, PA Phase I Report”), at pp. 29, 36-37, 41, 45 (Section 8.8(a), (b), (c))

2. Area of dark stained soil adjacent to treatment (settling) ponds located at the southeast corner of the Continuous Rolling Mill portion of the Latrobe property, as described in the 2006 Latrobe, PA Phase I Report, at pp. 19, 26, 31-32, 38, and in the 2008 Latrobe, PA Phase I Report, at pp. 28, 37-38, 42, 45 (Section 8.8(a), (c))

3. Dark stained area surrounding staging area for dry grinding swarf, scale and small metal scrap located behind Continuous Rolling Mill building and in close proximity to storm water outfall No. 3 which discharges into Loyalhanna Creek, as described in the 2006 Latrobe, PA Phase I Report at pp. 26-27, 32 and in the 2008 Latrobe, PA Phase I Report at pp. 38, 42, 45 (Section 8.8(a), (c))

4. Release of slag wastewater to Loyalhanna Creek via runoff to adjacent storm water catch basin adjacent to slag storage building at Melt Shop, as described in the 2006 Latrobe, PA Phase I Report at pp. 27, 32, and in the 2008 Latrobe, PA Phase I Report at p.8, 38, 42, 45 (Section 8.8(a), (b), (c))

5. Releases of Argon Oxygen Decarburization baghouse dust, as described in the 2006 Latrobe, PA Phase I Report at pp. 27, 32, 39 and in the 2008 Latrobe, PA Phase I Report at pp. 8-9, 34, 39, 42, 45 (Section 8.8(a), (b), (c))

6. Releases of Electric Arc Furnace baghouse dust, as described in the 2006 Latrobe, PA Phase I Report at pp. 27-28, 32-33, 39 and in the 2008 Latrobe, PA Phase I Report at pp. 9, 39, 42, 46 (Section 8.8(a), (b), (c))

7. Discharge from storm and floor drains in manufacturing areas both within buildings and at outside areas to nearby storm water discharge locations, including August 1992 release of oily water to storm water management system which discharges to Loyalhanna Creek, as described in the 2006 Latrobe, PA

Phase I Report at pp. 28, 33 and in the 2008 Latrobe, PA Phase I Report at pp. 42-43, 46 (Section 8.8(a), (c))

8. Staining of concrete and brick floor in Main Site buildings, concrete floor of Melt Shop buildings and Continuous Rolling Mill buildings, as described in the 2006 Latrobe, PA Phase I Report at pp. 33-34, 39 and in the 2008 Latrobe, PA Phase I Report at pp. 43, 45 (Section 8.8(a), (c))

9. Contamination in soil and ground water on portion of property formerly owned by American Cyanamid (the Cap Works and Ross Site) and former coke ovens located on the former Cap Works property, as described in the Remedial Investigation Report Act 2 Release of Liability Former American Cyanamid Cap Works and Ross Sites, dated February 28, 2003, in the 2006 Latrobe, PA Phase I Report at pp. 3, 14, 17, 29, 34, 39 and in the 2008 Latrobe, PA Phase I Report at pp. 9-10, 21, 30, 43, 46 (Section 8.8(b), (c))

10. Former underground tanks used for storage of diesel fuel, as described in the 2006 Latrobe, PA Phase I Report at pp. 24, 34-35, and in the 2008 Latrobe, PA Phase I Report at pp. 34-35,43 (Section 8.8(a), (b), (c))

11. Disposal of Continuous Rolling Mill cooling pond sludge, as cited in June 27, 1989 Notice of Violation from Pennsylvania Department of Environmental Protection (“PA DEP”), as described in the 2006 Latrobe, PA Phase I Report at pp. 29-30, 35 and in the 2008 Latrobe, PA Phase I Report at pp. 10, 44 (Section 8.8(a), (b), (c))

12. PCB wastes from Thermal Induction Vacuum Furnace adjacent to Melt Shop, as described in the 2006 Latrobe, PA Phase I Report at pp. 24-25, 35 and in the 2008 Latrobe, PA Phase I Report at pp. 35-36, 44 (Section 8.8(a), (c))

13. Unmanaged, unlabelled, damaged and leaking drums containing raw materials, oils and petroleum products, coolants and wastes, as described in the 2006 Latrobe, PA Phase I Report at pp. 35-36 (Section 8.8(a), (c))

14. Asbestos containing materials, including in cement mortar between bricks in old coal fired boiler located in boiler room next to VAP area and in isolated boiler located in cold milling area, as described in the 2006 Latrobe, PA Phase I Report at p. 36 (Section 8.8(a), (c))

15. Metal grindings saturated with oil and cutting fluids which are drained to a concrete sump and then pumped to an aboveground storage tank, as described in the 2006 Latrobe, PA Phase I Report at pp. 28-29, 36 (Section 8.8(a), (c))

16. Fugitive air emission incidents, Notices of Violation and a Consent Order (1997), including reference to complaints from resident neighbors, as described in the 2006 Latrobe, PA Phase I Report at pp. 37 and in the Phase I ESA Preliminary

Findings Summary, prepared by WSP Environment & Energy (“WSP”), dated July 28, 2010 (“WSP Phase I”) at p. 6 (Section 8.8(a), (b), (c))

17. General Notice/Demand and Request for Information Pursuant to Section 104 of CERCLA and Section 3007 of RCRA for the Elmore Waste Disposal Superfund Site, Greer, SC issued by US EPA Region 4 to The Timken Company (Aug. 2, 2000), and response thereto, as described in the 2006 Latrobe, PA Phase I Report at p. 37 (Section 8.8(a), (b))

18. Letter from PA DEP, dated August 15, 2005, indicating Timken may be responsible party in connection with Everglade Junkyard Site, Hempfield, PA, as described in the 2006 Latrobe, PA Phase I Report at p. 37 (Section 8.8(a), (b))

19. US EPA Region 7 Request for Information by letters dated August 15, 1996 and August 22, 1996, regarding the Hayford Bridge Road Groundwater Superfund Site and response thereto stating no information available, as described in the 2006 Latrobe, PA Phase I Report at p. 37 (Section 8.8(a), (b))

20. Notice of completion from US EPA in March 2000 regarding Metcoa Superfund Site, as described in the 2006 Latrobe, PA Phase I Report at p. 37 (Section 8.8(a), (b))

21. Notice of Potential Liability regarding PCB Treatment, Inc. Superfund Site from U.S. EPA Region VII to Latrobe Steel Co. (Sept. 16, 1997), PCB Treatment, Inc., and subsequent cash-out settlement, as described in the 2006 Latrobe, PA Phase I Report at p. 37 (Section 8.8(a), (b))

22. Letter from Indiana Department of Environmental Management to Latrobe Steel Co. regarding Four County Landfill Special Notice of Potential Liability (April 3, 2002), and subsequent de minimis settlement for OU #1, as described in the 2006 Latrobe, PA Phase I Report at pp. 37-38 (Section 8.8(a), (b))

23. Letter from Douglas G. Haynam, Shumaker, Loop & Kendrick, LLP regarding Commercial Oil Services Group Ninth Phase II Assessment (Dec. 30, 2004), as described in the 2006 Latrobe, PA Phase I Report at p. 38 (Section 8.8(a), (b))

24. Deficiencies associated with aboveground storage tanks, as noted in the following in-service inspection reports, all prepared by Orbital Engineering, Inc.: Waste Water Storage Tank, dated January 11, 2006; Virgin Hydrochloric Acid Storage Tank No. 001A, dated May 19, 2006; Waste Hydrochloric Acid Storage Tank No. 002A, dated May 22, 2006; Sulfuric Acid Storage Tank No. 003A, dated May 22, 2006; Nitric Acid Storage Tank No. 004A, dated May 24, 2006; Spent Sulfuric Acid Storage Tank No. 005A, dated May 22, 2006; Spent Sulfuric Acid Storage Tank, dated May 22, 2006; Spent Nitric Hydrofluoric Acid Storage Tank No. 006A, dated May 22, 2006; Used Oil Storage Tank No. 007A, dated May 22,

2006; Diesel Fuel Storage Tank No. 008A, dated May 24, 2006 (Section 8.8(a), (c))

25. Contamination in soil and groundwater on property formerly operated by Vulcan Mold and Iron Company, as described in the WSP Phase I at p. 4 (Section 8.8(a), (c))

26. Releases of water soluble oil from Mesta Press at Main Plant to Loyalhanna Creek through stormwater outfalls, for which notices of violations from PA DEP are anticipated and for which response actions have been completed, as described in the WSP Phase I at p. 7 (Section 8.8(a), (b), (c))

27. Two potential PCB-containing transformers may be located on-site, as described in the WSP Phase I at p. 9 (Section 8.8(a)), (c))

Franklin, PA

28. On-site septic system/leachfield installed in 1994, and in use until at least 1996, as described in the Phase I Environmental Site Assessment, Timken Latrobe Steel Company, Franklin, PA, prepared by Delta, dated October 30, 2006 (“2006 Franklin, PA Phase I Report”) at Sections 5.2, 7.1 and 8.0 and in the Phase I Environmental Site Assessment, Latrobe Specialty Steel Company, Franklin, PA, prepared by Delta, dated November 26, 2008 (“2008 Franklin, PA Phase I Report”) at p. 11 (Section 8.8(c))

29. Debris in drainage trench associate with storm water retention pond at east edge of parking lot, as described in the 2006 Franklin, PA Phase I Report at Section 7.3 (Section 8.8(c))

30. Oil staining throughout manufacturing area on concrete floor below cutting and grinding machines, as described in the 2006 Franklin, PA Phase I Report at Sections 5.4.4 and 7.3 and in the 2008 Franklin, PA Phase I Report at pp. 20, 22 (Section 8.8(a), (c))

31. Residual material in drums stored outside on northeast corner of property on asphalt, as described in the 2006 Franklin, PA Phase I Report at Section 7.4 (Section 8.8(a), (c))

32. No secondary containment for two above-ground storage tanks and two drum rack/storage areas, as described in the WSP Phase I, pp. 10-11 (Section 8.8(a), (c))

33. Storage of swarf stored uncovered outdoors, as described in the WSP Phase I, p. 11 (Section 8.8(a),(c))

34. Non-compliance with regulatory requirements with respect to the Preparedness, Prevention and Contingency Plan, as described in the WSP Phase I, p. 11 (Section 8.8(a))

35. Non-compliance with regulatory requirements with respect to the Spill Prevention Control and Countermeasures Plan, as described in the WSP Phase I, p. 11 (Section 8.8(a))

Wauseon, OH

36. The site has a long history of industrial use and waste generation, including generation of hazardous wastes and use of petroleum products which may have had the potential to be discharged to the sewer system via sinks or toilets. As described in the Phase I Environmental Site Assessment, Timken Latrobe Steel Koncor Plant, Wauseon, OH, prepared by Delta, dated October 31, 2006 (“2006 Wauseon, OH Phase I Report”) at pp. 21, 24-25, 29-30 and in the Phase I Environmental Site Assessment, Latrobe Specialty Steel Company - Koncor, Wauseon, OH, prepared by Delta, dated November 26, 2008 (“2008 Wauseon, OH Phase I Report”) at pp. 30-31, 35-36, 39-40, a septic system/on-site sewage treatment system was installed in 1974. (Section 8.8(a), (c))

37. As described in the 2006 Wauseon, OH Phase I Report at pp. 21-22, 25-26, 30 and in the 2008 Wauseon, OH Phase I Report at pp. 11, 14, 32-33, 38 the Wauseon, OH facility operated and maintained a barium salt heat treating operation with associated hazardous waste accumulation area and storage tank. The heat treating operation was discontinued and the hazardous waste tank and accumulation pad was closed in 1996. (Section 8.8(a), (c))

38. Four vents on the north side of building K-1 of the Wauseon, OH facility were observed to have a small black-stained area on the side of the building around the vents and on vegetation/soil directly beneath the vents, as described in the 2006 Wauseon, OH Phase I Report at pp. 23, 26, 30, and in the 2008 Wauseon, OH Phase I Report at pp. 34, 36, 40 (Section 8.8(a), (c))

39. Potential for runoff to be contaminated with petroleum products and/or hazardous substances and to be discharged to storm water system from catch basins located in northeast corner of parking area and on concrete storage pad adjacent to and east of building K-2 and eventually to Turkey Foot Creek, as described in the 2006 Wauseon, OH Phase I Report at pp. 26, 30-31, and in the 2008 Wauseon, OH Phase I Report at pp. 36, 40 (Section 8.8(a), (c))

40. Stained areas of concrete floor in manufacturing areas in buildings K-I and K-2 and the concrete floor of K-3, as described in the 2006 Wauseon, OH Phase I Report at pp. 23, 26, 31, and in the 2008 Wauseon, OH Phase I Report at pp. 11, 33, 38-39 (Section 8.8(a), (c))

41. Heavily stained area of concrete floor in building K-5, as described in the 2006 Wauseon, OH Phase I Report at pp. 22-23, 27, and in the 2008 Wauseon, OH Phase I Report at pp. 33, 39 (Section 8.8(a), (c))

42. Listing of northwesterly adjoining property in database search, as described in the 2008 Wauseon, OH Phase I Report at pp. 21-22, 36-37 (Section 8.8(a), (c))

43. Former 10,000-gallon underground diesel fuel storage tank, as described in the 2006 Wauseon, OH Phase I Report at pp. 20, 27 and in the 2008 Wauseon, OH Phase I Report at pp. 30, 37 (Section 8.8(a), (b), (c))

44. Former 250-gallon aboveground kerosene tank with no documentation of removal or closure, as described in the 2006 Wauseon, OH Phase I Report at p. 27 and in the 2008 Wauseon, OH Phase I Report at p. 37 (Section 8.8(a), (c))

45. Non-compliance with terms and conditions of NPDES Ohio EPA Facility Permit No. 2GR00582* AG, dated June 2004, as described in the 2006 Wauseon, OH Phase I Report at p. 28 and in the 2008 Wauseon, OH Phase I Report at pp. 11-12 (Section 8.8(a))

46. Non-compliance with regulatory requirements with respect to the Spill Prevention Control and Countermeasures Plan, as described in the 2006 Wauseon, OH Phase I Report at p. 28 and in the 2008 Wauseon, OH Phase I Report at pp. 11-12 (Section 8.8(a))

47. Non-compliance with respect to requirements for operating as Conditionally Exempt Small Quantity Generator of Hazardous Waste, as described in the 2006 Wauseon, OH Phase I Report at p. 28 and in the 2008 Wauseon, OH Phase I Report at pp. 11-12 (Section 8.8(a))

48. A permit may be required for the air emissions from the oil/water evaporator, as described in the 2006 Wauseon, OH Phase I Report at pp. 29, 31 and in the 2008 Wauseon, OH Phase I Report at pp. 11-12 (Section 8.8(d))

49. Suspect asbestos containing material in building K-1, as described in the 2006 Wauseon, OH Phase I Report at p. 29 and in the 2008 Wauseon, OH Phase I Report at pp. 11, 12 (Section 8.8(a), (c))

Northborough, MA

50. On-site septic tank with leachfield constructed in 1985, as described in the Phase I Environmental Site Assessment, Timken Latrobe Steel Distribution, Northborough, MA, prepared by Delta, dated October 30, 2006 (“2006 Northborough, MA Phase I Report”) at pp. 14, 16, 17-18 and in the Phase I Environmental Site Assessment, Latrobe Specialty Steel Company,

Northborough, MA, prepared by Delta, dated November 26, 2008 (“2008 Northborough, MA Phase I Report” at pp. 21, 24, 25 (Section 8.8(a), (c))

51. No stormwater permitting documentation, as described in the 2006 Northborough, MA Phase I Report at p. 18 (Section 8.8(d))

52. Unneeded chemical materials are stored in a fire-proof location at the facility, as described in the 2006 Northborough, MA Phase I Report at p. 18 (Section 8.8(a))

53. Drums containing machine coolant/hydraulic oil, as described in the 2006 Northborough, MA Phase I Report at pp. 16, 19, and the 2008 Northborough, MA Phase I Report at p. 25 (Section 8.8(a))

54. Speedi-dry absorbent used to clean up minor hydraulic oil spills associated with saws is disposed of in on-site solid waste dumpster as non-regulated waste, as described in the 2006 Northborough, MA Phase I Report at pp. 16, 19 and the 2008 Northborough, MA Phase I Report at p. 21 (Section 8.8(a))

55. Dry well in facility building north of storage room, as described in the 2008 Northborough, MA Phase I Report at pp. 11, 20, 21-22, 23, 25 (Section 8.8(a), (c))

56. Hydraulic oil staining on floor beneath one of three cross cut saws, as described in the WSP Phase I at p. 17 (Section 8.8(a), (c))

White House, TN

57. Petroleum hydrocarbons were identified in groundwater monitoring wells downgradient of a former septic tank/leachfield in 1996, as described in the Phase I Environmental Site Assessment, Timken Latrobe Steel Distribution, White House, TN, prepared by Delta, dated October 30, 2006 (“2006 White House, TN Phase I Report”) at pp. 3-6, 23-24, 26-27 and in the Phase I Environmental Site Assessment, Latrobe Specialty Steel Company, White House, TN, prepared by Delta, dated September 24, 2008 (“2008 White House, TN Phase I Report”) at pp. 6-9, 27, 28 (Section 8.8(a), (c))

58. Two former sumps (a 150-gallon below-ground machine coolant sump in the southeasterly portion of the building and a 2,800 gallon “sludge pit” located near the southeast building) and one current sump (a 150-gallon below-ground machine coolant sump in the northwesterly portion of the building) have been used at the White House, TN facility, as described in the 2006 White House, TN Phase I Report at pp. 3-5, 21-22, 24-25, 27-28 and in the 2008 White House, TN Phase I Report at pp. 6-10, 14, 24 (Section 8.8(a), (c))

59. Approximately 20 gallons of diesel fuel were released to the ground on the south side of the White House, TN plant (near the property line) on December 4, 2002,

as described in the 2006 White House, TN Phase I Report at pp. 14-15, 25 and in the 2008 White House, TN Phase I Report at p. 2 of the User Questionnaire (Section 8.8(a), (c))

60. Release of motor oil from truck located in shipping/receiving bay on August 28, 2006, as described in the 2006 White House, TN Phase I Report at pp. 15-16, 22, 25 and in the 2008 White House, TN Phase I Report at pp. 24-25 (Section 8.8(a), (c))

61. Removal of petroleum contaminated soils from north storm water ditch, as described in the 2006 White House, TN Phase I Report at pp. 3-6, 15, 25-26 and in the 2008 White House, TN Phase I Report at pp. 6-10, 27 (Section 8.8(a), (c))

62. Oil staining at various locations in manufacturing area on concrete floor, as described in the 2006 White House, TN Phase I Report at p. 26 and in the 2008 White House, TN Phase I Report at p. 27 (Section 8.8(a), (c))

63. Storm water samples from Outfalls 001 and 002 were not analyzed for total recoverable zinc as listed in the permit, as described in the 2006 White House, TN Phase I Report at pp. 13-14, 26 (Section 8.8(a))

64. Non-compliance with regulatory requirements with respect to the Preparedness, Prevention and Contingency Plan, as described in the WSP Phase I at p. 20 (Section 8.8(a))

Sheffield, UK

65. Site-wide soil and groundwater contamination, as described in the Draft Phase I Environmental Site Assessment Summary – All Sites, prepared by Delta, dated October 5, 2006 (“Phase I Summary Findings”) at pp. 1-2 of 4 for Sheffield, UK (Section 8.8(a), (c))

66. Oil staining in manufacturing area on concrete floor below cutting and grinding machines in Building 61, with two sunken sumps adjacent to the associated grinding machines and oil staining in manufacturing area on concrete floor below cutting and grinding machines, as described in the Phase I Summary Findings at p. 2 of 4 for Sheffield, UK (Section 8.8(a), (c))

67. Non-compliance with regulatory requirements for 300-gallon aboveground storage tank north of Building 38, as described in the Phase I Summary Findings at pp. 2-3 of 4 for Sheffield, UK (Section 8.8(a), (c))

68. Asbestos located at fascia over entrance to Building 38 and lack of signs noting locations of asbestos containing materials, as described in the Phase I Summary Findings at p. 3 of 4 for Sheffield, UK (Section 8.8(a), (c))

69. Lack of documentation regarding proper disposal of hazardous waste, as described in the Phase I Summary Findings at p. 4 of 4 for Sheffield, UK (Section 8.8(a), (c))

Sterling Heights, MI

70. Surficial staining of concrete floor of warehouse and receiving area, as described in the Phase I Summary Findings at p. 1 of 2 for Sterling Heights, MI (Section 8.8(a), (c))

71. Former 6,000-gallon heating fuel underground storage tank in December 1994, as described in the Phase I Summary Findings at p. 1 of 2 for Sterling Heights, MI (Section 8.8(a), (c))

72. Used oil stored in unlabeled plastic containers and brought to local used oil recycle facility, as described in the Phase I Summary Findings at p. 1 of 2 for Sterling Heights, MI (Section 8.8(a))

73. Suspect asbestos containing materials, as described in the Phase I Summary Findings at p. 2 of 2 for Sterling Heights, MI (Section 8.8(a))

Chicago, IL

74. Removal of former 10,000-gallon underground fuel oil storage tank, as described in the Phase I Summary Findings at p. 1 of 2 for Chicago, IL (Section 8.8(a), (b), (c))

75. Storm water retention basin at southern edge of parking lot within three feet of neighboring property, which contains stockpiles of debris and scrap, as described in the Phase I Summary Findings at p. 1 of 2 for Chicago, IL (Section 8.8(a), (c))

76. Oil staining on concrete below wooden pallet on which hydraulic oil and coolant are stored, as described in the Phase I Summary Findings at p. 1 of 2 for Chicago, IL (Section 8.8(a), (c))

77. Broken pallets and racks stored outside in gravel parking area, as described in the Phase I Summary Findings at p. 1 of 2 for Chicago, IL (Section 8.8(a), (c))

78. No storm water permitting documentation, as described in the Phase I Summary Findings at p. 1 of 2 for Chicago, IL (Section 8.8(d))

79. Unlabelled hydraulic oil storage drums, as described in the Phase I Summary Findings at p. 1 of 2 for Chicago, IL (Section 8.8(a))

Vienna, OH

80. Staining on concrete floor in manufacturing area below cutting and grinding machines, as described in the Phase I Summary Findings at p. 1 of 1 for Vienna, OH (Section 8.8(a), (c))

Greer. SC

81. Oil spillage beneath two above-ground storage tanks, one containing a mixture of waste motor oil and spent soluble oil and one containing virgin soluble oil, as described in the Phase I Environmental Site Assessment, OH&R Special Steels Company, 310 Brookshire Road, Greer, SC, dated March 2004 (“Greer, SC Phase I Report”) at pp. 5-6, 7 (Section 8.8(a)(c))

82. Dark stained soils limited in extent and of a surficial nature adjacent to eastern edge of concrete pad southwest of facility, as described in the Greer, SC Phase I Report at pp. 6, 7 (Section 8.8(a), (c))

Marlborough. MA

83. Petroleum staining on concrete floor of former manufacturing/warehouse area, as described in the Phase I/II Environmental Site Review, Houghton & Richards Facility, Marlborough, MA, dated August 1996 (“Marlborough, MA Phase I/II Report”) at p. 3 (Section 8.8(a), (c))

84. Petroleum hydrocarbons related to steel cutting operations between 1970 and 1191/1992 have penetrated the concrete floor of the former manufacturing/warehouse area, as described in the Marlborough, MA Phase I/II Report at pp. 4-6(Section 8.8(a), (c))

Houston, TX

85. Former underground gasoline storage tanks, as described in the WSP Phase I at p. 22 (Section 8.8(a), (c))

86. Former hazardous wastes generated by previous operator, as described in the WSP Phase I at p. 22 (Section 8.8(a), (c))

SCHEDULE 8.9(d)

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LOAN AND SECURITY AGREEMENT

Post-Employment Health and Welfare Benefits

• Latrobe Steel Company Retiree Health Care Premium Reimbursement Account (as amended and restated effective January 1, 2009).

• Latrobe Specialty Steel Company Non-Bargaining Retiree Medical Coverage.

• Latrobe Steel Company Non-Union Employee Supplemental Unemployment Benefit Plan.

• USWA Supplemental Unemployment Benefit Plan.

• Latrobe Specialty Steel RMM Retirees, Group 14710-25 & -95 PPO Program.

• Latrobe Steel Company Postretirement Health Care and Life Insurance Plan for Hourly- Paid Employees, which includes Latrobe Steel Company Post-Employment Healthcare and Life Insurance Plan for USWA employees.

• 2008 Basic Agreement between Latrobe Specialty Steel and the United Steel Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, dated July 21, 2008.

• 2002 Insurance Agreement between Timken Latrobe Steel and United Steelworkers of America AFL-CIO, which includes Latrobe Specialty Steel United Steel Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Retirees.

• Agreement between Latrobe Steel and International Brotherhood of Teamsters Local No. 247, effective April 1, 2009, which includes Latrobe Specialty Steel Detroit Teamsters Retirees, Group 14710-25 & -95 PPO Programs.

• Insurance Agreement between Latrobe Steel Company and the International Brotherhood of Teamsters and its affiliated Local Number 247, dated April 1, 2009.

SCHEDULE 8.10

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LOAN AND SECURITY AGREEMENT

Bank Accounts

Toolrock Holding, Inc.
Bank Accounts:	None
Investment Accounts:	None

Latrobe Steel Company

Bank Accounts

Acct. No.	Bank Name	Location	Acct. Name
	PNC Bank	Pittsburgh, PA	Latrobe Steel Company Collection Account
	PNC Bank	Pittsburgh, PA	Latrobe Steel Company Funding Account
	PNC Bank	Pittsburgh, PA	Latrobe Steel Company Controlled Disbursement Account
Investment Accounts:		None
OH&R Specialty Steels Company Bank Accounts
Acct. No.	Bank Name	Location	Acct. Name
	PNC Bank	Pittsburgh, PA	OH&R Special Steel Company Collection Account
	PNC Bank	Pittsburgh, PA	OH&R Special Steel Company Controlled Account
Investment Accounts:		None
Specialty Steel Supply, Inc. Bank Accounts:
Acct. No.	Bank Name	Location	Acct. Name
	PNC Bank	East Brunswick, NJ	Specialty Steel Supply, Inc. Collection Account
	PNC Bank	East Brunswick, NJ	Specialty Steel Supply, Inc. Disbursement Account
Investment Accounts:		None

SCHEDULE 8.11

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LOAN AND SECURITY AGREEMENT

Intellectual Property

1. Domain names used by the Loan Parties:

latrobesteel.com

latrobespecialtysteel.com

latrobe-steel.com

latrobesteeldirect.com

latrobedirect.com

specialtysteelsupply.com

2. The following federally registered trademarks:

Mark	Application No.		Filing Date		Registration No.		Registration Date
G.S.N. (Stylized)		71/482106		04/13/45		417324		10/23/45
STAMINAL		71/483227		05/11/45		417918		11/20/45
L.P.D.		71/474697		09/28/44		419971		03/19/46
LESCO		71/470616		05/25/44		428968		04/15/47
VDC (Block letters)		71/573781		02/12/49		560070		06/17/52
XL (Block Letters)		71/669893		07/13/54		603509		03/22/55
BR-4 (Stylized)		72/100268		07/05/60		722498		10/10/61
L in Diamond in Square		72/143745		05/03/62		774374		08/04/64
THERM-I-VAC (Stylized)		72/182191		12/02/63		774843		08/11/64
BG42		73/026131		07/05/74		1000945		01/07/75
VERTEX		76/492429		02/25/03		3117527		07/18/06
GRAPH-AIR		75/726575		06/10/99		2336119		03/28/00
GRAPH-MO		75/726573		06/10/99		2336118		03/28/00
A-21		76/403107		05/01/02		2704287		04/08/03

The following unregistered trademarks:

Tool, Die and High Speed Steels

Badger	Dynavan	Riptide
Brickmold	E. No. I	Saxman-6R
Cascade	GSN-Mo	Select B
Chipper Knife	HW-108	Stark
CLW	Kelvan	Super Cobalt

CM-50	Koncor	Tatmo
CM-52	Lanark	Tatmo Cobalt
C006	Lescowear	Tatmo-V
Corsair	Magnadie	Tatmo-VN
Crusader	Mazeman	TNW
Dart	MGR	Whitebear
Double Six	Montana	XL Chisel
Dycast No. 1	Olympic	440 N-Die
		440C Air Melt

Specialty Alloy Steels

Lescalloy® HP 94TM-30 VAC-ARC®	Nitralloy N™ VAC-ARC®
Nitralloy 135™ Modified VAC-ARC®	CBS-50NiL™ VIM-VAR
CBS-600™ VIM-VAR	440 N-DUR™
CSS-42L™

2. OH&R holds the Ohio registered trade name: Timken Latrobe Steel Distribution, registration number 1624718.

3. Specialty Steel Supply, Inc. holds the common law trademark:

Patents: The patents attached hereto as Exhibit 8.11.

License Agreements:

Software Licenses

Purchase and Support Agreement between OH&R Special Steels, Inc. [sic] and Intrix Systems Group Inc. effective as of November, 1997.

License Agreement between Taxware, a division of govONE Solutions, LP and Latrobe Steel Company dated May 28, 1998 and amended December 20, 2004 and Addendum.

Authorized Affiliate Agreement between Timken Latrobe Steel and SAP America, Inc. dated November 20, 1998.

Software License Agreement between The Timken Company and Intellection Inc. i2 Technologies US, Inc. dated April 13, 1994 and amended March 29, 1996, April 17, 1996 and June 22, 2004.

Sales, Software License and Services Agreement between The Timken Co and Kronos Incorporated dated October 28, 2005, as amended by that Amendment to Kronos Sales, Software License and Services Agreement dated November 8, 2006. (for Workforce Connect).

License Agreement between Kronos Incorporated and Latrobe Specialty Steel Company dated March 30, 2007.

SAP America, Inc. Software and user License Agreement dated July 20, 2007 and amended December 14, 2007.

Master maintenance and sales agreement between IKON and Latrobe Steel Company dated April 19, 2007.

License Agreement between Symantec and Latrobe Steel Company dated August 1, 2007.

Software License Agreement between Black Berry Enterprise and Latrobe Steel Company dated May 1, 2007.

Other Licenses

A license agreement between Latrobe Steel Company and Carnegie Mellon University dated July 20, 2007 with respect to CMU’s martensitic stainless steels technology for potential use in the manufacture of aircraft landing gear.

Proprietary Production Agreement between Timken Latrobe Steel Company and Firth Rixson Special Steels dated January 1, 2006 thru December 31, 2008.

There is an unsigned copy of a Trademark License Agreement between SPS

Technologies, Inc. and Latrobe Steel Company re Aerex bearing a date of July 9, 1996. The Company is in the process of determining whether it was ever signed. This Trademark License Agreement references a Patent License Agreement. To the knowledge of Latrobe, no such Patent License Agreement exists.

A license agreement between Latrobe and QuesTek Innovations LLC dated November 20, 2009 whereby Latrobe acquired a license to produce and sell Ferrium^® C61^™ and C64^™.

A license agreement between Latrobe and QuesTek Innovations LLC dated April 5, 2010 whereby Latrobe acquired a license to produce and sell Ferrium^® M54^™ .

Exhibit 8.11

Patents

Patent Applications

Country	Patent Number
European Patent Application	Serial No. 2004/80009273.7
Canadian Patent Application	Serial No. 2515219
Japanese Patent Application	Serial No. 2006-501146
Chinese Patent Application	Serial No. 200480009273.7 (patent pending)
Brazilian Patent Application	Serial No. PI0406958-7

US Patents

Jurisdiction	Reference #	Type	Filed	Serial #	Issued	Patent
UNITED STATES	931033	NEW	12/23/1993	08/174,180	6/13/1995	5,424,028
UNITED STATES	091070	NEW	7/31/1991	07/738,805	5/4/1993	5,207,843
UNITED STATES	086552	CON	8/6/1986	893,634	1/3/1989	4,795,504
UNITED STATES			10/07/1992	07957724	5/10/1994	5,310,431
UNITED STATES			11/12/2003	10706154	5/10/2005	6,890,393
UNITED STATES			5/08/2003	10431680	5/31/2005	6,899,773
UNITED STATES			10/05/2007	11868078	12/30/2008	7,470,336
UNITED STATES			6/06/1989	07361910	4/07/1992	5,102,619
UNITED STATES			9/17/1998	09156727	3/13/2001	6,200,528
UNITED STATES			N/A	N/A	5/16/1950	2,507,843

Foreign Patents

Jurisdiction	Reference #	Type	Filed	Serial #	Issued	Patent
EUROPEAN PATENT	940972	CEQ	11/7/1994	94308179.4	9/3/1997	EP 0664342
JAPAN	940973	CEQ	12/22/1994	318939/1994	11/21/1997	2,719,892

FRANCE	971423	DCA	11/7/1994	94308179.4	9/3/1997	EP 0664342
GERMANY	971424	DCA	11/7/1994	DE69405375.9	9/3/1997	69405375.9
UNITED KINGDOM	971425	DCA	11/7/1994	N/A	9/3/1997	EP 0664342
SWEDEN	971426	DCA	11/7/1994	N/A	9/3/1997	EP 0664342
ISRAEL	088835	CEQ	10/5/1988	87927	11/19/1992	87,927
SWEDEN	088838	CEQ	10/6/1988	8803555-5	7/15/1991	8803555-5
SOUTH AFRICA						2005-06565
RUSSIA						2,321,670
INDIA						219722

SCHEDULE 8.12

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LOAN AND SECURITY AGREEMENT

Capitalization Chart of Borrowers and Subsidiaries

Company	Class of Stock	Number of Authorized Shares	Owner	Number of Outstanding Shares	Ownership Percentage
Latrobe Steel Company	Common	100	Toolrock Holding, Inc.	100	100%
OH&R Specialty Steels Company	Common	100	Latrobe Steel Company	100	100%
Specialty Steel Supply, Inc.	Common	1,000	Latrobe Steel Company	1,000	100%
Latrobe Specialty Steel Europe, Inc.	Common	100	Latrobe Steel Company	100	100%
Latrobe Specialty Steel Distribution Inc. (Distribution D’Acier Spécialisé Latrobe Inc.)	Common	Unlimited	OH&R Specialty Steels Company	100	100%

Capitalization Chart of Toolrock Holdings, Inc.

Holder	Common Stock	Stock Options	Series A Preferred	Series B Preferred	Common Equivalents	Fully- Diluted Ownership
Toolrock Investment, LLC			31,100,000	12,041,251	43,141,251	87.92%

SCHEDULE 8.13

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LOAN AND SECURITY AGREEMENT

Labor Disputes

2008 Basic Agreement between Latrobe Specialty Steel Company and the United Steel Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, dated July 21, 2008. (Termination Date: August 1, 2013, renews yearly unless terminated by either party).

Insurance Agreement between Latrobe and the International Brotherhood of Teamsters dated April 1, 2009. (Termination Date: April 1, 2011, renews yearly unless terminated by either party).

2008 Pension Agreement between Latrobe Specialty Steel and the United Steel Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union dated July 21, 2008. (Termination Date: December 31, 2013, renews yearly unless terminated by either party).

2008 Insurance Agreement between Latrobe Specialty Steel and the United Steel Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, dated July 21, 2008 (with a provision that the provisions of this agreement become effective January 1, 2009). (Termination Date: December 31, 2013, renews yearly unless terminated by either party).

2008 Supplemental Unemployment Benefit Agreement between Latrobe Specialty Steel and the United Steel Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, dated July 21, 2008. (Termination Date: December 31, 2013, renews yearly unless terminated by either party).

2008 401(K) Agreement between Latrobe Specialty Steel and the United Steel Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, dated July 21, 2008. (Termination Date: December 31, 2013, renews yearly unless terminated by either party.)

Basic Agreement between Latrobe Specialty Steel and the International Brotherhood of Teamsters dated April 1, 2009. (Termination Date: December 31, 2013, renews yearly unless terminated by either party).

SCHEDULE 9.7

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LOAN AND SECURITY AGREEMENT

Assets Permitted to be Sold

None.

SCHEDULE 9.8(k)

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LOAN AND SECURITY AGREEMENT

Certain Equipment Subject to Liens

5 Magnet Lifts

Rework P&H Crane

12 Pallet Racks

2 Lifts & Conveyor System-Bar Pulls

6 Lift Tables for Bandsaws

6 Storage Racks-Maint Dept

Racks-Storage Room

Jarke Racks Relocation

4 Cantilever Racks

Pallet Racks-CNC Dept

Clymer Racks-39 Double 31 Single

Horiz Prod Mill w/ Fixtures

SCHEDULE 9.9

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LOAN AND SECURITY AGREEMENT

Indebtedness

Guaranties:

1. Primary Guaranty Agreement of Latrobe in favor of The Director of Development of the State of Ohio, The Provident Bank (as Trustee) and Western Reserve Port Authority dated June 1,2000.

2. Security Agreement between OH&R and The Director of Development of the State of Ohio dated June 1, 2000.

3. Sublease Agreement between OH&R and Western Reserve Port Authority dated June 1, 2000.

4. First Amendment and Supplement to Financing Agreements between Director of Development of the State of Ohio, Western Reserve Port Authority, The Provident Bank, County of Trumbull, Ohio, OH&R Special Steels Company, dba Timken Latrobe Steel Distribution, Latrobe Steel Company and The Timken Company dated November 1, 2001.

5. In connection with that certain Consent and Release (the “Consent”) dated as of December 8, 2006, by and among The Director of Development of the State of Ohio, The Huntington National Bank, as successor trustee to The Provident Bank (the “Trustee”), Western Reserve Port Authority, the Seller and Latrobe, Latrobe is required to deliver a supporting letter of credit in an amount not less than 25% of the aggregate principal balance of the Bonds (as defined in the Consent) outstanding from time to time to the Trustee on or around May 1, 2009 if Latrobe does not achieve positive net income in accordance with GAAP and a net worth of $30,000,000. The current amount of the letter of credit issued for the account of the Seller is approximately $1,800,000 and such amount is based upon the formula set forth above with respect to the potential letter of credit to be issued for the account of Latrobe.

6. The following capital leases of Specialty Steel Supply, Inc.:

Description (VIN)	Term	Lessor	2010		2011		2012		2013		2014		Total
Hubtex(MSU37-2010 Sideloader)	48 mths	De Lage Landen		20,688.96		20,688.96		20,688.96		12,068.56		—		74,135
Hubtex(MSU37-2140 Sideloader)	60 mths	De Lage Landen		28,174.80		28,174.80		28,174.80		28,174.80		16,435.30		129,135
Racking System	60 mths	De Lage Landen		49,767.24		49,767.24		49,767.24		49,767.24		29,030.89		228,100
Kyocera Copy Machine	60 mths	De Lage Landen		1,406.88		1,406.88		820.68		—		—		3,634
2009 International 24’ Flatbed	60 mths	Ward Idealease		15,636.36		15,636.36		15,636.36		15,636.36		3,909.09		66,455
Hyster(HI2OXM Forklift)	36 mths	NMI-IG Financial Services		9,036.50		—		—		—		—		9,037

Apex (62D Sweeper)	48 mths	Toyota Financial Services	7,247.04	7,247.04	7,247.04	6,643.12	—	28,384
Toyota Financial Toyota (7FDU7O Forklift)	48 mths	Toyota Financial Services	16,738.44	1,394.87	—	—	—	18,133
Konica Minolta (Bizhub 420 Copier)	60 mths	Konica Minolta	1,286.0	1,286.0	1,286.0	428.7	—	4,287

Primary Debt:

2. Credit Card Purchase Program with PNC Bank, National Association, with a maximum credit of $100,000.

SCHEDULE 9.10

to

LOAN AND SECURITY AGREEMENT

Loans, Investments, Etc.

None.

EX-10.6

Exhibit 10.6

NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT CONTAINS INDEMNIFICATION PROVISIONS IN SECTION 5 THAT APPLY TO CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF HICKS HOLDINGS OPERATING LLC OR ANY OTHER INDEMNIFIED PERSON IDENTIFIED HEREIN, SO LONG AS SUCH CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES ARE NOT A RESULT OF BAD FAITH OR WILLFUL MISCONDUCT OF HICKS HOLDINGS OPERATING LLC OR SUCH OTHER INDEMNIFIED PERSON, AS APPLICABLE.

MONITORING AND OVERSIGHT AGREEMENT

This MONITORING AND OVERSIGHT AGREEMENT (this “Agreement”) is made and entered into effective as of December 8, 2006, among Latrobe Steel Company, a Pennsylvania corporation (together with its successors, the “Company”), Toolrock Holdings, Inc., a Delaware corporation (together with its successors, “Holdings” and together with the Company, the “Clients”) and Hicks Holdings Operating LLC (together with its successors, “Monitor”).

WHEREAS, the Clients have requested that Monitor render, and Monitor agrees to render, financial oversight and monitoring services to the Clients as requested from time to time by the board of directors of Holdings.

NOW, THEREFORE, in consideration of the services to be rendered by Monitor to the Clients, and to evidence the obligations of the Clients to Monitor and the mutual covenants herein contained, the Clients hereby jointly and severally agree with Monitor as follows:

1. Retention. The Clients hereby acknowledge that they have retained Monitor to, and Monitor acknowledges that, subject to reasonable advance notice in order to accommodate scheduling, Monitor will, provide financial oversight and monitoring services to the Clients as requested by the board of directors of Holdings during the term of this Agreement.

2. Term. The term of this Agreement shall continue until the earlier to occur of (i) the tenth anniversary of the date hereof or (ii) the date on which Hicks Holdings LLC or its successors and their respective affiliates shall cease to own beneficially, directly or indirectly, any securities of any of the Clients or their respective successors.

3. Compensation.

(a) As compensation for Monitor’s services to the Clients under this Agreement, the Clients hereby irrevocably agree, jointly and severally, to pay to Monitor an annual fee of $500,000 (the “Monitoring Fee”), prorated on a daily basis for any partial calendar year during the term of this Agreement. The Monitoring Fee shall be payable in equal quarterly installments on each January 1, April 1, July 1 and October 1 during the term of this Agreement (each a “Payment Date”), beginning with the first Payment Date following the date hereof. All payments shall be made by wire transfer of immediately available funds to the account described on Exhibit A hereto (or such other account as Monitor may hereafter designate in writing).

(b) Reference is made to that certain Monitoring and Oversight Agreement, of even date herewith, by and among Watermill Management Company, LLC (“Watermill”), the Company and Holdings (the “Watermill M&O Agreement”). To the extent that the Clients are prohibited in any period from paying the entire Monitoring Fee due to Monitor and the entire “Monitoring Fee” (as such term is defined in the Watermill M&O Agreement, together with the Monitoring Fee, the “Fees”) due to Watermill, the amounts of such Fees actually paid to each of Monitor and Watermill in such period shall be reduced in proportion to the relative amounts otherwise due to each of them. The amount of any such reduction in Fees paid shall instead be paid in the next subsequent period in which the Clients are not prohibited from making such payment (together with the amount of any Fees otherwise due in such subsequent period).

(c) All past due payments in respect of the Monitoring Fee shall bear interest at the lesser of the highest rate of interest which may be charged under applicable law or the prime commercial lending rate per annum of JPMorgan Chase Bank or its successors (which rate is a reference rate and is not necessarily its lowest or best rate of interest actually charged to any customer) (the “Prime Rate”) as in effect from time to time, plus five percent (5.0%), from the due date of such payment to and including the date on which payment is made to Monitor in full, including such interest accrued thereon.

4. Reimbursement of Expenses. In addition to the compensation to be paid pursuant to Section 3 hereof, the Clients agree, jointly and severally, to pay or reimburse Monitor for all “Reimbursable Expenses,” which shall consist of all reasonable disbursements and out-of-pocket expenses (including, without limitation, costs of travel, postage, deliveries, fees and disbursements of counsel, communications, etc., but excluding allocated overhead) incurred by Monitor or its affiliates for the account of any Client or in connection with the performance by Monitor of the services contemplated by Section 1 hereof. Promptly (but not more than 10 days) after request by or notice from Monitor, the applicable Client shall pay Monitor, by wire transfer of immediately available funds to the account described on Exhibit A hereto (or such other account as Monitor may hereafter designate in writing), the Reimbursable Expenses for which Monitor has provided such Client invoices or reasonably detailed descriptions. All past due payments in respect of the Reimbursable Expenses shall bear interest at the lesser of the highest rate of interest which may be charged under applicable law or the Prime Rate

2

plus 5.0% from the Payment Date to and including the date on which such Reimbursable Expenses plus accrued interest thereon are fully paid to Monitor.

5. Indemnification. The Clients jointly and severally shall indemnify and hold harmless each of Monitor, its affiliates, and their respective directors, officers, controlling persons (within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20(a) of the Securities Exchange Act of 1934, as amended), if any, agents and employees (Monitor, its affiliates, and such other specified persons being collectively referred to as “Indemnified Persons,” and individually as an “Indemnified Person”) from and against any and all claims, liabilities, losses, damages and expenses incurred by any Indemnified Person (including those arising out of an Indemnified Person’s negligence and reasonable fees and disbursements of the respective Indemnified Person’s counsel) which (A) are related to or arise out of (i) actions taken or omitted to be taken (including, without limitation, any untrue statements made or any statements omitted to be made) by any of the Clients or (ii) actions taken or omitted to be taken by an Indemnified Person with any Client’s consent or in conformity with any Client’s instructions or any Client’s actions or omissions or (B) are otherwise related to or arise out of Monitor’s engagement, and will reimburse each Indemnified Person for all reasonable costs and expenses, including, without limitation, reasonable fees and disbursements of any Indemnified Person’s counsel, as they are incurred, in connection with investigating, preparing for, defending or appealing any action, formal or informal claim, investigation, inquiry or other proceeding, whether or not in connection with pending or threatened litigation, caused by or arising out of or in connection with Monitor’s acting pursuant to Monitor’s engagement, whether or not any Indemnified Person is named as a party thereto and whether or not any liability results therefrom. None of the Clients will, however, be responsible for any claims, liabilities, losses, damages or expenses pursuant to clause (B) of the preceding sentence to the extent they have resulted from Monitor’s bad faith, gross negligence or willful misconduct. The Clients also agree that neither Monitor nor any other Indemnified Person shall have any liability to any Client for or in connection with such engagement except for any such liability for claims, liabilities, losses, damages or expenses incurred by any Client to the extent they have resulted from Monitor’s bad faith, gross negligence or willful misconduct. The Clients further agree that neither of them will, without the prior written consent of Monitor, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not any Indemnified Person is an actual or potential party to such claim, action, suit or proceeding) unless such settlement, compromise or consent includes an unconditional release of Monitor and each other Indemnified Person hereunder from all liability arising out of such claim, action, suit or proceeding. EACH CLIENT HEREBY ACKNOWLEDGES THAT THE FOREGOING INDEMNITY SHALL BE APPLICABLE TO ANY CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF MONITOR OR ANY OTHER INDEMNIFIED PERSON, SO LONG AS SUCH CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES

3

ARE NOT A RESULT OF BAD FAITH OR WILLFUL MISCONDUCT OF MONITOR OR SUCH OTHER INDEMNIFIED PERSON, AS APPLICABLE.

The foregoing right to indemnity shall be in addition to any rights that Monitor and/or any other Indemnified Person may have at common law or otherwise and shall remain in full force and effect following the completion or any termination of the engagement. Each Client hereby consents to personal jurisdiction and to service and venue in any court in which any claim which is subject to this Agreement is brought against Monitor or any other Indemnified Person.

It is understood that, in connection with Monitor’s engagement, Monitor may also be engaged to act for a Client or Clients in one or more additional capacities, and that the terms of this engagement or any such additional engagement(s) may be embodied in one or more separate written agreements. This indemnification shall apply to the engagement specified in the first paragraph hereof as well as to any such additional engagement(s) (whether written or oral) and any modification of said engagement or such additional engagement(s) and shall remain in full force and effect following the completion or termination of said engagement or such additional engagements.

Each of the Clients further understands and agrees that if Monitor is asked to furnish any Client a financial opinion letter or act for any Client in any other formal capacity, such further action may be subject to a separate agreement containing provisions and terms to be mutually agreed upon.

6. Confidential Information. Monitor agrees not to divulge any confidential information, secret processes or trade secrets disclosed by any Client or any of its subsidiaries to Monitor in connection with the performance of the services hereunder, unless such Client consents to the divulging thereof or such information, secret processes or trade secrets are publicly available or otherwise available other than as a result of a breach of this Section 6 to Monitor without restriction or breach of any confidentiality agreement or unless required by any governmental authority or in response to any valid legal process.

7. Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of Texas, excluding any choice-of- law provisions thereof. Each of the parties hereby (a) irrevocably submits to the exclusive jurisdiction of the United States Federal District Court for the Northern District of Texas, sitting in Dallas County, Texas, the United States of America, in the event such court has jurisdiction or, if such court does not have jurisdiction, to any district court sitting in Dallas County, Texas, the United States of America, for the purpose of any suit, action, or proceeding arising out of or relating to this Agreement, including any claims by any Indemnified Persons for indemnity pursuant to Section 5 hereof, (b) waives, and agrees not to assert in any such suit, action, or proceeding, any claim that (i) it is not personally subject to the jurisdiction of such court or of any other court to which proceedings in such court may be appealed, (ii) such suit, action or proceeding is brought in an inconvenient forum, or (iii) the venue of such suit, action, or proceeding is improper and (c) expressly waives any requirement for the posting of a bond by the party bringing

4

such suit, action, or proceeding. Each of the parties consents to process being served in any such suit, action, or proceeding by mailing, certified mail, return receipt requested, a copy thereof to such party at the address in effect for notices hereunder, and agrees that such services shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 7 shall affect or limit any right to serve process in any other manner permitted by law.

8. Assignment. This Agreement and all provisions contained herein shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, however, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned (other than with respect to the rights of Monitor, which may be assigned to any one or more of its principals or affiliates) by any of the parties without the prior written consent of the other parties.

9. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and the signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart.

10. Other Understandings. All discussions, understanding and agreements heretofore made between any of the parties hereto with respect to the subject matter hereof are merged in this Agreement, which alone fully and completely expresses the Agreement of the parties hereto. All calculations of Monitoring Fee and Reimbursable Expenses shall be made by Monitor and, in the absence of mathematical error, shall be presumed correct.

*****

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

5

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written.

HICKS HOLDINGS OPERATING LLC
By:	/s/ Joseph B. Armes

LATROBE STEEL COMPANY
By:	/s/ Stephen Kotler
	Name: Stephen Kotler Title:   Vice President, Treasurer and Secretary

TOOLROCK HOLDING, INC.
By:	/s/ Stephen Kotler
	Name: Stephen Kotler Title:   Vice President, Treasurer and Secretary

SIGNATURE PAGE TO

MONITORING AND OVERSIGHT AGREEMENT

EXHIBIT A

Wire Transfer Instructions

JPMorgan Chase Bank

ABA #:
Account #:
Account Name:	Hicks Holdings Operating LLC
Reference:	Latrobe
Attention:

EX-10.7

Exhibit 10.7

NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT CONTAINS INDEMNIFICATION PROVISIONS IN SECTION 5 THAT APPLY TO CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF WATERMILL MANAGEMENT COMPANY, LLC OR ANY OTHER INDEMNIFIED PERSON IDENTIFIED HEREIN, SO LONG AS SUCH CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES ARE NOT A RESULT OF BAD FAITH OR WILLFUL MISCONDUCT OF WATERMILL MANAGEMENT COMPANY, LLC OR SUCH OTHER INDEMNIFIED PERSON, AS APPLICABLE.

MONITORING AND OVERSIGHT AGREEMENT

This MONITORING AND OVERSIGHT AGREEMENT (this “Agreement”) is made and entered into effective as of December 8, 2006, among Latrobe Steel Company, a Pennsylvania corporation (together with its successors, the “Company”), Toolrock Holdings, Inc., a Delaware corporation (together with its successors, “Holdings” and together with the Company, the “Clients”) and Watermill Management Company, LLC (together with its successors, “Monitor”).

WHEREAS, the Clients have requested that Monitor render, and Monitor agrees to render, financial oversight and monitoring services to the Clients as requested from time to time by the board of directors of Holdings.

NOW, THEREFORE, in consideration of the services to be rendered by Monitor to the Clients, and to evidence the obligations of the Clients to Monitor and the mutual covenants herein contained, the Clients hereby jointly and severally agree with Monitor as follows:

1. Retention. The Clients hereby acknowledge that they have retained Monitor to, and Monitor acknowledges that, subject to reasonable advance notice in order to accommodate scheduling, Monitor will, provide financial oversight and monitoring services to the Clients as requested by the board of directors of Holdings during the term of this Agreement.

2. Term. The term of this Agreement shall continue until the earlier to occur of (i) the tenth anniversary of the date hereof or (ii) the date on which Watermill-Toolrock Partners, L.P. or its successors and their respective affiliates shall cease to own beneficially, directly or indirectly, any securities of any of the Clients or their respective successors.

3. Compensation.

(a) As compensation for Monitor’s services to the Clients under this Agreement, the Clients hereby irrevocably agree, jointly and severally, to pay to Monitor an annual fee of $750,000 (the “Monitoring Fee”), prorated on a daily basis for any partial calendar year during the term of this Agreement. The Monitoring Fee shall be payable in equal quarterly installments on each January 1, April 1, July 1 and October 1 during the term of this Agreement (each a “Payment Date”), beginning with the first Payment Date following the date hereof. All payments shall be made by wire transfer of immediately available funds to the account described on Exhibit A hereto (or such other account as Monitor may hereafter designate in writing).

(b) Reference is made to that certain Monitoring and Oversight Agreement, of even date herewith, by and among Hicks Holdings Operating LLC (“Hicks”), the Company and Holdings (the “Hicks M&O Agreement”). To the extent that the Clients are prohibited in any period from paying the entire Monitoring Fee due to Monitor and the entire “Monitoring Fee” (as such term is defined in the Hicks M&O Agreement, together with the Monitoring Fee, the “Fees”) due to Hicks, the amounts of such Fees actually paid to each of Monitor and Hicks in such period shall be reduced in proportion to the relative amounts otherwise due to each of them. The amount of any such reduction in Fees paid shall instead be paid in the next subsequent period in which the Clients are not prohibited from making such payment (together with the amount of any Fees otherwise due in such subsequent period).

(c) All past due payments in respect of the Monitoring Fee shall bear interest at the lesser of the highest rate of interest which may be charged under applicable law or the prime commercial lending rate per annum of JPMorgan Chase Bank or its successors (which rate is a reference rate and is not necessarily its lowest or best rate of interest actually charged to any customer) (the “Prime Rate”) as in effect from time to time, plus five percent (5.0%), from the due date of such payment to and including the date on which payment is made to Monitor in full, including such interest accrued thereon.

4. Reimbursement of Expenses. In addition to the compensation to be paid pursuant to Section 3 hereof, the Clients agree, jointly and severally, to pay or reimburse Monitor for all “Reimbursable Expenses,” which shall consist of all reasonable disbursements and out-of-pocket expenses (including, without limitation, costs of travel, postage, deliveries, fees and disbursements of counsel, communications, etc., but excluding allocated overhead) incurred by Monitor or its affiliates for the account of any Client or in connection with the performance by Monitor of the services contemplated by Section 1 hereof. Promptly (but not more than 10 days) after request by or notice from Monitor, the applicable Client shall pay Monitor, by wire transfer of immediately available funds to the account described on Exhibit A hereto (or such other account as Monitor may hereafter designate in writing), the Reimbursable Expenses for which Monitor has provided such Client invoices or reasonably detailed descriptions. All past due payments in respect of the Reimbursable Expenses shall bear interest at the lesser of the highest rate of interest which may be charged under applicable law or the Prime Rate

2

plus 5.0% from the Payment Date to and including the date on which such Reimbursable Expenses plus accrued interest thereon are fully paid to Monitor.

5. Indemnification. The Clients jointly and severally shall indemnify and hold harmless each of Monitor, its affiliates, and their respective directors, officers, controlling persons (within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20(a) of the Securities Exchange Act of 1934, as amended), if any, agents and employees (Monitor, its affiliates, and such other specified persons being collectively referred to as “Indemnified Persons,” and individually as an “Indemnified Person”) from and against any and all claims, liabilities, losses, damages and expenses incurred by any Indemnified Person (including those arising out of an Indemnified Person’s negligence and reasonable fees and disbursements of the respective Indemnified Person’s counsel) which (A) are related to or arise out of (i) actions taken or omitted to be taken (including, without limitation, any untrue statements made or any statements omitted to be made) by any of the Clients or (ii) actions taken or omitted to be taken by an Indemnified Person with any Client’s consent or in conformity with any Client’s instructions or any Client’s actions or omissions or (B) are otherwise related to or arise out of Monitor’s engagement, and will reimburse each Indemnified Person for all reasonable costs and expenses, including, without limitation, reasonable fees and disbursements of any Indemnified Person’s counsel, as they are incurred, in connection with investigating, preparing for, defending or appealing any action, formal or informal claim, investigation, inquiry or other proceeding, whether or not in connection with pending or threatened litigation, caused by or arising out of or in connection with Monitor’s acting pursuant to Monitor’s engagement, whether or not any Indemnified Person is named as a party thereto and whether or not any liability results therefrom. None of the Clients will, however, be responsible for any claims, liabilities, losses, damages or expenses pursuant to clause (B) of the preceding sentence to the extent they have resulted from Monitor’s bad faith, gross negligence or willful misconduct. The Clients also agree that neither Monitor nor any other Indemnified Person shall have any liability to any Client for or in connection with such engagement except for any such liability for claims, liabilities, losses, damages or expenses incurred by any Client to the extent they have resulted from Monitor’s bad faith, gross negligence or willful misconduct. The Clients further agree that neither of them will, without the prior written consent of Monitor, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not any Indemnified Person is an actual or potential party to such claim, action, suit or proceeding) unless such settlement, compromise or consent includes an unconditional release of Monitor and each other Indemnified Person hereunder from all liability arising out of such claim, action, suit or proceeding. EACH CLIENT HEREBY ACKNOWLEDGES THAT THE FOREGOING INDEMNITY SHALL BE APPLICABLE TO ANY CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF MONITOR OR ANY OTHER INDEMNIFIED PERSON, SO LONG AS SUCH CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES

3

ARE NOT A RESULT OF BAD FAITH OR WILLFUL MISCONDUCT OF MONITOR OR SUCH OTHER INDEMNIFIED PERSON, AS APPLICABLE.

The foregoing right to indemnity shall be in addition to any rights that Monitor and/or any other Indemnified Person may have at common law or otherwise and shall remain in full force and effect following the completion or any termination of the engagement. Each Client hereby consents to personal jurisdiction and to service and venue in any court in which any claim which is subject to this Agreement is brought against Monitor or any other Indemnified Person.

It is understood that, in connection with Monitor’s engagement, Monitor may also be engaged to act for a Client or Clients in one or more additional capacities, and that the terms of this engagement or any such additional engagemen(s) may be embodied in one or more separate written agreements. This indemnification shall apply to the engagement specified in the first paragraph hereof as well as to any such additional engagement(s) (whether written or oral) and any modification of said engagement or such additional engagement(s) and shall remain in full force and effect following the completion or termination of said engagement or such additional engagements.

Each of the Clients further understands and agrees that if Monitor is asked to furnish any Client a financial opinion letter or act for any Client in any other formal capacity, such further action may be subject to a separate agreement containing provisions and terms to be mutually agreed upon.

6. Confidential Information. Monitor agrees not to divulge any confidential information, secret processes or trade secrets disclosed by any Client or any of its subsidiaries to Monitor in connection with the performance of the services hereunder, unless such Client consents to the divulging thereof or such information, secret processes or trade secrets are publicly available or otherwise available other than as a result of a breach of this Section 6 to Monitor without restriction or breach of any confidentiality agreement or unless required by any governmental authority or in response to any valid legal process.

7. Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the Commonwealth of Massachusetts, excluding any choice-of-law provisions thereof. Each of the parties hereby (a) irrevocably submits to the exclusive jurisdiction of the United States Federal District Court for the District of Massachusetts, sitting in Suffolk County, Massachusetts, the United States of America, in the event such court has jurisdiction or, if such court does not have jurisdiction, to any district court sitting in Suffolk County, Massachusetts, the United States of America, for the purpose of any suit, action, or proceeding arising out of or relating to this Agreement, including any claims by any Indemnified Persons for indemnity pursuant to Section 5 hereof, (b) waives, and agrees not to assert in any such suit, action, or proceeding, any claim that (i) it is not personally subject to the jurisdiction of such court or of any other court to which proceedings in such court may be appealed, (ii) such suit, action or proceeding is brought in an inconvenient forum, or (iii) the venue of such suit, action, or proceeding is improper and (c) expressly waives any requirement

4

for the posting of a bond by the party bringing such suit, action, or proceeding. Each of the parties consents to process being served in any such suit, action, or proceeding by mailing, certified mail, return receipt requested, a copy thereof to such party at the address in effect for notices hereunder, and agrees that such services shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 7 shall affect or limit any right to serve process in any other manner permitted by law.

8. Assignment. This Agreement and all provisions contained herein shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, however, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned (other than with respect to the rights of Monitor, which may be assigned to any one or more of its principals or affiliates) by any of the parties without the prior written consent of the other parties.

9. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and the signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart.

10. Other Understandings. All discussions, understanding and agreements heretofore made between any of the parties hereto with respect to the subject matter hereof are merged in this Agreement, which alone fully and completely expresses the Agreement of the parties hereto. All calculations of Monitoring Fee and Reimbursable Expenses shall be made by Monitor and, in the absence of mathematical error, shall be presumed correct.

*****

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

5

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date and year first above written.

WATERMILL MANAGEMENT COMPANY, LLC
By:	/s/ Stephen Kotler

LATROBE STEEL COMPANY
By:	/s/ Stephen Kotler
	Name: Stephen Kotler Title:   Vice President, Treasurer and Secretary

TOOLROCK HOLDING, INC.
By:	/s/ Stephen Kotler
	Name: Stephen Kotler Title:   Vice President, Treasurer and Secretary

SIGNATURE PAGE TO

MONITORING AND OVERSIGHT AGREEMENT

EXHIBIT A

Wire Transfer Instructions

Citizens Bank

One Financial Center

Boston, MA 02111

ABA #:
Account #:
Account Name:	Watermill Management Company, LLC
Address:	750 Marrett Road, Suite 401
	Lexington, MA 02421
Reference:	Latrobe
Attention:

EX-10.8

Exhibit 10.8

NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT CONTAINS INDEMNIFICATION PROVISIONS IN SECTION 5 THAT APPLY TO CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF HICKS HOLDINGS OPERATING LLC OR ANY OTHER INDEMNIFIED PERSON IDENTIFIED THEREIN.

TRANSACTION SERVICES AGREEMENT

This TRANSACTION SERVICES AGREEMENT (this “Agreement”) is made and entered into effective as of March 6, 2008, by and among Latrobe Steel Company, a Pennsylvania corporation (together with its successors, the “Company”), Toolrock Holding, Inc., a Delaware corporation (together with its successors, “Holding” and together with the Company, the “Clients”), and Hicks Holdings Operating LLC (together with its successors, “Advisor”).

WHEREAS, the Clients have requested that Advisor render, and Advisor has rendered, transaction and financial advisory services to them in connection with the negotiation and execution of the credit facilities being provided under that certain Loan and Security Agreement, dated as of March 6, 2008, among the Company and OH&R Special Steels Company, as borrowers, the guarantors (including Holding) from time to time party thereto, the lenders from time to time party thereto, Wachovia Bank, National Association, as agent, and the other parties thereto (the “Transaction,” and such Loan and Security Agreement, the “LSA”); and

WHEREAS, the Clients have requested that Advisor render transaction, financial advisory, investment banking, and other similar services to them with respect to (i) future credit arrangements and debt or equity securities offerings (“Subsequent Financing Transactions”) and (ii) potential future tender offer, acquisition, sale, merger, exchange offer, recapitalization, restructuring, or other similar transactions directly or indirectly involving any of the Clients or any of their respective subsidiaries and any other person or entity (“Subsequent Acquisition Transactions” and together with the Subsequent Financing Transactions, “Subsequent Transactions”).

NOW, THEREFORE, in consideration of the services rendered and to be rendered by Advisor to the Clients, and to evidence the obligations of the Clients to Advisor and the mutual covenants herein contained, the Clients hereby jointly and severally agree with Advisor as follows:

1. Retention.

(a) The Clients hereby acknowledge that they have retained Advisor, and Advisor acknowledges that it has acted, as financial advisor to the Clients in connection with the Transaction.

(b) Each of the Clients acknowledges that it has retained Advisor as its financial advisor in connection with any Subsequent Transaction that may be consummated during the term of this Agreement and that none of the Clients will retain any other person or entity to provide such services in connection with any such Subsequent Transaction without the prior written consent of Advisor. Advisor agrees that it shall provide such financial advisory, investment banking and other similar services in connection with any such Subsequent Transaction as may be requested from time to time by the board of directors or board of managers of the applicable Client. If requested by Advisor, the Clients shall cause their respective subsidiaries to execute a joinder agreement to become a party to this Agreement.

2. Term. The term of this Agreement shall continue until the earlier to occur of (i) the tenth anniversary of the date hereof or (ii) the date on which HHEP-Latrobe, L.P. or its successors and their respective affiliates shall cease to own beneficially, directly or indirectly, any securities of any of the Clients or their respective successors.

3. Compensation.

(a) As compensation for Advisor’s services as financial advisor to the Clients in connection with the Transaction, the Clients hereby irrevocably agree, jointly and severally, to pay to Advisor a cash fee equal to $1,500,000, to be paid at the closing of the Transaction, which will occur substantially simultaneously with the execution of this Agreement.

(b) In connection with any Subsequent Transaction consummated during the term of this Agreement, the applicable Client shall pay to Advisor, at the closing of any such Subsequent Transaction, a cash fee equal to 1.0% of the Transaction Value of any Subsequent Financing Transaction and .75% of the Transaction Value of any Subsequent Acquisition Transaction. As used herein, the term “Transaction Value” means the total value of the Subsequent Transaction, including, without limitation, the gross proceeds raised in a Subsequent Financing Transaction or the aggregate funds required to complete a Subsequent Acquisition Transaction, including, without limitation, the amount of any indebtedness, preferred stock or similar items assumed (or remaining outstanding) in such Subsequent Acquisition Transaction (in each case before deduction of any fees payable pursuant to this Section 3(b)).

(c) In the event the payment of a fee that is due and payable pursuant to Section 3(b) above is then prohibited under the terms of Section 9.12 of the LSA, such fee shall be deferred and shall instead be payable, together with interest thereon at the rate of 8% per annum, on the first date such payment is permissible under Section 9.12 of the LSA, or if applicable, such earlier date that the LSA terminates.

4. Reimbursement of Expenses. In addition to the compensation to be paid pursuant to Section 3 above, the Clients agree, jointly and severally, to reimburse Advisor, promptly following demand therefor, together with invoices or reasonably detailed descriptions thereof, for all reasonable disbursements and out-of-pocket expenses (including, without limitation, fees and disbursements of counsel) incurred by Advisor (i) as financial advisor to the Clients in connection with the Transaction or (ii) in connection with the performance by it of the services contemplated by Section (b) above.

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5. Indemnification. The Clients jointly and severally shall indemnify and hold harmless each of Advisor, its affiliates, and their respective directors, partners, officers, controlling persons (within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20(a) of the Securities Exchange Act of 1934, as amended), if any, agents and employees (each of Advisor, its affiliates and such other specified persons being collectively referred to as “Indemnified Persons” and individually as an “Indemnified Person”) from and against any and all claims, liabilities, losses, damages and expenses incurred by any Indemnified Person (including, without limitation, those arising out of an Indemnified Person’s negligence and reasonable fees and disbursements of the respective Indemnified Person’s counsel) which (A) are related to or arise out of (i) actions taken or omitted to be taken (including, without limitation, any untrue statements made or any statements omitted to be made) by any of the Clients or (ii) actions taken or omitted to be taken by an Indemnified Person with any Client’s consent or in conformity with any Client’s instructions or any Client’s actions or omissions or (B) are otherwise related to or arise out of Advisor’s engagement, and will reimburse each Indemnified Person for all costs and expenses, including, without limitation, fees and disbursements of any Indemnified Person’s counsel, as they are incurred, in connection with investigating, preparing for, defending or appealing any action, formal or informal claim, investigation, inquiry or other proceeding, whether or not in connection with pending or threatened litigation, caused by or arising out of or in connection with Advisor’s acting pursuant to Advisor’s engagement, whether or not any Indemnified Person is named as a party thereto and whether or not any liability results therefrom. None of the Clients will, however, be responsible to any Indemnified Person for any claims, liabilities, losses, damages or expenses pursuant to clause (B) of the preceding sentence that have resulted primarily from such Indemnified Person’s gross negligence or willful misconduct. The Clients also agree that neither Advisor nor any other Indemnified Person shall have any liability to any Client for or in connection with such engagement except for any such liability for claims, liabilities, losses, damages or expenses incurred by any Client that have resulted primarily from such Indemnified Person’s gross negligence or willful misconduct. The Clients further agree that none of them will, without the prior written consent of Advisor, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not any Indemnified Person is an actual or potential party to such claim, action, suit or proceeding) unless such settlement, compromise or consent includes an unconditional release of Advisor and each other Indemnified Person hereunder from all liability arising out of such claim, action, suit or proceeding. EACH CLIENT HEREBY ACKNOWLEDGES THAT THE FOREGOING INDEMNITY SHALL BE APPLICABLE TO ALL CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF ADVISOR OR ANY OTHER INDEMNIFIED PERSON.

The Clients further agree that with respect to any Indemnified Person who is employed, retained or otherwise associated with, or appointed or nominated by, the Advisor or any of its affiliates and who acts or serves as a director, officer, manager, fiduciary, employee, consultant, advisor or agent of, for or to the Clients or any of their subsidiaries, that the Clients or such subsidiaries, as applicable, shall be primarily liable for all indemnification, reimbursements, advancements or similar payments (the “Indemnity Obligations”) afforded to such Indemnified Person acting in such capacity or capacities on behalf or at the request of the

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Clients, whether the Indemnity Obligations are created by law, organizational or constituent documents, contract (including this Agreement) or otherwise. Notwithstanding the fact that the Advisor and/or any of its affiliates, other than the Clients (such persons, together with its and their heirs, successors and assigns, the “Advisor Parties”), may have concurrent liability to an Indemnified Person with respect to the Indemnity Obligations, the Clients hereby agree that in no event shall the Clients or any of their subsidiaries have any right or claim against any of the Advisor Parties for contribution or have rights of subrogation against any Advisor Parties through an indemnified Person for any payment made by the Clients or any of their subsidiaries with respect to any Indemnity Obligation. In addition, the Clients hereby agree that in the event that any Advisor Parties pay or advance an Indemnified Person any amount with respect to an Indemnity Obligation, the Clients will, or will cause their subsidiaries to, as applicable, promptly reimburse any such Advisor Parties for such payment or advance upon request.

The foregoing right to indemnity shall be in addition to any rights that Advisor and/or any other Indemnified Person may have at common law or otherwise and shall remain in full force and effect following the completion or any termination of the engagement. Each Client hereby consents to personal jurisdiction and to service and venue in any court in which any claim that is subject to this Agreement is brought against Advisor or any other Indemnified Person.

It is understood that, in connection with Advisor’s engagement, Advisor may also be engaged to act for a Client or Clients in one or more additional capacities, and that the terms of this engagement or any such additional engagement(s) may be embodied in one or more separate written agreements. This indemnification shall apply to the engagement specified in the first paragraph hereof as well as to any such additional engagement(s) (whether written or oral) and any modification of said engagement or such additional engagement(s) and shall remain in full force and effect following the completion or termination of said engagement or such additional engagement(s).

Each of the Clients further understands and agrees that if Advisor is asked to act for any Client in any other formal capacity, such further action shall be at the option of Advisor and may be subject to a separate agreement containing provisions and terms to be mutually agreed upon.

6. Confidential Information. In connection with the performance of the services hereunder, Advisor agrees not to divulge any confidential information, secret processes or trade secrets disclosed by any Client or any of its subsidiaries to it solely in its capacity as a financial advisor, unless such Client consents to the divulging thereof or such information, secret processes or trade secrets are publicly available or otherwise available to Advisor without restriction or breach of any confidentiality agreement or unless required by any governmental authority or in response to any valid legal process.

7. Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of Texas, excluding any choice-of-law provisions thereof. Each of the parties hereby (i) irrevocably submits to the exclusive jurisdiction of the United States Federal District Court for the Northern District of Texas, sitting in Dallas County, Texas, the United States of America, in the event such court has jurisdiction or, if such court does not have jurisdiction, to any district court sitting in Dallas County, Texas,

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the United States of America, for the purpose of any suit, action, or proceeding arising out of or relating to this Agreement, including any claims by any Indemnified Persons for indemnity pursuant to Section 5 above, (ii) waives, and agrees not to assert in any such suit, action or proceeding, any claim that (x) it is not personally subject to the jurisdiction of such court or of any other court to which proceedings in such court may be appealed, (y) such suit, action or proceeding is brought in an inconvenient forum, or (z) the venue of such suit, action or proceeding is improper and (iii) expressly waives any requirement for the posting of a bond by the party bringing such suit, action or proceeding. Each of the parties consents to process being served in any such suit, action or proceeding by mailing, certified mail, return receipt requested, a copy thereof to such party at the address in effect for notices hereunder, and agrees that such services shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 7 shall affect or limit any right to serve process in any other manner permitted by law.

8. Assignment. This Agreement and all provisions contained herein shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, however, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned (other than with respect to the rights, interests and obligations of Advisor, which may be assigned to any one or more of its principals or affiliates) by any of the parties without the prior written consent of the other parties.

9. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and the signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart.

10. Other Understandings. All discussions, understandings and agreements heretofore made between any of the parties hereto with respect to the subject matter hereof are merged in this Agreement, which alone fully and completely expresses the agreement of the parties hereto.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

HICKS HOLDINGS OPERATING LLC
By:	/s/ Joseph B. Armes
Name:	Joseph B. Armes
Title:	Chief Operating Officer
LATROBE STEEL COMPANY
By:	/s/ Dale B. Mikus
Name:	Dale B. Mikus
Title:	Vice President and Chief Financial Officer
TOOLROCK HOLDING, INC.
By:	/s/ Dale B. Mikus
Name:	Dale B. Mikus
Title:	Vice President and Chief Financial Officer

SIGNATURE PAGE TO

TRANSACTION SERVICES AGREEMENT

EX-10.9

Exhibit 10. 9

NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT CONTAINS INDEMNIFICATION PROVISIONS IN SECTION 5 THAT APPLY TO CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF WATERMILL MANAGEMENT COMPANY, LLC OR ANY OTHER INDEMNIFIED PERSON IDENTIFIED THEREIN.

TRANSACTION SERVICES AGREEMENT

This TRANSACTION SERVICES AGREEMENT (this “Agreement”) is made and entered into effective as of March 6, 2008, by and among Latrobe Steel Company, a Pennsylvania corporation (together with its successors, the “Company”). Toolrock Holding, Inc., a Delaware corporation (together with its successors, “Holding” and together with the Company, the “Clients”), and Watermill Management Company, LLC (together with its successors, “Advisor”).

WHEREAS, the Clients have requested that Advisor render, and Advisor has rendered, transaction and financial advisory services to them in connection with the negotiation and execution of the credit facilities being provided under that certain Loan and Security Agreement, dated as of March 6, 2008, among the Company and OH&R Special Steels Company, as borrowers, the guarantors (including Holding) from time to time party thereto, the lenders from time to time party thereto, Wachovia Bank, National Association, as agent, and the other parties thereto (the “Transaction,” and such Loan and Security Agreement, the “LSA”); and

WHEREAS, the Clients have requested that Advisor render transaction, financial advisory, investment banking, and other similar services to them with respect to (i) future credit arrangements and debt or equity securities offerings (“Subsequent Financing Transactions”) and (ii) potential future tender offer, acquisition, sale, merger, exchange offer, recapitalization, restructuring, or other similar transactions directly or indirectly involving any of the Clients or any of their respective subsidiaries and any other person or entity (“Subsequent Acquisition Transactions” and together with the Subsequent Financing Transactions, “Subsequent Transactions”).

NOW, THEREFORE, in consideration of the services rendered and to be rendered by Advisor to the Clients, and to evidence the obligations of the Clients to Advisor and the mutual covenants herein contained, the Clients hereby jointly and severally agree with Advisor as follows:

1. Retention.

(a) The Clients hereby acknowledge that they have retained Advisor, and Advisor acknowledges that it has acted, as financial advisor to the Clients in connection with the Transaction.

(b) Each of the Clients acknowledges that it has retained Advisor as its financial advisor in connection with any Subsequent Transaction that may be consummated during the term of this Agreement and that none of the Clients will retain any other person or entity to provide such services in connection with any such Subsequent Transaction without the prior written consent of Advisor. Advisor agrees that it shall provide such financial advisory, investment banking and other similar services in connection with any such Subsequent Transaction as may be requested from time to time by the board of directors or board of managers of the applicable Client. If requested by Advisor, the Clients shall cause their respective subsidiaries to execute a joinder agreement to become a party to this Agreement.

2. Term. The term of this Agreement shall continue until the earlier to occur of (i) the tenth anniversary of the date hereof or (ii) the date on which Watermill-Toolrock Partners, L.P. or its successors and their respective affiliates shall cease to own beneficially, directly or indirectly, any securities of any of the Clients or their respective successors.

3. Compensation.

(a) As compensation for Advisor’s services as financial advisor to the Clients in connection with the Transaction, the Clients hereby irrevocably agree, jointly and severally, to pay to Advisor a cash fee equal to $1,500,000, to be paid at the closing of the Transaction, which will occur substantially simultaneously with the execution of this Agreement.

(b) In connection with any Subsequent Transaction consummated during the term of this Agreement, the applicable Client shall pay to Advisor, at the closing of any such Subsequent Transaction, a cash fee equal to 1.0% of the Transaction Value of any Subsequent Financing Transaction and .75% of the Transaction Value of any Subsequent Acquisition Transaction. As used herein, the term “Transaction Value” means the total value of the Subsequent Transaction, including, without limitation, the gross proceeds raised in a Subsequent Financing Transaction or the aggregate funds required to complete a Subsequent Acquisition Transaction, including, without limitation, the amount of any indebtedness, preferred stock or similar items assumed (or remaining outstanding) in such Subsequent Acquisition Transaction (in each case before deduction of any fees payable pursuant to this Section 3(b)).

(c) In the event the payment of a fee that is due and payable pursuant to Section 3(b) above is then prohibited under the terms of Section 9.12 of the LSA, such fee shall be deferred and shall instead be payable, together with interest thereon at the rate of 8% per annum, on the first date such payment is permissible under Section 9.12 of the LSA, or if applicable, such earlier date that the LSA terminates.

4. Reimbursement of Expenses. In addition to the compensation to be paid pursuant to Section 3 above, the Clients agree, jointly and severally, to reimburse Advisor, promptly following demand therefor, together with invoices or reasonably detailed descriptions thereof, for all reasonable disbursements and out-of-pocket expenses (including, without limitation, fees and disbursements of counsel) incurred by Advisor (i) as financial advisor to the Clients in connection with the Transaction or (ii) in connection with the performance by it of the services contemplated by Section 1(b) above.

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5. Indemnification. The Clients jointly and severally shall indemnify and hold harmless each of Advisor, its affiliates, and their respective directors, partners, officers, controlling persons (within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20(a) of the Securities Exchange Act of 1934, as amended), if any, agents and employees (each of Advisor, its affiliates and such other specified persons being collectively referred to as “Indemnified Persons” and individually as an “Indemnified Person”) from and against any and all claims, liabilities, losses, damages and expenses incurred by any Indemnified Person (including, without limitation, those arising out of an Indemnified Person’s negligence and reasonable fees and disbursements of the respective Indemnified Person’s counsel) which (A) are related to or arise out of (i) actions taken or omitted to be taken (including, without limitation, any untrue statements made or any statements omitted to be made) by any of the Clients or (ii) actions taken or omitted to be taken by an Indemnified Person with any Client’s consent or in conformity with any Client’s instructions or any Client’s actions or omissions or (B) are otherwise related to or arise out of Advisor’s engagement, and will reimburse each Indemnified Person for all costs and expenses, including, without limitation, fees and disbursements of any Indemnified Person’s counsel, as they are incurred, in connection with investigating, preparing for, defending or appealing any action, formal or informal claim, investigation, inquiry or other proceeding, whether or not in connection with pending or threatened litigation, caused by or arising out of or in connection with Advisor’s acting pursuant to Advisor’s engagement, whether or not any Indemnified Person is named as a party thereto and whether or not any liability results therefrom. None of the Clients will, however, be responsible to any Indemnified Person for any claims, liabilities, losses, damages or expenses pursuant to clause (B) of the preceding sentence that have resulted primarily from such Indemnified Person’s gross negligence or willful misconduct. The Clients also agree that neither Advisor nor any other Indemnified Person shall have any liability to any Client for or in connection with such engagement except for any such liability for claims, liabilities, losses, damages or expenses incurred by any Client that have resulted primarily from such Indemnified Person’s gross negligence or willful misconduct. The Clients further agree that none of them will, without the prior written consent of Advisor, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not any Indemnified Person is an actual or potential party to such claim, action, suit or proceeding) unless such settlement, compromise or consent includes an unconditional release of Advisor and each other Indemnified Person hereunder from all liability arising out of such claim, action, suit or proceeding. EACH CLIENT HEREBY ACKNOWLEDGES THAT THE FOREGOING INDEMNITY SHALL BE APPLICABLE TO ALL CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF ADVISOR OR ANY OTHER INDEMNIFIED PERSON.

The Clients further agree that with respect to any Indemnified Person who is employed, retained or otherwise associated with, or appointed or nominated by, the Advisor or any of its affiliates and who acts or serves as a director, officer, manager, fiduciary, employee, consultant, advisor or agent of, for or to the Clients or any of their subsidiaries, that the Clients or such subsidiaries, as applicable, shall be primarily liable for all indemnification, reimbursements, advancements or similar payments (the “Indemnity Obligations”) afforded to such Indemnified Person acting in such capacity or capacities on behalf or at the request of the

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Clients, whether the Indemnity Obligations are created by law, organizational or constituent documents, contract (including this Agreement) or otherwise. Notwithstanding the fact that the Advisor and/or any of its affiliates, other than the Clients (such persons, together with its and their heirs, successors and assigns, the “Advisor Parties”), may have concurrent liability to an Indemnified Person with respect to the Indemnity Obligations, the Clients hereby agree that in no event shall the Clients or any of their subsidiaries have any right or claim against any of the Advisor Parties for contribution or have rights of subrogation against any Advisor Parties through an Indemnified Person for any payment made by the Clients or any of their subsidiaries with respect to any Indemnity Obligation. In addition, the Clients hereby agree that in the event that any Advisor Parties pay or advance an Indemnified Person any amount with respect to an Indemnity Obligation, the Clients will, or will cause their subsidiaries to, as applicable, promptly reimburse any such Advisor Parties for such payment or advance upon request.

The foregoing right to indemnity shall be in addition to any rights that Advisor and/or any other Indemnified Person may have at common law or otherwise and shall remain in full force and effect following the completion or any termination of the engagement. Each Client hereby consents to personal jurisdiction and to service and venue in any court in which any claim that is subject to this Agreement is brought against Advisor or any other Indemnified Person.

It is understood that, in connection with Advisor’s engagement, Advisor may also be engaged to act for a Client or Clients in one or more additional capacities, and that the terms of this engagement or any such additional engagement(s) may be embodied in one or more separate written agreements. This indemnification shall apply to the engagement specified in the first paragraph hereof as well as to any such additional engagement(s) (whether written or oral) and any modification of said engagement or such additional engagement(s) and shall remain in full force and effect following the completion or termination of said engagement or such additional engagement(s).

Each of the Clients further understands and agrees that if Advisor is asked to act for any Client in any other formal capacity, such further action shall be at the option of Advisor and may be subject to a separate agreement containing provisions and terms to be mutually agreed upon.

6. Confidential Information. In connection with the performance of the services hereunder, Advisor agrees not to divulge any confidential information, secret processes or trade secrets disclosed by any Client or any of its subsidiaries to it solely in its capacity as a financial advisor, unless such Client consents to the divulging thereof or such information, secret processes or trade secrets are publicly available or otherwise available to Advisor without restriction or breach of any confidentiality agreement or unless required by any governmental authority or in response to any valid legal process.

7. Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the Commonwealth of Massachusetts, excluding any choice-of-law provisions thereof. Each of the parties hereby (i) irrevocably submits to the exclusive jurisdiction of the United States Federal District Court for the District of Massachusetts, sitting in Suffolk County, Massachusetts, the United States of America, in the event such court has jurisdiction or, if such court does not have jurisdiction, to any district court

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sitting in Suffolk County, Massachusetts, the United States of America, for the purpose of any suit, action, or proceeding arising out of or relating to this Agreement, including any claims by any Indemnified Persons for indemnity pursuant to Section 5 above, (ii) waives, and agrees not to assert in any such suit, action or proceeding, any claim that (x) it is not personally subject to the jurisdiction of such court or of any other court to which proceedings in such court may be appealed, (y) such suit, action or proceeding is brought in an inconvenient forum, or (z) the venue of such suit, action or proceeding is improper and (iii) expressly waives any requirement for the posting of a bond by the party bringing such suit, action or proceeding. Each of the parties consents to process being served in any such suit, action or proceeding by mailing, certified mail, return receipt requested, a copy thereof to such party at the address in effect for notices hereunder, and agrees that such services shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 7 shall affect or limit any right to serve process in any other manner permitted by law.

8. Assignment. This Agreement and all provisions contained herein shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, however, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned (other than with respect to the rights, interests and obligations of Advisor, which may be assigned to any one or more of its principals or affiliates) by any of the parties without the prior written consent of the other parties.

9. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, and the signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart.

10. Other Understandings. All discussions, understandings and agreements heretofore made between any of the parties hereto with respect to the subject matter hereof are merged in this Agreement, which alone fully and completely expresses the agreement of the parties hereto.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

WATERMILL MANAGEMENT COMPANY, LLC
By:	/s/ Stephen Kotler
Name:	Stephen Kotler
Title:	Principal
LATROBE STEEL COMPANY
By:	/s/ Dale B. Mikus
Name:	Dale B. Mikus
Title:	Vice President and Chief Financial Officer
TOOLROCK HOLDING, INC.
By:	/s/ Dale B. Mikus
Name:	Dale B. Mikus
Title:	Vice President and Chief Financial Officer

SIGNATURE PAGE TO

TRANSACTION SERVICES AGREEMENT

EX-10.10

Exhibit 10.10

TOOLROCK INVESTMENT, LLC

AMENDED AND RESTATED

REGISTRATION RIGHTS AGREEMENT

March 17, 2010

TABLE OF CONTENTS

		Page
SECTION 1.	Registration Rights		1
1.01	Definitions		1
1.02	Piggyback Registration		3
1.03	Obligations of the Company		3
1.04	Furnish Information		4
1.05	Expenses of Registration		5
1.06	Underwriting Requirements		5
1.07	Indemnification		5
1.08	Reports Under 1934 Act		7
1.09	Form S-3 Registration		8
1.10	Assignment of Registration Rights		9
1.11	Limitations on Subsequent Registration Rights		9
1.12	“Market Stand Off” Agreement		9
1.13	Consistency of Treatment of Shares and Units.		10
1.14	Termination of Registration Rights		10
SECTION 2.	Miscellaneous		10
2.01	Successors and Assigns		10
2.02	Governing Law		10
2.03	Counterparts		10
2.04	Titles and Subtitles		11
2.05	Notices		11
2.06	Expenses		11
2.07	Amendments and Waivers		11
2.08	Severability		11
2.09	Entire Agreement; Binding Effect		11

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT is made as of the 17th day of March 2010 is entered into by and among Toolrock Investment, LLC, a Delaware limited liability company (the “Company”), Toolrock Holding, Inc., a Delaware corporation (the “Corporation”) and the Members listed on Schedule A attached hereto (each, a “Member”, and collectively, the “Members”).

WHEREAS, the Company and certain of the Members entered into a Registration Rights Agreement, dated as of December 8, 2006 (the “Original Agreement”) in connection with the Company’s issuance to certain of the Members of units of membership interest consisting of its Series 1 Units (the “Series 1 Units”), Series 2 Units (the “Series 2 Units”) and Series 3 Units (the “Series 3 Units”); and

WHEREAS, pursuant to a Securities Purchase Agreement of even date herewith between the Company and certain of the Members (the “Securities Purchase Agreement”), the Company is issuing to certain of the Members units of membership interest consisting of its Series 4 Units (the “Series 4 Units”), Series 5 Units (the “Series 5 Units”) and Series 6 Units (the “Series 6 Units” and together with Series 1 Units, Series 2 Units, Series 3 Units, Series 4 Units and Series 5 Units, the “Units”);

WHEREAS, the Units are held by the Members as set forth on Schedule A to the Amended and Restated Limited Liability Company Agreement of the Company of even date herewith by and among the Company and the Members (the “LLC Agreement”);

WHEREAS, pursuant to the Securities Purchase Agreement, the Corporation is issuing to certain of the Members warrants (the “Warrants”) to purchase shares (the “Shares”) of the Corporation’s common stock, $0.01 par value per share (the “Common Stock”), and Series A Convertible Preferred Stock, $0.01 par value per share (the “Series A Stock”); and

WHEREAS, one of the conditions to the consummation of the transactions contemplated by the Securities Purchase Agreement is the execution and delivery of this Agreement to provide for registration rights for the Units and Shares purchased by the Members as set forth herein.

NOW, THEREFORE, in consideration of the foregoing premises and the covenants and agreements of the parties contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

SECTION 1. Registration Rights. The Company covenants and agrees as follows:

1.01 Definitions. For purposes of this Agreement:

(a) “Act” means the Securities Act of 1933, as amended.

(b) “Common Shares” means (a) the Units of the Company, (b) the Shares of the Corporation, (c) any other securities into which or for which any of the securities described

in (a) or (b) may be converted or exchanged pursuant to a conversion, plan of recapitalization, reorganization, merger, sale of assets or other similar transaction.

(c) “Form S-1 or SB-2” means such forms under the Act as in effect on the date hereof or any successor or similar registration form under the Act subsequently adopted by the SEC.

(d) “Form S-3” means such form under the Act as in effect on the date hereof or any successor or similar registration form under the Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

(e) “Holder” means any person owning or having the right to acquire Registrable Securities or any assignee to whom such rights may be transferred in accordance with Section 1.10 hereof.

(f) “Initial Public Offering” means the first underwritten public offering of Common Shares for the account of the Company and offered on a “firm commitment” or “best efforts” basis pursuant to an offering registered under the Act with the SEC on Form S-1 or SB-2.

(g) “Investors” means (i) the Members and any future Member of the Company who agrees to bind itself as an Investor by executing and delivering to the Company a counterpart page hereto, and includes any successor to, or assignee or transferee of, any such person who or which agrees in writing to be treated as an Investor hereunder and to be bound by the terms and comply with all applicable provisions hereof.

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

(i) “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Act, and the declaration or ordering of effectiveness of such registration statement or document.

(j) “Registrable Securities” means (i) the Common Shares and (ii) Common Shares or other securities issued or issuable in respect of such Common Shares or such other securities issued or issuable pursuant to the conversion of the Common Shares upon any split, dividend, recapitalization, reorganization, merger, consolidation, sale of assets or similar event. Any Registrable Securities will cease to be such when (i) a registration statement covering such Registrable Securities has been declared effective by the Commission and such Registrable Securities have been disposed of pursuant to such effective registration statement, (ii) such Registrable Securities are distributed to the public pursuant to Rule 144 (or any similar provision then in effect) under the Securities Act or (iii) such Registrable Securities may be resold in any three month period in accordance with Rule 144(k) under the Securities Act.

(k) “SEC” shall mean the Securities and Exchange Commission.

(j) “Violation” shall have the meaning set forth in Section 1.07(a).

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1.02 Piggyback Registration. If following the Company’s Initial Public Offering (but without any obligation to do so) the Company proposes to register (including for this purpose a registration effected by the Company for any of its Members) any of its Common Shares or other securities under the Act in connection with the public offering of such securities solely for cash (other than pursuant to a registration statement on Form S-8 or Form S-4, or any successor to such forms promulgated by the SEC or a registration on any form which does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities), the Company shall, at such time, promptly give each Holder written notice of such registration. Upon the written request of each Holder given within thirty (30) days after mailing of such notice by the Company in accordance with Section 1.04, the Company shall, subject to the provisions of Section 1.06, cause to be registered under the Act all of the Registrable Securities that each such Holder has requested to be registered.

1.03 Obligations of the Company. Whenever required under this Section 1 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

(a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its reasonable best efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to one hundred twenty (120) days or until the distribution contemplated in the Registration Statement has been completed; provided, however, that (i) such 120-day period shall be extended for a period of time equal to the period the Holder refrains from selling any securities included in such registration at the request of an underwriter of Common Shares (or other securities) of the Company; and (ii) in the case of any registration of units of Registrable Securities on Form S-3 which are intended to be offered on a continuous or delayed basis, such 120-day period shall be extended, if necessary, to keep the registration statement effective until all such units of Registrable Securities are sold, provided that Rule 415, or any successor rule under the Act, permits an offering on a continuous or delayed basis, and provided further that applicable rules under the Act governing the obligation to file a post-effective amendment permit, in lieu of filing a post-effective amendment which (A) includes any prospectus required by Section 10(a)(3) of the Act or (B) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of information required to be included in (A) and (B) above to be contained in periodic reports filed pursuant to Section 13 or 15(d) of the 1934 Act in the registration statement.

(b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement.

(c) Furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.

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(d) Use its reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Holders; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

(e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.

(f) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.

(g) Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then listed.

(h) Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration.

(i) Furnish, or cause to be furnished, at the request of any Holder requesting registration of Registrable Securities, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective: (1) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders requesting registration, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities and (2) a “comfort” letter dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering and reasonably satisfactory to a majority in interest of the Holders requesting registration, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities.

1.04 Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 1 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder’s Registrable Securities.

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1.05 Expenses of Registration. The Company shall bear and pay all expenses incurred in connection with any registration, filing or qualification of Registrable Securities with respect to the registrations pursuant to Section 1.02 for each Holder (which right may be assigned as provided in Section 1.10), including (without limitation) all registration, filing, and qualification fees, printers and accounting fees relating or apportionable thereto and the reasonable fees and disbursements of one counsel for the selling Holders selected by them, but excluding underwriting discounts and commissions relating to Registrable Securities.

1.06 Underwriting Requirements. In connection with any offering involving an underwriting of Common Shares of the Company, the Company shall not be required under Section 1.02 to include any of the Holders’ Registrable Securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters), and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the underwriter advises the Company in writing that in its opinion the number of units of Registrable Securities requested to be included in such offering exceeds the number of units that can be sold in an orderly manner in such offering within a price range acceptable to the Company without adversely affecting the marketability of the offering, then the Company will include in such registration: first, the securities the Company proposes to sell; second, the Registrable Securities requested to be included in such registration (pro rata as between the Holders thereof based upon the number of units of Registrable Securities owned by each such Holder), but in no event shall the number of units of Registrable Securities of the selling Holders be reduced below 10% of the total amount of securities included in such offering, unless such offering is the initial public offering of the Company (in which case the selling Holders may be excluded if the managing underwriter makes the determination described above and no securities other than those of the Company are included); and third any other securities of the Company requested to be included in such registration, in such manner as the Company may determine.

1.07 Indemnification. In the event any units of Registrable Securities are included in a registration statement under this Section 1:

(a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder, any underwriter (as defined in the Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Act or the 1934 Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Act or the 1934 Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a “Violation”): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein, any free-writing prospectus as defined in Rule 405 under the Act or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Act, the 1934 Act, any federal or state securities law or any rule or regulation promulgated under the Act or the 1934 Act or any federal or state securities law; and the Company will pay to each such Holder, underwriter or controlling person, promptly after

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request for reimbursement has been received by the Company, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 1.07(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld or delayed), nor shall the Company be liable in any such case for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, underwriter or controlling person.

(b) To the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Act, any underwriter, any other Holder selling securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Act or the 1934 Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will pay any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this subsection 1.07(b), in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 1.07(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld or delayed; provided further, that, in no event shall any indemnity under this subsection 1.07(b) exceed the net proceeds from the offering received by such Holder.

(c) Promptly after receipt by an indemnified party under this Section 1.07 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.07, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to an actual or potential conflict of interest between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 1.07, but the omission so to deliver written notice to the

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indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 1.07.

(d) If the indemnification provided for in this Section 1.07 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage, or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the Violation that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission; provided further, that, in no event shall any contribution of a Holder under this subsection 1.07(d) exceed the net proceeds from the offering received by such Holder.

(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

(f) The obligations of the Company and the Holders under this Section 1.07 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 1, and otherwise; provided that any such indemnification obligations shall not extend beyond the period prescribed by the applicable statute of limitations (and all extensions thereof) with respect to such action or claim; provided further, that if notice is given under this Section 1.07 with respect to any alleged Violation or other matter entitling a party to indemnification hereunder prior to the applicable expiration date, such indemnification obligation shall continue indefinitely in respect of the applicable claim until it is finally resolved.

1.08 Reports Under 1934 Act. With a view to making available to the Holders the benefits of Rule 144 promulgated under the Act and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company agrees to:

(a) make and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times after ninety (90) days after the effective date of its Initial Public Offering;

(b) as soon as practicable after its Initial Public Offering, take such action, including the voluntary registration of its Common Shares under Section 12 of the 1934 Act, as is necessary to enable the Holders to utilize Form S-3 for the sale of their Registrable Securities, such action to be taken as soon as practicable after the end of the fiscal year in which its Initial Public Offering is consummated;

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(c) use its reasonable best efforts, after its Initial Public Offering, to file with the SEC in a timely manner all reports and other documents required of the Company under the Act and the 1934 Act; and

(d) furnish to any Holder, forthwith upon request by such Holder (i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the consummation of its Initial Public Offering), the Act and the 1934 Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form.

1.09 Form S-3 Registration. In case the Company shall receive from any Holder or Holders a written request or requests that the Company effect a registration on Form S-3 with respect to all or a part of the Registrable Securities owned by such Holder or Holders, the Company will:

(a) promptly give written notice of the proposed registration to all other Holders;

(b) as soon as practicable, use its reasonable best efforts to effect such registration as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder’s or Holders’ Registrable Securities as is specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as is specified in a written request given within twenty (20) days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration pursuant to this Section 1.09: (i) if Form S-3 is not available for such offering by the Holders; (ii) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than $3,000,000; or (iii) if the Company shall furnish to the Holders a certificate signed by the Chief Executive Officer of the Company stating that, in the good faith judgment of the Board of Directors of the Company, it would have a material adverse effect on the Company for such registration statement to be filed and it is therefore essential to defer the filing of such registration statement, in which event the Company shall have the right to defer taking action with respect to such filing for a period of not more than ninety (90) days after receipt of the request of the Holder or Holders under this Section 1.09; provided, however, that the Company shall not utilize this right more than twice in any twelve (12)-month period; and

(c) Subject to the foregoing, the Company shall use its reasonable best efforts to file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders. All expenses other than underwriting discounts and commissions incurred in connection with registrations pursuant to this Section 1.09, including (without limitation) all registration, filing and qualification fees, printers’ and accounting fees, fees and disbursements

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of counsel for the Company (including the reasonable fees and disbursements of one counsel to the selling Holders) shall be borne by the Company.

1.10 Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Section 1 may be assigned (but only with all related obligations) by a Holder to a transferee or assignee of such securities who has acquired such securities in compliance with the LLC Agreement, provided, in each case that: (i) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; (ii) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement, including without limitation the provisions of Section 1.12 below; and (iii) such assignment shall be effective only if immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Act.

1.11 Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of greater than 50% of the Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of the Company which would grant to such holder or prospective holder the right, other than as set forth herein and except to employees of the Company with respect to registrations on Form S-8 (or any successor forms thereto), to request the Company to register any securities of the Company except such rights as are not more favorable than or inconsistent with the rights granted to the Holders herein, and further provided, that such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the amount of the Registrable Securities of the Holders which is included.

1.12 “Market Stand Off” Agreement. Each Holder hereby agrees that, during the one hundred and eighty (180) day period following the date of the first sale to the public pursuant to the first registration statement of the Company filed under the Act, it shall not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any securities of the Company held by it at any time during such period other than Registrable Securities held by such Holder included in such registration; provided, however, that:

(a) all officers and directors of the Company and all members owning at least 1% of the outstanding Common Shares of the Company enter into similar agreements;

(b) the Market Stand-Off provided for in this Section 1.12 shall be applicable only to the first such registration statement of the Company that covers securities to be sold on its behalf to the public in an underwritten offering but not the Registrable Securities sold pursuant to such registration statement; and

(c) nothing in this Section 1.12 shall prohibit, and any lock-up agreement entered into hereunder shall permit, the transfer by a Holder of Registrable Securities to a member of such Holder’s immediate family or to a partner or member or affiliate of such Holder,

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or such partner or member’s partner or member, so long as such transferee also agrees to enter into and be bound by a lock-up agreement substantially identical to the lock-up agreement required by this Section 1.12.

In order to enforce the foregoing covenant, the Company may impose stop transfer instructions with respect to the Registrable Securities of each Holder (and the Common Shares or other securities of every other person subject to the foregoing restriction) until the end of such period.

Notwithstanding the foregoing, the obligations described in this Section 1.12 shall not apply to a registration relating solely to employee benefit plans on Form S-8 or successor or similar forms which may be promulgated in the future, or a registration relating solely to a Rule 145 transaction on Form S-4 or successor or similar forms which may be promulgated by the SEC in the future.

1.13 Consistency of Treatment of Shares and Units. At any time that the Company is requested to register either Shares or Units hereunder, the Company and the Corporation shall use their reasonable best efforts, and the Members shall cooperate as reasonably requested, to provide for the same rights for the holders of each type of security by conversion, plan of recapitalization, reorganization, merger, or other similar transaction or method reasonably designed to provide such rights while maintaining the Members’ respective beneficial ownership in the Corporation.

1.14 Termination of Registration Rights. The obligations of the Company to register Registrable Shares pursuant to this Agreement shall expire on the first to occur of the fifth anniversary of the Initial Public Offering and the date when no Registrable Shares are outstanding.

SECTION 2. Miscellaneous.

2.01 Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any Registrable Securities). Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

2.02 Governing Law. This Agreement shall be deemed to be a contract governed by the laws of the State of Delaware and shall for all purposes be construed in accordance with the laws of such state, without reference to the conflicts of laws provisions thereof.

2.03 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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2.04 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

2.05 Notices. All notices and other communications given to or made upon any party hereto in connection with this Agreement shall, except as otherwise expressly herein provided, be in writing (including facsimile communication delivered during normal business hours) and mailed, faxed, sent by Federal Express or other nationally recognized overnight courier service or personally delivered to the respective parties. All such notices and other communications shall, except as otherwise expressly herein provided, be effective upon delivery if delivered by hand or by Federal Express or other nationally recognized courier service, three business days after deposit in the mail, postage prepaid, in the case of mail, and in the case of facsimile, when received. All communications shall be sent to the address as set forth on the signature page hereof (or, with respect to the Company, at the address of the Company’s principal offices) or at such other address as such party may designate by ten days’ advance written notice to the other parties hereto.

2.06 Expenses. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled.

2.07 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holders of greater than 50% of the Registrable Securities then outstanding (provided, however, no amendment or waiver which would adversely affect any Holder of Registrable Securities or impose any additional obligations on any Holder of Registrable Securities but not all other Holders of Registrable Securities shall be made without the consent of such adversely affected Holder of Registrable Securities). Any amendment or waiver effected in accordance with this paragraph shall be binding upon each Holder of any Registrable Securities then outstanding, each future Holder of all such Registrable Securities and the Company.

2.08 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

2.09 Entire Agreement; Binding Effect. This Agreement (including the Exhibits and Schedules hereto, if any) constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof.

*    *    *

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

COMPANY:	TOOLROCK INVESTMENT, LLC
	By:	[Illegible]
	Name:	Illegible
	Title:	Vice President
INVESTORS:	WATERMILL-TOOLROCK PARTNERS, L.P.
	By:   Watermill-Toolrock Enterprises, LLC, its General Partner
	By:	[Illegible]
	Name:	Illegible
	Title:	Illegible
	WATERMILL-TOOLROCK PARTNERS II, L.P.
	By:   Watermill-Toolrock Enterprises, LLC, its General Partner
	By:	[Illegible]
	Name:	Illegible
	Title:	Illegible
	HHEP-LATROBE, L.P.
	By: Hicks-Latrobe GP, L.P., its General Partner
	By: Hicks-Latrobe GP, L.L.C., its General Partner
	By:	/s/ Thomas O. Hicks
		Name:     Thomas O. Hicks
		Title:

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SANKATY CREDIT OPPORTUNITIES II, L.P.
By:	/s/ Michael Ewald
Name:	Michael Ewald
Title:	Managing Director
PROSPECT HARBOR CREDIT PARTNERS, L.P.
By:	/s/ Michael Ewald
Name:	Michael Ewald
Title:	Managing Director
SANKATY HIGH YIELD PARTNERS III, L.P.
By:	/s/ Michael Ewald
Name:	Michael Ewald
Title:	Managing Director
RGIP, LLC
By:	/s/ Alfred O. Rose
Name:	Alfred O. Rose
Title:	Managing Member

Signature Page to Registration Rights Agreement

EX-10.12

Exhibit 10.12

EXECUTION VERSION

CONFIDENTIAL EMPLOYMENT AGREEMENT

This CONFIDENTIAL EMPLOYMENT AGREEMENT (this “Agreement”) dated as of January 17, 2011 (the “Effective Date”), is made by and between Latrobe Steel Company, a Pennsylvania corporation doing business as Latrobe Specialty Steel Company (the “Company”), and B. Christopher DiSantis, an individual resident of the State of Ohio (the “Executive”). Collectively, the Company and Executive are referred to in this Agreement as the “Parties.”

WHEREAS, the Company engages in the business of manufacturing and distributing high-performance, remelted materials for aerospace, defense, energy, hydrocarbon and other life-critical applications; and

WHEREAS, the Company wishes to employ Executive as the President and Chief Executive Officer of the Company, and Executive wishes to be so employed, pursuant to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained in this Agreement, the Parties, intending to be legally bound hereby, mutually agree as follows:

1. Employment; Board Membership.

(a) Title and Duties. Commencing on the Effective Date, Executive shall be employed as the President and Chief Executive Officer of the Company and shall perform all duties and have all responsibilities and power commensurate with such positions, including effective supervision and control over, and responsibility for the business and affairs of the Company, and the power and authority to establish, subject to the approval of the Board of Directors of the Company (the “Board”), the strategic plans and budgets, and to manage the day-to-day operations of the Company, and employ and discharge employees of the Company. Notwithstanding the foregoing, Executive shall have the authority, without Board approval, to hire and discharge any employees of the Company other than those employees who directly report to Executive. Executive agrees to perform such other duties reasonably assigned or delegated to him by the Board consistent with his position as the President and Chief Executive Officer. Executive shall report solely and directly to the Board. If elected by the board of directors of Toolrock Holding, Inc., a Delaware corporation (“Toolrock”), or the board of directors of any direct or indirect subsidiary of Toolrock or the Company, Executive will also serve as the President and Chief Executive Officer of Toolrock or any subsidiaries of Toolrock or the Company, as the case may be.

(b) Relocation of Company’s Headquarters. During Executive’s employment under this Agreement, Executive shall work, in conjunction with the Board, to relocate the Company’s headquarters from Latrobe, Pennsylvania to the Pittsburgh, Pennsylvania area (the “Relocated HQ”). Executive and the Board shall work together to determine the timing, location, staffing and related matters of such relocation.

(c) Board Membership. Upon the earlier of (i) the first filing by the Company or Toolrock of a Form S-1 with the Securities and Exchange Commission, or (ii) April 26, 2011, and continuing for the duration of Executive’s employment under this Agreement, the Company

shall use commercially reasonable efforts to ensure that Executive is elected to the Board and the board of directors of Toolrock, including nominating Executive during Executive’s employment under this Agreement for election at the expiration of each of his terms. Executive agrees that if he is so elected, that he shall serve as a member of such boards. Executive will not participate as a director as to any deliberations made or actions taken by the Board with respect to Executive, or with respect to all rights and obligations of the Company or the Board under this Agreement, it being agreed that the foregoing shall not serve to prevent Executive from participating in deliberations or actions pertaining to a group of employees, which group includes Executive. Executive will also serve on such boards of directors of subsidiaries of the Company as requested by the Board.

2. Term. The Company shall employ Executive until Executive’s employment is terminated in accordance with the terms and conditions of this Agreement, it being understood that Executive will be employed as an at-will employee. As such, Executive’s employment may be terminated by Executive or the Company at any time for any reason or no reason.

3. Compensation.

(a) Base Salary. The Company shall pay Executive an annual base salary (the “Base Salary”) of $425,000. The Board shall review the amount of Executive’s Base Salary in January, 2012, and periodically thereafter, and may increase (but not decrease) such Base Salary, in its sole discretion. Such adjusted annual salary then shall become Executive’s “Base Salary” for purposes of this Agreement. Such Base Salary and other compensation shall be payable in accordance with the Company’s normal payroll practices as in effect from time to time, and shall be subject to applicable deductions and withholdings as required by law, and as authorized by Executive.

(b) Incentive Compensation. During Executive’s employment under this Agreement, Executive shall be eligible to participate in an annual bonus plan, to be designed and implemented by the Company, whereby Executive will be eligible to receive an annual bonus with a target value of one hundred percent (100%) of the Base Salary then in effect. For purposes of developing Executive’s 2011 annual bonus plan and determining Executive’s 2011 annual bonus, the Board shall consider Executive’s performance during the last six to eight months of the Company’s 2011 fiscal year. The Board shall consider the proposed bands, targets and 2011 bonus plan at the Board Compensation Committee’s April, 2011 meeting.

(c) Equity. Concurrently with the execution and delivery of this Agreement, Toolrock and the Executive are entering into (i) a Stock Purchase Agreement in the form attached hereto as Exhibit A (the “SPA”), pursuant to which Executive is purchasing 460,993 shares of common stock of Toolrock for a purchase price of $2.82 per share, in accordance with and subject to the terms and conditions of the SPA, and (ii) an Incentive Stock Option Agreement in the form attached hereto as Exhibit B (the “Option Agreement”), pursuant to which Executive will have the right and option to purchase 900,000 shares of common stock of Toolrock for a purchase price of $2.82 per share, in accordance with and subject to the terms and conditions of the Option Agreement.

(d) Benefits. During Executive’s employment under this Agreement, Executive shall be entitled to participate in all employee benefit plans or programs, including,

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but not limited to, health and welfare and 401(k) plans, generally available to other senior management employees of the Company, to the extent that Executive is eligible to participate under the terms of each particular plan or program. The Company may eliminate any such benefit or change the terms thereof at any time or from time to time so long as such adjustment is applicable to all management employees of the Company.

(e) Vacation. During Executive’s employment under this Agreement, Executive shall be entitled to four weeks of paid vacation leave during each calendar year. All vacation is subject to, and must be taken in accordance with, the Company’s procedures and policies regarding vacation, as established from time to time.

(f) Vehicle Allowance. During Executive’s employment under this Agreement, the Company shall pay Executive a monthly automobile allowance in the amount of $1,000, and shall pay for or reimburse Executive for expenses regarding the operation, insurance and routine maintenance of such vehicle, including deductibles, fuel, parking, tolls and car washes (collectively, the “Vehicle Allowance”). The Company shall also pay Executive an additional amount (the “Additional Payment”) such that, after payment by Executive of all income taxes imposed upon the Vehicle Allowance and the Additional Payment, Executive retains such portion of the Additional Payment equal to the income tax imposed upon the Vehicle Allowance and the Additional Payment.

(g) Expense Reimbursement. The Company shall reimburse Executive for all reasonable out-of-pocket business expenses incurred by Executive in connection with the performance of Executive’s duties and responsibilities under this Agreement, including but not limited to all business expenses associated with Executive’s use of a club described in Section 3(h), in accordance with, and subject to, Company’s procedures and policies regarding expense reimbursement, as established from time to time.

(h) Club Membership. During Executive’s employment under this Agreement, the Company will reimburse Executive for the cost of membership and basic monthly dues for a golf, tennis, social or similar type of club in the Western Pennsylvania area. Executive shall be responsible for any personal use expenses associated with his use of such club.

(i) Young Presidents’ Organization Membership. During Executive’s employment under this Agreement, the Company will reimburse Executive for the cost of membership and basic annual or monthly dues associated with Executive’s participation in a Young Presidents’ Organization (“YPO”), should Executive elect to join and be selected for membership. The Company also agrees to reimburse Executive for reasonable YPO membership-related dues and the cost for Executive to attend local meetings and events for YPO. Executive agrees that any other reimbursement of YPO-related costs will be subject to prior approval by the Board. Executive further agrees that any significant expenditure of time beyond the normal monthly YPO meetings will be subject to prior approval by the Board.

(j) Relocation. In accordance with the Company’s procedures and policies as established from time to time, the Company will provide reasonable relocation assistance to Executive. Notwithstanding the foregoing, the Company agrees that Executive will not be limited in the number of house-hunting trips to Pittsburgh. The Company further agrees that it

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will reimburse Executive for the actual monetary loss incurred by Executive on the sale of Executive’s current residence in Ohio if the net proceeds of such sale are less than the Executive’s tax basis in such residence (the “Relocation Payment”). Furthermore, the Company shall pay Executive an Additional Payment such that, after payment by Executive of all income taxes imposed upon the Relocation Payment and the Additional Payment, Executive retains such portion of the Additional Payment equal to the income tax imposed upon the Relocation Payment and the Additional Payment.

(k) Interest on Late Payments. If the Company fails to timely make any payment to Executive that is required to be made hereunder, the amount not timely paid shall bear interest after the date it is due hereunder at the rate of ten percent (10%) per annum, until payment is made.

4. Disability or Incapacity.

(a) If, because of illness or otherwise, Executive should become disabled from performing his duties hereunder, Executive shall be entitled to a leave of absence from the Company for the duration of any such disability for a period or periods of up to, but not exceeding, one hundred eighty (180) days in the aggregate in any period of three hundred sixty five (365) consecutive days. During any such leave of absence, Executive’s compensation and status as an employee hereunder shall continue as provided herein; provided, however, that amounts, if any, payable to Executive under any short term or long term disability plan of the Company will be offset against Executive’s compensation which is payable under this Agreement.

(b) Executive shall be deemed to be “Permanently Incapacitated” under this Agreement only if and when such leaves of absence (whether continuous or intermittent) for disability shall have continued for more than one hundred eighty (180) days in the aggregate in any period of three hundred sixty five (365) consecutive days, and thereafter, upon impartial medical advice which shall have been certified to the Company that the disability is such that it will substantially impair Executive’s ability to perform the essential functions of his job, with or without reasonable accommodation.

(c) In calculating the period of three hundred sixty five (365) consecutive days set forth in Section 4(a) and (b) of this Agreement, that period shall be deemed to begin on the first day of the calendar month during which Executive is first absent on account of the state or condition which leads to his permanent incapacity hereunder.

5. Representations of Executive. Executive represents and warrants that he is not under any obligation, contractual or otherwise, which would prevent his entry into the employ of the Company or his performance of the terms of this Agreement. Executive will not in violation of any agreement binding on Executive bring or use any confidential information or trade secrets belonging to any other person or entity while employed by the Company under this Agreement. Executive agrees that he will indemnify and hold the Company harmless against loss, damage, liability or expense arising from any claim based upon circumstances alleged to be inconsistent with such representation and warranty. Further, breach of Executive’s obligations under this paragraph would constitute a material breach of this Agreement justifying the Company’s termination of Executive’s employment for Cause (as defined in Section 8(a) below).

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6. Exclusivity of Employment. Executive shall devote his best efforts to the performance of his employment under this Agreement. During his employment, Executive shall not, at any time or place, either directly or indirectly, engage in any other employment other than on behalf of the Company unless the Board gives him its prior written permission. While employed under this Agreement, Executive owes the Company a duty of loyalty, and shall diligently perform his duties and shall devote his entire business skill, and sufficient time and effort to his duties hereunder to contribute to the continued success of the Company; provided, however, that nothing in this Section 6 will prevent Executive from engaging in incidental additional activities in connection with personal investments and interests and charitable and community affairs that do not interfere with Executive’s duties under this Agreement. The parties hereby acknowledge that Executive intends to serve as a member of a YPO. The parties hereby agree that, during Executive’s employment hereunder, Executive shall be permitted to serve in this position and to become a member of the board of directors of one private company and an additional charitable organization, to be selected by Executive, but subject to the Board’s prior approval, or as authorized by the Board or Co-Chairs of the Board.

7. Confidentiality, Intellectual Property and Non-Competition. Concurrently with the execution and delivery of this Agreement, the Company and the Executive are entering into a Confidentiality, Assignment of Inventions and Non-Competition Agreement in the form attached hereto as Exhibit C.

8. Termination of Employment. Either the Company or Executive shall have the right to terminate Executive’s employment under this Agreement at any time, with or without notice, it being understood that Executive is an at-will employee. Termination of Executive’s employment shall be as follows:

(a) Termination By the Company For Cause. The Company may terminate the employment of Executive for Cause under this Agreement at any time and without notice. As used in this Agreement, “Cause” shall include: (i) the failure of such Executive to perform such duties as are reasonably requested by the Board, which requested duties must be consistent with the duties of an executive at the same level of the Executive; (ii) the failure by Executive to observe the material policies of the Company and its subsidiaries applicable to Executive and communicated to Executive in writing; (iii) any act or omission constituting gross negligence or willful misconduct of Executive in the performance of his duties; (iv) the breach of any material provision of this Agreement; (v) any act or omission constituting fraud, embezzlement, disloyalty or dishonesty against the Company or its subsidiaries; or (vi) Executive’s conviction of, or a plea of nolo contendere to, a felony; provided with respect to parts (i), (ii) and (iv) of this clause, the Board shall provide Executive with notice of such material violation (which notice shall specifically identify the manner and set forth specific facts, circumstances and examples of which the Board believes that the Executive has failed to perform his duties, violated this Agreement or failed to observe material policies) and Executive shall willfully fail to cure such breach or nonperformance within a reasonable time period established by the Board of not less than thirty (30) calendar days after Executive’s receipt of such notice, which period shall be sufficient to provide Executive with a reasonable opportunity to cure such defects.

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Any such termination shall be without prejudice to any other remedy to which the Company may be entitled either at law, in equity, or under this Agreement. In the event Executive’s employment under this Agreement is terminated for Cause, Executive shall cease to be an employee after the date of termination and shall have no right to receive compensation or other benefits after the date of termination; provided, however, that nothing in this Agreement is intended to affect any rights that Executive may have as a shareholder of the Company or to which Executive may be entitled under any employee benefit plan.

(b) Termination Without Cause. Either Executive or the Company may terminate the employment of Executive under this Agreement without Cause at any time, with or without notice. In the event Executive’s employment under this Agreement is terminated without Cause, Executive shall cease to be an employee after the effective date of the termination and shall have no right to receive compensation or other benefits after the effective date of the termination, except as otherwise provided by Section 8(g) of this Agreement; provided, however, that nothing in this Agreement is intended to affect any rights that Executive may have as a shareholder of the Company or to which Executive may be entitled under any employee benefit plan.

(c) Resignation with Good Reason by Executive. Executive shall have the right to resign his employment under this Agreement with Good Reason. Any of the following acts or omissions shall constitute grounds for Executive to resign his employment pursuant to this Agreement for “Good Reason”:

(i) The Company materially diminishes Executive’s duties, authority, responsibility or base salary without performance justification; or

(ii) The Company materially breaches this Agreement;

(iii) The principal office at which the Executive performs services on behalf of the Company is relocated to a location more than fifty (50) miles from the Relocated HQ; or

(iv) The Company requires Executive to report directly to a person or persons other than the Board or the Chair or Co-Chairs of the Board; provided, however, that Good Reason shall not exist if the Company changes such reporting relationship as a result of a Change in Control of the Company arising from an acquisition of the Company or Toolrock by an entity with greater than $1,000,000,000 in annual revenue (on a consolidated basis together with any affiliates, subsidiaries and parent companies excluding the annual revenue of the Company), which acquisition results in (A) the Company being operated as a division or wholly owned subsidiary of the acquiring entity or its affiliate(s) and (B) the Executive reporting directly to the Chief Executive Officer of the ultimate parent operating company of the acquiring entity; provided that notwithstanding the foregoing Good Reason shall exist if prior to the date of any such acquisition, the Company has not relocated to the Relocated HQ and the acquiring entity does not

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permit Executive to relocate to the Relocated HQ. “Change of Control” shall mean the consummation of one of the following events: (x) a merger, consolidation or sale of equity securities of the Company or Toolrock (other than an initial public offering of the equity securities of the Company or Toolrock) other than one which would result in the voting securities of the Company or Toolrock outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) more than 50% of the total voting power represented by the voting securities of the Company, Toolrock, the other surviving entity, or a parent of any of the foregoing, as applicable, outstanding immediately after such merger, consolidation or sale of equity securities; or (y) the sale or disposition by the Company or Toolrock of all or substantially all of their respective assets.

Executive shall not have the right to resign Executive’s employment for Good Reason unless: (a) Executive provides the Company with a written objection to the event or condition that is the basis for Executive’s Good Reason termination within thirty (30) days following the occurrence thereof; (b) the Company does not reverse or otherwise reasonably cure the event or condition within thirty (30) days of receiving such written objection; and (c) Executive resigns his employment within thirty (30) days following the expiration of such cure period. In the event Executive resigns his employment under this Agreement for Good Reason, Executive shall cease to be an employee after the effective date of the resignation and shall have no right to receive compensation or other benefits after the effective date of the resignation, except as otherwise provided by Section 8(g) of this Agreement; provided, however, that nothing in this Agreement is intended to affect any rights that Executive may have as a shareholder of the Company or to which Executive may be entitled under any employee benefit plan.

(d) Termination Upon Death. Executive’s employment under this Agreement shall be immediately terminated without notice by the Company upon the death of Executive. In the event Executive’s employment under this Agreement is terminated because of Executive’s death, no compensation or other benefits will be due after the date of termination, except as otherwise provided by Section 8(g) of this Agreement; provided, however, that nothing in this Agreement is intended to affect any rights that Executive may have as a shareholder of the Company, to which Executive may be entitled under any employee benefit plan or under applicable workers’ compensation laws.

(e) Termination Upon Permanent Incapacity. Executive’s employment under this Agreement shall be immediately terminated without notice by the Company upon Executive becoming Permanently Incapacitated, as defined in Section 4 of this Agreement. In the event Executive’s employment under this Agreement is terminated because of Executive’s becoming Permanently Incapacitated, no compensation or other benefits will be due after the date of termination, except as otherwise provided by Section 8(g) of this Agreement; provided, however, that nothing in this Agreement is intended to affect any rights that Executive may have as a shareholder of the Company, to which Executive may be entitled under any employee benefit plan or under applicable workers’ compensation laws. It is the Company’s intent to comply with

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the Family and Medical Leave Act, the Americans with Disabilities Act and the Pennsylvania Human Relations Act, if applicable, and nothing in this Agreement should be construed to the contrary.

(f) Effect of Termination. Upon termination of Executive’s employment for any reason, Executive shall deliver to the Board his resignation from all offices, directorships and positions with the Company and its affiliates, and shall be deemed to have resigned from all offices and fiduciary positions with any employee benefit plans and shall provide any written confirmation of such resignation(s) as may be required by any such plan.

(g) Separation Benefits. If (i) the Company terminates Executive’s employment under this Agreement without Cause pursuant to Section 8(b) of this Agreement, (ii) the Executive resigns his employment under this Agreement for Good Reason pursuant to Section 8(c) of this Agreement, or (iii) the Executive’s employment under this Agreement is terminated by reason of Executive’s death or permanent incapacity under Sections 8(d) or (e), respectively, and contingent upon Executive (or the estate or representative of Executive in the event of death) first signing a separation agreement and general release of all claims against the Company, its affiliates and representatives, in a form prepared by the Company, the Company shall: (x) pay a cash lump sum payment equal to two times Executive’s Base Salary then in effect at the date of termination or resignation; (y) pay to Executive a cash lump sum payment equal to the bonus under the bonus plan in effect at the time of Executive’s termination, pro-rated based on Executive’s actual performance through the month of Executive’s termination or resignation; and (z) if Executive elects continued group health insurance coverage through the Company pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), pay the full amount of the premium for Executive’s COBRA coverage for a period of eighteen (18) months from the COBRA coverage election date (the “COBRA Coverage Period”), unless or until the Board determines, in its discretion, that providing or paying for such benefits results in a violation of 409A of the Internal Revenue Code of 1986, as amended (“409A”) or an impermissible discrimination under federal or state tax laws, including but not limited to the Employee Retirement Income Security Act, Public Health Services Act, or any other similar law, or would otherwise result in a penalty or adverse tax consequences to the Company; provided that in the event that the Board determines that providing or paying for such benefits results in a violation of 409A or an impermissible discrimination under federal or state tax laws, including but not limited to the Employee Retirement Income Security Act, Public Health Services Act, or any other similar law, or would otherwise result in a penalty or adverse tax consequences to the Company, the Company shall pay a cash lump sum payment equal to the premium for Executive’s COBRA coverage for the remainder of Executive’s COBRA Coverage Period. The form of the separation agreement and general release will be substantially similar to the form attached as Exhibit D, although the Company reserves the right to seek revisions to such form to the extent necessary under then applicable law to effectuate the intent of a full general release to the greatest extent permitted by law as set forth in the attached form. The Company will make all payments due under this Section 8(g) within five (5) days after the last to occur of (A) the Executive’s execution of the separation agreement and general release, and (B) the statutory revocation period set forth in Section 11 of the separation agreement and general release attached as Exhibit D has expired, as the same may be modified as contemplated by this Section 8(g). If such separation agreement and general release is not executed by Executive and received by the Company within sixty (60) days following the effective date of termination, or if the Executive

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revokes all or any part of such separation agreement and general release, Executive shall forfeit all right to any separation benefits under this Section 8(g). Except as otherwise provided by this section, Executive shall have no right to receive compensation or other benefits after the effective date of the termination or resignation; provided, however, that nothing in this Agreement is intended to affect any rights that Executive may have as a shareholder of the Company or to which Executive may be entitled under any employee benefit plan.

(h) Mitigation of Damages. Executive shall not be required to mitigate the amount of any payment or benefit provided for under this Agreement by seeking employment or otherwise, nor shall any amounts received or hereby provided from employment or otherwise by Executive affect in any manner the obligations of the Company hereunder.

9. Withholding Taxes. The Company may withhold from any salary and benefits payable under this Agreement all federal, state, local or other taxes or amounts as shall be required to be withheld pursuant to any law or governmental regulation or ruling.

10. Section 409A Compliance. To the extent applicable, it is intended that this Agreement and any payment made hereunder shall comply with the requirements of Section 409A or an exemption or exclusion therefrom, and any related regulations or other guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service, including but not limited to the following.

(a) For purposes of this Agreement, any references to termination of employment or resignation shall mean a “separation from service” within the meaning of 409A.

(b) Each payment made pursuant to Section 8(g) of this Agreement shall be deemed to be a separate payment for purposes of 409A.

11. General.

(a) Notices. All notices, requests, consents and other communications hereunder will be in writing, will be addressed to the receiving party’s address set forth below or to such other address as a party may designate by notice hereunder, and will be either (i) delivered by hand, (ii) sent by overnight courier, or (iii) sent by registered mail, return receipt requested, postage prepaid. All notices, requests, consents and other communications hereunder will be deemed to have been given either (x) if by hand, at the time of the delivery thereof to the receiving party at the address of such party set forth above, (y) if sent by overnight courier, on the next business day following the day such notice is delivered to the courier service, or (z) if sent by registered mail, on the fifth business day following the day such mailing is made.

Latrobe Steel Company:	Latrobe Specialty Steel Company 2626 Ligonier Street Latrobe, PA 15650 Attention: Secretary of the Board
B. Christopher DiSantis:	B. Christopher DiSantis 8059 Long Forest Drive Brecksville, OH 44141

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(b) Entire Agreement. This Agreement, along with any attachments or Exhibits, embodies the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement of any kind not expressly set forth in this Agreement will affect, or be used to interpret, change or restrict, the express terms and provisions of this Agreement.

(c) Modifications and Amendments. The terms and provisions of this Agreement may be modified or amended only by written agreement executed by the Parties.

(d) Waivers and Consents. The terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent will be deemed to be or will constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent will be effective only in the specific instance and for the purpose for which it was given, and will not constitute a continuing waiver or consent.

(e) Assignment. The Company may assign its rights and obligations hereunder to any person or entity that succeeds to all or substantially all of the Company’s business or that aspect of the Company’s business in which Executive is principally involved. Executive may not assign his rights and obligations under this Agreement without the prior written consent of the Company and any such attempted assignment by Executive without the prior written consent of the Company will be void.

(f) Benefit. All statements, representations, warranties, covenants and agreements in this Agreement will be binding on the Parties and will inure to the benefit of the respective successors and permitted assigns of each party hereto. Nothing in this Agreement will be construed to create any rights or obligations except between the Company and Executive, and no person or entity other than the Company will be regarded as a third-party beneficiary of this Agreement.

(g) Governing Law. This Agreement and the rights and obligations of the Parties hereunder will be construed in accordance with and governed by the law of the Commonwealth of Pennsylvania, without giving effect to the conflict of law principles thereof.

(h) Jurisdiction, Venue and Service of Process. Any legal action or proceeding with respect to this Agreement will be brought in the courts of Pennsylvania or of the United States of America for the Western District of Pennsylvania. By execution and delivery of this Agreement, each of the Parties accepts for itself and in respect of its property, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts.

(i) WAIVER OF JURY TRIAL. ANY ACTION, DEMAND, CLAIM OR COUNTERCLAIM ARISING UNDER OR RELATING TO THIS AGREEMENT WILL BE RESOLVED BY A JUDGE ALONE AND EACH OF THE COMPANY AND EXECUTIVE WAIVE ANY RIGHT TO A JURY TRIAL THEREOF.

(j) Severability. The Parties intend this Agreement to be enforced as written. However, if any portion or provision of this Agreement is to any extent declared illegal or

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unenforceable by a duly authorized court having jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, will not be affected thereby, and each portion and provision of this Agreement will be valid and enforceable to the fullest extent permitted by law.

(k) Headings and Captions. The headings and captions of the paragraphs and sections of this Agreement are for convenience of reference only and will in no way modify or affect the meaning or construction of any of the terms or provisions hereof.

(l) No Waiver of Rights, Powers and Remedies. No failure or delay by a party hereto in exercising any right, power or remedy under this Agreement, and no course of dealing between the Parties, will operate as a waiver of any such right, power or remedy of the party. No single or partial exercise of any right, power or remedy under this Agreement by a party hereto, nor any abandonment or discontinuance of steps to enforce any such right, power or remedy, will preclude such party from any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The election of any remedy by a party hereto will not constitute a waiver of the right of such party to pursue other available remedies.

(m) Counterparts. This Agreement may be executed in two or more counterparts, and by different Parties on separate counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

(n) Interpretation. This Agreement has been fully and freely negotiated by the Parties, shall be considered as having been drafted jointly by the Parties, and shall be interpreted and construed as if so drafted, without construction in favor of or against any party on account of its or his participation in the drafting hereof.

(o) Opportunity to Review. Executive hereby acknowledges that he has had adequate opportunity to review this Agreement and to reflect upon and consider the terms and conditions of this Agreement, and that Executive has had the opportunity to consult with counsel of his own choosing regarding such terms. Executive further acknowledges that he fully understands the terms of this Agreement and has voluntarily executed this Agreement.

(p) Breach of Agreement by the Company. The Company agrees that if the approvals and filings contemplated by Section 1(b) of the SPA and Section 1(b) of the Option Agreement are not complete by June 30, 2011, the failure shall be deemed to be a violation of this Agreement.

(q) Attorney’s Fees. The Company agrees to pay for the reasonable attorney’s fees of Executive in connection with the review, negotiation, execution and delivery of the Agreement, the SPA, the Option Agreement and any agreements related thereto.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year set forth above.

/s/ Laura DiSantis	/s/ B. Christopher DiSantis
Witness	B. Christopher DiSantis
	LATROBE STEEL COMPANY d/b/a
	LATROBE SPECIALTY STEEL COMPANY
/s/ Jane Mikulich	/s/ Dale B. Mikus
Witness	By:	Dale B. Mikus
	Title:	Vice President and Chief Financial Officer

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EXHIBIT A

STOCK PURCHASE AGREEMENT

EXHIBIT B

OPTION AGREEMENT

EXHIBIT C

CONFIDENTIALITY, ASSIGNMENT OF INVENTIONS

AND NON-COMPETITION AGREEMENT

EXHIBIT D

FORM OF

CONFIDENTIAL EMPLOYMENT SEPARATION AGREEMENT AND RELEASE

This Confidential Employment Separation Agreement and Release (“the Agreement”) is entered into between _______________________ (“Executive”), and Latrobe Steel Company, a Pennsylvania corporation doing business as Latrobe Specialty Steel Company (the “Company”).

WHEREAS, Executive was employed by the Company under the terms of an Employment Agreement dated ____________________, 2011 (the “Employment Agreement”); and

WHEREAS, in accordance with its terms, the Employment Agreement has been terminated; and

WHEREAS, the Company and Executive are entering into this Agreement to resolve all questions of compensation, entitlement to benefits, and any and all other claims, whether known or unknown, which Executive may have relating to his employment with, and separation from the employment of, the Company;

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

1. Severance Pay. On and after the Effective Date (as hereinafter defined), the Company will provide the Executive with the separation benefits set forth in Section 8(g) of the Employment Agreement (consisting of              (the “Separation Benefits”)) in full satisfaction of the Company’s obligations under the Employment Agreement. Executive understands and agrees that Executive has no right or entitlement to the separation benefits unless Executive signs, and does not revoke, this Agreement.

2. Release. Executive hereby releases the Company, its subsidiaries, parents, predecessors, successors, affiliates, and assigns, and the partners, shareholders, directors, officers, employees, trustees, and agents of the foregoing (hereinafter also referred to collectively as the “Released Parties”), from any and all rights and claims that arose prior to Executive’s signing of this Agreement and that involve or in any way relate to Executive’s employment with the Company or the termination of such employment, except with respect to rights of Executive set forth in the Employment Agreement which survive the termination of the Employment Agreement. The rights and claims that Executive hereby releases include, but are not limited to, any and all rights and claims for negligence, emotional distress, invasion of privacy, defamation, breach of fiduciary duty, wrongful or unjust discharge and breach of contract or promise, express or implied; and any and all claims for violation of Title VII of the Civil Rights Act of 1964, the Equal Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Genetic Information Nondiscrimination Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act, the Worker Adjustment and Retraining Notification Act, the Fair Labor Standards Act, the Pennsylvania Wage Payment and Collection Law, the Pennsylvania Minimum Wage Act, the Pennsylvania Human Relations Act, and any other federal, state, or local statute or regulation; and all rights and claims under any other federal, state or local statute, regulation, or common law theory, except claims that cannot legally be waived.

3. Exclusions From Claims Released. This Agreement is not intended to release, and should not be interpreted as releasing, any right or claim that Executive is legally prohibited from releasing. Notwithstanding anything contained herein to the contrary, this Agreement does not apply to any rights as a shareholder of the Company, any agreement or transaction entered into after the date of this Agreement, any actions or omissions of any Released Party after the date of

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this Agreement, any rights Executive may be entitled to under any employee benefit plan, or any failure by the Company to fulfill its obligations to Employee pursuant to Section 8(g) of the Employment Agreement. The Company advises Executive to seek independent legal counsel if Executive seeks clarification on the interpretation or scope of this release.

4. Covenant Not to Sue. Except as otherwise prohibited by the Age Discrimination in Employment Act or applicable law, Executive agrees never to file a lawsuit, demand, action or claim, and promises not to otherwise assert any claims that are released in Paragraph 2 of this Agreement. Executive agrees that he will not accept any monetary relief or recovery from any claims that are released in Paragraph 2 of this Agreement. Executive hereby represents that he has not filed, initiated or caused to be filed any lawsuit, complaint, claim or charge with respect to any claims that are released in Paragraph 2 of this Agreement, nor has any lawsuit, complaint, claim or charge been initiated or filed on his behalf. This covenant not to sue, however, is not intended to preclude, and should not be interpreted as precluding, Executive from filing a lawsuit to enforce the terms of this Agreement.

5. Non-Disparagement. Executive agrees that he will not directly or indirectly disparage the Released Parties or their products or services. The Company agrees that it will not directly or indirectly disparage Executive.

6. Involvement in Legal Proceedings. Executive agrees to cooperate with and assist the Company in its defense or prosecution of claims or charges relating to events, acts, or omissions occurring during Executive’s employment relationship with the Company. Executive’s agreement to cooperate and assist shall include, but not be limited to, providing truthful information and/or truthful testimony at the Company’s reasonable request. Executive agrees to not voluntarily assist any party opposing the Company in any present, potential or future legal

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proceedings by or against the Company. Executive further agrees to not provide information to a party opposing the Company in any present, potential or future legal proceedings by or against the Company, except pursuant to and to the extent required by subpoena or order of court.

7. Confidentiality. Executive will keep the details of this Agreement in strict confidence, and will not reveal those details to anyone except members of his immediate family, his attorney, and his financial advisor, except pursuant to subpoena or order of court, or except with the express prior written consent of the Company’s Board of Directors.

8. Advice to Consult with Attorney. The Company hereby advises Executive that he should consult with an attorney before signing this Agreement.

9. Non-Admission. By offering or entering into this Agreement, the Company in no way admits that it has treated Executive in any way unlawfully, discriminatorily, wrongly or unfairly.

10. Period to Consider Agreement. Executive hereby acknowledges that he received this Confidential Employment Separation Agreement and Release on __________________. Executive shall have a period of 21 days after his receipt of this Agreement, within which to review, consider, and sign the Agreement. Any changes discussed or made to this Agreement after it is presented to Executive for consideration does not restart the 21-day period. The Agreement should be signed and returned to _____________________ at the offices of the Company, __________________________, PA _____, by no later than _______________ or otherwise this offer shall be null and void.

11. Revocation Period and Effective Date. Executive shall have a period of seven days following his signing of this Agreement, within which to change his mind and revoke this Agreement. If Executive wishes to revoke this Agreement after signing the Agreement, he must

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provide written notice of that revocation to ___________________, at the address set forth above, within seven days after signing the Agreement. This Agreement shall become effective and enforceable after the expiration of seven days after Executive has signed the Agreement, provided that Executive has not revoked the Agreement during that seven-day period. The Effective Date of this Agreement shall be the eighth day after Executive has signed the Agreement, provided that Executive has not previously revoked the Agreement.

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

13. No Amendment. This Agreement shall be binding upon and inure to the benefit of each of the Company and Executive and each of their respective agents, assigns, heirs, executors, successors and administrators, and may not be abandoned, supplemented, amended, changed or modified in any manner, orally or otherwise, except by an instrument in writing of concurrent or subsequent date signed by the parties hereto.

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

15. Captions. The captions set forth in this Agreement have been included for convenience only, and are not intended and should not be used as a guide to interpretation of this Agreement.

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16. Choice of Law. This Agreement shall be governed by, and shall be interpreted in accordance with, the internal law, and not the law of conflicts, of the Commonwealth of Pennsylvania.

17. Assignment. The Company and Released Parties have the right to assign this Agreement, but Executive does not. This Agreement inures to the benefit of the successors and assigns of the Company, which are intended third party beneficiaries of this Agreement.

18. Entire Agreement. This Agreement is not intended to supersede and does not supersede any confidentiality, non-solicitation or non-competition agreement between the Company and Employee. This Agreement otherwise represents the entire agreement between Executive and the Company with respect to the subject matter hereof. The Released Parties have made no written or oral representations, promises or agreements with Executive other than those contained herein.

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

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EX-10.13

Exhibit 10.13

TOOLROCK HOLDING, INC.

2006 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN

1. DEFINITIONS.

Unless otherwise specified or unless the context otherwise requires, the following terms, as used in this Toolrock Holding, Inc. 2006 Employee, Director and Consultant Stock Plan, have the following meanings:

Administrator means the Board of Directors, unless it has delegated power to act on its behalf to the Committee, in which case the Administrator means the Committee.

Affiliate means a corporation which, for purposes of Section 424 of the Code, is a parent or subsidiary of the Company, direct or indirect.

Agreement means an agreement between the Company and a Participant delivered pursuant to the Plan, in such form as the Administrator shall approve.

Board of Directors means the Board of Directors of the Company.

Code means the United States Internal Revenue Code of 1986, as amended.

Committee means the committee of the Board of Directors to which the Board of Directors has delegated power to act under or pursuant to the provisions of the Plan.

Common Stock means shares of the Company’s Common Stock, $0.01 par value per share.

Company means Toolrock Holding, Inc., a Delaware corporation.

Disability or Disabled means permanent and total disability as defined in Section 22(e)(3) of the Code.

Employee means any employee of the Company or of an Affiliate (including, without limitation, an employee who is also serving as an officer or director of the Company or of an Affiliate), designated by the Administrator to be eligible to be granted one or more Stock Rights under the Plan.

Fair Market Value of a Share of Common Stock means:

(1) If the Common Stock is listed on a national securities exchange or traded in the over-the-counter market and sales prices are regularly reported for the

Common Stock, the closing or last price of the Common Stock on the composite tape or other comparable reporting system on the applicable date or, if such date is not a trading day, the last trading day immediately prior to such date;

(2) If the Common Stock is not traded on a national securities exchange but is traded on the over-the-counter market, if sales prices are not regularly reported for the Common Stock for the trading day referred to in clause (1), and if bid and asked prices for the Common Stock are regularly reported, the mean between the bid and the asked price for the Common Stock at the close of trading in the over-the-counter market on the applicable date or, if such date is not a trading day, the last trading day immediately prior to such date; and

(3) If the Common Stock is neither listed on a national securities exchange nor traded in the over-the-counter market, such value as the Administrator, in good faith, shall determine.

ISO means an option meant to qualify as an incentive stock option under Section 422 of the Code.

Non-Qualified Option means an option which is not intended to qualify as an ISO.

Option means an ISO or Non-Qualified Option granted under the Plan.

Participant means an Employee, director or consultant of the Company or an Affiliate to whom one or more Stock Rights are granted under the Plan. As used herein, “Participant” shall include “Participant’s Survivors” where the context requires.

Plan means this Toolrock Holding, Inc. 2006 Employee, Director and Consultant Stock Plan.

Shares means shares of the Common Stock as to which Stock Rights have been or may be granted under the Plan or any shares of capital stock into which the Shares are changed or for which they are exchanged within the provisions of Paragraph 3 of the Plan. The Shares issued under the Plan may be authorized and unissued shares or shares held by the Company in its treasury, or both.

Stock-Based Award means a grant by the Company under the Plan of an equity award or an equity based award which is not an Option or a Stock Grant.

Stock Grant means a grant by the Company of Shares under the Plan.

Stock Right means a right to Shares, or the value of Shares, of the Company granted pursuant to the Plan — an ISO, a Non-Qualified Option, a Stock Grant or a Stock-Based Award.

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Survivor means a deceased Participant’s legal representatives and/or any person or persons who acquired the Participant’s rights to a Stock Right by will or by the laws of descent and distribution.

2. PURPOSES OF THE PLAN.

The Plan is intended to encourage ownership of Shares by Employees and directors of and certain consultants to the Company in order to attract and retain such people, to induce them to work for the benefit of the Company or of an Affiliate and to provide additional incentive for them to promote the success of the Company or of an Affiliate. The Plan provides for the granting of ISOs, Non-Qualified Options, Stock Grants and Stock-Based Awards.

3. SHARES SUBJECT TO THE PLAN.

a. The number of Shares which may be issued from time to time pursuant to this Plan shall be 1,657,895, or the equivalent of such number of Shares after the Administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with Paragraph 23 of the Plan. If an Option ceases to be “outstanding”, in whole or in part, or if the Company shall reacquire any Shares issued pursuant to a Stock Grant, the Shares which were subject to such Option and any Shares so reacquired by the Company shall be available for the granting of other Stock Rights under the Plan. Any Option shall be treated as “outstanding” until such Option is exercised in full, or terminates or expires under the provisions of the Plan, or by agreement of the parties to the pertinent Option Agreement.

b. If an Option ceases to be “outstanding”, in whole or in part (other than by exercise), or if the Company shall reacquire (at not more than its original issuance price) any Shares issued pursuant to a Stock Grant or Stock-Based Award, or if any Stock Right expires or is forfeited, cancelled, or otherwise terminated or results in any Shares not being issued, the unissued Shares which were subject to such Stock Right shall again be available for issuance from time to time pursuant to this Plan. Notwithstanding the foregoing, if a Stock Right is exercised, in whole or in part, by tender of Shares or if the Company’s tax withholding obligation is satisfied by withholding Shares, the number of Shares deemed to have been issued under the Plan for purposes of the limitation set forth in Paragraph 3(a) above shall be the number of Shares that were subject to the Stock Right or portion thereof, and not the net number of Shares actually issued.

4. ADMINISTRATION OF THE PLAN.

The Administrator of the Plan will be the Board of Directors, except to the extent the Board of Directors delegates its authority to the Committee, in which case the Committee shall be the Administrator. Subject to the provisions of the Plan, the Administrator is authorized to:

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a. Interpret the provisions of the Plan or of any Stock Rights and to make all rules and determinations which it deems necessary or advisable for the administration of the Plan;

b. Determine which Employees, directors and consultants shall be granted Stock Rights;

c. Determine the number of Shares for which a Stock Right or Stock Rights shall be granted;

d. Specify the terms and conditions upon which a Stock Right or Stock Rights may be granted; and

e. Make changes to any outstanding Stock Right, including, without limitation, to reduce or increase the exercise price or purchase price, accelerate the vesting schedule or extend the expiration date, provided that no such change shall impair the rights of a Participant under any grant previously made without such Participant’s consent;

f. Buy out for a payment in cash or Shares, a Stock Right previously granted and/or cancel any such Stock Right and grant in substitution therefor other Stock Rights, covering the same or a different number of Shares and having an exercise price or purchase price per share which may be lower or higher than the exercise price or purchase price of the cancelled Stock Right, based on such terms and conditions as the Administrator shall establish and the Participant shall accept; and

g. Adopt any sub-plans applicable to residents of any specified jurisdiction as it deems necessary or appropriate in order to comply with or take advantage of any tax or other laws applicable to the Company or to Plan Participants or to otherwise facilitate the administration of the Plan, which sub-plans may include additional restrictions or conditions applicable to Stock Rights or Shares issued (or issuable) pursuant to a Stock Right.

provided, however, that all such interpretations, rules, determinations, terms and conditions shall be made and prescribed in the context of preserving the tax status under Section 422 of the Code of those Options which are designated as ISOs. Subject to the foregoing, the interpretation and construction by the Administrator of any provisions of the Plan or of any Stock Right granted under it shall be final, unless otherwise determined by the Board of Directors, if the Administrator is the Committee. In addition, if the Administrator is the Committee, the Board of Directors may take any action under the Plan that would otherwise be the responsibility of the Committee.

To the extent permitted under applicable law, the Board of Directors or the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any portion of its responsibilities and powers to any other person selected by it. Any such allocation or delegation may be revoked by the Board of Directors or the Committee at any time.

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5. ELIGIBILITY FOR PARTICIPATION.

The Administrator will, in its sole discretion, name the Participants in the Plan, provided, however, that each Participant must be an Employee, director or consultant of the Company or of an Affiliate at the time a Stock Right is granted. Notwithstanding the foregoing, the Administrator may authorize the grant of a Stock Right to a person not then an Employee, director or consultant of the Company or of an Affiliate; provided, however, that the actual grant of such Stock Right shall be conditioned upon such person becoming eligible to become a Participant at or prior to the time of the execution of the Agreement evidencing such Stock Right. ISOs may be granted only to Employees. Non-Qualified Options, Stock Grants and Stock-Based Awards may be granted to any Employee, director or consultant of the Company or an Affiliate. The granting of any Stock Right to any individual shall neither entitle that individual to, nor disqualify him or her from, participation in any other grant of Stock Rights.

6. TERMS AND CONDITIONS OF OPTIONS.

Each Option shall be set forth in writing in an Option Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. The Administrator may provide that Options be granted subject to such terms and conditions, consistent with the terms and conditions specifically required under this Plan, as the Administrator may deem appropriate including, without limitation, subsequent approval by the shareholders of the Company of this Plan or any amendments thereto. The Option Agreements shall be subject to at least the following terms and conditions:

a. Non-Qualified Options: Each Option intended to be a Non-Qualified Option shall be subject to the terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards for any such Non-Qualified Option:

i. Option Price: Each Option Agreement shall state the option price (per share) of the Shares covered by each Option, which option price shall be determined by the Administrator but shall not be less than the par value per share of Common Stock;

ii. Number of Shares: Each Option Agreement shall state the number of Shares to which it pertains;

iii. Option Periods: Each Option Agreement shall state the date or dates on which it first is exercisable and the date after which it may no longer be exercised, and may provide that the Option rights accrue or become exercisable in installments over a period of months or years, or upon the occurrence of certain conditions or the attainment of stated goals or events; and

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iv. Option Conditions: Exercise of any Option may be conditioned upon the Participant’s execution of a Share purchase agreement in form satisfactory to the Administrator providing for certain protections for the Company and its other shareholders, including requirements that:

A. The Participant’s or the Participant’s Survivors’ right to sell or transfer the Shares may be restricted; and

B. The Participant or the Participant’s Survivors may be required to execute letters of investment intent and must also acknowledge that the Shares will bear legends noting any applicable restrictions.

b. ISOs: Each Option intended to be an ISO shall be issued only to an Employee and be subject to the following terms and conditions, with such additional restrictions or changes as the Administrator determines are appropriate but not in conflict with Section 422 of the Code and relevant regulations and rulings of the Internal Revenue Service:

i. Minimum standards: The ISO shall meet the minimum standards required of Non-Qualified Options, as described in Paragraph 6(a) above, except clause (a) thereunder.

ii. Option Price: Immediately before the ISO is granted, if the Participant owns, directly or by reason of the applicable attribution rules in Section 424(d) of the Code:

A. 10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, the Option price per share of the Shares covered by each ISO shall not be less than 100% of the Fair Market Value per share of the Shares on the date of the grant of the Option; or

B. More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, the Option price per share of the Shares covered by each ISO shall not be less than 110% of the said Fair Market Value on the date of grant.

iii. Term of Option: For Participants who own:

A. 10% or less of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not more than ten years from the date of the grant or at such earlier time as the Option Agreement may provide; or

B. More than 10% of the total combined voting power of all classes of stock of the Company or an Affiliate, each ISO shall terminate not

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more than five years from the date of the grant or at such earlier time as the Option Agreement may provide.

iv. Limitation on Yearly Exercise: The Option Agreements shall restrict the amount of ISOs which may become exercisable in any calendar year (under this or any other ISO plan of the Company or an Affiliate) so that the aggregate Fair Market Value (determined at the time each ISO is granted) of the stock with respect to which ISOs are exercisable for the first time by the Participant in any calendar year does not exceed $100,000.

7. TERMS AND CONDITIONS OF STOCK GRANTS AND STOCK-BASED AWARDS.

a. Each offer of a Stock Grant to a Participant shall state the date prior to which the Stock Grant must be accepted by the Participant, and the principal terms of each Stock Grant shall be set forth in an Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. Such Agreement shall be in a form approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company, subject to the following minimum standards:

i. Such Agreement shall state the purchase price (per share), if any, of the Shares covered by each Stock Grant, which purchase price shall be determined by the Administrator but shall not be less than the minimum consideration required by the Delaware General Corporation Law on the date of the grant of the Stock Grant;

ii. Such Agreement shall state the number of Shares to which the Stock Grant pertains; and

iii. Such Agreement shall include the terms of any right of the Company to restrict or reacquire the Shares subject to the Stock Grant, including the time and events upon which such reacquisition rights shall accrue and the purchase price therefor, if any.

b. The Administrator shall have the right to grant Stock-Based Awards based upon the Common Stock having such terms and conditions as the Board may determine, including, without limitation, the grant of Shares based upon certain conditions, the grant of securities convertible into Shares and the grant of stock appreciation rights, phantom stock awards or stock units. The principal terms of each Stock-Based Award shall be set forth in an Agreement, duly executed by the Company and, to the extent required by law or requested by the Company, by the Participant. Such Agreement shall be in a form approved by the Administrator and shall contain terms and conditions which the Administrator determines to be appropriate and in the best interest of the Company.

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8. EXERCISE OF OPTIONS AND ISSUE OF SHARES.

An Option (or any part or installment thereof) shall be exercised by giving written notice to the Company or its designee, together with provision for payment of the full purchase price in accordance with this Paragraph for the Shares as to which the Option is being exercised, and upon compliance with any other condition(s) set forth in the Option Agreement. Such notice shall be signed by the person exercising the Option, shall state the number of Shares with respect to which the Option is being exercised and shall contain any representation required by the Plan or the Option Agreement. Payment of the purchase price for the Shares as to which such Option is being exercised shall be made (a) in United States dollars in cash or by check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock having a Fair Market Value equal as of the date of the exercise to the cash exercise price of the Option and held for at least six months, or (c) at the discretion of the Administrator, by having the Company retain from the Shares otherwise issuable upon exercise of the Option, a number of Shares having a Fair Market Value equal as of the date of exercise to the exercise price of the Option, or (d) at the discretion of the Administrator, by delivery of the grantee’s personal recourse note bearing interest payable not less than annually at no less than 100% of the applicable Federal rate, as defined in Section 1274(d) of the Code, or (e) at the discretion of the Administrator, in accordance with a cashless exercise program established with a securities brokerage firm, and approved by the Administrator, or (f) at the discretion of the Administrator, by any combination of (a), (b), (c), (d) and (e) above or (g) at the discretion of the Administrator, payment of such other lawful consideration as the Administrator may determine. Notwithstanding the foregoing, the Administrator shall accept only such payment on exercise of an ISO as is permitted by Section 422 of the Code.

The Company shall then reasonably promptly deliver the Shares as to which such Option was exercised to the Participant (or to the Participant’s Survivors, as the case may be). In determining what constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or “blue sky” laws) which requires the Company to take any action with respect to the Shares prior to their issuance. The Shares shall, upon delivery, be fully paid, non-assessable Shares.

The Administrator shall have the right to accelerate the date of exercise of any installment of any Option; provided that the Administrator shall not accelerate the exercise date of any installment of any Option granted to an Employee as an ISO (and not previously converted into a Non-Qualified Option pursuant to Paragraph 26) if such acceleration would violate the annual vesting limitation contained in Section 422(d) of the Code, as described in Paragraph 6(b)(iv).

The Administrator may, in its discretion, amend any term or condition of an outstanding Option provided (i) such term or condition as amended is permitted by the Plan, (ii) any such amendment shall be made only with the consent of the Participant to whom the Option was granted, or in the event of the death of the Participant, the Participant’s Survivors, if the amendment is adverse to the Participant, and (iii) any such amendment of any Option shall be

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made only after the Administrator determines whether such amendment would constitute a “modification” of any Option which is an ISO (as that term is defined in Section 424(h) of the Code) or would cause any adverse tax consequences for the holder of such Option including, but not limited to, pursuant to Section 409A of the Code.

9. ACCEPTANCE OF STOCK GRANT AND ISSUE OF SHARES.

A Stock Grant or Stock-Based Award (or any part or installment thereof) shall be accepted by executing the applicable Agreement and delivering it to the Company or its designee, together with provision for payment of the full purchase price, if any, in accordance with this Paragraph for the Shares as to which such Stock Grant or Stock-Based Award is being accepted, and upon compliance with any other conditions set forth in the applicable Agreement. Payment of the purchase price for the Shares as to which such Stock Grant or Stock-Based Award is being accepted shall be made (a) in United States dollars in cash or by check, or (b) at the discretion of the Administrator, through delivery of shares of Common Stock held for at least six months and having a Fair Market Value equal as of the date of acceptance of the Stock Grant or Stock Based-Award to the purchase price of the Stock Grant or Stock-Based Award, or (c) at the discretion of the Administrator, by delivery of the grantee’s personal recourse note bearing interest payable not less than annually at no less than 100% of the applicable Federal rate, as defined in Section 1274(d) of the Code, or (d) at the discretion of the Administrator, by any combination of (a), (b) and (c) above; or (e) at the discretion of the Administrator, payment of such other lawful consideration as the Administrator may determine.

The Company shall then, if required by the applicable Agreement, reasonably promptly deliver the Shares as to which such Stock Grant or Stock-Based Award was accepted to the Participant (or to the Participant’s Survivors, as the case may be), subject to any escrow provision set forth in the applicable Agreement. In determining what constitutes “reasonably promptly,” it is expressly understood that the issuance and delivery of the Shares may be delayed by the Company in order to comply with any law or regulation (including, without limitation, state securities or “blue sky” laws) which requires the Company to take any action with respect to the Shares prior to their issuance.

The Administrator may, in its discretion, amend any term or condition of an outstanding Stock Grant, Stock-Based Award or applicable Agreement provided (i) such term or condition as amended is permitted by the Plan, and (ii) any such amendment shall be made only with the consent of the Participant to whom the Stock Grant or Stock-Based Award was made, if the amendment is adverse to the Participant.

10. RIGHTS AS A SHAREHOLDER.

No Participant to whom a Stock Right has been granted shall have rights as a shareholder with respect to any Shares covered by such Stock Right, except after due exercise of the Option or acceptance of the Stock Grant or as set forth in the applicable Agreement, and tender of the full purchase price, if any, for the Shares being purchased pursuant to such exercise or

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acceptance and registration of the Shares in the Company’s share register in the name of the Participant.

11. ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.

By its terms, a Stock Right granted to a Participant shall not be transferable by the Participant other than (i) by will or by the laws of descent and distribution, or (ii) as approved by the Administrator in its discretion and set forth in the applicable Agreement. Notwithstanding the foregoing, an ISO transferred except in compliance with clause (i) above shall no longer qualify as an ISO. The designation of a beneficiary of a Stock Right by a Participant, with the prior approval of the Administrator and in such form as the Administrator shall prescribe, shall not be deemed a transfer prohibited by this Paragraph. Except as provided above, a Stock Right shall only be exercisable or may only be accepted, during the Participant’s lifetime, by such Participant (or by his or her legal representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of any Stock Right or of any rights granted thereunder contrary to the provisions of this Plan, or the levy of any attachment or similar process upon a Stock Right, shall be null and void.

12. EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR DEATH OR DISABILITY.

Except as otherwise provided in a Participant’s Option Agreement, in the event of a termination of service (whether as an employee, director or consultant) with the Company or an Affiliate before the Participant has exercised an Option, the following rules apply:

a. A Participant who ceases to be an employee, director or consultant of the Company or of an Affiliate (for any reason other than termination “for cause”, Disability, or death for which events there are special rules in Paragraphs 13, 14, and 15, respectively), may exercise any Option granted to him or her to the extent that the Option is exercisable on the date of such termination of service, but only within such term as the Administrator has designated in a Participant’s Option Agreement.

b. Except as provided in Subparagraph (c) below, or Paragraph 14 or 15, in no event may an Option intended to be an ISO, be exercised later than three months after the Participant’s termination of employment.

c. The provisions of this Paragraph, and not the provisions of Paragraph 14 or 15, shall apply to a Participant who subsequently becomes Disabled or dies after the termination of employment, director status or consultancy, provided, however, in the case of a Participant’s Disability or death within three months after the termination of employment, director status or consultancy, the Participant or the Participant’s Survivors may exercise the Option within one

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year after the date of the Participant’s termination of service, but in no event after the date of expiration of the term of the Option.

d. Notwithstanding anything herein to the contrary, if subsequent to a Participant’s termination of employment, termination of director status or termination of consultancy, but prior to the exercise of an Option, the Board of Directors determines that, either prior or subsequent to the Participant’s termination, the Participant engaged in conduct which would constitute “cause”, then such Participant shall forthwith cease to have any right to exercise any Option.

e. A Participant to whom an Option has been granted under the Plan who is absent from the Company or an Affiliate because of temporary disability (any disability other than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide.

f. Except as required by law or as set forth in a Participant’s Option Agreement, Options granted under the Plan shall not be affected by any change of a Participant’s status within or among the Company and any Affiliates, so long as the Participant continues to be an employee, director or consultant of the Company or any Affiliate.

13. EFFECT ON OPTIONS OF TERMINATION OF SERVICE “FOR CAUSE”.

Except as otherwise provided in a Participant’s Option Agreement, the following rules apply if the Participant’s service (whether as an employee, director or consultant) with the Company or an Affiliate is terminated “for cause” prior to the time that all his or her outstanding Options have been exercised:

a. All outstanding and unexercised Options as of the time the Participant is notified his or her service is terminated “for cause” will immediately be forfeited.

b. For purposes of this Plan, “cause” shall include (and is not limited to) dishonesty with respect to the Company or any Affiliate, insubordination, substantial malfeasance or non-feasance of duty, unauthorized disclosure of confidential information, breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or similar agreement between the Participant and the Company, and conduct substantially prejudicial to the business of the Company or any Affiliate. The determination of the Administrator as to the existence of “cause” will be conclusive on the Participant and the Company.

c. “Cause” is not limited to events which have occurred prior to a Participant’s termination of service, nor is it necessary that the Administrator’s finding of “cause” occur prior to termination. If the Administrator determines, subsequent to a Participant’s termination of service but prior to the exercise of an Option, that either prior or subsequent to the Participant’s

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termination the Participant engaged in conduct which would constitute “cause”, then the right to exercise any Option is forfeited.

d. Any provision in an agreement between the Participant and the Company or an Affiliate, which contains a conflicting definition of “cause” for termination and which is in effect at the time of such termination, shall supersede the definition in this Plan with respect to that Participant.

14. EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.

Except as otherwise provided in a Participant’s Option Agreement:

a. A Participant who ceases to be an employee, director or consultant of the Company or of an Affiliate by reason of Disability may exercise any Option granted to such Participant:

i. To the extent that the Option has become exercisable but has not been exercised on the date of Disability; and

ii. In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of Disability of any additional vesting rights that would have accrued on the next vesting date had the Participant not become Disabled. The proration shall be based upon the number of days accrued in the current vesting period prior to the date of Disability.

b. A Disabled Participant may exercise such rights only within the period ending one year after the date of the Participant’s Disability, notwithstanding that the Participant might have been able to exercise the Option as to some or all of the Shares on a later date if the Participant had not become Disabled and had continued to be an employee, director or consultant or, if earlier, within the originally prescribed term of the Option.

c. The Administrator shall make the determination both of whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be used for such determination). If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.

15. EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

Except as otherwise provided in a Participant’s Option Agreement:

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a. In the event of the death of a Participant while the Participant is an employee, director or consultant of the Company or of an Affiliate, such Option may be exercised by the Participant’s Survivors:

i. To the extent that the Option has become exercisable but has not been exercised on the date of death; and

ii. In the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of death of any additional vesting rights that would have accrued on the next vesting date had the Participant not died. The proration shall be based upon the number of days accrued in the current vesting period prior to the Participant’s date of death.

b. If the Participant’s Survivors wish to exercise the Option, they must take all necessary steps to exercise the Option within one year after the date of death of such Participant, notwithstanding that the decedent might have been able to exercise the Option as to some or all of the Shares on a later date if he or she had not died and had continued to be an employee, director or consultant or, if earlier, within the originally prescribed term of the Option.

16. EFFECT OF TERMINATION OF SERVICE ON STOCK GRANTS.

In the event of a termination of service (whether as an employee, director or consultant) with the Company or an Affiliate for any reason before the Participant has accepted a Stock Grant, such offer shall terminate.

For purposes of this Paragraph 16 and Paragraph 17 below, a Participant to whom a Stock Grant has been offered and accepted under the Plan who is absent from the Company or an Affiliate because of temporary disability (any disability other than a Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not, during the period of any such absence, be deemed, by virtue of such absence alone, to have terminated such Participant’s employment, director status or consultancy with the Company or with an Affiliate, except as the Administrator may otherwise expressly provide.

In addition, for purposes of this Paragraph 16 and Paragraph 17 below, any change of employment or other service within or among the Company and any Affiliates shall not be treated as a termination of employment, director status or consultancy so long as the Participant continues to be an employee, director or consultant of the Company or any Affiliate.

17. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN “FOR CAUSE” OR DEATH OR DISABILITY.

Except as otherwise provided in a Participant’s Stock Grant Agreement, in the event of a termination of service (whether as an employee, director or consultant), other than termination “for cause,” Disability, or death for which events there are special rules in Paragraphs 18, 19, and

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20, respectively, before all Company rights of repurchase shall have lapsed, then the Company shall have the right to repurchase that number of Shares subject to a Stock Grant as to which the Company’s repurchase rights have not lapsed.

18. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE “FOR CAUSE”.

Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules apply if the Participant’s service (whether as an employee, director or consultant) with the Company or an Affiliate is terminated “for cause”:

a. All Shares subject to any Stock Grant shall be immediately subject to repurchase by the Company at the original purchase price, if any, thereof.

b. For purposes of this Plan, “cause” shall include (and is not limited to) dishonesty with respect to the employer, insubordination, substantial malfeasance or non-feasance of duty, unauthorized disclosure of confidential information, breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or similar agreement between the Participant and the Company, and conduct substantially prejudicial to the business of the Company or any Affiliate. The determination of the Administrator as to the existence of “cause” will be conclusive on the Participant and the Company.

c. “Cause” is not limited to events which have occurred prior to a Participant’s termination of service, nor is it necessary that the Administrator’s finding of “cause” occur prior to termination. If the Administrator determines, subsequent to a Participant’s termination of service, that either prior or subsequent to the Participant’s termination the Participant engaged in conduct which would constitute “cause,” then the Company’s right to repurchase all of such Participant’s Shares shall apply.

d. Any provision in an agreement between the Participant and the Company or an Affiliate, which contains a conflicting definition of “cause” for termination and which is in effect at the time of such termination, shall supersede the definition in this Plan with respect to that Participant.

19. EFFECT ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY.

Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules apply if a Participant ceases to be an employee, director or consultant of the Company or of an Affiliate by reason of Disability: to the extent the forfeiture provisions or the Company’s rights of repurchase have not lapsed on the date of Disability, they shall be exercisable; provided, however, that in the event such forfeiture provisions or rights of repurchase lapse periodically, such provisions or rights shall lapse to the extent of a pro rata portion of the Shares subject to

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such Stock Grant through the date of Disability as would have lapsed had the Participant not become Disabled. The proration shall be based upon the number of days accrued prior to the date of Disability.

The Administrator shall make the determination both of whether Disability has occurred and the date of its occurrence (unless a procedure for such determination is set forth in another agreement between the Company and such Participant, in which case such procedure shall be used for such determination). If requested, the Participant shall be examined by a physician selected or approved by the Administrator, the cost of which examination shall be paid for by the Company.

20. EFFECT ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.

Except as otherwise provided in a Participant’s Stock Grant Agreement, the following rules apply in the event of the death of a Participant while the Participant is an employee, director or consultant of the Company or of an Affiliate: to the extent the forfeiture provisions or the Company’s rights of repurchase have not lapsed on the date of death, they shall be exercisable; provided, however, that in the event such forfeiture provisions or rights of repurchase lapse periodically, such provisions or rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant through the date of death as would have lapsed had the Participant not died. The proration shall be based upon the number of days accrued prior to the Participant’s death.

21. PURCHASE FOR INVESTMENT.

Unless the offering and sale of the Shares to be issued upon the particular exercise or acceptance of a Stock Right shall have been effectively registered under the Securities Act of 1933, as now in force or hereafter amended (the “1933 Act”), the Company shall be under no obligation to issue the Shares covered by such exercise unless and until the following conditions have been fulfilled:

a. The person(s) who exercise(s) or accept(s) such Stock Right shall warrant to the Company, prior to the receipt of such Shares, that such person(s) are acquiring such Shares for their own respective accounts, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall be endorsed upon the certificate(s) evidencing their Shares issued pursuant to such exercise or such grant:

“The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from

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registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws.”

b. At the discretion of the Administrator, the Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise or acceptance in compliance with the 1933 Act without registration thereunder.

22. DISSOLUTION OR LIQUIDATION OF THE COMPANY.

Upon the dissolution or liquidation of the Company, all Options granted under this Plan which as of such date shall not have been exercised and all Stock Grants and Stock-Based Awards which have not been accepted will terminate and become null and void; provided, however, that if the rights of a Participant or a Participant’s Survivors have not otherwise terminated and expired, the Participant or the Participant’s Survivors will have the right immediately prior to such dissolution or liquidation to exercise or accept any Stock Right to the extent that the Stock Right is exercisable or subject to acceptance as of the date immediately prior to such dissolution or liquidation. Upon the dissolution or liquidation of the Company, any outstanding Stock-Based Awards shall immediately terminate unless otherwise determined by the Administrator or specifically provided in the applicable Agreement.

23. ADJUSTMENTS.

Upon the occurrence of any of the following events, a Participant’s rights with respect to any Stock Right granted to him or her hereunder shall be adjusted as hereinafter provided, unless otherwise specifically provided in a Participant’s Agreement:

a. Stock Dividends and Stock Splits. If (i) the shares of Common Stock shall be subdivided or combined into a greater or smaller number of shares or if the Company shall issue any shares of Common Stock as a stock dividend on its outstanding Common Stock, or (ii) additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Common Stock, the number of shares of Common Stock deliverable upon the exercise of an Option or acceptance of a Stock Grant shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made including, in the purchase price per share, to reflect such events. The number of Shares subject to the limitations in Paragraph 3 and 4 shall also be proportionately adjusted upon the occurrence of such events.

b. Corporate Transactions. If the Company is to be consolidated with or acquired by another entity in a merger, sale of all or substantially all of the Company’s assets other than a transaction to merely change the state of incorporation (a “Corporate Transaction”), the Administrator or the board of directors of any entity assuming the obligations of the Company hereunder (the “Successor Board”), shall, as to outstanding Options, either (i) make appropriate provision for the continuation of such Options by substituting on an equitable basis for the Shares then subject to such Options either the consideration payable with respect to the

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outstanding shares of Common Stock in connection with the Corporate Transaction or securities of any successor or acquiring entity; or (ii) upon written notice to the Participants, provide that all Options must be exercised (either to the extent then exercisable or, at the discretion of the Administrator, all Options being made fully exercisable for purposes of this Subparagraph), within a specified number of days of the date of such notice, at the end of which period the Options shall terminate; or (iii) terminate all Options in exchange for a cash payment equal to the excess of the Fair Market Value of the Shares subject to such Options (either to the extent then exercisable or, at the discretion of the Administrator, all Options being made fully exercisable for purposes of this Subparagraph) over the exercise price thereof.

With respect to outstanding Stock Grants, the Administrator or the Successor Board, shall either (i) make appropriate provisions for the continuation of such Stock Grants on the same terms and conditions by substituting on an equitable basis for the Shares then subject to such Stock Grants either the consideration payable with respect to the outstanding Shares of Common Stock in connection with the Corporate Transaction or securities of any successor or acquiring entity; or (ii) terminate all Stock Grants in exchange for a cash payment equal to the excess of the Fair Market Value of the Shares subject to such Stock Grants over the purchase price thereof, if any. In addition, in the event of a Corporate Transaction, the Administrator may waive any or all Company forfeiture or repurchase rights with respect to outstanding Stock Grants.

c. Recapitalization or Reorganization. In the event of a recapitalization or reorganization of the Company other than a Corporate Transaction pursuant to which securities of the Company or of another corporation are issued with respect to the outstanding shares of Common Stock, a Participant upon exercising an Option or accepting a Stock Grant after the recapitalization or reorganization shall be entitled to receive for the purchase price paid upon such exercise or acceptance the number of replacement securities which would have been received if such Option had been exercised or Stock Grant accepted prior to such recapitalization or reorganization.

d. Adjustments to Stock-Based Awards. Upon the happening of any of the events described in Subparagraphs a, b or c above, any outstanding Stock-Based Award shall be appropriately adjusted to reflect the events described in such Subparagraphs. The Administrator shall determine the specific adjustments to be made under this Paragraph 23 and, subject to Paragraph 4, its determination shall be conclusive.

e. Modification of ISOs. Notwithstanding the foregoing, any adjustments made pursuant to Subparagraph a, b or c above with respect to ISOs shall be made only after the Administrator determines whether such adjustments would constitute a “modification” of such ISOs (as that term is defined in Section 424(h) of the Code) or would cause any adverse tax consequences for the holders of such ISOs. If the Administrator determines that such adjustments made with respect to ISOs would constitute a modification of such ISOs, it may refrain from making such adjustments, unless the holder of an ISO specifically requests in writing that such adjustment be made and such writing indicates that the holder has full knowledge of the consequences of such “modification” on his or her income tax treatment with respect to the ISO.

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24. ISSUANCES OF SECURITIES.

Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares subject to Stock Rights. Except as expressly provided herein, no adjustments shall be made for dividends paid in cash or in property (including without limitation, securities) of the Company prior to any issuance of Shares pursuant to a Stock Right.

25. FRACTIONAL SHARES.

No fractional shares shall be issued under the Plan and the person exercising a Stock Right shall receive from the Company cash in lieu of such fractional shares equal to the Fair Market Value thereof.

26. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.

The Administrator, at the written request of any Participant, may in its discretion take such actions as may be necessary to convert such Participant’s ISOs (or any portions thereof) that have not been exercised on the date of conversion into Non-Qualified Options at any time prior to the expiration of such ISOs, regardless of whether the Participant is an employee of the Company or an Affiliate at the time of such conversion. At the time of such conversion, the Administrator (with the consent of the Participant) may impose such conditions on the exercise of the resulting Non-Qualified Options as the Administrator in its discretion may determine, provided that such conditions shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give any Participant the right to have such Participant’s ISOs converted into Non-Qualified Options, and no such conversion shall occur until and unless the Administrator takes appropriate action. The Administrator, with the consent of the Participant, may also terminate any portion of any ISO that has not been exercised at the time of such conversion.

27. WITHHOLDING.

In the event that any federal, state, or local income taxes, employment taxes, Federal Insurance Contributions Act (“F.I.C.A.”) withholdings or other amounts are required by applicable law or governmental regulation to be withheld from the Participant’s salary, wages or other remuneration in connection with the exercise or acceptance of a Stock Right, in connection with a Disqualifying Disposition (as defined in Paragraph 28), upon the lapsing of any forfeiture provision or right of repurchase, or for any other reason as required by applicable law, the Company may withhold from the Participant’s compensation, if any, or may require that the Participant advance in cash to the Company, or to any Affiliate of the Company which employs or employed the Participant, the statutory minimum amount of such withholdings unless a

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different withholding arrangement, including the use of shares of the Company’s Common Stock or a promissory note, is authorized by the Administrator (and permitted by law). For purposes hereof, the fair market value of the shares withheld for purposes of payroll withholding shall be determined in the manner provided in Paragraph 1 above, as of the most recent practicable date prior to the date of exercise. If the fair market value of the shares withheld is less than the amount of payroll withholdings required, the Participant may be required to advance the difference in cash to the Company or the Affiliate employer. The Administrator in its discretion may condition the exercise of an Option for less than the then Fair Market Value on the Participant’s payment of such additional withholding.

28. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

Each Employee who receives an ISO must agree to notify the Company in writing immediately after the Employee makes a Disqualifying Disposition of any shares acquired pursuant to the exercise of an ISO. A Disqualifying Disposition is defined in Section 424(c) of the Code and includes any disposition (including any sale or gift) of such shares before the later of (a) two years after the date the Employee was granted the ISO, or (b) one year after the date the Employee acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c) of the Code. If the Employee has died before such stock is sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter.

29. TERMINATION OF THE PLAN.

The Plan will terminate on December 7, 2016, the date which is ten years from the earlier of the date of its adoption by the Board of Directors and the date of its approval by the shareholders. The Plan may be terminated at an earlier date by vote of the shareholders or the Board of Directors of the Company; provided, however, that any such earlier termination shall not affect any Agreements executed prior to the effective date of such termination.

30. AMENDMENT OF THE PLAN AND AGREEMENTS.

The Plan may be amended by the shareholders of the Company. The Plan may also be amended by the Administrator, including, without limitation, to the extent necessary to qualify any or all outstanding Stock Rights granted under the Plan or Stock Rights to be granted under the Plan for favorable federal income tax treatment (including deferral of taxation upon exercise) as may be afforded incentive stock options under Section 422 of the Code, and to the extent necessary to qualify the shares issuable upon exercise or acceptance of any outstanding Stock Rights granted, or Stock Rights to be granted, under the Plan for listing on any national securities exchange or quotation in any national automated quotation system of securities dealers. Any amendment approved by the Administrator which the Administrator determines is of a scope that requires shareholder approval shall be subject to obtaining such shareholder approval. Any modification or amendment of the Plan shall not, without the consent of a Participant, adversely affect his or her rights under a Stock Right previously granted to him or her. With the consent of

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the Participant affected, the Administrator may amend outstanding Agreements in a manner which may be adverse to the Participant but which is not inconsistent with the Plan. In the discretion of the Administrator, outstanding Agreements may be amended by the Administrator in a manner which is not adverse to the Participant.

31. EMPLOYMENT OR OTHER RELATIONSHIP.

Nothing in this Plan or any Agreement shall be deemed to prevent the Company or an Affiliate from terminating the employment, consultancy or director status of a Participant, nor to prevent a Participant from terminating his or her own employment, consultancy or director status or to give any Participant a right to be retained in employment or other service by the Company or any Affiliate for any period of time.

32. GOVERNING LAW.

This Plan shall be construed and enforced in accordance with the law of the State of Delaware.

Adopted by the Board of Directors on December 7, 2006.

Adopted by the stockholders on December 7, 2006.

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EX-10.14

Exhibit 10.14

AMENDMENT NO. 1 TO THE

TOOLROCK HOLDING, INC.

2006 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN

This Amendment No.1 (the “Amendment”) to the Toolrock Holding, Inc. 2006 Employee, Director and Consultant Stock Plan (the “Plan”) has been adopted by the Administrator and the stockholders of the Company in accordance with the provisions of Section 30 of the Plan. Any capitalized terms used, but not defined herein shall have the meaning set forth in the Plan.

Section 3(a) of the Plan shall be amended and replaced in its entirety with the following:

“The number of Shares which may be issued from time to time pursuant to this Plan shall be 3,542,822, or the equivalent of such number of Shares after the Administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with Paragraph 23 of the Plan. If an Option ceases to be “outstanding”, in whole or in part, or if the Company shall reacquire any Shares issued pursuant to a Stock Grant, the Shares which were subject to such Option and any Shares so reacquired by the Company shall be available for the granting of other Stock Rights under the Plan. Any Option shall be treated as “outstanding” until such Option is exercised in full, or terminates or expires under the provisions of the Plan, or by agreement of the parties to the pertinent Option Agreement.”

Except as expressly set forth herein, no other terms or provisions of the Plan are amended or modified, and all such provisions and terms are hereby ratified and confirmed in all respects.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned has executed this Amendment this 20^th day of May, 2011.

TOOLROCK HOLDING, INC.
By:	/s/ Dale B. Mikus
Name:	Dale B. Mikus
Title:	Vice President and Chief Financial Officer

[Signature Page to Amendment No. 1 to 2006 Employee, Director and Consultant Stock Plan]

EX-10.15

Exhibit 10.15

FORM OF RESTRICTED STOCK AGREEMENT

TOOLROCK HOLDING, INC.

AGREEMENT made as of the              day of              (the “Grant Date”), between Toolrock Holding, Inc. (the “Company”), a Delaware corporation having its principal place of business in Latrobe, Pennsylvania, and              of             , (the “Participant”).

WHEREAS, the Company has adopted the Toolrock Holding, Inc. 2006 Employee, Director and Consultant Stock Plan (the “Plan”) to promote the interests of the Company by providing an incentive for employees, directors and consultants of the Company or its Affiliates;

WHEREAS, pursuant to the provisions of the Plan, the Company desires to grant to the Participant shares of the Company’s Non-Voting Common Stock, $0.01 par value per share (“Non-Voting Common Stock”), in accordance with the provisions of the Plan, all on the terms and conditions hereinafter set forth;

WHEREAS, Participant wishes to accept said offer; and

WHEREAS, the parties hereto understand and agree that any terms used and not defined herein have the meanings ascribed to such terms in the Plan and that any and all references herein to employment of the Participant by the Company shall include the Participant’s employment or service as an employee, director or consultant of the Company or any Affiliate.

NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Terms of Grant. The Participant hereby accepts the Company’s grant to the Participant, in accordance with the terms of the Plan and this Agreement, of          shares of the Company’s Non-Voting Common Stock (such shares, subject to adjustment pursuant to Section 23 of the Plan and Subsection 2.1(h) hereof, the “Granted Shares”) for consideration consisting of services rendered, the receipt of which is hereby acknowledged by the Company.

2.1. Company’s Lapsing Repurchase Right.

(a) Lapsing Repurchase Right. Except as set forth in Subsections 2.1(b) hereof, in the event that for any reason the Participant no longer is an employee, director or consultant of the Company or an Affiliate prior to the second anniversary of the Grant Date, the Company (or its designee) shall have the option, but not the obligation, to purchase from the Participant (or the Participant’s Survivor), and, in the event the Company exercises such option, the Participant (or the Participant’s Survivor) shall be obligated to sell to the Company (or its designee), at a price per Granted Share equal to $0.0001 (the “Forfeiture Price”), all or any part of the Granted Shares set forth in clauses (i), (ii) and (iii) below (the “Lapsing Repurchase Right”). The Company’s Lapsing Repurchase Right shall be valid for a period of one year commencing with the date of

such termination of employment or service. Notwithstanding any other provision hereof, in the event the Company is prohibited during such one year period from exercising its Lapsing Repurchase Right by applicable law, then the time period during which such Lapsing Repurchase Right may be exercised shall be extended until 30 days after the Company is first not so prohibited.

(i) If such termination is prior to             , the Company shall have the option to repurchase all of the Granted Shares acquired by the Participant hereunder.

(ii) If such termination is on or after              and before             , the Company shall have the option to repurchase 50% of the Granted Shares.

(iii) Notwithstanding anything to the contrary contained in this Agreement, in the event (A) the Company or an Affiliate terminates the Participant’s employment or service for cause (as defined in the Plan, “Cause”), (B) the Participant voluntarily terminates his or her employment or service with the Company or an Affiliate for any reason, (C) the Administrator determines, within 90 days after the Participant’s termination, that either prior or subsequent to the Participant’s termination the Participant engaged in conduct that would constitute Cause, or (D) the Administrator determines at any time prior or subsequent to the Participant’s termination the Participant violated any of the provision of the letter agreement of even date herewith between the Company and the Participant relating to Confidentiality, Assignment of Inventions and Non-Competition, then in each case the Company shall have the option to repurchase all of the Granted Shares acquired by the Participant hereunder at the Forfeiture Price and payment in excess thereof previously made by the Company shall be promptly returned to the Company by the Participant upon notice of such event.

(b) Effect of Termination by the Company without Cause, for Disability or upon Death. Except as otherwise provided in Subsection 2.1(a)(iii) above, if the Participant ceases to be an employee, director or consultant of the Company or an Affiliate by reason of Disability, death or termination by the Company without Cause, the Company’s Lapsing Repurchase Right shall be deemed to have lapsed for all Granted Shares, including those for which the Company’s Lapsing Repurchase Right had not previously lapsed, and Participant’s ownership of all Granted Shares shall become vested.

(c) Effect of Change of Control. Except as otherwise provided in Subsection 2.1(a)(iii) above, in the event of a Change of Control (as defined below), the Company’s Lapsing Repurchase Right shall be deemed to have lapsed for all Granted Shares, including those for which the Company’s Lapsing Repurchase Right had not previously lapsed, and Participant’s ownership of all Granted Shares shall become vested. Change of Control means the occurrence of one of the following events:

(i) Control. Following the Company’s registration of its common stock under the Securities Exchange Act of 1934, as amended or any successor statute (the “Exchange Act”), Watermill-Toolrock Partners, L.P. and HHEP-Latrobe, L.P. and their respective affiliates together (A) cease to own directly or indirectly, securities representing in the

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aggregate 50% or more of the total voting power represented by the then outstanding voting securities of Latrobe Steel Company and (B) do not otherwise control the business and affairs of Latrobe Steel Company; or

(ii) Merger/Sale of Assets. (A) A merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation, as the case may be, outstanding immediately after such merger or consolidation; or (B) the stockholders of the Company approve an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

(d) Closing. In the event that the Company exercises the Lapsing Repurchase Right, the Company shall notify the Participant, or, in the case of the Participant’s death, his or her Survivor, in writing of its intent to repurchase the Granted Shares. Such notice may be mailed by the Company up to and including the last day of the time period provided for above for exercise of the Lapsing Repurchase Right. The notice shall specify the place, time and date for payment therefor (the “Closing”) and the number of Granted Shares with respect to which the Company is exercising the Lapsing Repurchase Right. The Closing shall be not less than ten days nor more than 60 days from the date of mailing of the notice, and the Participant or the Participant’s Survivor with respect to the Granted Shares which the Company elects to repurchase shall have no further rights as the owner thereof from and after the date specified in the notice. At the Closing, (i) the Forfeiture Price shall be delivered to the Participant or the Participant’s Survivor and (ii) the Granted Shares being repurchased, duly endorsed for transfer, shall, to the extent that they are not then in the possession of the Company, be delivered to the Company by the Participant or the Participant’s Survivor.

(e) Escrow. The certificates representing all Granted Shares acquired by the Participant hereunder which from time to time are subject to the Lapsing Repurchase Right shall be delivered to the Company and the Company shall hold such Granted Shares in escrow as provided in this Subsection 2.1(e). In the event of a repurchase by the Company of Granted Shares subject to the Lapsing Repurchase Right, the Company shall release from escrow and cancel a certificate for the number of Granted Shares so repurchased. Any securities distributed in respect of the Granted Shares held in escrow, including, without limitation, shares issued as a result of stock splits, stock dividends or other recapitalizations, shall also be held in escrow in the same manner as the Granted Shares.

(f) Prohibition on Transfer. The Participant recognizes and agrees that all Granted Shares which are subject to the Lapsing Repurchase Right may not be sold, transferred, assigned, hypothecated, pledged, encumbered or otherwise disposed of, whether voluntarily or by operation of law, other than to the Company (or its designee). However, the Participant, with the approval of the Administrator, may transfer the Granted Shares for no consideration to or for the benefit of the Participant’s Immediate Family (including, without limitation, to a trust for the benefit of the Participant’s Immediate Family or to a partnership or limited liability company for

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one or more members of the Participant’s Immediate Family), subject to such limits as the Administrator may establish, and the transferee shall remain subject to all the terms and conditions applicable to this Agreement prior to such transfer and each such transferee shall so acknowledge in writing as a condition precedent to the effectiveness of such transfer. The term “Immediate Family” shall mean the Participant’s spouse, former spouse, parents, children, stepchildren, adoptive relationships, sisters, brothers, nieces and nephews and grandchildren (and, for this purpose, shall also include the Participant). The Company shall not be required to transfer any Granted Shares on its books which shall have been sold, assigned or otherwise transferred in violation of this Subsection 2.1(f), or to treat as the owner of such Granted Shares, or to accord the right to vote as such owner or to pay dividends to, any person or organization to which any such Granted Shares shall have been so sold, assigned or otherwise transferred, in violation of this Subsection 2.1(f).

(g) Failure to Deliver Granted Shares to be Repurchased. In the event that the Granted Shares to be repurchased by the Company under this Agreement are not in the Company’s possession pursuant to Subsection 2.1(e) above or otherwise and the Participant or the Participant’s Survivor fails to deliver such Granted Shares to the Company (or its designee), the Company may elect (i) to establish a segregated account in the amount of the consideration payable therefor, such account to be turned over to the Participant or the Participant’s Survivor upon delivery of such Granted Shares, and (ii) immediately to take such action as is appropriate to transfer record title of such Granted Shares from the Participant to the Company (or its designee) and to treat the Participant and such Granted Shares in all respects as if delivery of such Granted Shares had been made as required by this Agreement. The Participant hereby irrevocably grants the Company a power of attorney which shall be coupled with an interest for the purpose of effectuating the preceding sentence.

(h) Adjustments. The Plan contains provisions covering the treatment of Shares in a number of contingencies such as stock splits and mergers. Provisions in the Plan for adjustment with respect to the Shares and the related provisions with respect to successors to the business of the Company are hereby made applicable hereunder and are incorporated herein by reference.

2.2 General Restrictions on Transfer of Granted Shares.

(a) Limitations on Transfer. In addition to the restrictions set forth in Section 2.1, Vested Shares (as defined below) shall not be transferred by the Participant except as permitted in this Section 2.2. As used herein the term “Vested Shares” shall mean Granted Shares that are no longer subject to the provisions of Sections 2.1(a)(i) or 2.1(a)(ii) hereof or which have otherwise expressly become vested pursuant to Section 2.1(b) or 2.1(c) hereof.

(b) Right to Repurchase following Termination of Service. If the Participant’s service as an employee, director or consultant with the Company or an Affiliate shall be terminated for any reason other than as set forth in Section 2.1(a)(iii), including due to death or Disability, then the Company shall have the option to repurchase the Vested Shares not previously repurchased in accordance with the provisions of Section 2.1 of this Agreement as follows:

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(i) The Company’s option to repurchase the Vested Shares in the event of termination of service under this Section 2.2(b) shall be valid for a period of one year commencing with the date of such termination of service.

(ii) In the event the Company shall be entitled to and shall elect to exercise its option to repurchase the Vested Shares under this Section 2.2(b), the Company shall notify the Participant, or in case of death, his or her Survivor, in writing of its intent to repurchase the Vested Shares. Such written notice may be mailed by the Company up to and including the last day of the time period provided for in Section 2.2(b)(i) for exercise of the Company’s option to repurchase.

(iii) The written notice to the Participant shall specify the address at, and the time and date on, which payment of the Repurchase Price (as defined below) is to be made (the “Closing”). The date specified shall not be less than ten days nor more than 60 days from the date of the mailing of the notice, and the Participant or the Participant’s Survivor with respect to the Vested Shares shall have no further rights as the owner thereof from and after the date specified in the notice. At the Closing, the Repurchase Price shall be delivered to the Participant or the Participant’s Survivor and the Vested Shares being purchased, duly endorsed for transfer, shall, to the extent that they are not then in the possession of the Company, be delivered to the Company by the Participant or the Participant’s Survivor. Notwithstanding the foregoing, the Company shall have the option to pay the Repurchase Price over a four year period commencing on the Closing date.

(iv) The price paid per share for any Vested Shares repurchased under this Section 2.2 (the “Repurchase Price”) shall equal the Fair Market Value of such Vested Shares determined in accordance with the Plan as of the date of termination of service.

(c) Right to Repurchase on Proposed Transfer. It shall be a condition precedent to the validity of any sale or other transfer of any Vested Shares by the Participant that the following restrictions be complied with (except as hereinafter otherwise provided):

(i) No Vested Shares owned by the Participant may be sold, pledged or otherwise transferred (including by gift or devise) to any person or entity, voluntarily, or by operation of law, except in accordance with the terms and conditions hereinafter set forth.

(ii) Before selling or otherwise transferring all or part of the Vested Shares, the Participant shall give written notice of such intention to the Company which notice shall include the name of the proposed transferee, the proposed purchase price per share, the terms of payment of such purchase price and all other matters relating to such sale or transfer and shall be accompanied by a copy of the binding written agreement of the proposed transferee to purchase the Vested Shares of the Participant. Such notice shall

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constitute a binding offer by the Participant to sell to the Company such number of the Vested Shares then held by the Participant as are proposed to be sold in the notice at the monetary price per share designated in such notice, payable on the terms offered to the Participant by the proposed transferee (provided, however, that the Company shall not be required to meet any non-monetary terms of the proposed transfer, including, without limitation, delivery of other securities in exchange for the Vested Shares proposed to be sold). The Company shall give written notice to the Participant as to whether such offer has been accepted in whole by the Company within 60 days after its receipt of written notice from the Participant. The Company may only accept such offer in whole and may not accept such offer in part. Such acceptance notice shall fix a time, location and date for the closing on such purchase (“Closing Date”) which shall not be less than ten nor more than sixty days after the giving of the acceptance notice, provided, however, if any of the Shares to be sold pursuant to this Section 2.2(c) have been held by the Participant for less than six months, then the Closing Date may be extended by the Company until no more than ten days after such Shares have been held by the Participant for six months. At the Closing, the Participant shall accept payment as set forth herein and shall deliver to the Company in exchange therefor the Granted Shares being repurchased, duly endorsed for transfer, to the extent that they are not then in the possession of the Company. Notwithstanding the foregoing, the Company shall have the option to pay the Repurchase Price over a four year period commencing on the date of the Closing.

(iii) If the Company shall fail to accept any such offer, the Participant shall be free to sell all, but not less than all, of the Vested Shares set forth in her notice to the designated transferee at the price and terms designated in the Participant’s notice, provided that (i) such sale is consummated within six months after the giving of notice by the Participant to the Company as aforesaid, and (ii) the transferee first agrees in writing to be bound by the provisions of this Section 2.2(c) so that he or she (and all subsequent transferees) shall thereafter only be permitted to sell or transfer the Vested Shares in accordance with the terms hereof. After the expiration of such six months, the provisions of this Section 2.2(c) shall again apply with respect to any proposed voluntary transfer of the Vested Shares.

(iv) The provisions of this Section 2.2(c) may be waived by the Company. Any such waiver may be unconditional or based upon such conditions as the Company may impose.

(v) The restrictions on transfer contained in this Section 2.2(c) shall not apply to (a) transfers by the Participant to his or her spouse or children or to a trust for the benefit of his or her spouse or children, (b) transfers by the Participant to his or her guardian or conservator, and (c) or transfers by the Participant, in the event of his or her death, to his or her executor(s) or administrator(s) or to trustee(s) under his or her will (collectively, “Permitted Transferees”); provided however, that in any such event the Vested Shares so transferred in the hands of each such Permitted Transferee shall remain subject to this Agreement, and each such Permitted Transferee shall so acknowledge in writing as a condition precedent to the effectiveness of such transfer.

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(d) The provisions of Section 2.2 (a) through (c) shall terminate upon the effective date of the registration of the Company’s common stock pursuant to the Exchange Act.

(e) If in connection with a registration statement filed by the Company pursuant to the Securities Act of 1933, as amended (the “1933 Act”), the Company or its underwriter so requests, the Participant will agree not to sell any Vested Shares for a period not to exceed the lesser of: (i) 180 days following the effectiveness of such registration statement or (ii) such period as the officers and directors of the Company agree not to sell their Common Stock of the Company.

(f) The Participant acknowledges and agrees that neither the Company nor any of its shareholders, directors or officers, has any duty or obligation to disclose to the Participant any material information regarding the business of the Company or affecting the value of the Shares before, at the time of, or following a termination of the employment of the Participant by the Company or an Affiliate, including, without limitation, any information concerning plans for the Company to make a public offering of its securities or to be acquired by or merged with or into another firm or entity.

3. Legend. In addition to any legend required pursuant to the Plan, all certificates representing the Granted Shares to be issued to the Participant pursuant to this Agreement shall have endorsed thereon a legend substantially as follows:

“The shares represented by this certificate are subject to restrictions set forth in a Restricted Stock Agreement dated as of              with this Company, a copy of which Agreement is available for inspection at the offices of the Company or will be made available upon request.”

4. Purchase for Investment; Securities Law Compliance. If the offering and sale of the Granted Shares have not been effectively registered under the 1933 Act, the Participant hereby represents and warrants that he or she is acquiring the Granted Shares for his or her own account, for investment, and not with a view to, or for sale in connection with, the distribution of any such Granted Shares. The Participant specifically acknowledges and agrees that any sales of Granted Shares shall be made in accordance with the requirements of the 1933 Act, in a transaction as to which the Company shall have received an opinion of counsel satisfactory to it confirming such compliance. The Participant shall be bound by the provisions of the following legend which shall be endorsed upon the certificate(s) evidencing the Shares issued:

“The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws.”

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5. Rights as a Stockholder. The Participant shall have all the rights of a stockholder with respect to the Granted Shares, including dividend rights, subject to the transfer and other restrictions set forth herein and in the Plan.

6. Incorporation of the Plan. The Participant specifically understands and agrees that the Granted Shares issued under the Plan are being sold to the Participant pursuant to the Plan, a copy of which Plan the Participant acknowledges he or she has read and understands and by which Plan he or she agrees to be bound. The provisions of the Plan are incorporated herein by reference.

7. Tax Liability of the Participant and Payment of Taxes. The Participant acknowledges and agrees that any income or other taxes due from the Participant with respect to the Granted Shares issued pursuant to this Agreement, including, without limitation, the Lapsing Repurchase Right, shall be the Participant’s responsibility. Without limiting the foregoing, the Participant agrees that, to the extent that the lapsing of restrictions on disposition of any of the Granted Shares or the declaration of dividends on any such shares before the lapse of such restrictions on disposition results in the Participant’s being deemed to be in receipt of earned income under the provisions of the Code, the Company shall be entitled to immediate payment from the Participant of the amount of any tax required to be withheld by the Company.

Upon execution of this Agreement, the Participant may file an election under Section 83 of the Code in substantially the form attached as Exhibit B. The Participant acknowledges that if she does not file such an election, as the Granted Shares are released from the Lapsing Repurchase Right in accordance with Section 2.1, the Participant will have income for tax purposes equal to the fair market value of the Granted Shares at such date, less the price paid for the Granted Shares by the Participant.

8. Equitable Relief. The Participant specifically acknowledges and agrees that in the event of a breach or threatened breach of the provisions of this Agreement or the Plan, including the attempted transfer of the Granted Shares by the Participant in violation of this Agreement, monetary damages may not be adequate to compensate the Company, and, therefore, in the event of such a breach or threatened breach, in addition to any right to damages, the Company shall be entitled to equitable relief in any court having competent jurisdiction. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for any such breach or threatened breach.

9. No Obligation to Maintain Relationship. The Company is not by the Plan or this Agreement obligated to continue the Participant as an employee, director or consultant of the Company or an Affiliate. The Participant acknowledges: (i) that the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (ii) that the grant of the Shares is a one-time benefit which does not create any contractual or other right to receive future grants of shares, or benefits in lieu of shares; (iii) that all determinations with respect to any such future grants, including, but not limited to, the times when shares shall be granted, the number of shares to be granted, the purchase price, and the time or times when each share shall be free from a lapsing repurchase right, will be at the sole discretion of the Company; (iv) that the Participant’s participation in the Plan is voluntary; (v) that the value of the Shares is an

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extraordinary item of compensation which is outside the scope of the Participant’s employment contract, if any; and (vi) that the Shares are not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.

10. Notices. Any notices required or permitted by the terms of this Agreement or the Plan shall be given by recognized courier service, facsimile, registered or certified mail, return receipt requested, addressed as follows:

If to the Company:

Toolrock Holding, Inc.

2626 Ligonier Street

Latrobe, Pennsylvania 15650

If to the Participant:

or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given on the earliest of receipt, one business day following delivery by the sender to a recognized courier service, or three business days following mailing by registered or certified mail.

11. Benefit of Agreement. Subject to the provisions of the Plan and the other provisions hereof, this Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.

12. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the conflict of law principles thereof. For the purpose of litigating any dispute that arises under this Agreement, whether at law or in equity, the parties hereby consent to exclusive jurisdiction in Delaware and agree that such litigation shall be conducted in the courts of Newcastle County, Delaware or the federal courts of the United States for the District of Delaware.

13. Severability. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then such provision or provisions shall be modified to the extent necessary to make such provision valid and enforceable, and to the extent that this is impossible, then such provision shall be deemed to be excised from this Agreement, and the validity, legality and enforceability of the rest of this Agreement shall not be affected thereby.

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14. Entire Agreement. This Agreement, together with the Plan, constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in this Agreement shall affect or be used to interpret, change or restrict the express terms and provisions of this Agreement provided, however, in any event, this Agreement shall be subject to and governed by the Plan.

15. Modifications and Amendments; Waivers and Consents. The terms and provisions of this Agreement may be modified or amended as provided in the Plan. Except as provided in the Plan, the terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.

16. Consent of Spouse. If the Participant is married as of the date of this Agreement, the Participant’s spouse shall execute a Consent of Spouse in the form of Exhibit A hereto, effective as of the date hereof. Such consent shall not be deemed to confer or convey to the spouse any rights in the Granted Shares that do not otherwise exist by operation of law or the agreement of the parties. If the Participant marries or remarries subsequent to the date hereof, the Participant shall, not later than 60 days thereafter, obtain his or her new spouse’s acknowledgement of and consent to the existence and binding effect of all restrictions contained in this Agreement by such spouse’s executing and delivering a Consent of Spouse in the form of Exhibit A.

17. Counterparts. This Agreement may be executed in one or more counterparts, and by different parties hereto on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

18. Data Privacy. By entering into this Agreement, the Participant: (i) authorizes the Company and each Affiliate, and any agent of the Company or any Affiliate administering the Plan or providing Plan record keeping services, to disclose to the Company or any of its Affiliates such information and data as the Company or any such Affiliate shall request in order to facilitate the grant of Shares and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information; and (iii) authorizes the Company and each Affiliate to store and transmit such information in electronic form.

[THE NEXT PAGE IS THE SIGNATURE PAGE]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

TOOLROCK HOLDING, INC.

By:

Name:

Title:

PARTICIPANT:

Name:

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EXHIBIT A

CONSENT OF SPOUSE

I, ____________________________, spouse of _____________________________, acknowledge that I have read the RESTRICTED STOCK AGREEMENT dated as of              (the “Agreement”) to which this Consent is attached as Exhibit A and that I know its contents. Capitalized terms used and not defined herein shall have the meanings assigned to such terms in the Agreement. I am aware that by its provisions the Granted Shares granted to my spouse pursuant to the Agreement are subject to a Lapsing Repurchase Right in favor of Toolrock Holding, Inc. (the “Company”) and that, accordingly, the Company has the right to repurchase up to all of the Granted Shares of which I may become possessed as a result of a gift from my spouse or a court decree and/or any property settlement in any domestic litigation.

I hereby agree that my interest, if any, in the Granted Shares subject to the Agreement shall be irrevocably bound by the Agreement and further understand and agree that any community property interest I may have in the Granted Shares shall be similarly bound by the Agreement.

I agree to the Lapsing Repurchase Right described in the Agreement and I hereby consent to the repurchase of the Granted Shares by the Company and the sale of the Granted Shares by my spouse or my spouse’s legal representative in accordance with the provisions of the Agreement. Further, as part of the consideration for the Agreement, I agree that at my death, if I have not disposed of any interest of mine in the Granted Shares by an outright bequest of the Granted Shares to my spouse, then the Company shall have the same rights against my legal representative to exercise its rights of repurchase with respect to any interest of mine in the Granted Shares as it would have had pursuant to the Agreement if I had acquired the Granted Shares pursuant to a court decree in domestic litigation.

I AM AWARE THAT THE LEGAL, FINANCIAL AND RELATED MATTERS CONTAINED IN THE AGREEMENT ARE COMPLEX AND THAT I AM FREE TO SEEK INDEPENDENT PROFESSIONAL GUIDANCE OR COUNSEL WITH RESPECT TO THIS CONSENT. I HAVE EITHER SOUGHT SUCH GUIDANCE OR COUNSEL OR DETERMINED AFTER REVIEWING THE AGREEMENT CAREFULLY THAT I WILL WAIVE SUCH RIGHT.

Dated as of the _______ day of ________________, 200    .

Print name:

A-1

EXHIBIT B

Election to Include Gross Income in Year

of Transfer Pursuant to Section 83(b)

of the Internal Revenue Code of 1986, as amended

In accordance with Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”), the undersigned hereby elects to include in his gross income as compensation for services the excess, if any, of the fair market value of the property (described below) at the time of transfer over the amount paid for such property.

The following sets for the information required in accordance with the Code and the regulations promulgated hereunder:

1. The name, address and social security number of the undersigned are:

Name:

Address:

Social Security No.:

2. The description of the property with respect to which the election is being made is as follows:

____________ (        ) shares (the “Shares”) of Non-Voting Common Stock, $0.01 par value per share, of Toolrock Holding, Inc., a Delaware corporation (the “Company”).

3. This election is made for the calendar year             , with respect to the transfer of the property to the Taxpayer on             .

4. Description of restrictions: The property is subject to the following restrictions:

In the event taxpayer’s employment with the Company or an Affiliate is terminated, the Company may repurchase all or any portion of the Shares determined as set forth below at a price of $0.0001 per share:

A. If the termination takes place on or prior to             , the Purchase Option will apply to all of the Shares.

B. If the termination takes place after              and before             , the number of Shares to which the Purchase Option applies shall be              Shares.

5. The fair market value at time of transfer (determined without regard to any restrictions other than restrictions which by their terms will never lapse) of the property with respect to which this election is being made was not more than $             per Share.

B-1

6. The amount paid by taxpayer for said property was $0.00 per Share.

7. A copy of this statement has been furnished to the Company.

Signed this ____ day of             .

Print Name:

B-2

EX-10.16

Exhibit 10.16

FORM OF INCENTIVE STOCK OPTION AGREEMENT

TOOLROCK HOLDING, INC.

AGREEMENT made as of the              day of                     , between Toolrock Holding, Inc. (the “Company”), a Delaware corporation, and             , an employee of the Company or its subsidiaries (the “Employee”).

WHEREAS, the Company desires to grant to the Employee an Option to purchase shares of its Non-Voting Common Stock, $0.01 par value per share (the “Shares”), under and for the purposes set forth in the Company’s 2006 Employee, Director and Consultant Stock Plan (the “Plan”);

WHEREAS, the Company and the Employee understand and agree that any terms used and not defined herein have the same meanings as in the Plan; and

WHEREAS, the Company and the Employee each intend that the Option granted herein qualify as an ISO.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto agree as follows:

1. GRANT OF OPTION.

The Company hereby grants to the Employee the right and option to purchase all or any part of an aggregate of              (            ) Shares, on the terms and conditions and subject to all the limitations set forth herein, under United States securities and tax laws, and in the Plan, which is incorporated herein by reference. The Employee acknowledges receipt of a copy of the Plan.

2. PURCHASE PRICE.

The purchase price of the Shares covered by the Option shall be $             per Share, subject to adjustment, as provided in the Plan, in the event of a stock split, reverse stock split or other events affecting the holders of Shares after the date hereof (the “Purchase Price”). Payment shall be made in accordance with Paragraph 8 of the Plan.

3. EXERCISABILITY OF OPTION.

Subject to the terms and conditions set forth in this Agreement and the Plan, the Option granted hereby shall become exercisable as follows:

On	up to 25% of Shares
On	up to an additional 25% of Shares

On	up to an additional 25% of Shares
On	up to an additional 25% of Shares

The foregoing rights are cumulative and are subject to the other terms and conditions of this Agreement and the Plan.

4. TERM OF OPTION.

The Option shall terminate ten years from the date of this Agreement or, if the Employee owns as of the date hereof more than 10% of the total combined voting power of all classes of capital stock of the Company or an Affiliate, five years from the date of this Agreement, but shall be subject to earlier termination as provided herein or in the Plan.

If the Employee ceases to be an employee of the Company or of an Affiliate (for any reason other than the death or Disability of the Employee or termination of the Employee’s employment for “cause” (as defined in the Plan)), the Option may be exercised, if it has not previously terminated, within three months after the date the Employee ceases to be an employee of the Company or an Affiliate, or within the originally prescribed term of the Option, whichever is earlier, but may not be exercised thereafter. In such event, the Option shall be exercisable only to the extent that the Option has become exercisable and is in effect at the date of such cessation of employment.

Notwithstanding the foregoing, in the event of the Employee’s Disability or death within three months after the termination of employment, the Employee or the Employee’s Survivors may exercise the Option within one year after the date of the Employee’s termination of employment, but in no event after the date of expiration of the term of the Option.

In the event the Employee’s employment is terminated by the Employee’s employer for “cause” (as defined in the Plan), the Employee’s right to exercise any unexercised portion of this Option shall cease immediately as of the time the Employee is notified his or her employment is terminated for “cause,” and this Option shall thereupon terminate. Notwithstanding anything herein to the contrary, if subsequent to the Employee’s termination as an employee, but prior to the exercise of the Option, the Board of Directors of the Company determines that, either prior or subsequent to the Employee’s termination, the Employee engaged in conduct which would constitute “cause,” then the Employee shall immediately cease to have any right to exercise the Option and this Option shall thereupon terminate.

In the event of the Disability of the Employee, as determined in accordance with the Plan, the Option shall be exercisable within one year after the Employee’s termination of employment or, if earlier, within the term originally prescribed by the Option. In such event, the Option shall be exercisable:

(a) to the extent that the Option has become exercisable but has not been exercised as of the date of Disability; and

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(b) in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of Disability of any additional vesting rights that would have accrued on the next vesting date had the Employee not become Disabled. The proration shall be based upon the number of days accrued in the current vesting period prior to the date of Disability.

In the event of the death of the Employee while an employee of the Company or of an Affiliate, the Option shall be exercisable by the Employee’s Survivors within one year after the date of death of the Employee or, if earlier, within the originally prescribed term of the Option. In such event, the Option shall be exercisable:

(x) to the extent that the Option has become exercisable but has not been exercised as of the date of death; and

(y) in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of death of any additional vesting rights that would have accrued on the next vesting date had the Employee not died. The proration shall be based upon the number of days accrued in the current vesting period prior to the Employee’s date of death.

5. METHOD OF EXERCISING OPTION.

Subject to the terms and conditions of this Agreement, the Option may be exercised by written notice to the Company or its designee, in substantially the form of Exhibit A attached hereto. Such notice shall state the number of Shares with respect to which the Option is being exercised and shall be signed by the person exercising the Option. Payment of the purchase price for such Shares shall be made in accordance with Paragraph 8 of the Plan. The Company shall deliver such Shares as soon as practicable after the notice shall be received, provided, however, that the Company may delay issuance of such Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including, without limitation, state securities or “blue sky” laws). The Shares as to which the Option shall have been so exercised shall be registered in the Company’s share register in the name of the person so exercising the Option (or, if the Option shall be exercised by the Employee and if the Employee shall so request in the notice exercising the Option, shall be registered in the name of the Employee and another person jointly, with right of survivorship) and shall be delivered as provided above to or upon the written order of the person exercising the Option. In the event the Option shall be exercised, pursuant to Section 4 hereof, by any person other than the Employee, such notice shall be accompanied by appropriate proof of the right of such person to exercise the Option. All Shares that shall be purchased upon the exercise of the Option as provided herein shall be fully paid and nonassessable.

6. PARTIAL EXERCISE.

Exercise of this Option to the extent above stated may be made in part at any time and from time to time within the above limits, except that no fractional share shall be issued pursuant to this Option.

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7. NON-ASSIGNABILITY.

The Option shall not be transferable by the Employee otherwise than by will or by the laws of descent and distribution. The Option shall be exercisable, during the Employee’s lifetime, only by the Employee (or, in the event of legal incapacity or incompetency, by the Employee’s guardian or representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of the Option or of any rights granted hereunder contrary to the provisions of this Section 7, or the levy of any attachment or similar process upon the Option shall be null and void.

8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.

The Employee shall have no rights as a stockholder with respect to Shares subject to this Agreement until registration of the Shares in the Company’s share register in the name of the Employee. Except as is expressly provided in the Plan with respect to certain changes in the capitalization of the Company, no adjustment shall be made for dividends or similar rights for which the record date is prior to the date of such registration.

9. ADJUSTMENTS.

The Plan contains provisions covering the treatment of Options in a number of contingencies such as stock splits and mergers. Provisions in the Plan for adjustment with respect to stock subject to Options and the related provisions with respect to successors to the business of the Company are hereby made applicable hereunder and are incorporated herein by reference.

10. TAXES.

The Employee acknowledges that any income or other taxes due from him or her with respect to this Option or the Shares issuable pursuant to this Option shall be the Employee’s responsibility.

In the event of a Disqualifying Disposition (as defined in Section 15 below) or if the Option is converted into a Non-Qualified Option and such Non-Qualified Option is exercised, the Company may withhold from the Employee’s remuneration, if any, the minimum statutory amount of federal, state and local withholding taxes attributable to such amount that is considered compensation includable in such person’s gross income. At the Company’s discretion, the amount required to be withheld may be withheld in cash from such remuneration, or in kind from the Shares otherwise deliverable to the Employee on exercise of the Option. The Employee further agrees that, if the Company does not withhold an amount from the Employee’s remuneration sufficient to satisfy the Company’s income tax withholding obligation, the Employee will reimburse the Company on demand, in cash, for the amount under-withheld.

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11. PURCHASE FOR INVESTMENT.

Unless the offering and sale of the Shares to be issued upon the particular exercise of the Option shall have been effectively registered under the Securities Act of 1933, as now in force or hereafter amended (the “1933 Act”), the Company shall be under no obligation to issue the Shares covered by such exercise unless and until the following conditions have been fulfilled:

(a) The person(s) who exercise the Option shall warrant to the Company, at the time of such exercise, that such person(s) are acquiring such Shares for their own respective accounts, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall be endorsed upon any certificate(s) evidencing the Shares issued pursuant to such exercise:

“The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws;” and

(b) If the Company so requires, the Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise in compliance with the 1933 Act without registration thereunder. Without limiting the generality of the foregoing, the Company may delay issuance of the Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including without limitation state securities or “blue sky” laws).

12. RESTRICTIONS ON TRANSFER OF SHARES.

12.1 The Shares acquired by the Employee pursuant to the exercise of the Option granted hereby shall not be transferred by the Employee except as permitted herein.

12.2 In the event of the Employee’s termination of employment for any reason, the Company shall have the option, but not the obligation, to repurchase all or any part of the Shares issued pursuant to this Agreement (including, without limitation, Shares purchased after termination of employment, Disability or death in accordance with Section 4 hereof). In the event the Company does not, upon the termination of employment of the Employee (as described above), exercise its option pursuant to this Section 12.2, the restrictions set forth in the balance of this Agreement shall not thereby lapse, and the Employee for himself or herself, his or her heirs, legatees, executors, administrators and other successors in interest, agrees that the Shares

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shall remain subject to such restrictions. The following provisions shall apply to a repurchase under this Section 12.2:

(i) The per share repurchase price of the Shares to be sold to the Company upon exercise of its option under this Section 12.2 shall be equal to the Fair Market Value of each such Share determined in accordance with the Plan as of the date of termination of employment provided, however, in the event of a termination by the Company for “cause” (as defined in the Plan), the per share repurchase price of the Shares to be sold to the Company upon exercise of its option under this Section 12.2 shall be equal to the Purchase Price.

(ii) The Company’s option to repurchase the Employee’s Shares in the event of termination of employment shall be valid for a period of 12 months commencing with the date of such termination of employment.

(iii) In the event the Company shall be entitled to and shall elect to exercise its option to repurchase the Employee’s Shares under this Section 12.2, the Company shall notify the Employee, or in case of death, his or her Survivor, in writing of its intent to repurchase the Shares. Such written notice may be mailed by the Company up to and including the last day of the time period provided for in Section 12.2(ii) for exercise of the Company’s option to repurchase.

(iv) The written notice to the Employee shall specify the address at, and the time and date on, which payment of the repurchase price is to be made (the “Closing”). The date specified shall not be less than ten days nor more than 60 days from the date of the mailing of the notice, and the Employee or his or her successor in interest with respect to the Shares shall have no further rights as the owner thereof from and after the date specified in the notice. At the Closing, the repurchase price shall be delivered to the Employee or his or her successor in interest and the Shares being purchased, duly endorsed for transfer, shall, to the extent that they are not then in the possession of the Company, be delivered to the Company by the Employee or his or her successor in interest.

12.3 It shall be a condition precedent to the validity of any sale or other transfer of any Shares by the Employee that the following restrictions be complied with (except as hereinafter otherwise provided):

(i) No Shares owned by the Employee may be sold, pledged or otherwise transferred (including by gift or devise) to any person or entity, voluntarily, or by operation of law, except in accordance with the terms and conditions hereinafter set forth.

(ii) Before selling or otherwise transferring all or part of the Shares, the Employee shall give written notice of such intention to the Company, which notice shall include the name of the proposed transferee, the proposed purchase price per share, the terms of payment of such purchase price and all other matters relating to such sale or transfer and shall be accompanied by a copy of the binding written

6

agreement of the proposed transferee to purchase the Shares of the Employee. Such notice shall constitute a binding offer by the Employee to sell to the Company such number of the Shares then held by the Employee as are proposed to be sold in the notice at the monetary price per share designated in such notice, payable on the terms offered to the Employee by the proposed transferee (provided, however, that the Company shall not be required to meet any non-monetary terms of the proposed transfer, including, without limitation, delivery of other securities in exchange for the Shares proposed to be sold). The Company shall give written notice to the Employee as to whether such offer has been accepted in whole by the Company within 60 days after its receipt of written notice from the Employee. The Company may only accept such offer in whole and may not accept such offer in part. Such acceptance notice shall fix a time, location and date for the Closing on such purchase (“Closing Date”) which shall not be less than ten nor more than sixty days after the giving of the acceptance notice, provided, however, if any of the Shares to be sold pursuant to this Section 12.3 have been held by the Employee for less than six months, then the Closing Date may be extended by the Company until no more than ten days after such Shares have been held by the Employee for six months if required under applicable accounting rules in effect at the time. The place for such Closing shall be at the Company’s principal office. At such Closing, the Employee shall accept payment as set forth herein and shall deliver to the Company in exchange therefor certificates for the number of Shares stated in the notice accompanied by duly executed instruments of transfer.

(iii) If the Company shall fail to accept any such offer, the Employee shall be free to sell all, but not less than all, of the Shares set forth in his or her notice to the designated transferee at the price and terms designated in the Employee’s notice, provided that (i) such sale is consummated within six months after the giving of notice by the Employee to the Company as aforesaid, and (ii) the transferee first agrees in writing to be bound by the provisions of this Section 12 so that such transferee (and all subsequent transferees) shall thereafter only be permitted to sell or transfer the Shares in accordance with the terms hereof. After the expiration of such six months, the provisions of this Section 12.3 shall again apply with respect to any proposed voluntary transfer of the Employee’s Shares.

(iv) The restrictions on transfer contained in this Section 12.3 shall not apply to (a) transfers by the Employee to his or her spouse or children or to a trust for the benefit of his or her spouse or children, (b) transfers by the Employee to his or her guardian or conservator, and (c) transfers by the Employee, in the event of his or her death, to his or her executor(s) or administrator(s) or to trustee(s) under his or her will (collectively, “Permitted Transferees”); provided however, that in any such event the Shares so transferred in the hands of each such Permitted Transferee shall remain subject to this Agreement, and each such Permitted Transferee shall so acknowledge in writing as a condition precedent to the effectiveness of such transfer.

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(v) The provisions of this Section 12.3 may be waived by the Company. Any such waiver may be unconditional or based upon such conditions as the Company may impose.

12.4 In the event that the Employee or his or her successor in interest fails to deliver the Shares to be repurchased by the Company under this Agreement, the Company may elect (a) to establish a segregated account in the amount of the repurchase price, such account to be turned over to the Employee or his or her successor in interest upon delivery of such Shares, and (b) immediately to take such action as is appropriate to transfer record title of such Shares from the Employee to the Company and to treat the Employee and such Shares in all respects as if delivery of such Shares had been made as required by this Agreement. The Employee hereby irrevocably grants the Company a power of attorney which shall be coupled with an interest for the purpose of effectuating the preceding sentence.

12.5 If the Company shall pay a stock dividend or declare a stock split on or with respect to any of its Non-Voting Common Stock, or otherwise distribute securities of the Company to the holders of its Non-Voting Common Stock, the number of shares of stock or other securities of Company issued with respect to the shares then subject to the restrictions contained in this Agreement shall be added to the Shares subject to the Company’s rights to repurchase pursuant to this Agreement. If the Company shall distribute to its stockholders shares of stock of another corporation, the shares of stock of such other corporation, distributed with respect to the Shares then subject to the restrictions contained in this Agreement, shall be added to the Shares subject to the Company’s rights to repurchase pursuant to this Agreement.

12.6 If the outstanding shares of Non-Voting Common Stock of the Company shall be subdivided into a greater number of shares or combined into a smaller number of shares, or in the event of a reclassification of the outstanding shares of Non-Voting Common Stock of the Company, or if the Company shall be a party to a merger, consolidation or capital reorganization, there shall be substituted for the Shares then subject to the restrictions contained in this Agreement such amount and kind of securities as are issued in such subdivision, combination, reclassification, merger, consolidation or capital reorganization in respect of the Shares subject immediately prior thereto to the Company’s rights to repurchase pursuant to this Agreement.

12.7 The Company shall not be required to transfer any Shares on its books which shall have been sold, assigned or otherwise transferred in violation of this Agreement, or to treat as owner of such Shares, or to accord the right to vote as such owner or to pay dividends to, any person or organization to which any such Shares shall have been so sold, assigned or otherwise transferred, in violation of this Agreement.

12.8 The provisions of Sections 12.1, 12.2 and 12.3 shall terminate upon the effective date of the registration of the Shares pursuant to the Securities Exchange Act of 1934.

12.9 The Employee agrees that in the event the Company proposes to offer for sale to the public any of its equity securities and such Employee is requested by the Company and any underwriter engaged by the Company in connection with such offering to sign an agreement restricting the sale or other transfer of Shares, then it will promptly sign such agreement and will

8

not transfer, whether in privately negotiated transactions or to the public in open market transactions or otherwise, any Shares or other securities of the Company held by him or her during such period as is determined by the Company and the underwriters, not to exceed 180 days following the closing of the offering, plus such additional period of time as may be required to comply with Marketplace Rule 2711 of the National Association of Securities Dealers, Inc. or similar rules thereto (such period, the “Lock-Up Period”). Such agreement shall be in writing and in form and substance reasonably satisfactory to the Company and such underwriter and pursuant to customary and prevailing terms and conditions. Notwithstanding whether the Employee has signed such an agreement, the Company may impose stop-transfer instructions with respect to the Shares or other securities of the Company subject to the foregoing restrictions until the end of the Lock-Up Period.

12.10 The Employee acknowledges and agrees that neither the Company, its shareholders nor its directors and officers, has any duty or obligation to disclose to the Employee any material information regarding the business of the Company or affecting the value of the Shares before, at the time of, or following a termination of the employment of the Employee by the Company, including, without limitation, any information concerning plans for the Company to make a public offering of its securities or to be acquired by or merged with or into another firm or entity.

12.11 All certificates representing the Shares to be issued to the Employee pursuant to this Agreement shall have endorsed thereon a legend substantially as follows: “The shares represented by this certificate are subject to restrictions set forth in an Incentive Stock Option Agreement dated                      with this Company, a copy of which Agreement is available for inspection at the offices of the Company or will be made available upon request.”

13. NO OBLIGATION TO EMPLOY.

The Company is not by the Plan or this Option obligated to continue the Employee as an employee of the Company or an Affiliate. The Employee acknowledges: (i) that the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (ii) that the grant of the Option is a one-time benefit which does not create any contractual or other right to receive future grants of options, or benefits in lieu of options; (iii) that all determinations with respect to any such future grants, including, but not limited to, the times when options shall be granted, the number of shares subject to each option, the option price, and the time or times when each option shall be exercisable, will be at the sole discretion of the Company; (iv) that the Employee’s participation in the Plan is voluntary; (v) that the value of the Option is an extraordinary item of compensation which is outside the scope of the Employee’s employment contract, if any; and (vi) that the Option is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.

14. OPTION IS INTENDED TO BE AN ISO.

The parties each intend that the Option be an ISO so that the Employee (or the Employee’s Survivors) may qualify for the favorable tax treatment provided to holders of

9

Options that meet the standards of Section 422 of the Code. Any provision of this Agreement or the Plan which conflicts with the Code so that this Option would not be deemed an ISO is null and void and any ambiguities shall be resolved so that the Option qualifies as an ISO. Nonetheless, if the Option is determined not to be an ISO, the Employee understands that neither the Company nor any Affiliate is responsible to compensate him or her or otherwise make up for the treatment of the Option as a Non-qualified Option and not as an ISO. The Employee should consult with the Employee’s own tax advisors regarding the tax effects of the Option and the requirements necessary to obtain favorable tax treatment under Section 422 of the Code, including, but not limited to, holding period requirements.

15. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

The Employee agrees to notify the Company in writing immediately after the Employee makes a Disqualifying Disposition of any of the Shares acquired pursuant to the exercise of the Option. A Disqualifying Disposition is defined in Section 424(c) of the Code and includes any disposition (including any sale) of such Shares before the later of (a) two years after the date the Employee was granted the Option or (b) one year after the date the Employee acquired Shares by exercising the Option, except as otherwise provided in Section 424(c) of the Code. If the Employee has died before the Shares are sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter.

16. NOTICES.

Any notices required or permitted by the terms of this Agreement or the Plan shall be given by recognized courier service, facsimile, registered or certified mail, return receipt requested, addressed as follows:

If to the Company:

Attn: Chief Financial Officer

Toolrock Holding, Inc.

c/o Latrobe Specialty Steel Company

2626 Ligonier Street

Latrobe, PA 15650

If to the Employee:

or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given upon the earlier of receipt, one business day following delivery to a recognized courier service or three business days following mailing by registered or certified mail.

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17. GOVERNING LAW.

This Agreement shall be construed and enforced in accordance with the law of the State of Delaware, without giving effect to the conflict of law principles thereof. For the purpose of litigating any dispute that arises under this Agreement, the parties hereby consent to exclusive jurisdiction in Delaware and agree that such litigation shall be conducted in the courts of Newcastle County, Delaware or the federal courts of the United States for the District of Delaware.

18. BENEFIT OF AGREEMENT.

Subject to the provisions of the Plan and the other provisions hereof, this Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.

19. ENTIRE AGREEMENT.

This Agreement, together with the Plan, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in this Agreement shall affect or be used to interpret, change or restrict, the express terms and provisions of this Agreement, provided, however, in any event, this Agreement shall be subject to and governed by the Plan.

20. MODIFICATIONS AND AMENDMENTS.

The terms and provisions of this Agreement may be modified or amended as provided in the Plan.

21. WAIVERS AND CONSENTS.

Except as provided in the Plan, the terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.

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22. DATA PRIVACY.

By entering into this Agreement, the Employee: (i) authorizes the Company and each Affiliate, and any agent of the Company or any Affiliate administering the Plan or providing Plan recordkeeping services, to disclose to the Company or any of its Affiliates such information and data as the Company or any such Affiliate shall request in order to facilitate the grant of options and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information; and (iii) authorizes the Company and each Affiliate to store and transmit such information in electronic form.

23. CONSENT OF SPOUSE.

If the Employee is married as of the date of this Agreement, the Employee’s spouse shall execute a Consent of Spouse in the form of Exhibit B hereto, effective as of the date hereof. Such consent shall not be deemed to confer or convey to the spouse any rights in the Shares that do not otherwise exist by operation of law or the agreement of the parties. If the Employee marries or remarries subsequent to the date hereof, the Employee shall, not later than 60 days thereafter, obtain his or her new spouse’s acknowledgement of and consent to the existence and binding effect of Section 12.2 of this Agreement by such spouse’s executing and delivering a Consent of Spouse in the form of Exhibit B.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Employee has hereunto set his or her hand, all as of the day and year first above written.

TOOLROCK HOLDING, INC.
By:
	Name
	Title

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Exhibit A

NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION

[Form for Unregistered Shares]

To: Toolrock Holding, Inc.

Ladies and Gentlemen:

I hereby exercise my Incentive Stock Option to purchase ___________ shares (the “Shares”) of the Non-Voting Common Stock, $0.01 par value, of Toolrock Holding, Inc. (the “Company”), at the exercise price of $             per share, pursuant to and subject to the terms of that certain Incentive Stock Option Agreement between the undersigned and the Company dated                     .

I am aware that the Shares have not been registered under the Securities Act of 1933, as amended (the “1933 Act”), or any state securities laws. I understand that the reliance by the Company on exemptions under the 1933 Act is predicated in part upon the truth and accuracy of the statements by me in this Notice of Exercise.

I hereby represent and warrant that (1) I have been furnished with all information which I deem necessary to evaluate the merits and risks of the purchase of the Shares; (2) I have had the opportunity to ask questions concerning the Shares and the Company and all questions posed have been answered to my satisfaction; (3) I have been given the opportunity to obtain any additional information I deem necessary to verify the accuracy of any information obtained concerning the Shares and the Company; and (4) I have such knowledge and experience in financial and business matters that I am able to evaluate the merits and risks of purchasing the Shares and to make an informed investment decision relating thereto.

I hereby represent and warrant that I am purchasing the Shares for my own personal account for investment and not with a view to the sale or distribution of all or any part of the Shares.

I understand that because the Shares have not been registered under the 1933 Act, I must continue to bear the economic risk of the investment for an indefinite time and the Shares cannot be sold unless the Shares are subsequently registered under applicable federal and state securities laws or an exemption from such registration requirements is available.

I agree that I will in no event sell or distribute or otherwise dispose of all or any part of the Shares unless (1) there is an effective registration statement under the 1933 Act and applicable state securities laws covering any such transaction involving the Shares or (2) the Company receives an opinion of my legal counsel (concurred in by legal counsel for the Company) stating that such transaction is exempt from registration or the Company otherwise satisfies itself that such transaction is exempt from registration.

A-1

I consent to the placing of a legend on my certificate for the Shares stating that the Shares have not been registered and setting forth the restriction on transfer contemplated hereby and to the placing of a stop transfer order on the books of the Company and with any transfer agents against the Shares until the Shares may be legally resold or distributed without restriction.

I understand that at the present time Rule 144 of the Securities and Exchange Commission (the “SEC”) may not be relied on for the resale or distribution of the Shares by me. I understand that the Company has no obligation to me to register the sale of the Shares with the SEC and has not represented to me that it will register the sale of the Shares.

I understand the terms and restrictions on the right to dispose of the Shares set forth in the 2006 Employee, Director and Consultant Stock Plan and the Incentive Stock Option Agreement, both of which I have carefully reviewed. I consent to the placing of a legend on my certificate for the Shares referring to such restriction and the placing of stop transfer orders until the Shares may be transferred in accordance with the terms of such restrictions.

I have considered the Federal, state and local income tax implications of the exercise of my Option and the purchase and subsequent sale of the Shares.

I am paying the option exercise price for the Shares as follows:

Please issue the stock certificate for the Shares (check one):

¨ to me; or

¨ to me and                                 , as joint tenants with right of survivorship

and mail the certificate to me at the following address:

A-2

My mailing address for shareholder communications, if different from the address listed above is:

Very truly yours,

Employee (signature)

Print Name

Date

Social Security Number

A-3

Exhibit A

NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION

[Form For Registered Shares]

TO: Toolrock Holding, Inc.

IMPORTANT NOTICE: This form of Notice of Exercise may only be used at such time as the Company has filed a Registration Statement with the Securities and Exchange Commission under which the issuance of the Shares for which this exercise is being made is registered and such Registration Statement remains effective.

Ladies and Gentlemen:

I hereby exercise my Incentive Stock Option to purchase                  shares (the “Shares”) of the Non-Voting Common Stock, $0.01 par value, of Toolrock Holding, Inc. (the “Company”), at the exercise price of $             per share, pursuant to and subject to the terms of that certain Incentive Stock Option Agreement between the undersigned and the Company dated.

I understand the nature of the investment I am making and the financial risks thereof. I am aware that it is my responsibility to have consulted with competent tax and legal advisors about the relevant national, state and local income tax and securities laws affecting the exercise of the Option and the purchase and subsequent sale of the Shares.

I am paying the option exercise price for the Shares as follows:

Please issue the Shares (check one):

¨ to me; or

¨ to me and ____________________________, as joint tenants with right of survivorship,

at the following address:

A-1

My mailing address for shareholder communications, if different from the address listed above, is:

Very truly yours,

Employee (signature)

Print Name

Date

Social Security Number

A-2

Exhibit B

CONSENT OF SPOUSE

I, ____________________________, spouse of _____________________________, acknowledge that I have read the Incentive Stock Option Agreement dated as of (the “Agreement”) to which this Consent is attached as Exhibit B and that I know its contents. Capitalized terms used and not defined herein shall have the meanings assigned to such terms in the Agreement. I am aware that by its provisions the Shares granted to my spouse pursuant to the Agreement are subject to a right of repurchase in favor of Toolrock Holding, Inc. (the “Company”) and that, accordingly, the Company has the right to repurchase up to all of the Shares of which I may become possessed as a result of a gift from my spouse or a court decree and/or any property settlement in any domestic litigation.

I hereby agree that my interest, if any, in the Shares subject to the Agreement shall be irrevocably bound by the Agreement and further understand and agree that any community property interest I may have in the Shares shall be similarly bound by the Agreement.

I agree to the repurchase right described in Section 12.2 of the Agreement and I hereby consent to the repurchase of the Shares by the Company and the sale of the Shares by my spouse or my spouse’s legal representative in accordance with the provisions of the Agreement. Further, as part of the consideration for the Agreement, I agree that at my death, if I have not disposed of any interest of mine in the Shares by an outright bequest of the Shares to my spouse, then the Company shall have the same rights against my legal representative to exercise its rights of repurchase with respect to any interest of mine in the Shares as it would have had pursuant to the Agreement if I had acquired the Shares pursuant to a court decree in domestic litigation.

I AM AWARE THAT THE LEGAL, FINANCIAL AND RELATED MATTERS CONTAINED IN THE AGREEMENT ARE COMPLEX AND THAT I AM FREE TO SEEK INDEPENDENT PROFESSIONAL GUIDANCE OR COUNSEL WITH RESPECT TO THIS CONSENT. I HAVE EITHER SOUGHT SUCH GUIDANCE OR COUNSEL OR DETERMINED AFTER REVIEWING THE AGREEMENT CAREFULLY THAT I WILL WAIVE SUCH RIGHT.

Dated as of the _______ day of ________________, 20__.

Print name:

B-1

EX-10.17

Exhibit 10.17

FORM OF STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of                     ,             , is made by and among Toolrock Holding, Inc., a Delaware corporation (the “Company”) having a place of business at One Cranberry Hill, 750 Marrett Road, Suite 401, Lexington, MA 02421,                 , an individual residing in the                 , (the “Purchaser”), and Toolrock Investment, LLC, a Delaware limited liability company and stockholder of the Company (the “Parent”).

WHEREAS, the Company desires to sell to the Purchaser, and the Purchaser desires to purchase from the Company, shares of the Company’s common stock, $0.01 par value per share (“Common Stock”), all on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Terms of Purchase. The Company hereby agrees to sell to the Purchaser, and the Purchaser hereby agrees to purchase from the Company, in accordance with the terms of this Agreement,                  shares of Common Stock (“Purchased Shares”) at a purchase price per share equal to $                 (the “Purchase Price”). On the date hereof, the Purchaser shall pay the Purchase Price to the Company by wire transfer of immediately available funds into an account designated in writing by the Company.

2. Company’s Repurchase Right; Restrictions on Transfer.

(a) Repurchase Right. In the event that for any reason the Purchaser no longer is an employee, director or consultant of the Company or an affiliate of the Company, the Company (or its designee) shall have the option, but not the obligation, to purchase from the Purchaser (or the Purchaser’s survivor), and, in the event the Company exercises such option, the Purchaser (or the Purchaser’s survivor) shall be obligated to sell to the Company (or its designee), at a price per Purchased Share equal to the Repurchase Price (as defined below), all or any part of the Purchased Shares (the “Repurchase Right”). The Company’s Repurchase Right shall be valid for a period of one hundred eighty (180) days commencing with the date of such termination of employment or service. Notwithstanding any other provision hereof, in the event the Company is prohibited during such one hundred eighty (180) day period from exercising its Repurchase Right by applicable law, then the time period during which such Repurchase Right may be exercised shall be extended until thirty (30) days after the Company is first not so prohibited. For purposes of this Agreement, “Repurchase Price” means a price per share equal to the greater of: (i) the Purchase Price (such price subject to equitable adjustment in the event of any stock split, stock dividend, combination, reorganization, reclassification or other similar event affecting the Common Stock) and (ii) the fair market value of each share of Common Stock as determined in good faith by the Board of Directors of the Company as of the date the Purchaser ceases to be an employee, director or consultant of the Company or an affiliate of the Company.

(b) Closing. In the event that the Company exercises the Repurchase Right, the Company shall notify the Purchaser, or, in the case of the Purchaser’s death, his or her Survivor,

in writing of its intent to repurchase the Purchased Shares. Such notice may be mailed by the Company up to and including the last day of the time period provided for above for exercise of the Repurchase Right. The notice shall specify the place, time and date for payment of the repurchase price (the “Closing”) and the number of Purchased Shares with respect to which the Company is exercising the Repurchase Right. The Closing shall be not less than ten (10) days nor more than sixty (60) days from the date of mailing of the notice, and the Purchaser or the Purchaser’s Survivor with respect to the Purchased Shares which the Company elects to repurchase shall have no further rights as the owner thereof from and after the date specified in the notice. At the Closing, the Repurchase Price shall be delivered to the Purchaser or the Purchaser’s Survivor and the Purchased Shares being repurchased, duly endorsed for transfer, shall, to the extent that they are not then in the possession of the Company, be delivered to the Company by the Purchaser or the Purchaser’s Survivor.

(c) Escrow. The certificates representing all Purchased Shares acquired by the Purchaser hereunder shall be delivered to the Company and the Company shall hold such Purchased Shares in escrow as provided in this Subsection 2.1(c). In the event of a repurchase by the Company of Purchased Shares subject to the Repurchase Right or a sale of Purchased Shares pursuant to Section 3, the Company shall release from escrow and cancel a certificate for the number of Purchased Shares so repurchased. Any securities distributed in respect of the Purchased Shares held in escrow, including, without limitation, shares issued as a result of stock splits, stock dividends or other recapitalizations, shall also be held in escrow in the same manner as the Purchased Shares.

(d) Prohibition on Transfer. The Purchaser recognizes and agrees that all Purchased Shares are subject to the Repurchase Right and may not be sold, transferred, assigned, hypothecated, pledged, encumbered or otherwise disposed of, whether voluntarily or by operation of law, other than to the Company (or its designee). However, the Purchaser may transfer the Purchased Shares for no consideration to or for the benefit of the Purchaser’s Immediate Family (as defined below) (including, without limitation, to a trust for the benefit of the Purchaser’s Immediate Family or to a partnership or limited liability company for one or more members of the Purchaser’s Immediate Family) and the transferee shall remain subject to all the terms and conditions applicable to this Agreement prior to such transfer and each such transferee shall so acknowledge in writing as a condition precedent to the effectiveness of such transfer. The term “Immediate Family” shall mean the Purchaser’s spouse, former spouse, parents, children, stepchildren, adoptive relationships, sisters, brothers, nieces and nephews and grandchildren (and, for this purpose, shall also include the Purchaser). The Company shall not be required to transfer any Purchased Shares on its books which shall have been sold, assigned or otherwise transferred in violation of this Subsection 2.1(d), or to treat as the owner of such Purchased Shares, or to accord the right to vote as such owner or to pay dividends to, any person or organization to which any such Purchased Shares shall have been so sold, assigned or otherwise transferred, in violation of this Subsection 2.1(d).

(e) Failure to Deliver Purchased Shares to be Repurchased. In the event that the Purchased Shares to be repurchased by the Company under this Agreement are not in the Company’s possession pursuant to Subsection 2.1(c) above or otherwise and the Purchaser or the Purchaser’s Survivor fails to deliver such Purchased Shares to the Company (or its designee), the Company may elect (i) to establish a segregated account in the amount of the Repurchase Price,

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such account to be turned over to the Purchaser or the Purchaser’s Survivor upon delivery of such Purchased Shares, and (ii) immediately to take such action as is appropriate to transfer record title of such Purchased Shares from the Purchaser to the Company (or its designee) and to treat the Purchaser and such Purchased Shares in all respects as if delivery of such Purchased Shares had been made as required by this Agreement The Purchaser hereby irrevocably grants the Company a power of attorney which shall be coupled with an interest for the purpose of effectuating the preceding sentence.

(f) Termination of Restrictions. The provisions of Subsections (a) through (e) of this Section 2 shall terminate upon the consummation of a public offering of any of the Company’s securities pursuant to a registration statement filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the “Securities Act”), in which offering the aggregate gross proceeds to the Company exceed $30,000,000 and in which the price per share of such securities equals or exceeds $3.00 (such price subject to equitable adjustment in the event of any stock split, stock dividend, combination, reorganization, reclassification or other similar event affecting the Common Stock) (a “Qualified Public Offering”).

(g) Lock-up. If, in connection with a registration statement filed by the Company pursuant to the Securities Act, the Company or its underwriter so requests, the Purchaser will agree not to sell any of his or her Purchased Shares for a period not to exceed one hundred eighty (180) days following the effectiveness of such registration statement; provided, that all stockholders of the Company then holding at least 1% of the outstanding Common Stock (on an as-converted basis) and substantially all officers and directors of the Company enter into similar agreements.

3. Take-Along and Bring-Along.

(a) Take-Along Rights. In the event that the Parent or the members of the Parent (the “Members”) receive a bona fide offer from a third party or parties other than any Affiliate of the Parent (the “Buyer”) to purchase all or any part of the shares of Company Common Stock owned by the Parent or membership interests of Parent owned by the Members (the “Take-Along Securities”), for a specified price payable in cash or otherwise and on specified terms and conditions (the “Take-Along Offer”), and the Parent or the Members, as applicable, proposes to sell or otherwise transfer the Take-Along Securities to the Buyer pursuant to the Take-Along Offer, the Purchaser shall have the right to sell to the Buyer, at the same price per share of Common Stock proposed to be sold (directly or beneficially, as the case may be) but considering the different economic rights of the membership interests in the Parent in relation to each other, and otherwise on the same terms and conditions as stated in the Take Along Offer, such number of Purchased Shares as is equal to the Take-Along Securities multiplied by the fully-diluted percentage beneficial ownership of the Company represented by the Purchased, Shares then owned by the Purchaser. Parent shall take such steps as are reasonably necessary to give effect to the provisions of this Section 3(a) as applicable to the Members.

(b) Notices of Offer and Intent to Participate. The Parent shall provide notice to the Purchaser stating the name of the Buyer, the terms of the Take-Along Offer and the period of time available to the Purchaser for notifying the Parent of its intent to participate in the sale (the

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“Notice Period”). The Parent shall, if reasonably possible, provide the Purchaser with a Notice Period of up to thirty (30) days, but in no event will the Parent provide the Purchaser with a Notice Period of less than ten (10) days. If the Purchaser wishes to participate in any sale pursuant to Section 3(a), the Purchaser shall notify the Parent in writing of such intention as soon as practicable after receipt of the notice from the Parent and in any event within the Notice Period. If the Parent does not receive such notice from the Purchaser within the Notice Period, the Parent shall be free to consummate the proposed transaction without any obligation to include the Purchaser’s Purchased Shares in such transaction.

(c) Sale of Take-Along Securities. The Purchaser, if participating, shall sell to the Buyer all, or at the option of the Buyer, any part of the Purchased Shares proposed to be sold by it at not less than the price and upon other terms and conditions, if any, not more favorable to the Buyer than those stated in the Take-Along Offer; provided, however, that any purchase of less than all of the Common Stock of the Company by the Buyer shall be made from the Purchaser pro rata based upon the relative fully-diluted beneficial ownership of the Company represented by the Purchaser’s Purchased Shares.

(d) Bring-Along Obligation. In the event that (x) any person or group (as such term is defined in Section 13(d) of the Securities Exchange Act of 1934, as amended) desires to acquire all or substantially all of the capital stock of the Company or equity interests in the Parent, whether directly or indirectly, by way of sale, lease or other transfer (in one transaction or a series of related transactions) or by way of merger, consolidation, combination, exchange or any similar transaction, (y) the Parent, or its successor-in-interest, or the Members, as applicable, desire to so transfer such capital stock to such person or group and (z) the Management Committee of the Parent approves such transaction and recommends it to the stockholders of the Company, the Purchaser agrees to sell, lease or transfer to, or exchange with, such third party on the terms offered by such third party, a percentage of the Purchased Shares owned by it equal to the percentage of the outstanding fully-diluted beneficial ownership of the Company being sold.

(e) Agreement to Vote. The Purchaser hereby agrees on behalf of itself and any permitted transferee or assignee of any Purchased Shares, to hold all of such Purchased Shares registered in its name subject to, and to vote such Purchased Shares as instructed by the Parent at any regular or special meeting (or by written consent in lieu thereof) of stockholders of the Company, for any purpose whatsoever, ordinary or extraordinary, including, without limitation, (i) amending or restating the Articles of Incorporation or By-laws of the Company; (ii) approving any merger, consolidation, recapitalization, reorganization of the Company in which all holders of Common Stock are treated in the same manner or any sale, lease or exchange of all or any part of the assets of the Company, and taking any and all action in connection therewith that may be properly taken by the stockholders of the Company; (iii) electing the directors of the Company and increasing or decreasing the number of directors constituting the entire board of directors of the Company; and (iv) approving any stock option or similar plan presented to the stockholders of the Company for approval.

(f) Grant of Proxy. The Purchaser hereby grants to the Parent a proxy coupled with an interest in all Purchased Shares owned from time to time by the Purchaser, which proxy shall be irrevocable until it terminates in accordance with the terms hereof, to vote all such Purchased Shares in the manner provided in Section 3(e).

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(g) Termination of Rights. The provisions of (a) through (f) of this Section 3 shall terminate upon the consummation of a Qualified Public Offering.

4. Legend. In addition to any legend required pursuant to applicable law, all certificates representing the Purchased Shares to be issued to the Purchaser pursuant to this Agreement shall have endorsed thereon a legend substantially as follows:

“The shares represented by this certificate are subject to restrictions set forth in a Stock Purchase Agreement dated as of                              with this Company, a copy of which Agreement is available for inspection at the offices of the Company or will be made available upon request.”

5. Purchase for Investment; Securities Law Compliance. If the offering and sale of the Purchased Shares have not been effectively registered under the Securities Act, (a) the Purchaser hereby represents and warrants that he or she is acquiring the Purchased Shares for his or her own account, for investment, and not with a view to, or for sale in connection with, the distribution of any such Purchased Shares, and (b) the Purchaser specifically acknowledges and agrees that any sales of Purchased Shares shall be made in accordance with the requirements of the Securities Act, in a transaction as to which the Company shall have received an opinion of counsel satisfactory to it confirming such compliance. The Purchaser shall be bound by the provisions of the following legend which shall be endorsed upon the certificate(s) evidencing the Purchased Shares issued:

“The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws.”

6. Rights as a Stockholder. The Purchaser shall have all the rights of a stockholder with respect to the Purchased Shares, including voting and dividend rights, subject to the transfer and other restrictions set forth herein. The Purchaser acknowledges and agrees that nothing herein is intended to give the Purchaser any right to continued employment by the Company.

7. Equitable Relief. The Purchaser specifically acknowledges and agrees that in the event of a breach or threatened breach of the provisions of this Agreement, including the attempted transfer of the Purchased Shares by the Purchaser in violation of this Agreement, monetary damages may not be adequate to compensate the Company or the Parent, as applicable, and, therefore, in the event of such a breach or threatened breach, in addition to any right to damages, the Company and the Parent shall be entitled to equitable relief in any court having competent jurisdiction. Nothing herein shall be construed as prohibiting the Company or the Parent from pursuing any other remedies available to it for any such breach or threatened breach.

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8. Notices. Any notices required or permitted by the terms of this Agreement shall be given by recognized courier service, facsimile, registered or certified mail, return receipt requested, addressed as follows:

If to the Company:

Toolrock Holding, Inc.

One Cranberry Hill

750 Marrett Road, Suite 401

Lexington, MA 02421

If to the Parent:

Toolrock Holding, Inc.

One Cranberry Hill

750 Marrett Road, Suite 401

Lexington, MA 02421

If to the Purchaser:

_________________________

_________________________

_________________________

or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given on the earliest of receipt, one business day following delivery by the sender to a recognized courier service, or three business days following mailing by registered or certified mail.

9. Benefit of Agreement. Subject to the other provisions hereof, this Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto. Neither party shall assign their rights or obligations under this Agreement without the consent of the other party, which consent shall not be unreasonably withheld.

10. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the conflict of law principles thereof. For the purpose of litigating any dispute that arises under this Agreement, whether at law or in equity, the parties hereby consent to exclusive jurisdiction in the State of Delaware and agree that such litigation shall be conducted in the courts of Newcastle County, Delaware or the federal courts of the United States for the District of Delaware.

11. Severability. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then such provision or provisions shall be modified to the extent necessary to make such provision valid and enforceable, and to the extent

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that this is impossible, then such provision shall be deemed to be excised from this Agreement, and the validity, legality and enforceability of the rest of this Agreement shall not be affected thereby.

12. Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in this Agreement shall affect or be used to interpret, change or restrict the express terms and provisions of this Agreement.

13. Modifications and Amendments; Waivers and Consents. The terms and provisions of this Agreement may be amended, waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.

14. Consent of Spouse. If the Purchaser is married as of the date of this Agreement, the Purchaser’s spouse shall execute a Consent of Spouse in the form of Exhibit A hereto, effective as of the date hereof. Such consent shall not be deemed to confer or convey to the spouse any rights in the Purchased Shares that do not otherwise exist by operation of law or the agreement of the parties. If the Purchaser marries or remarries subsequent to the date hereof, the Purchaser shall, not later than 60 days thereafter, obtain his or her new spouse’s acknowledgement of and consent to the existence and binding effect of all restrictions contained in this Agreement by such spouse’s executing and delivering a Consent of Spouse in the form of Exhibit A hereto.

15. Counterparts. This Agreement may be executed in one or more counterparts, and by different parties hereto on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[the remainder of this page has been intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

The Company:		TOOLROCK HOLDING, INC.
		By:
		Name:
		Title:
The Parent:		TOOLROCK INVESTMENT, LLC
		By:
		Name:
		Title:
	The Purchaser:

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EXHIBIT A

CONSENT OF SPOUSE

I,                  , spouse of                  , acknowledge that I have read the STOCK PURCHASE AGREEMENT dated as of December 7, 2006 (the “Agreement”) to which this Consent is attached as Exhibit A and that I know its contents. Capitalized terms used and not defined herein shall have the meanings assigned to such terms in the Agreement. I am aware that by its provisions the Purchased Shares granted to my spouse pursuant to the Agreement are subject to, among other things, a Repurchase Right in favor of Latrobe Steel Company (the “Company”) and that, accordingly, the Company has the right to repurchase up to all of the Purchased Shares of which I may become possessed as a result of a gift from my spouse or a court decree and/or any property settlement in any domestic litigation.

I hereby agree that my interest, if any, in the Purchased Shares subject to the Agreement shall be irrevocably bound by the Agreement and further understand and agree that any community property interest. I may have in the Purchased Shares shall be similarly bound by the Agreement.

I agree to the Repurchase Right described in the Agreement and I hereby consent to the repurchase of the Purchased Shares by the Company and the sale of the Purchased Shares by my spouse or my spouse’s legal representative in accordance with the provisions of the Agreement. Further, as part of the consideration for the Agreement, I agree that at my death, if I have not disposed of any interest of mine in the Purchased Shares by an outright bequest of the Purchased Shares to my spouse, then the Company shall have the same rights against my legal representative to exercise its rights of repurchase with respect to any interest of mine in the Purchased Shares as it would have had pursuant to the Agreement if I had acquired the Purchased Shares pursuant to a court decree in domestic litigation.

I AM AWARE THAT THE LEGAL, FINANCIAL AND RELATED MATTERS CONTAINED IN THE AGREEMENT ARE COMPLEX AND THAT I AM FREE TO SEEK INDEPENDENT PROFESSIONAL GUIDANCE OR COUNSEL WITH RESPECT TO THIS CONSENT. I HAVE EITHER SOUGHT SUCH GUIDANCE OR COUNSEL OR DETERMINED AFTER REVIEWING THE AGREEMENT CAREFULLY THAT I WILL WAIVE SUCH RIGHT.

Dated as of the              day of                     .

Print name:

EX-10.18

Exhibit 10.18

SERIES B PREFERRED STOCK PURCHASE AGREEMENT

This SERIES B PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of , is made by and among Toolrock Holding, Inc., a Delaware corporation (the “Company”) having a place of business at One Cranberry Hill, 750 Marrett Road, Suite 401, Lexington, MA 02421,         , an individual residing in             , (the “Purchaser”), and Toolrock Investment, LLC, a Delaware limited liability company and stockholder of the Company (the “Parent”).

WHEREAS, the Company desires to sell to the Purchaser, and the Purchaser desires to purchase from the Company, shares of the Company’s Series B Convertible Preferred Stock, $0.01 par value per share (“Series B Stock”), all on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Terms of Purchase. The Company hereby agrees to sell to the Purchaser, and the Purchaser hereby agrees to purchase from the Company, in accordance with the terms of this Agreement,              shares of Series B Stock (“Purchased Shares”) at a purchase price per share equal to $             (the “Purchase Price”). On the date hereof, the Purchaser shall pay the Purchase Price to the Company by wire transfer of immediately available funds into an account designated in writing by the Company.

2. Company’s Repurchase Right; Restrictions on Transfer.

(a) Repurchase Right. In the event that for any reason the Purchaser no longer is an employee, director or consultant of the Company or an affiliate of the Company, the Company (or its designee) shall have the option, but not the obligation, to purchase from the Purchaser (or the Purchaser’s survivor), and, in the event the Company exercises such option, the Purchaser (or the Purchaser’s survivor) shall be obligated to sell to the Company (or its designee), at a price per Purchased Share equal to the Repurchase Price (as defined below), all or any part of the Purchased Shares (the “Repurchase Right”). The Company’s Repurchase Right shall be valid for a period of one hundred eighty (180) days commencing with the date of such termination of employment or service. Notwithstanding any other provision hereof, in the event the Company is prohibited during such one hundred eighty (180) day period from exercising its Repurchase Right by applicable law, then the time period during which such Repurchase Right may be exercised shall be extended until thirty (30) days after the Company is first not so prohibited. For purposes of this Agreement, “Repurchase Price” means a price per share equal to the greater of: (i) the Purchase Price (such price subject to equitable adjustment in the event of any stock split, stock dividend, combination, reorganization, reclassification or other similar event affecting the Series B Stock) and (ii) the fair market value of each share of Series B Stock as determined in good faith by the Board of Directors of the Company as of the date the Purchaser ceases to be an employee, director or consultant of the Company or an affiliate of the Company.

(b) Closing. In the event that the Company exercises the Repurchase Right, the Company shall notify the Purchaser, or, in the case of the Purchaser’s death, his or her Survivor,

in writing of its intent to repurchase the Purchased Shares. Such notice may be mailed by the Company up to and including the last day of the time period provided for above for exercise of the Repurchase Right. The notice shall specify the place, time and date for payment of the repurchase price (the “Closing”) and the number of Purchased Shares with respect to which the Company is exercising the Repurchase Right. The Closing shall be not less than ten (10) days nor more than sixty (60) days from the date of mailing of the notice, and the Purchaser or the Purchaser’s Survivor with respect to the Purchased Shares which the Company elects to repurchase shall have no further rights as the owner thereof from and after the date specified in the notice. At the Closing, the Repurchase Price shall be delivered to the Purchaser or the Purchaser’s Survivor and the Purchased Shares being repurchased, duly endorsed for transfer, shall, to the extent that they are not then in the possession of the Company, be delivered to the Company by the Purchaser or the Purchaser’s Survivor.

(c) Escrow. The certificates representing all Purchased Shares acquired by the Purchaser hereunder shall be delivered to the Company and the Company shall hold such Purchased Shares in escrow as provided in this Subsection 2(c). In the event of a repurchase by the Company of Purchased Shares subject to the Repurchase Right or a sale of Purchased Shares pursuant to Section 3, the Company shall release from escrow and cancel a certificate for the number of Purchased Shares so repurchased. Any securities distributed in respect of the Purchased Shares held in escrow, including, without limitation, shares issued as a result of stock splits, stock dividends or other recapitalizations, shall also be held in escrow in the same manner as the Purchased Shares.

(d) Prohibition on Transfer. The Purchaser recognizes and agrees that all Purchased Shares are subject to the Repurchase Right and may not be sold, transferred, assigned, hypothecated, pledged, encumbered or otherwise disposed of, whether voluntarily or by operation of law, other than to the Company (or its designee). However, the Purchaser may transfer the Purchased Shares for no consideration to or for the benefit of the Purchaser’s Immediate Family (as defined below) (including, without limitation, to a trust for the benefit of the Purchaser’s Immediate Family or to a partnership or limited liability company for one or more members of the Purchaser’s Immediate Family) and the transferee shall remain subject to all the terms and conditions applicable to this Agreement prior to such transfer and each such transferee shall so acknowledge in writing as a condition precedent to the effectiveness of such transfer. The term “Immediate Family” shall mean the Purchaser’s spouse, former spouse, parents, children, stepchildren, adoptive relationships, sisters, brothers, nieces and nephews and grandchildren (and, for this purpose, shall also include the Purchaser). The Company shall not be required to transfer any Purchased Shares on its books which shall have been sold, assigned or otherwise transferred in violation of this Subsection 2(d), or to treat as the owner of such Purchased Shares, or to accord the right to vote as such owner or to pay dividends to, any person or organization to which any such Purchased Shares shall have been so sold, assigned or otherwise transferred, in violation of this Subsection 2(d).

(e) Failure to Deliver Purchased Shares to be Repurchased. In the event that the Purchased Shares to be repurchased by the Company under this Agreement are not in the Company’s possession pursuant to Subsection 2(c) above or otherwise and the Purchaser or the Purchaser’s Survivor fails to deliver such Purchased Shares to the Company (or its designee), the Company may elect (i) to establish a segregated account in the amount of the Repurchase Price,

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such account to be turned over to the Purchaser or the Purchaser’s Survivor upon delivery of such Purchased Shares, and (ii) immediately to take such action as is appropriate to transfer record title of such Purchased Shares from the Purchaser to the Company (or its designee) and to treat the Purchaser and such Purchased Shares in all respects as if delivery of such Purchased Shares had been made as required by this Agreement. The Purchaser hereby irrevocably grants the Company a power of attorney which shall be coupled with an interest for the purpose of effectuating the preceding sentence.

(f) Termination of Restrictions. The provisions of Subsections (a) through (e) of this Section 2 shall terminate upon the consummation of a public offering of any of the Company’s securities pursuant to a registration statement filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the “Securities Act”), in which offering the aggregate gross proceeds to the Company exceed $30,000,000 and in which the price per share of such securities equals or exceeds $3.00 (such price subject to equitable adjustment in the event of any stock split, stock dividend, combination, reorganization, reclassification or other similar event affecting the Series B Stock) (a “Qualified Public Offering”).

(g) Lock-up. If, in connection with a registration statement filed by the Company pursuant to the Securities Act, the Company or its underwriter so requests, the Purchaser will agree not to sell any of his or her Purchased Shares for a period not to exceed one hundred eighty (180) days following the effectiveness of such registration statement; provided, that all stockholders of the Company then holding at least 1% of the outstanding Common Stock (on an as-converted basis) and substantially all officers and directors of the Company enter into similar agreements.

3. Take-Along and Bring-Along.

(a) Take-Along Rights. In the event that the Parent or the members of the Parent (the “Members”) receive a bona fide offer from a third party or parties other than any Affiliate of the Parent (the “Buyer”) to purchase all or any part of the shares of Series B Stock owned by the Parent or membership interests of Parent owned by the Members (the “Take-Along Securities”), for a specified price payable in cash or otherwise and on specified terms and conditions (the “Take-Along Offer”), and the Parent or the Members, as applicable, proposes to sell or otherwise transfer the Take-Along Securities to the Buyer pursuant to the Take-Along Offer, the Purchaser shall have the right to sell to the Buyer, at the same price per share of Series B Stock proposed to be sold (directly or beneficially, as the case may be) but considering the different economic rights of the membership interests in the Parent in relation to each other, and otherwise on the same terms and conditions as stated in the Take Along Offer, such number of Purchased Shares as is equal to the Take-Along Securities multiplied by the fully-diluted percentage beneficial ownership of the Company represented by the Purchased Shares then owned by the Purchaser. Parent shall take such steps as are reasonably necessary to give effect to the provisions of this Section 3(a) as applicable to the Members.

(b) Notices of Offer and Intent to Participate. The Parent shall provide notice to the Purchaser stating the name of the Buyer, the terms of the Take-Along Offer and the period of time available to the Purchaser for notifying the Parent of its intent to participate in the sale (the

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“Notice Period”). The Parent shall, if reasonably possible, provide the Purchaser with a Notice Period of up to thirty (30) days, but in no event will the Parent provide the Purchaser with a Notice Period of less than ten (10) days. If the Purchaser wishes to participate in any sale pursuant to Section 3(a), the Purchaser shall notify the Parent in writing of such intention as soon as practicable after receipt of the notice from the Parent and in any event within the Notice Period. If the Parent does not receive such notice from the Purchaser within the Notice Period, the Parent shall be free to consummate the proposed transaction without any obligation to include the Purchaser’s Purchased Shares in such transaction.

(c) Sale of Take-Along Securities. The Purchaser, if participating, shall sell to the Buyer all, or at the option of the Buyer, any part of the Purchased Shares proposed to be sold by it at not less than the price and upon other terms and conditions, if any, not more favorable to the Buyer than those stated in the Take-Along Offer; provided, however, that any purchase of less than all of the Series B Stock of the Company by the Buyer shall be made from the Purchaser pro rata based upon the relative fully-diluted beneficial ownership of the Company represented by the Purchaser’s Purchased Shares.

(d) Bring-Along Obligation. In the event that (x) any person or group (as such term is defined in Section 13(d) of the Securities Exchange Act of 1934, as amended) desires to acquire all or substantially all of the capital stock of the Company or equity interests in the Parent, whether directly or indirectly, by way of sale, lease or other transfer (in one transaction or a series of related transactions) or by way of merger, consolidation, combination, exchange or any similar transaction, (y) the Parent, or its successor-in-interest, or the Members, as applicable, desire to so transfer such capital stock to such person or group and (z) the Management Committee of the Parent approves such transaction and recommends it to the stockholders of the Company, the Purchaser agrees to sell, lease or transfer to, or exchange with, such third party on the terms offered by such third party, a percentage of the Purchased Shares owned by it equal to the percentage of the outstanding fully-diluted beneficial ownership of the Company being sold.

(e) Agreement to Vote. The Purchaser hereby agrees on behalf of itself and any permitted transferee or assignee of any Purchased Shares, to hold all of such Purchased Shares registered in its name subject to the provisions of this Agreement, and to vote such Purchased Shares as instructed by the Parent at any regular or special meeting (or by written consent in lieu thereof) of stockholders of the Company, for any purpose whatsoever, ordinary or extraordinary, including, without limitation, (i) amending or restating the Certificate of Incorporation or By-laws of the Company; (ii) approving any merger, consolidation, recapitalization, reorganization of the Company in which all holders of Series B Stock are treated in the same manner or any sale, lease or exchange of all or any part of the assets of the Company, and taking any and all action in connection therewith that may be properly taken by the stockholders of the Company; (iii) electing the directors of the Company and increasing or decreasing the number of directors constituting the entire board of directors of the Company; and (iv) approving any stock option or similar plan presented to the stockholders of the Company for approval.

(f) Grant of Proxy. The Purchaser hereby grants to the Parent a proxy coupled with an interest in all Purchased Shares owned from time to time by the Purchaser, which proxy shall be irrevocable until it terminates in accordance with the terms hereof, to vote all such Purchased Shares in the manner provided in Section 3(e).

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(g) Termination of Rights. The provisions of (a) through (f) of this Section 3 shall terminate upon the consummation of a Qualified Public Offering.

4. Legend. In addition to any legend required pursuant to applicable law, all certificates representing the Purchased Shares to be issued to the Purchaser pursuant to this Agreement shall have endorsed thereon a legend substantially as follows:

“The shares represented by this certificate are subject to restrictions set forth in a Series B Preferred Stock Purchase Agreement dated as of              with this Company, a copy of which Agreement is available for inspection at the offices of the Company or will be made available upon request.”

5. Purchase for Investment; Securities Law Compliance. If the offering and sale of the Purchased Shares have not been effectively registered under the Securities Act, (a) the Purchaser hereby represents and warrants that he or she is acquiring the Purchased Shares for his or her own account, for investment, and not with a view to, or for sale in connection with, the distribution of any such Purchased Shares, and (b) the Purchaser specifically acknowledges and agrees that any sales of Purchased Shares shall be made in accordance with the requirements of the Securities Act, in a transaction as to which the Company shall have received an opinion of counsel satisfactory to it confirming such compliance. The Purchaser shall be bound by the provisions of the following legend which shall be endorsed upon the certificate(s) evidencing the Purchased Shares issued:

“The shares represented by this certificate have been taken for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws.”

6. Rights as a Stockholder. The Purchaser shall have all the rights of a stockholder with respect to the Purchased Shares, including voting and dividend rights, subject to the transfer and other restrictions set forth herein. The Purchaser acknowledges and agrees that nothing herein is intended to give the Purchaser any right to continued employment by the Company.

7. Equitable Relief. The Purchaser specifically acknowledges and agrees that in the event of a breach or threatened breach of the provisions of this Agreement, including the attempted transfer of the Purchased Shares by the Purchaser in violation of this Agreement, monetary damages may not be adequate to compensate the Company or the Parent, as applicable, and, therefore, in the event of such a breach or threatened breach, in addition to any right to damages, the Company and the Parent shall be entitled to equitable relief in any court having competent jurisdiction. Nothing herein shall be construed as prohibiting the Company or the Parent from pursuing any other remedies available to it for any such breach or threatened breach.

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8. Notices. Any notices required or permitted by the terms of this Agreement shall be given by recognized courier service, facsimile, registered or certified mail, return receipt requested, addressed as follows:

If to the Company or the Parent:

Toolrock Holding, Inc.

One Cranberry Hill

750 Marrett Road, Suite 401

Lexington, MA 02421

If to the Purchaser:

or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given on the earliest of receipt, one business day following delivery by the sender to a recognized courier service, or three business days following mailing by registered or certified mail.

9. Benefit of Agreement. Subject to the other provisions hereof, this Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto. Neither party shall assign their rights or obligations under this Agreement without the consent of the other party, which consent shall not be unreasonably withheld.

10. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the conflict of law principles thereof. For the purpose of litigating any dispute that arises under this Agreement, whether at law or in equity, the parties hereby consent to exclusive jurisdiction in the State of Delaware and agree that such litigation shall be conducted in the courts of Newcastle County, Delaware or the federal courts of the United States for the District of Delaware.

11. Severability. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then such provision or provisions shall be modified to the extent necessary to make such provision valid and enforceable, and to the extent that this is impossible, then such provision shall be deemed to be excised from this Agreement, and the validity, legality and enforceability of the rest of this Agreement shall not be affected thereby.

12. Entire Agreement. This Agreement constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes

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all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in this Agreement shall affect or be used to interpret, change or restrict the express terms and provisions of this Agreement.

13. Modifications and Amendments; Waivers and Consents. The terms and provisions of this Agreement may be amended, waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.

14. Consent of Spouse. If the Purchaser is married as of the date of this Agreement, the Purchaser’s spouse shall execute a Consent of Spouse in the form of Exhibit A hereto, effective as of the date hereof. Such consent shall not be deemed to confer or convey to the spouse any rights in the Purchased Shares that do not otherwise exist by operation of law or the agreement of the parties. If the Purchaser marries or remarries subsequent to the date hereof, the Purchaser shall, not later than 60 days thereafter, obtain his or her new spouse’s acknowledgement of and consent to the existence and binding effect of all restrictions contained in this Agreement by such spouse’s executing and delivering a Consent of Spouse in the form of Exhibit A hereto.

15. Counterparts. This Agreement may be executed in one or more counterparts, and by different parties hereto on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[the remainder of this page has been intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

The Company:	TOOLROCK HOLDING, INC.
	By:
	Name:	Benjamin P. Procter
	Title:	Vice President
The Parent:	TOOLROCK INVESTMENT, LLC
	By:
	Name:	Benjamin P. Procter
	Title:	Vice President
The Purchaser:

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EXHIBIT A

CONSENT OF SPOUSE

I, _______________, spouse of _________________, acknowledge that I have read the SERIES B PREFERRED STOCK PURCHASE AGREEMENT dated as of          (the “Agreement”) to which this Consent is attached as Exhibit A and that I know its contents. Capitalized terms used and not defined herein shall have the meanings assigned to such terms in the Agreement. I am aware that by its provisions the Purchased Shares granted to my spouse pursuant to the Agreement are subject to, among other things, a Repurchase Right in favor of Toolrock Holding, Inc. (the “Company”) and that, accordingly, the Company has the right to repurchase up to all of the Purchased Shares of which I may become possessed as a result of a gift from my spouse or a court decree and/or any property settlement in any domestic litigation.

I hereby agree that my interest, if any, in the Purchased Shares subject to the Agreement shall be irrevocably bound by the Agreement and further understand and agree that any community property interest I may have in the Purchased Shares shall be similarly bound by the Agreement.

I agree to the Repurchase Right described in the Agreement and I hereby consent to the repurchase of the Purchased Shares by the Company and the sale of the Purchased Shares by my spouse or my spouse’s legal representative in accordance with the provisions of the Agreement. Further, as part of the consideration for the Agreement, I agree that at my death, if I have not disposed of any interest of mine in the Purchased Shares by an outright bequest of the Purchased Shares to my spouse, then the Company shall have the same rights against my legal representative to exercise its rights of repurchase with respect to any interest of mine in the Purchased Shares as it would have had pursuant to the Agreement if I had acquired the Purchased Shares pursuant to a court decree in domestic litigation.

I AM AWARE THAT THE LEGAL, FINANCIAL AND RELATED MATTERS CONTAINED IN THE AGREEMENT ARE COMPLEX AND THAT I AM FREE TO SEEK INDEPENDENT PROFESSIONAL GUIDANCE OR COUNSEL WITH RESPECT TO THIS CONSENT. I HAVE EITHER SOUGHT SUCH GUIDANCE OR COUNSEL OR DETERMINED AFTER REVIEWING THE AGREEMENT CAREFULLY THAT I WILL WAIVE SUCH RIGHT.

Dated as of the _______ day of         .

Name:

EX-10.19

Exhibit 10.19

SECURITIES PURCHASE AGREEMENT

by and among

TOOLROCK INVESTMENT, LLC,

TOOLROCK HOLDING, INC.

and

THE PURCHASERS NAMED ON THE SIGNATURE PAGES HERETO

Dated as of March 17, 2010

TABLE OF CONTENTS

1.	INCORPORATION OF RECITALS; DEFINITIONS; CERTAIN RULES OF CONSTRUCTION	2
	1.1. Incorporation of Recitals	2
	1.2. Definitions	2
	1.3. Certain Rules of Construction	6
2.	PURCHASE OF UNITS; CLOSING OF CONTEMPLATED TRANSACTIONS	6
	2.1. Purchase of Units	6
	2.2. The Closing	6
	2.3. Closing Deliveries	6
3.	REPRESENTATIONS AND WARRANTIES OF THE LLC AND THE COMPANY	7
	3.1. Organization, Good Standing and Qualification	8
	3.2. Capitalization	8
	3.3. Authorization	8
	3.4. Valid Issuance of the Units and the Shares	8
	3.5. Consents	9
	3.6. Litigation	10
	3.7. Brokerage Fees, etc.	10
4.	REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS	10
	4.1. Legal Capacity; Due Authorization	10
	4.2. Restrictions on Transfer	10
	4.3. Accredited Investor, etc.	11
	4.4. Brokerage Fees etc.	11
5.	COVENANTS	11
	5.1. Fees and Expenses	11
	5.2. Confidentiality	12
	5.3. Transfer Taxes	12
	5.4. Use of Proceeds	13
	5.5. Further Assurances	13

6.	INDEMNIFICATION	13
	6.1. Indemnification	13
	6.2. Additional Provisions Regarding Indemnification	14
7.	MISCELLANEOUS	15
	7.1. Notices	15
	7.2. Succession and Assignment; No Third-Party Beneficiary	15
	7.3. Amendments and Waivers	16
	7.4. Signature	16
	7.5. Entire Agreement	16
	7.6. Counterparts	16
	7.7. Severability	16
	7.8. Headings	16
	7.9. Governing Law	16
	7.10. Specific Performance	17
	7.11. Waiverof Jury Trial	17
	7.12. Jurisdiction	17

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EXHIBITS

Exhibit A	Operating Agreement
Exhibit B	Registration Rights Agreement
Exhibit C	Certificate of Formation of the LLC
Exhibit D	Amended and Restated Certificate of Incorporation of the Company
Exhibit E	Bylaws of the Company

SCHEDULES

Schedule 3.2	Capitalization
Schedule 3.4.3	Preemptive Rights; Redemption; Registration Rights
Schedule 3.5	Consents

ANNEXES

Annex I	Allocation of Units and Purchase Price
Annex II	Addresses for Notices to Purchasers

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SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (this “Agreement”) is entered into as of March 17, 2010 by and among Toolrock Investment, LLC, a Delaware limited liability company (the “LLC”); Toolrock Holding, Inc., a Delaware corporation and a majority-owned subsidiary of the LLC (the “Company”); and each of the purchasers named on the signature pages hereto (collectively, the “Purchasers”).

RECITALS

A. As of the date hereof and immediately prior to giving effect to the transactions contemplated hereby, the Purchasers and their Affiliates collectively own 100% of the membership interests of the LLC (the “Membership Interests”).

B. The LLC desires to sell to the Purchasers, and the Purchasers desire to purchase from the LLC, newly issued Units (as defined below) (the “Purchase”) representing the right to participate in distributions made in respect of the shares of Series B Convertible Participating Preferred Stock, par value $0.01 per share (the “Senior Preferred Stock”), of the Company, all upon the terms and subject to the conditions set forth in this Agreement. Simultaneously with the closing of the Purchase (the “Closing”), the proceeds thereof will be used by the LLC to acquire shares of the Senior Preferred Stock representing approximately 24.5393% of the Company’s fully-diluted capital stock on an as-converted basis (the “Shares”).

C. Simultaneously with the execution and delivery of this Agreement, the LLC and/or the Company and the other parties thereto have entered into the Operating Agreement, the Registration Rights Agreement, the Fourth Amendment Agreement, the Second Senior Credit Amendment and the Subordination Amendment (each as defined below; this Agreement, the Operating Agreement and the Registration Rights Agreement being referred to collectively as the “Transaction Documents”).

D. Contemporaneously with the Closing, (i) the Company is issuing to the Sankaty Parties (as defined below) warrants to purchase an aggregate of 135,556 shares of the Company’s voting Common Stock, par value $0.01 per share (the “Common Warrants”), and warrants to purchase an aggregate of 3,498,889 shares of the Company’s Series A Convertible Participating Preferred Stock, par value $0.01 per share (the “Preferred Warrants” and, together with the Common Warrants, collectively, the “Warrants”), with such Warrants representing approximately 7.4068% ownership of the Company on a fully-diluted, as-converted basis, and (ii) pursuant to the Fourth Amendment Agreement, Latrobe Steel Company, a Pennsylvania corporation (“Latrobe”), and OH&R Special Steels Company, a Delaware corporation (“OH&R” and, together with Latrobe, collectively, the “Note Issuers”), are issuing to the Sankaty Parties Senior Subordinated Secured Notes due June 8, 2013 in the aggregate principal amount of $10,204,081.63 (the “Notes”) for an aggregate purchase price of $10,000,000.00 in cash, all upon the terms and subject to the conditions set forth in the Note Purchase Agreement (as defined below).

E. The parties hereto intend that the transactions contemplated by the Transaction Documents (including the issuance and sale of the Units, the Shares, the Notes and the Warrants) occur substantially contemporaneously at the Closing.

AGREEMENT

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

1. INCORPORATION OF RECITALS; DEFINITIONS; CERTAIN RULES OF CONSTRUCTION.

1.1. Incorporation of Recitals. The LLC and the Company hereby stipulate, acknowledge and affirm as being accurate each of the foregoing Recitals, and each of the Recitals is hereby incorporated as part of this Agreement.

1.2. Definitions. As used herein, the following terms shall have the following respective meanings:

“Affiliate” means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract or otherwise. Without limitation, any director, executive officer or beneficial owner of ten percent (10%) or more of the Equity Interests of a Person shall, for the purposes of this Agreement, be deemed to control the other Person.

“Agreement” is defined in the Preamble.

“Business Day” means any weekday other than a weekday on which banks in New York, NY are authorized or required to be closed.

“Certificate of Incorporation” is defined in Section 3.1.

“Closing” is defined in Recital B.

“Closing Date” means the date on which the Closing actually occurs.

“Common Warrants” is defined in Recital D.

“Company” is defined in the Preamble.

“Contemplated Transactions” means, collectively, the transactions contemplated by this Agreement, including (a) the issuance and sale of the Units, the Shares and the Warrants and (b) the execution, delivery and performance of this Agreement and each of the other Transaction Documents.

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“Contractual Obligation” means, with respect to any Person, any contract, agreement, deed, mortgage, lease, license, commitment, promise, undertaking, arrangement or understanding, whether written or oral and whether express or implied, or other document or instrument (including any document or instrument evidencing or otherwise relating to any debt obligation) to which or by which such Person is a party or otherwise subject or bound or to which or by which any property, business, operation or right of such Person is subject or bound.

“Encumbrance” means any charge, claim, community or other marital property interest, condition, equitable interest, lien, license, option, pledge, security interest, mortgage, right of way, easement, encroachment, servitude, right of first offer or first refusal, buy/sell agreement and any other restriction or covenant with respect to, or condition governing the use, construction, voting (in the case of any security or equity interest), transfer, receipt of income or exercise of any other attribute of ownership.

“Enforceable” means, with respect to any Contractual Obligation stated to be Enforceable by or against any Person, that such Contractual Obligation is a legal, valid and binding obligation of such Person enforceable by or against such Person in accordance with its terms, except to the extent that enforcement of the rights and remedies created thereby is subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application affecting the rights and remedies of creditors and to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).

“Equity Interests” means (a) any capital stock, share, partnership or membership interest, unit of participation or other similar interest (however designated) in any Person, whether voting or nonvoting, and (b) any option, warrant, purchase right, conversion right, exchange rights or other Contractual Obligation which would entitle any Person to acquire any such interest in such Person or otherwise entitle any Person to share in the equity, profit, earnings, losses or gains of such Person (including stock appreciation, phantom stock, profit participation or other similar rights).

“Fourth Amendment Agreement” means the Waiver and Fourth Amendment Agreement, dated as of the date hereof, by and among the Note Issuers, Specialty Steel, the Company, the Sankaty Parties and Sankaty Advisors, as collateral agent for the Sankaty Parties.

“Governmental Authority” means any United States federal, state or local or any foreign government, or political subdivision thereof, or any multinational organization or authority or any authority, agency or commission entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power, any court or tribunal (or any department, bureau or division thereof), or any arbitrator or arbitral body.

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, ruling, determination or award entered by or with any Governmental Authority.

“Indemnified Liabilities” is defined in Section 6.1.

“Indemnitees” is defined in Section 6.1.

“Indemnitor” is defined in Section 6.1.

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“Information” is defined in Section 5,2.

“Latrobe” is defined in Recital D.

“Legal Requirement” means any present or future United States federal, state or local or foreign law, statute, standard, ordinance, code, rule, regulation, resolution or promulgation, or any Governmental Order, or any license, franchise, permit or similar right granted under any of the foregoing, or any similar provision having the force or effect of law.

“LLC” is defined in the Preamble.

“Membership Interests” is defined in Recital A.

“Note Issuers” is defined in Recital D.

“Note Purchase Agreement” means the Securities Purchase Agreement, dated as of December 8, 2006, by and among the Note Issuers, the Company, the Sankaty Parties and Sankaty Advisors, as collateral agent for the Sankaty Parties, as amended, restated or modified from time to time (including, for the avoidance of doubt, pursuant to the Fourth Amendment Agreement).

“Notes” is defined in Recital D.

“OH&R” is defined in Recital D.

“Operating Agreement” means the Amended and Restated Limited Liability Company Agreement of the LLC, dated as of March 17, 2010, by and among the LLC and the members party thereto, substantially in the form of Exhibit A hereto.

“Organizational Documents” means, with respect to any Person, such Person’s articles and by-laws if a corporation, operating agreement and certificate of formation if a limited liability company, limited partnership agreement and certificate of limited partnership if a limited partnership, and other similar governing documents with respect to any other entity.

“Person” means any entity, whether of natural or legal constitution, including any present or future individual, corporation, association, partnership, limited liability company, joint venture, joint stock or other company, business trust, trust, organization, Governmental Authority or other entity of any kind.

“Preferred Warrants” is defined in Recital D.

“Proceeding” is defined in Section 7.12.

“Purchase” is defined in Recital B.

“Purchase Price” is defined in Section 2.1.

“Purchasers” is defined in the Preamble.

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“Registration Rights Agreement” means the Amended and Restated Registration Rights Agreement, dated as of the date hereof, by and among the LLC, the Purchasers and the other members of the LLC party thereto, substantially in the form of Exhibit B hereto.

“Sankaty Advisors” means Sankaty Advisors, LLC, a Delaware limited liability company.

“Sankaty Parties” means, collectively, Sankaty Credit Opportunities II, L.P., a Delaware limited partnership; Prospect Harbor Credit Partners, L.P., a Delaware limited partnership; Sankaty High Yield Partners III, L.P., a Delaware limited partnership; and RGIP, LLC, a Delaware limited liability company.

“Second Senior Credit Amendment” means the Waiver and Amendment No. 2 to Loan and Security Agreement, dated as of the date hereof, in respect of the Senior Credit Agreement, by and among the Note Issuers, Specialty Steel, the Company, the agent party thereto and the other parties thereto.

“Securities Act” means the Securities Act of 1933, as amended.

“Senior Credit Agreement” means the Loan and Security Agreement, dated as of March 6, 2008, by and among the Note Issuers, Specialty Steel, the Company, the agent party thereto and the other parties thereto, as amended, restated or modified from time to time (including, for the avoidance of doubt, pursuant to the Second Senior Credit Amendment).

“Senior Preferred Stock” is defined in Recital B.

“Shares” is defined in Recital B.

“Specialty Steel” means Specialty Steel Supply, Inc., a Texas Corporation.

“Subordination Amendment” means Amendment No. 1 to Intercreditor and Subordination Agreement, dated as of the date hereof, by and among the Sankaty Parties, Sankaty Advisors, the senior collateral agent party thereto and the other parties thereto.

“Subsidiary” means, with respect to any specified Person, any other Person of which such specified Person will, at the time, directly or indirectly through one or more Subsidiaries, (a) own at least 50% of the outstanding capital stock (or other shares of beneficial interest) entitled to vote generally, (b) hold at least 50% of the partnership, limited liability company, joint venture or similar interests or (c) be a general partner, managing member or joint venturer.

“Transaction Documents” is defined in Recital C.

“Transaction Expenses” means all costs, fees and expenses incurred by the Purchasers on or prior to the Closing Date in connection with the due diligence review conducted by the Purchasers relating to the Contemplated Transactions or in connection with the negotiation, execution and delivery of this Agreement, the other Transaction Documents or the transactions contemplated hereby or thereby, including the costs, fees and expenses of the Purchasers’ respective agents, attorneys, accountants, consultants, appraisers and representatives performing any of the foregoing (including, without limitation, Ropes & Gray LLP).

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“Transfer Taxes” is defined in Section 5.3.

“Units” means an aggregate of 6,194,856, 3,910,503 and 1,935,892 of the LLC’s Series 4 Units, Series 5 Units and Series 6 Units (each such term being used herein as defined in the Operating Agreement), respectively.

“Warrants” is defined in Recital D.

1.3. Certain Rules of Construction. Except as otherwise explicitly specified to the contrary, (a) references to a Section, Annex, Exhibit or Schedule means a Section of, or Annex, Exhibit or Schedule to, this Agreement, unless another agreement is specified, (b) the word “including” will be construed as “including without limitation,” (c) references to a particular statute or regulation include all rules and regulations thereunder and any successor statute, rules or regulations, in each case, as amended or otherwise modified from time to time, (d) words in the singular or plural form include the plural and singular form, respectively, (e) references to the masculine, feminine or neuter gender shall include each other gender, (f) references to a particular Person include such Person’s successors and assigns to the extent not prohibited by this Agreement and (g) any reference to “$” or “dollars” means United States dollars.

2. PURCHASE OF UNITS; CLOSING OF CONTEMPLATED TRANSACTIONS.

2.1. Purchase of Units. At the Closing, subject to the terms and conditions of this Agreement, the LLC shall issue, sell and deliver to the Purchasers, and each of the Purchasers shall purchase from the LLC, severally and not jointly, the number of Units set forth opposite such Purchaser’s name on Annex I hereto in consideration of the payment to the LLC by such Purchaser, by wire transfer of immediately available funds, of such Purchaser’s portion of the Purchase Price set forth opposite such Purchaser’s name on Annex I hereto. The aggregate purchase price for all of the Units issued pursuant to this Agreement is $9,939,277.66 (the “Purchase Price”). The Purchasers shall be entitled to conclusively rely on all payment instructions provided to them by or on behalf of the LLC pursuant to this Section 2.1.

2.2. The Closing. The Closing shall take place at the offices of Ropes & Gray LLP at One International Place, Boston, Massachusetts 02110 on the date hereof, or at such other date, time and/or location as may be agreed upon by the parties hereto, subject to the terms and conditions hereof, including, without limitation, the simultaneous execution and delivery of the other Transaction Documents.

2.3. Closing Deliveries.

2.3.1. Deliveries by the LLC and the Company to the Purchasers. The obligation of each Purchaser to purchase and pay for the Units provided hereunder is subject to (unless otherwise waived by each of the Purchasers) the LLC and the Company delivering on or prior to the Closing Date the following to each of the Purchasers, in each case, in form and substance satisfactory to such Purchaser:

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(a) copies of this Agreement and each of the other Transaction Documents to which such Purchaser is a party, duly executed by each of the parties hereto and thereto;

(b) copies of the certificates representing Shares issued to the LLC;

(c) such Purchaser’s Transaction Expenses, by wire transfer of immediately available funds;

(d) legal opinion or opinions from counsel to the LLC and the Company relating to the due authorization and valid issuance of the Units and the Shares and other matters as the Purchasers may reasonably request;

(e) copies of the minutes of the meeting, or unanimous written consent, of (i) the Board of Directors or other applicable governing body of each of the LLC and the Company and (ii) the holders of the Membership Interests, in each case, approving each of this Agreement, the other Transaction Documents and the Contemplated Transactions;

(f) certificates of the appropriate officers of each of the LLC and the Company certifying (i) that all representations and warranties of the LLC and the Company, respectively, set forth in this Agreement are true and correct in all respects and (ii) as to such other matters as the Purchasers may reasonably request; and

(g) certificates of the secretaries of each of the LLC and the Company as to the absence of any amendments to their respective Organizational Documents, the resolutions taken pursuant to the minutes and/or consents referred to in Section 2.3.1(e) above and the incumbency and signatures of certain officers of the LLC and the Company who signed this Agreement and the other Transaction Documents.

2.3.2. Deliveries by the Purchasers to the LLC and the Company. Each of the Purchasers is delivering to the LLC and the Company at the Closing (a) copies of this Agreement and each of the other Transaction Documents to which such Purchaser is a party, duly executed by such Purchaser, and (b) such Purchaser’s, portion of the Purchase Price.

3. REPRESENTATIONS AND WARRANTIES OF THE LLC AND THE COMPANY.

In order to induce each Purchaser to enter into this Agreement and to purchase the Units to be purchased by such Purchaser hereunder, the LLC and the Company hereby represent and warrant, jointly and severally, to each of the Purchasers that, as of the Closing Date (unless otherwise stated, both before and after giving effect to the issuance of the Units and the other Contemplated Transactions or in connection with the foregoing):

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3.1. Organization, Good Standing and Qualification. Each of the LLC and the Company is a legal entity duly organized, validly existing and in good standing under the laws of the State of Delaware. Each of the LLC and the Company has all requisite limited liability company or corporate power and authority to conduct its business as now conducted or contemplated to be conducted. Each of the LLC and the Company is duly qualified as a foreign entity and in good standing in all states or other jurisdictions where the nature and extent of the business transacted by it or the ownership of assets makes such qualification necessary, except for those jurisdictions in which the failure to so qualify would not reasonably be expected to result in a material adverse effect on the business, assets, financial condition or income of the LLC and its Subsidiaries (including the Company), taken as a whole, or the ability of the LLC or the Company to perform its obligations under this Agreement. Certified copies of the Certificate of Formation of the LLC and the Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) and the Bylaws of the Company are attached as Exhibits C, D and E hereto, respectively, and are correct and complete.

3.2. Capitalization. Prior to the Closing, all of the outstanding Equity Interests of the LLC and each of its Subsidiaries (including the Company) are held and beneficially owned by the Persons and in the respective amounts set forth in Part A of Schedule 3.2. At and immediately after the Closing, all of the outstanding Equity Interests of the LLC and the Company will be held and beneficially owned by the Persons and in the respective amounts set forth in Part B of Schedule 3.2. Except as disclosed in Part C of Schedule 3.2, neither the LLC nor any of its Subsidiaries (including the Company) controls, directly or indirectly, or owns any direct or indirect Equity Interest in, any Person. At and immediately after the Closing, the Series 4 Capital Members, the Series 5 Capital Members and the Series 6 Capital Members (each as defined in the Operating Agreement) will respectively hold the Series 4 Units, the Series 5 Units and the Series 6 Units (each as defined in the Operating Agreement), with the various rights and privileges set forth in the Operating Agreement, and there will be no profits or carried interest or any similar right with respect to the Series 4 Units or the Series 6 Units.

3.3. Authorization. Each of the LLC and the Company has the requisite limited liability company or corporate power and authority to execute, deliver and perform its obligations under this Agreement and the other Transaction Documents to which it is a party. All action on the part of each of the LLC and the Company and each of such Person’s officers, directors, members or partners necessary for the authorization, execution and delivery of this Agreement and the other Transaction Documents to which it is a party, the performance of all its obligations hereunder and thereunder and, in the case of the LLC, the authorization, issuance and delivery of the Units being sold hereunder, and, in the case of the Company, the authorization, issuance and delivery of the Shares, have been taken, and this Agreement and the other Transaction Documents to which such Person is a party constitute valid and legally binding obligations of such Person, Enforceable against such Person in accordance with their respective terms.

3.4. Valid Issuance of the Units and the Shares.

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3.4.1. Valid Issuance of the Units. The Units, when issued, sold and delivered to the Purchasers in accordance with the terms hereof for the consideration expressed herein, will be duly and validly authorized and issued, fully paid and non-assessable, and free and clear of all Encumbrances, other than restrictions imposed under this Agreement, the Operating Agreement and applicable United States state or federal securities laws, and, immediately following the Closing, each of the Purchasers will be the record and beneficial owner of all of the Units set forth opposite such Purchaser’s name on Annex I. The LLC has not violated any preemptive or other similar rights of any Person in connection with the issuance and sale of the Units and, assuming the truth and accuracy of the Purchasers’ representations set forth in Article 4 of this Agreement, the offer, sale and issuance of the Units as contemplated by this Agreement is exempt from the registration requirements of the Securities Act or any state “blue sky” or securities laws. Neither the LLC or the Company nor any authorized agent acting on their behalf has taken or will take any action hereafter that would cause the loss of such exemption, including without limitation, by means of general solicitation or publicly disseminated advertisements or sales literature.

3.4.2. Valid Issuance of the Shares. The Shares, which are being issued by the Company to the LLC contemporaneously with the Closing, when issued, sold and delivered to the LLC, will be duly and validly authorized and issued, fully paid and non-assessable, and free and clear of all Encumbrances, other than restrictions imposed under the Certificate of Incorporation and applicable United States state or federal securities laws.

3.4.3. Preemptive Rights; Redemption; Registration Rights. Except as disclosed on Schedule 3.4.3: (a) there are no preemptive rights or other similar rights in respect of any Equity Interests in the LLC or the Company, (b) except for the Contemplated Transactions, the Operating Agreement and the Certificate of Incorporation, there is no Contractual Obligation, or provision in the Organizational Documents of the LLC or the Company, which obligates the LLC or the Company to purchase, redeem or otherwise acquire, or make any payment (including any dividend or distribution) in respect of, any Equity Interests in the LLC or the Company and (c) there are no existing rights with respect to registration under the Securities Act of any Equity Interests in the LLC or the Company.

3.5. Consents. Except as set forth on Schedule 3.5, no consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local Governmental Authority, or any third party in connection with any material agreement to which the LLC and/or the Company are party in order to avoid such material agreement being in default after giving effect to the issuance of the Units, the execution of this Agreement and the other Transaction Documents and the consummation of the Contemplated Transactions, which has not been obtained, is required to be obtained or made by the LLC or the Company in connection with the consummation of the Contemplated Transactions or in order to avoid the occurrence of a

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default under any such material agreement or a termination right under any such material agreement arising as a result of the issuance of the Units, the execution of this Agreement and the other Transaction Documents and the consummation of the Contemplated Transactions.

3.6. Litigation. There is no action, suit, proceeding or investigation pending or, to the best of the knowledge, information and reasonable belief of the LLC and/or the Company, currently threatened which questions the validity of this Agreement, the Units, the Warrants, the Notes, the other Transaction Documents or the right of the LLC and/or the Company to enter into the Transaction Documents, or to consummate the Contemplated Transactions. Neither the LLC nor the Company is a party to any action, suit, proceeding or investigation, and neither the LLC nor the Company intends to initiate any action, suit, proceeding or investigation, nor is there any reasonable basis for the foregoing. Neither the LLC nor the Company is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any Governmental Authority.

3.7. Brokerage Fees, etc. No broker’s, finders’ or placement fee or commission will be payable to any Person retained, directly or indirectly, by or on behalf of the LLC or the Company with respect to any of the Contemplated Transactions. The LLC and the Company hereby indemnify, severally and jointly, each Purchaser against, and agree that they will, severally and jointly, hold each such Purchaser harmless from any claim, demand or liability, including reasonable attorneys’ fees, for any broker’s, finder’s or placement fee or commission incurred by the LLC and/or the Company.

4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.

Each of the Purchasers hereby represents and warrants to the LLC and the Company and, solely with respect to the representations and warranties set forth in Section 4.4, to each of the other parties hereto, solely as to such Purchaser and not on behalf of any of the other Purchasers, that:

4.1. Legal Capacity; Due Authorization. Such Purchaser has full legal capacity, power and authority to execute and deliver this Agreement and to perform its obligations hereunder; this Agreement has been duly executed and delivered by such Purchaser and constitutes the legal, valid and binding obligation of such Purchaser, Enforceable against such Purchaser in accordance with the terms hereof.

4.2. Restrictions on Transfer. Such Purchaser has been advised that the Units have not been registered under the Securities Act or any state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable state securities laws or unless an exemption from such registration requirements is available, and that the Units may have to be held by such Purchaser for an indefinite period of time. Such Purchaser is aware that, except as provided in the Operating Agreement and the Registration Rights Agreement with respect to the Units, the LLC is not under any obligation to effect any such registration with respect to the Units or to file for or comply with any exemption from registration. Such Purchaser is purchasing the Units to be acquired by such Purchaser hereunder for its own account and

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not with a view to, or for resale in connection with, the distribution thereof in violation of the Securities Act; provided, however, that the disposition of such Purchaser’s property shall at all times be and remain in its control and sole discretion.

4.3. Accredited Investor, etc. Such Purchaser has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Units hereunder, is able to incur a complete loss of such investment and to bear the economic risk of such investment for an indefinite period of time. Such Purchaser (i) is an “accredited investor,” as that term is defined in Regulation D under the Securities Act, and (ii) has been represented by counsel in the purchase of the Units to be purchased by it hereunder and is aware of the limitations of state and federal securities laws with respect to the disposition of the Units. Such Purchaser acknowledges that such Purchaser has had an opportunity to examine the financial and business affairs of the LLC and its Subsidiaries (including the Company) and an opportunity to ask questions of and receive answers from the LLC’s and its Subsidiaries’ management.

4.4. Brokerage Fees, etc. Such Purchaser represents and warrants that no broker’s, finder’s or placement fee or commission will be payable to any Person alleged to have been retained by such Purchaser with respect to any of the transactions contemplated by this Agreement. Such Purchaser hereby indemnifies each other party hereto against, and agrees that it will hold each such party harmless from, any claim, demand or liability, including reasonable attorneys’ fees, for any broker’s, finder’s or placement fee or commission alleged to have been incurred by such Purchaser.

5. COVENANTS.

5.1. Fees and Expenses. Each of the parties hereto shall bear its own costs and expenses (including legal, accounting, consulting, advisory and brokerage fees and expenses) incurred by it in connection with the transactions contemplated by this Agreement, except that the LLC and the Company, jointly and severally, shall be responsible for the Purchasers’ Transaction Expenses and the Company shall reimburse the Purchasers for such Transactions Expenses in full at Closing. In addition, (i) if in connection with a liquidation, dissolution or winding up of the Company or an event that constitutes a Deemed Liquidation Event (as defined in the Certificate of Incorporation of the Company), the holders of the Series B Preferred Stock receive, in lieu of the Series B Liquidation Price, the amount payable in respect of the number of shares of Common Stock into which the Series B Preferred Stock is then convertible, (ii) upon a conversion of the Series B Preferred Stock into Common Stock at a Mandatory Conversion Time, or (iii) upon a conversion of shares of Series B Preferred Stock into Common Stock pursuant to the Conversion Rights, in each case which includes a supplemental payment of a cash amount equal to the Series B Original Issue Price and the Series B Accruing Dividend in respect of each such share of Series B Preferred Stock so converted or deemed converted, then upon consummation of such liquidation, dissolution, winding up or Deemed Liquidation Event or at such Mandatory Conversion Time or upon exercise of such Conversion Rights, as the case may be, the Company shall pay to the Sankaty Parties (or their transferees), pro rata in accordance with the number of Warrants (or

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securities issued upon exercise of the Warrants) then held, a fee in the aggregate amount of $799,926.41; provided, however, that if the number of Warrants (or securities issued upon exercise thereof) is reduced pursuant to Section 5.2 of the Warrants, the aggregate amount of the fee shall be proportionately reduced; provided, further, that in the case where less than all of the shares of Series B Preferred Stock originally issued are converted or deemed converted, the aggregate amount of the fee shall also be proportionately reduced.

5.2. Confidentiality. Each Purchaser agrees to keep confidential (and to cause its respective officers, directors, employees, agents and representatives to keep confidential) all information, materials and documents concerning the business of the LLC and its Subsidiaries (including the Company) furnished to such Purchaser by the LLC or its Subsidiaries (including the Company) or on their behalf pursuant to this Agreement (“Information”). Notwithstanding the foregoing, any Purchaser may disclose any Information (i) to its officers, managers, members, partners, directors, employees, agents and representatives provided that such Information shall remain confidential; (ii) to the extent required by an applicable Legal Requirement or by any subpoena or similar legal process, or to the extent requested by any Governmental Authority, in which event such Purchaser agrees to provide notice thereof to the LLC; (iii) to the extent such Information (A) becomes publicly available other than as a result of a breach of this Agreement by such Purchaser, (B) becomes available to such Purchaser on a non-confidential basis from a source other than the LLC or its Subsidiaries (including the Company) other than from a third party whom such Purchaser is aware is breaching its confidentiality obligations to the LLC or its Subsidiaries (including the Company) or (C) was available to such Purchaser on a non-confidential basis prior to its disclosure to such Purchaser by the LLC or its Subsidiaries (including the Company); (iv) to the extent the LLC or its Subsidiaries (including the Company) shall have consented to such disclosure in writing; (v) in connection with the assignment of any Units; provided that the recipient of Information agrees to maintain the confidentiality of such Information; (vi) to its respective investors or lenders in connection with any reporting performed by such Purchaser to any such Persons provided that the recipient of Information agrees to maintain the confidentiality of the Information; or (vii) in connection with the exercise of its rights and remedies under this Agreement or the other Transaction Documents. Notwithstanding anything else in this Agreement, or in any other written or oral understanding or agreement to which the parties hereto are parties or by which they are bound, each party (and its representatives, agents and employees) may consult any tax advisor regarding the tax treatment and tax structure of the transaction and may disclose to any Person, without limitation, the tax treatment and tax structure of the transaction and all materials (including opinions or other tax analyses) that are provided relating to such treatment or structure.

5.3. Transfer Taxes. Any documentary, stamp or other transfer Tax (including penalties and interest) (collectively, “Transfer Taxes”) which may be payable by reason of the transactions contemplated by this Agreement shall be borne and timely paid by the LLC and/or the Company, and the LLC and/or the Company shall file any necessary tax returns and other documentation with respect to all such Transfer Taxes.

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5.4. Use of Proceeds. The proceeds of the Purchase shall be used by the LLC to acquire the Shares from the Company. The Company shall use such proceeds to refinance a portion of its senior credit facility under the Senior Credit Agreement and to reimburse the Purchasers for their Transaction Expenses in accordance with Section 5.1. Any remainder of such proceeds shall be used by the Company for general business purposes.

5.5. Further Assurances. From and after the Closing Date, upon the request of a party hereto and without further expense to such party, each of the other parties hereto shall do, execute, acknowledge and deliver all such further acts, assurances, deeds, assignments, transfers, conveyances and other instruments and papers as may be reasonably required or appropriate to carry out the Contemplated Transactions.

6. INDEMNIFICATION.

6.1. Indemnification. In addition to the payment of Transaction Expenses pursuant to Section 5.1. each of the LLC and the Company (an “Indemnitor”) agrees, jointly and severally, to indemnify, pay and hold the Purchasers, and the officers, directors, partners, managers, members, employees, agents, and Affiliates of the Purchasers (collectively, the “Indemnitees”) harmless from and against any and all other liabilities, costs, expenses, obligations, losses, damages, penalties, actions, judgments, suits, claims and disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of one counsel for such Indemnitees) as a result of, arising out of or in connection with any breach of, or inaccuracy in, any representation or warranty made by an Indemnitor in this Agreement or in any Schedule, certificate or other document or instrument (other than the Fourth Amendment Agreement or the Subordination Agreement) executed and delivered by an Indemnitor pursuant to this Agreement, any breach or violation of any covenant or agreement of an Indemnitor (including under this Section 6.1) in or pursuant to this Agreement, fraud, fraud in the inducement or intentional misrepresentation of an Indemnitor, or any investigative, administrative or judicial proceeding commenced or threatened (excluding claims among Indemnitees), whether or not such Indemnitee shall be designated a party thereto, which may be imposed on, incurred by, or asserted against that Indemnitee, in any manner relating to or arising out of this Agreement, the other Transaction Documents, the Units or the Purchasers’ agreement to purchase the Units or the use or intended use of any of the proceeds thereof (collectively, the “Indemnified Liabilities”); provided that the Indemnitors shall not have any obligation to an Indemnitee hereunder with respect to an Indemnified Liability solely to the extent that such Indemnified Liability arises from the gross negligence, bad faith or willful misconduct of such Indemnitee. Each Indemnitee shall give the Indemnitors prompt written notice of any claim that might give rise to Indemnified Liabilities setting forth a description of those elements of such claim of which such Indemnitee has knowledge; provided that any failure to give such notice shall not affect the obligations of an Indemnitor unless (and then solely to the extent) such Indemnitor is materially prejudiced thereby. An Indemnitor shall have the right at any time during which such claim is pending to select counsel to defend and control the defense thereof and settle any claims for which it is responsible for indemnification hereunder (provided that such Indemnitor will not settle

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any such claim without (i) the appropriate Indemnitee’s prior written consent, which consent shall not be unreasonably withheld, or (ii) obtaining an unconditional release of the appropriate Indemnitee from all claims arising out of or in any way relating to the circumstances involving such claim and without any admission as to culpability or fault of such Indemnitee) so long as in any such event such Indemnitor shall have stated in a writing delivered to such Indemnitee that, as between such Indemnitor and such Indemnitee, such Indemnitor is responsible to such Indemnitee with respect to such claim to the extent and subject to the limitations set forth herein; provided that such Indemnitor shall not be entitled to control the defense of any claim in the event that, in the reasonable opinion of counsel for such Indemnitee, there are one or more material defenses available to such Indemnitee which are not available to such Indemnitor; provided, further, that with respect to any claim as to which such Indemnitee is controlling the defense, such Indemnitor will not be liable to any Indemnitee for any settlement of any claim pursuant to this Section 6.1 that is effected without its prior written consent, which consent shall not be unreasonably withheld. To the extent that the undertaking to indemnify, pay and hold harmless set forth in this Section 6.1 may be unenforceable because it violates any Legal Requirement or public policy, each Indemnitor shall contribute the maximum portion which it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any of them.

6.2. Additional Provisions Regarding Indemnification. Each Indemnitor hereby agrees that it is the indemnitor of first resort (i.e., its obligations to any Indemnitee under this Agreement are primary and any obligation of any Purchaser (or any Affiliate thereof other than the LLC and the Company) to provide advancement or indemnification for the same Indemnified Liabilities (including all interest, assessment and other charges paid or payable in connection with or in respect of such Indemnified Liabilities) incurred by the Indemnitee are secondary), and if such Purchaser (or any Affiliate thereof other than the LLC and the Company) pays or causes to be paid, for any reason, any amounts otherwise indemnifiable hereunder or under any other indemnification agreement (whether pursuant to a Contractual Obligation or Organizational Document) with any Indemnitee, then (i) such Purchaser (or such Affiliate, as the case may be) shall be fully subrogated to all rights of such Indemnitee with respect to such payment and (ii) such Indemnitor shall reimburse such Purchaser (or such Affiliate) for any advancement or indemnification payments actually made. Each Indemnitor hereby unconditionally and irrevocably waives, relinquishes and releases (and covenants and agrees not to exercise, and to cause each Affiliate of such Indemnitor not to exercise), any claims or rights that such Indemnitor may now have or hereafter acquire against any Indemnitee (in any capacity) that arise from or relate to the existence, payment, performance or enforcement of such Indemnitor’s obligations under this Agreement or under any indemnification obligation (whether pursuant to any other Contractual Obligation, any Organizational Document or otherwise), including any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Indemnitee against any Indemnitee, whether such claim, remedy or right arises in equity or under a Contractual Obligation, statute, common law or otherwise, including any right to claim, take or receive from any Indemnitee, directly or indirectly, in cash or other property or by set-off or in any other manner, any payment or security or other credit support on account of such claim, remedy or right.

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7. MISCELLANEOUS

7.1. Notices. All notices, requests, demands, claims and other communications required or permitted to be delivered, given or otherwise provided under this Agreement must be in writing and must be delivered, given or otherwise provided: (a) by hand (in which case, it will be effective upon delivery); (b) by facsimile (in which case, it will be effective upon receipt of confirmation of good transmission); or (c) by overnight delivery by a nationally recognized courier service (in which case, it will be effective on the Business Day after being deposited with such courier service); in each case, to the address (or facsimile number) indicated below:

If to the LLC or the Company, to it at:

One Cranberry Hill

750 Marrett Road, Suite 401

Lexington, MA 02421

Attention: Benjamin P. Procter

Facsimile: (781) 891-9712

with a copy to:

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

One Financial Center

Boston, MA 02111

Attention: Daniel H. Follansbee, Esq.

Facsimile: (617) 542-2241

If to a Purchaser, to the address set forth opposite such Purchaser’s name on Annex II hereto.

Each of the parties to this Agreement may specify a different address or facsimile number by giving notice in accordance with this Section 7.1 to each of the other parties hereto.

7.2. Succession and Assignment; No Third-Party Beneficiary. Subject to the immediately following sentence, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, each of which such successors and permitted assigns shall be deemed to be a party hereto for all purposes hereof. No party may assign, delegate or otherwise transfer either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other parties; provided, however, that any of the Purchasers may (a) assign any or all of its rights and interests hereunder to one or more of its Affiliates and (b) designate one or more of its Affiliates to perform its obligations hereunder, in each case, so long as such Purchaser is not relieved of any liability hereunder. Except as expressly provided herein, this Agreement is for the sole benefit of the parties and their permitted successors and assignees and nothing herein expressed or implied will give or be construed to give any Person, other than the parties and such successors and assignees, any legal or equitable rights hereunder.

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7.3. Amendments and Waivers. No amendment or waiver of any provision of this Agreement will be valid and binding unless it is in writing and signed, in the case of an amendment, by each of the parties hereto or, in the case of a waiver, by the party against whom the waiver is to be effective. No waiver by any party of any breach or violation or, default under or inaccuracy in any representation, warranty or covenant hereunder, whether intentional or not, will be deemed to extend to any prior or subsequent breach, violation, default of, or inaccuracy in, any such representation, warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. No delay or omission on the part of any party in exercising any right, power or remedy under this Agreement will operate as a waiver thereof.

7.4. Signatures. For purposes of this Agreement and any documents, instruments and certificates explicitly referred to herein, facsimile signatures or signatures delivered by e-mail via a “PDF” file or in similar format shall have the same effect as an original signature.

7.5. Entire Agreement. This Agreement, together with the other Transaction Documents and any documents, instruments and certificates explicitly referred to herein (including the Exhibits, Schedules and Annexes) or therein, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and agreements, whether written or oral, with respect thereto.

7.6. Counterparts. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute but one and the same instrument. This Agreement will become effective when duly executed by each party hereto.

7.7. Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. In the event that any provision hereof would, under applicable Legal Requirements, be invalid or unenforceable in any respect, each party hereto intends that such provision will be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable Legal Requirements.

7.8. Headings. The headings contained in this Agreement are for convenience purposes only and will not in any way affect the meaning or interpretation hereof.

7.9. Governing Law. This Agreement, the rights of the parties and all actions arising in whole or in part under or in connection herewith, will be governed by and construed in accordance with the domestic substantive laws of the State of New York, without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.

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7.10. Specific Performance. Each of the parties acknowledges and agrees that the other parties would be damaged irreparably in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached or violated. Accordingly, each of the parties agrees that, without posting bond or other undertaking, the other parties shall be entitled to seek an injunction or injunctions to prevent breaches or violations of the provisions of this Agreement and to enforce specifically this Agreement and the terms and provisions hereof in any action instituted in any court of the United States or any state thereof having jurisdiction over the parties and the matter in addition to any other remedy to which it may be entitled, at law or in equity.

7.11. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTIES HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE ITS RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS WILL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

7.12. Jurisdiction. Each of the parties hereto irrevocably and unconditionally (a) submits for itself in any proceeding relating to this Agreement or the transactions contemplated hereby, or for the recognition and enforcement of any judgment in respect thereof (a “Proceeding”), to the exclusive jurisdiction of the state courts of the State of New York located in New York County or the United States District Court for the Southern District of New York, and appellate courts having jurisdiction of appeals from any of the foregoing, and agrees that all claims in respect of any such Proceeding shall be heard and determined in such New York State court or, to the extent permitted by law, in such federal court; (b) consents that any such Proceeding may and shall be brought in such courts and waives any objection that it may now or thereafter have to the venue or jurisdiction of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agrees not to plead or claim the same; and (c) agrees that service of process in any such Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address as provided in Section 7.1.

[Remainder of the Page Intentionally Left Blank; Signature Pages Follow.]

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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Agreement to be duly executed and delivered as of the date first above written.

LLC:	TOOLROCK INVESTMENT, LLC
	By:	/s/ Benjamin Procter
		Name:	Benjamin Procter
		Title:	Vice President
COMPANY:	TOOLROCK HOLDING, INC.
	By:	/s/ Dale B. Mikus
		Name:	Dale B. Mikus
		Title:	Vice President - Chief Financial Officer, Secretary and Treasurer

[Signature Page to Securities Purchase Agreement]

PURCHASERS:	HHEP-LATROBE, L.P.
	By: Hicks-Latrobe GP, L.P., its General Partner
	By: Hicks-Latrobe L.L.C., its General Partner
	By:	/s/ Thomas O. Hicks
		Name: Thomas O. Hicks
		Title:
	WATERMILL-TOOLROCK PARTNERS II, L.P.
	By:	Watermill-Toolrock Enterprises, LLC its General Partner
	By:	/s/ Benjamin Procter
		Name: Benjamin Procter
		Title: Authorized Person

[Signature Page to Securities Purchase Agreement]

SANKATY CREDIT OPPORTUNITIES II, L.P.
By:	/s/ Michael Ewald
	Name:	Michael Ewald
	Title:	Managing Director
PROSPECT HARBOR CREDIT PARTNERS, L.P.
By:	/s/ Michael Ewald
	Name:	Michael Ewald
	Title:	Managing Director
RGIP, LLC
By:	/s/ Alfred O. Rose
	Name:	Alfred O. Rose
	Title:	Managing Member

[Signature Page to Securities Purchase Agreement]

Annex I

Allocation of Units and Purchase Price

Purchaser	Series 4 Units		Series 5 Units		Series 6 Units		Aggregate Purchase Price
HHEP-Latrobe, L.P.		6,194,856		—		—	$	5,113,454.90
Watermill-Toolrock Partners II, L.P.		—		3,910,503		—	$	3,227,868.52
Sankaty Credit Opportunities II, L.P.		—		—		1,100,151	$	908,103.84
Prospect Harbor Credit Partners, L.P.		—		—		816,382	$	673,870.79
RGIP, LLC		—		—		19,359	$	15,979.61
TOTAL		6,194,856		3,910,503		1,935,892	$	9,939,277.66

Annex II

Addresses for Notices to Purchasers

Purchaser:	Address:	Copy to:
HHEP-Latrobe, L.P.	c/o Hicks Holdings LLC 100 Crescent Court, Suite 1200 Dallas, TX 75201	Weil, Gotshal & Manges LLP 200 Crescent Court, Suite 300 Dallas, Texas 75201 Attention: R. Scott Cohen, Esq. Facsimile: (214)746 7777
Watermill-Toolrock Partners II, L.P.	c/o Watermill Ventures One Cranberry Hill 750 Marrett Road, Suite 401 Lexington, MA 02421 Attention: Benjamin P. Procter	Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. One Financial Center Boston, MA 02111 Attention: Daniel H. Follansbee, Esq. Facsimile: (617) 542-2241
Sankaty Credit Opportunities II, L.P.	c/o Sankaty Advisors 111 Huntington Avenue Boston, MA 02199 Attention: Michael Ewald	Ropes & Gray LLP One International Place Boston, MA 02110 Attention: Alyson Allen, Esq. Facsimile: (617) 235-0345 and Ropes & Gray LLP 1211 Avenue of the Americas New York, NY 10036 Attention: Merrill A, Ulmer, Esq. Facsimile: (646)728-1526
Prospect Harbor Credit Partners, L.P.	c/o Sankaty Advisors 111 Huntington Avenue Boston, MA 02199 Attention: Michael Ewald	Ropes & Gray LLP One International Place Boston, MA 02110 Attention: Alyson Allen, Esq. Facsimile: (617) 235-0345 and Ropes & Gray LLP 1211 Avenue of the Americas New York, NY 10036 Attention: Merrill A. Ulmer, Esq. Facsimile: (646)728-1526
RGIP, LLC	Ropes & Gray LLP One International Place Boston, MA 02110 Attention: Alyson Allen, Esq. Facsimile: (617) 235-0345 and Ropes & Gray LLP 1211 Avenue of the Americas New York, NY 10036 Attention: Merrill A. Ulmer, Esq. Facsimile: (646)728-1526

Exhibit A

Operating Agreement

Exhibit B

Registration Rights Agreement

Exhibit C

Certificate of Formation of the LLC

Exhibit D

Amended and Restated Certificate of Incorporation of the Company

Exhibit E

Bylaws of the Company

Schedule 3.2

Part A — Prior to the Closing

TOOLROCK INVESTMENT, LLC

Holder	Series 1 Units		Series 2 Units		Series 3 Units		Total Units		Ownership
HHEP-Latrobe, L.P.		16,000,000						16,000,000		51.45	%
Watermill-Toolrock Partners, L.P.				10,100,000				10,100,000		32.48	%
Watermill-Toolrock Partners II, L.P.								0		0.00	%
Sankaty Credit Opportunities II, L.P.						2,520,000		2,520,000		8.10	%
Prospect Harbor Credit Partners L.P.						1,870,000		1,870,000		6.01	%
Sankaty High Yield Partners III, L.P.						560,000		560,000		1.80	%
RGIP, LLC						50,000		50,000		0.16	%
OUTSTANDING		16,000,000		10,100,000		5,000,000		31,100,000		100.00	%

TOOLROCK HOLDING, INC.

Holder	Common Stock		Series A Preferred		Common Equivalents		Fully-Diluted Ownership
Toolrock Investment, LLC				31,100,000		31,100,000		95.08	%
Management Stockholders
Hans Sack				200,000		200,000		0.61	%
Scott A. Balliet		99,000		15,000		114,000		0.35	%
Daniel G. Hennessy		191,000		30,000		221,000		0.68	%
David A. Murray		191,000		25,000		216,000		0.66	%
Randall D. Strayer		99,000		10,000		109,000		0.33	%
Mark T. Weberding		191,000		20,000		211,000		0.65	%
Dale B Mikus		191,000		60,000		251,000		0.77	%
Dudley J. Merchant		99,000		30,000		129,000		0.39	%
Joseph Wakeling		99,000				99,000		0.30	%
Optionholders
Paul Fulchino		30,000				30,000		0.09	%
David Schlaff		30,000				30,000		0.09	%
OUTSTANDING		1,220,000		31,490,000		32,710,000		100.00	%

Part C of this Schedule 3.2 is incorporated herein by reference.

Schedule 3.2

Part B – Immediately Following the Closing

TOOLROCK INVESTMENT, LLC

Holder	Series 1 Units		Series 2 Units		Series 3 Units		Total Units		Ownership
HHEP-Latrobe, L.P.		16,000,000						16,000,000		51.45	%
Watermill-Toolrock Partners, L.P.				10,100,000				10,100,000		32.48	%
Watermill-Toolrock Partners II, L.P.								0		0.00	%
Sankaty Credit Opportunities II, L.P.						2,520,000		2,520,000		8.10	%
Prospect Harbor Credit Partners L.P.						1,870,000		1,870,000		6.01	%
Sankaty High Yield Partners III, L.P.						560,000		560,000		1.80	%
RGIP, LLC						50,000		50,000		0.16	%
OUTSTANDING		16,000,000		10,100,000		5,000,000		31,100,000		100.00	%
Holder	Series 4 Units		Series 5 Units		Series 6 Units		Total Units		Ownership
HHEP-Latrobe, L.P.		6,194,856						6,194,856		51.45	%
Watermill-Toolrock Partners, L.P.										0.00	%
Watermill-Toolrock Partners II, L.P.				3,910,503				3,910,503		32.48	%
Sankaty Credit Opportunities II, L.P.						1,100,151		1,100,151		9.14	%
Prospect Harbor Credit Partners L.P.						816,382		816,382		6.78	%
Sankaty High Yield Partners III, L.P.										0.00	%
RGIP, LLC						19,359		19,359		0.16	%
OUTSTANDING		6,194,856		3,910,503		1,935,892		12,041,251		100.00	%

TOOLROCK HOLDING, INC.

Holder	Common Stock		Series A Preferred		Series B Preferred		Common Equivalents		Fully-Diluted Ownership
Toolrock Investment, LLC				31,100,000		12,041,251		43,141,251		89.03	%
Management Stockholders
Hans Sack				200,000				200,000		0.41	%
Scott A. Balliet		99,000		15,000		5,808		119,808		0.25	%
Daniel G. Hennessy		191,000		30,000		11,615		232,615		0.48	%
David A. Murray		191,000		25,000		9,679		225,679		0.47	%
Randall D. Strayer		99,000		10,000		3,872		112,872		0.23	%
Mark T. Weberding		191,000		20,000		7,744		218,744		0.45	%
Dale B Mikus		191,000		60,000		23,231		274,231		0.57	%
Dudley J. Merchant		99,000		30,000		11,615		140,615		0.29	%
Joseph Wakeling		99,000						99,000		0.20	%
Optionholders
Paul Fulchino		30,000						30,000		0.06	%
David Schlaff		30,000						30,000		0.06	%
Noteholder Warrants		135,556		3,498,889				3,634,445		7.50	%
OUTSTANDING		1,355,556		34,988,889		12,114,815		48,459,260		100.00	%

Part C of this Schedule 3.2 is incorporated herein by reference.

The Company has reserved an additional 609,927 shares of its non-voting common stock, par value $0.01 per share, for issuance pursuant to stock options to be granted in the near term under the Company’s 2006 Employee, Director and Consultant Stock Plan.

Schedule 3.2

Part C – Equity Interests

Latrobe is a wholly owned subsidiary of the Company, has the authority to issue 100 shares of its common stock, $0.01 par value per share, and has issued all such authorized shares to the Company.

OH&R, is wholly owned by Latrobe. OH&R has the authority to issue 100 shares of its common stock, $0.01 par value per share, and all such authorized shares are issued to Latrobe.

Specialty Steel is wholly owned by Latrobe. Specialty Steel has the authority to issue 1,000 shares of its common stock, $1.00 par value per share, and all such shares are issued to Latrobe.

Schedule 3.4.3

Certain Rights

None, other than those contained in the Transaction Documents and the Warrants.

Schedule 3.5

Consents

None.

EX-10.20

Exhibit 10.20

EXECUTION VERSION

STOCK PURCHASE AGREEMENT

TOOLROCK HOLDING, INC.

This STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of January 17, 2011, is made by and among Toolrock Holding, Inc., a Delaware corporation (the “Company”), B. Christopher DiSantis, an employee of the Company’s Affiliate (the “Employee”), and Toolrock Investment, LLC, a Delaware limited liability company and stockholder of the Company (the “Parent”).

WHEREAS, the Company desires to sell to the Employee, and the Employee desires to purchase from the Company, shares of the Company’s Non-Voting Common Stock, $0.01 par value per share (“Common Stock”), all on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1. Terms of Purchase.

(a) Purchased Shares. As of the Effective Date (as such term is defined in the Confidential Employment Agreement dated as of January 17, 2011, by and between Latrobe Steel Company, a Pennsylvania corporation (“Latrobe”) and Employee, as the same may be amended from time to time (the “Employment Agreement”), but subject to Section 1(b), the Company hereby agrees to sell to the Employee, and the Employee hereby agrees to purchase from the Company, in accordance with the terms of this Agreement, 460,993 shares of Common Stock (“Purchased Shares”) at a purchase price per share equal to $2.82 (the “Purchase Price”). Within three (3) business days of the date hereof, the Employee shall pay the Purchase Price to the Company by wire transfer of immediately available funds into an account designated by the Company.

(b) Approval by Board of Directors and Stockholders. The Company and the Parent hereby agree to use their respective commercially reasonable efforts to obtain the requisite board and stockholder approval to increase the number of authorized shares of Common Stock in the Company’s organization documents and to file the requisite amendments with the Secretary of the State of Delaware to effectuate the increase of the number of authorized shares of Common Stock to such amount that at least allows the issuance of the Purchased Shares as soon as reasonably practicable.

2. Company’s Repurchase Right; Restrictions on Transfer.

(a) Repurchase Right. In the event that the Employee’s employment with the Company or its Affiliates (defined as a corporation which, for purposes of Section 424 of the Internal Revenue Code of 1986, as amended, is a parent or subsidiary of the Company) is terminated prior to January 17, 2014 by the Employee for any reason or by the Company or its Affiliates for “Cause” (as defined in the Employment Agreement), the Company (or its designee)

shall have the option, but not the obligation, to purchase from the Employee (or the Employee’s legal representatives and/or any person or persons who acquired any of the Purchased Shares or rights in or to any of the Purchased Shares by will or by the laws of descent and distribution (a “Survivor”)), and, in the event the Company exercises such option, the Employee (or the Employee’s Survivor) shall be obligated to sell to the Company (or its designee), all or any part of the Unvested Shares (the “Repurchase Right”). The “Unvested Shares” shall be a number of Purchased Shares equal to (x) from the date hereof through January 16, 2012, all of the Purchased Shares, (y) from January 17, 2012 through January 16, 2013, two-thirds of the Purchased Shares, and (z) from January 17, 2013 through January 16, 2014, one-third of the Purchased Shares. In the event the Company does not, upon the termination of employment of the Employee (as described above), exercise its option pursuant to this Section 2(a), the restrictions set forth in the balance of this Agreement shall not thereby lapse, and the Employee for himself or herself, his or her heirs, legatees, executors, administrators and other successors in interest, agrees that the Purchased Shares (including the Unvested Shares) shall remain subject to such restrictions. The following provisions shall apply to a repurchase under this Section 2(a):

(i) The per share repurchase price of the Unvested Shares to be sold to the Company (or its designee) upon exercise of its option under this Section 2(a) shall be equal to the fair market value of each such Unvested Share as of the date of termination as determined by an independent investment bank or accounting firm of national standing having particular expertise in the valuation of businesses comparable to the Company mutually selected by the Company and the Employee, which determination shall be binding on the parties; provided, however, in the event of a termination by the Company or its Affiliates for “Cause”, the per share repurchase price of the Unvested Shares to be sold to the Company (or its designee) upon exercise of its option under this Section 2(a) shall be equal to the per share Purchase Price.

(ii) The Company’s option to repurchase the Unvested Shares in the event of termination of employment shall be valid for a period of 180 days commencing with the date of such termination of employment.

(iii) In the event the Company shall be entitled to and shall elect to exercise its option to repurchase the Unvested Shares under this Section 2(a), the Company shall notify the Employee, or in case of death, his Survivor, in writing of its intent to repurchase the Unvested Shares. Such written notice may be mailed by the Company up to and including the last day of the time period provided for in Section 2(a)(ii) for exercise of the Company’s option to repurchase.

(iv) The written notice to the Employee shall specify the address at, and the time and date on, which payment of the repurchase price is to be made (the “Closing”) and the number of Unvested Shares with respect to which the Company is exercising the Repurchase Right. The date specified shall not be less than ten days nor more than 60 days from the date of the mailing of the notice, and the Employee or his successor in interest with respect to the Unvested Shares shall have no further rights as the owner thereof from and after the date specified in the notice. At the Closing, the repurchase price shall be delivered to the Employee or his successor in interest and the Unvested Shares being purchased, duly endorsed for transfer, shall, to the extent that they are not

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then in the possession of the Company, be delivered to the Company by the Employee or his successor in interest.

(v) The provisions of Section 2(a) shall terminate upon the consummation of a Public Offering or a Change of Control. “Change of Control” means the consummation of one of the following events: (i) a merger, consolidation or sale of equity securities of the Company or Latrobe (other than an initial public offering of the equity securities of the Company or Latrobe) other than one which would result in the voting securities of the Company or Latrobe outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) more than 50% of the total voting power represented by the voting securities of the Company, Latrobe, the other surviving entity, or a parent of either of the foregoing, as applicable, outstanding immediately after such merger, consolidation or sale of equity securities; or (ii) the sale or disposition by the Company or Latrobe all or substantially all of their respective assets.

(b) Escrow. The certificates representing all Purchased Shares acquired by the Employee hereunder shall be delivered to the Company and the Company shall hold such Purchased Shares in escrow as provided in this Subsection 2(b). In the event of (i) a repurchase by the Company of Purchased Shares pursuant to Section 2(a), (ii) Purchased Shares no longer being considered Unvested Shares pursuant to Section 2(a), (iii) a termination of the provisions of Section 2(a) pursuant to Section 2(a)(v), or (iv) a sale of Purchased Shares pursuant to Section 3, the Company shall release from escrow and/or cancel, as applicable, a certificate for the applicable number of Purchased Shares. Any securities distributed in respect of the Purchased Shares held in escrow, including, without limitation, shares issued as a result of stock splits, stock dividends or other recapitalizations, shall also be held in escrow in the same manner as the Purchased Shares.

(c) Prohibition on Transfer. No Purchased Shares may be sold, transferred, assigned, hypothecated, pledged, encumbered or otherwise disposed of (including by gift or devise), whether voluntarily or by operation of law, except in accordance with the terms and conditions hereinafter set forth. However, the Employee may transfer the portion of the Purchased Shares that are not Unvested Shares for no consideration to or for the benefit of the Employee’s Immediate Family (as defined below) (including, without limitation, to a trust for the benefit of the Employee’s Immediate Family, to a partnership or limited liability company for one or more members of the Employee’s Immediate Family, to the Employee’s guardian or conservator or in the event of the Employee’s death, to his executor(s), administrator(s) or to trustee(s) under his will) and the transferee shall remain subject to all the terms and conditions applicable to this Agreement prior to such transfer and each such transferee shall so acknowledge in writing (in a form acceptable to the Company) as a condition precedent to the effectiveness of such transfer. The term “Immediate Family” shall mean the Employee’s spouse, former spouse, parents, children, stepchildren, adoptive relationships, sisters, brothers, nieces and nephews and grandchildren (and, for this purpose, shall also include the Employee). Any transferee of Purchased Shares pursuant to this Section shall be referred to in this Agreement as a “Related Shareholder” of Employee. All rights and obligations of an Employee with respect to the Purchased Shares under this Agreement shall be deemed to concurrently and automatically apply to, refer to, and be binding upon, each person or entity that is a Related Shareholder. For

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illustration purposes, when Employee is required to sell his Purchased Shares pursuant to this Agreement, all Related Shareholders of Employee must also sell their Shares, at the same time and upon the same terms as the sale of Purchased Shares by the Employee. The provisions of this Section 2(c) may be waved by the Company. Any such waiver may be unconditional or based upon such conditions as the Company may impose.

(d) Adjustments for Distributions. If the Company shall pay a stock dividend or declare a stock split on or with respect to any of its Common Stock, or otherwise distribute securities of the Company to the holders of its Common Stock, the number of shares of stock or other securities of the Company issued with respect to the shares then subject to the restrictions contained in this Agreement shall be added to the Purchased Shares subject to the Company’s rights to repurchase pursuant to this Agreement. If the Company shall distribute to its stockholders shares of stock of another corporation, the shares of stock of such other corporation, distributed with respect to the Purchased Shares then subject to the restrictions contained in this Agreement, shall be added to the Purchased Shares subject to the Company’s rights to repurchase pursuant to this Agreement.

(e) Adjustments for Other Changes. If the outstanding shares of Common Stock of the Company shall be subdivided into a greater number of shares or combined into a smaller number of shares, or in the event of a reclassification of the outstanding shares of Common Stock of the Company, or if the Company shall be a party to a merger, consolidation or capital reorganization, there shall be substituted for the Purchased Shares then subject to the restrictions contained in this Agreement such amount and kind of securities as are issued in such subdivision, combination, reclassification, merger, consolidation or capital reorganization in respect of the Purchased Shares subject immediately prior thereto to the Company’s rights to repurchase pursuant to this Agreement.

(f) Failure to Deliver Purchased Shares to be Repurchased. In the event that the Unvested Shares to be repurchased by the Company under this Agreement are not in the Company’s possession pursuant to Subsection 2(b) above or otherwise and the Employee or the Employee’s Survivor fails to deliver such Unvested Shares to the Company (or its designee), the Company may elect (i) to establish a segregated account in the amount of the repurchase price, such account to be turned over to the Employee or the Employee’s Survivor upon delivery of such Unvested Shares, and (ii) immediately to take such action as is appropriate to transfer record title of such Unvested Shares from the Employee to the Company (or its designee) and to treat the Employee and such Unvested Shares in all respects as if delivery of such Unvested Shares had been made as required by this Agreement. The Employee hereby irrevocably grants the Company a power of attorney which shall be coupled with an interest for the purpose of effectuating the preceding sentence. The Company shall not be required to transfer any Purchased Shares on its books which shall have been sold, assigned or otherwise transferred in violation of this Agreement, or to treat as the owner of such Purchased Shares, or to accord the right to vote as such owner or to pay dividends to, any person or organization to which any such Purchased Shares shall have been so sold, assigned or otherwise transferred, in violation of this Agreement.

(g) Termination of Restrictions. The provisions of Subsections (a) through (c) of this Section 2 shall terminate immediately prior to the consummation of a public offering of any of

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the Company’s securities pursuant to a registration statement filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the “Securities Act”), (a “Public Offering”) or a Change of Control.

(h) Lock-up. The Employee agrees that in the event the Company proposes to offer for sale to the public any of its equity securities and such Employee is requested by the Company and any underwriter engaged by the Company in connection with such offering to sign an agreement restricting the sale or other transfer of Purchased Shares, then it will promptly sign such agreement and will not transfer, whether in privately negotiated transactions or to the public in open market transactions or otherwise, any Purchased Shares or other securities of the Company held by him or her during such period as is determined by the Company and the underwriters, not to exceed 180 days following the closing of the offering, plus such additional period of time as may be required to comply with Marketplace Rule 2711 of the National Association of Securities Dealers, Inc. or similar rules thereto (such period, the “Lock-Up Period”). Such agreement shall be in writing and in form and substance reasonably satisfactory to the Company and such underwriter and pursuant to customary and prevailing terms and conditions. Notwithstanding whether the Employee has signed such an agreement, the Company may impose stop-transfer instructions with respect to the Purchased Shares or other securities of the Company subject to the foregoing restrictions until the end of the Lock-Up Period.

(i) No Right to Information. The Employee acknowledges and agrees that neither the Company, its shareholders nor its directors and officers, has any duty or obligation to disclose to the Employee any material information regarding the business of the Company or affecting the value of the Purchased Shares before, at the time of, or following a termination of the employment of the Employee by the Company, including, without limitation, any information concerning plans for the Company to make a public offering of its securities or to be acquired by or merged with or into another firm or entity.

3. Take-Along and Bring-Along.

(a) Take-Along Rights. In the event that the Parent or the members of the Parent (the “Members”) receive a bona fide offer from a third party or parties other than any Affiliate of the Parent (the “Buyer”) to purchase 50.1% or more of the shares of the Company’s Common Stock (or securities convertible into the Company’s Common Stock) owned by the Parent or membership interests of Parent owned by the Members (the “Take-Along Securities”), for a specified price payable in cash or otherwise and on specified terms and conditions (the “Take-Along Offer”), and the Parent or the Members, as applicable, propose to sell or otherwise transfer the Take-Along Securities to the Buyer pursuant to the Take-Along Offer, the Employee shall have the right to sell to the Buyer, at the same price per share of Common Stock proposed to be sold (directly or beneficially, as the case may be) and otherwise on the same terms and conditions as stated in the Take Along Offer, such number of Purchased Shares as is equal to the Take-Along Securities multiplied by the fully-diluted percentage beneficial ownership of the Company represented by the Purchased Shares then owned by the Employee. Parent shall take such steps as are reasonably necessary to give effect to the provisions of this Section 3(a) as applicable to the Members.

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(b) Notices of Offer and Intent to Participate. The Parent shall provide notice to the Employee stating the name of the Buyer, the terms of the Take-Along Offer and the period of time available to the Employee for notifying the Parent of its intent to participate in the sale (the “Notice Period”). The Parent shall, if reasonably possible, provide the Employee with a Notice Period of up to thirty (30) days, but in no event will the Parent provide the Employee with a Notice Period of less than ten (10) days. If the Employee wishes to participate in any sale pursuant to Section 3(a), the Employee shall notify the Parent in writing of such intention as soon as practicable after receipt of the notice from the Parent and in any event within the Notice Period. If the Parent does not receive such notice from the Employee within the Notice Period, the Parent shall be free to consummate the proposed transaction without any obligation to include the Employee’s Purchased Shares in such transaction.

(c) Sale of Take-Along Securities. The Employee, if participating in the Take-Along Offer, shall sell to the Buyer all, or at the option of the Buyer, any part of the Purchased Shares proposed to be sold by it at not less than the price and upon other terms and conditions, if any, not more favorable to the Buyer than those stated in the Take-Along Offer; provided, however, that any purchase of less than all of the Common Stock (or securities convertible into the Company’s Common Stock) of the Company by the Buyer shall be made from the Employee pro rata based upon the relative fully-diluted beneficial ownership of the Company represented by the Employee’s Purchased Shares.

(d) Bring-Along Obligation. In the event that (i) any person or group (as such term is defined in Section 13(d) of the Securities Exchange Act of 1934, as amended) desires to acquire 50.1% or more of the capital stock of the Company or equity interests in the Parent, whether directly or indirectly, by way of sale, assignment or other transfer (in one transaction or a series of related transactions) or by way of merger, consolidation, combination, exchange or any similar transaction, (ii) the Parent, or its successor-in-interest, or the Members, as applicable, desire to so transfer such capital stock to such person or group and (iii) the Management Committee of the Parent approves such transaction and recommends it to the stockholders of the Company, the Employee agrees to sell, assign or transfer to, or exchange with, such third party on the terms offered by such third party, a percentage of the Purchased Shares owned by it equal to the percentage of the outstanding fully-diluted beneficial ownership of the Company being sold.

(e) Agreement to Vote. The Employee hereby agrees on behalf of itself and any permitted transferee or assignee of any Purchased Shares, to hold all of such Purchased Shares registered in its name subject to, and to vote such Purchased Shares as instructed by the Parent at any regular or special meeting (or by written consent in lieu thereof) of stockholders of the Company, for any purpose whatsoever, ordinary or extraordinary, including, without limitation, (i) amending or restating the Certificate of Incorporation or By-laws of the Company; (ii) approving any merger, consolidation, recapitalization, reorganization of the Company in which all holders of Common Stock are treated in the same manner or any sale, assignment or exchange of all or any part of the assets of the Company, and taking any and all action in connection therewith that may be properly taken by the stockholders of the Company; (iii) electing the directors of the Company and increasing or decreasing the number of directors constituting the entire board of directors of the Company; and (iv) approving any stock option or similar plan presented to the stockholders of the Company for approval.

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(f) Grant of Proxy. The Employee hereby grants to the Parent a proxy coupled with an interest in all Purchased Shares owned from time to time by the Employee, which proxy shall be irrevocable until it terminates in accordance with the terms hereof, to vote all such Purchased Shares in the manner provided in Section 3(e).

(g) Termination of Rights. The provisions of (a) through (f) of this Section 3 shall terminate upon the consummation of a Public Offering or Change of Control.

4. Legend. In addition to any legend required pursuant to applicable law, all certificates representing the Purchased Shares to be issued to the Employee pursuant to this Agreement shall have endorsed thereon a legend substantially as follows:

“The shares represented by this certificate are subject to restrictions set forth in a Stock Purchase Agreement dated as of January 17, 2011, with this Company, a copy of which Agreement is available for inspection at the offices of the Company or will be made available upon request.”

5. Purchase for Investment; Securities Law Compliance. The Employee hereby represents and warrants that (a) he is acquiring the Purchased Shares for his own account, for investment, and not with a view to, or for sale in connection with, the distribution of any such Purchased Shares, (b) that he has been furnished with all information that he has requested for the purpose of evaluating his acquisition of the Purchased Shares to be issued to him pursuant hereto, and (c) and that Employee is an “accredited investor” as defined in Section 2(a)(15) of the Securities Act and Rule 215 thereunder and in Rule 501(a) of Regulation D thereunder. The Employee acknowledges and agrees that any sales of Purchased Shares may only be made in accordance with the requirements of the Securities Act, in a transaction as to which the Company shall have received an opinion of counsel satisfactory to it confirming such compliance. The Employee shall be bound by the provisions of the following legend which shall be endorsed upon the certificate(s) evidencing the Purchased Shares issued:

“The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Act”), or the securities laws of any of state of the Unites States of America. The shares represented by this certificate have been purchased for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Act, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws.”

6. Rights as a Stockholder. The Employee shall have all the rights of a stockholder with respect to the Purchased Shares, including voting and dividend rights, subject to the transfer and other restrictions set forth herein. The Employee acknowledges and agrees that nothing herein is intended to give the Employee any right to continued employment by the Company.

7. Equitable Relief. The Employee specifically acknowledges and agrees that in the event of a breach or threatened breach of the provisions of this Agreement, including the

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attempted transfer of the Purchased Shares by the Employee in violation of this Agreement, monetary damages may not be adequate to compensate the Company or the Parent, as applicable, and, therefore, in the event of such a breach or threatened breach, in addition to any right to damages, the Company and the Parent shall be entitled to equitable relief in any court having competent jurisdiction. Nothing herein shall be construed as prohibiting the Company or the Parent from pursuing any other remedies available to it for any such breach or threatened breach.

8. Notices. Any notices required or permitted by the terms of this Agreement shall be given by recognized courier service, facsimile, registered or certified mail, return receipt requested, addressed as follows:

If to the Company or Parent:

Toolrock Holding, Inc.

c/o Latrobe Specialty Steel Company

2626 Ligonier Street

Latrobe, PA 15650

Attn: Chief Financial Officer

If to the Employee:

B. Christopher DiSantis

8059 Long Forest Drive

Brecksville, OH 44141

or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given on the earliest of receipt, one business day following delivery by the sender to a recognized courier service, or three business days following mailing by registered or certified mail.

9. Benefit of Agreement. Subject to the provisions hereof, this Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, successors and permitted assigns of the parties hereto. Subject to the provisions hereof, the Employee may not assign his rights or obligations under this Agreement without the consent of the Company.

10. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the conflict of law principles thereof. For the purpose of litigating any dispute that arises under this Agreement, whether at law or in equity, the parties hereby consent to exclusive jurisdiction in the State of Delaware and agree that such litigation shall be conducted in the courts of Newcastle County, Delaware or the federal courts of the United States for the District of Delaware.

11. Entire Agreement. This Agreement embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No

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statement, representation, warranty, covenant or agreement not expressly set forth in this Agreement shall affect or be used to interpret, change or restrict the express terms and provisions of this Agreement.

12. Severability. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then such provision or provisions shall be modified to the extent necessary to make such provision valid and enforceable, and to the extent that this is impossible, then such provision shall be deemed to be excised from this Agreement, and the validity, legality and enforceability of the rest of this Agreement shall not be affected thereby.

13. Modifications and Amendments; Waivers and Consents. The terms and provisions of this Agreement may be amended, waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.

14. Consent of Spouse. If the Employee is married as of the date of this Agreement, the Employee’s spouse shall execute a Consent of Spouse in the form of Exhibit A hereto, effective as of the date hereof. Such consent shall not be deemed to confer or convey to the spouse any rights in the Purchased Shares that do not otherwise exist by operation of law or the agreement of the parties. If the Employee marries or remarries subsequent to the date hereof, the Employee shall, not later than 60 days thereafter, obtain his new spouse’s acknowledgement of and consent to the existence and binding effect of all restrictions contained in this Agreement by such spouse’s executing and delivering a Consent of Spouse in the form of Exhibit A hereto.

15. Data Privacy. By entering into this Agreement, the Employee: (i) authorizes the Company and each Affiliate to disclose to the Company or any of its Affiliates certain information and data as the Company or any such Affiliate shall request in order to facilitate the issuance of the Purchased Shares; (ii) waives any data privacy rights he or she may have with respect to such information for the sole purpose of facilitating the issuance of the Purchased Shares; and (iii) authorizes the Company and each Affiliate to store and transmit such information in electronic form. The Company agrees that the access to and use of the information in this Section 15 by the Company or any of its Affiliates shall be limited to authorized users for permitted purposes solely limited to the purpose of facilitating the issuance of the Purchased Shares.

16. Counterparts. This Agreement may be executed in one or more counterparts, and by different parties hereto on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[the remainder of this page has been intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

The Company:	TOOLROCK HOLDING, INC.
	By:	/s/ Dale B. Mikus
	Name:	Dale B. Mikus
	Title:	Vice President and Chief Financial Officer
The Parent:	TOOLROCK INVESTMENT, LLC
	By:	/s/ Steven E. Karol
	Name:	Steven E. Karol
	Title:	Managing Partner and Founder
The Employee:
	/s/ B. Christopher DiSantis
	B. Christopher DiSantis

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EXHIBIT A

CONSENT OF SPOUSE

I,                     , spouse of                     , acknowledge that I have read the STOCK PURCHASE AGREEMENT dated as of January 17, 2011 (the “Agreement”) to which this Consent is attached as Exhibit A and that I know its contents. Capitalized terms used and not defined herein shall have the meanings assigned to such terms in the Agreement. I am aware that by its provisions the Purchased Shares granted to my spouse pursuant to the Agreement are subject to, among other things, a Repurchase Right in favor of Toolrock Holding, Inc. (the “Company”) and that, accordingly, the Company has the right to repurchase up to all of the Purchased Shares of which I may become possessed as a result of a gift from my spouse or a court decree and/or any property settlement in any domestic litigation.

I hereby agree that my interest, if any, in the Purchased Shares subject to the Agreement shall be irrevocably bound by the Agreement and further understand and agree that any community property interest I may have in the Purchased Shares shall be similarly bound by the Agreement.

I agree to the Repurchase Right described in the Agreement and I hereby consent to the repurchase of the Purchased Shares by the Company and the sale of the Purchased Shares by my spouse or my spouse’s legal representative in accordance with the provisions of the Agreement. Further, as part of the consideration for the Agreement, I agree that at my death, if I have not disposed of any interest of mine in the Purchased Shares by an outright bequest of the Purchased Shares to my spouse, then the Company shall have the same rights against my legal representative to exercise its rights of repurchase with respect to any interest of mine in the Purchased Shares as it would have had pursuant to the Agreement if I had acquired the Purchased Shares pursuant to a court decree in domestic litigation.

I AM AWARE THAT THE LEGAL, FINANCIAL AND RELATED MATTERS CONTAINED IN THE AGREEMENT ARE COMPLEX AND THAT I AM FREE TO SEEK INDEPENDENT PROFESSIONAL GUIDANCE OR COUNSEL WITH RESPECT TO THIS CONSENT. I HAVE EITHER SOUGHT SUCH GUIDANCE OR COUNSEL OR DETERMINED AFTER REVIEWING THE AGREEMENT CAREFULLY THAT I WILL WAIVE SUCH RIGHT.

Dated as of the              day of             , 20    .

Print name:

EX-10.21

Exhibit 10.21

EXECUTION VERSION

STOCK OPTION AGREEMENT

TOOLROCK HOLDING, INC.

This STOCK OPTION AGREEMENT (this “Agreement”) dated as of January 17, 2011, is made by and among Toolrock Holding, Inc., a Delaware corporation (the “Company”), B. Christopher DiSantis, an employee of the Company’s Affiliate (the “Employee”), and Toolrock Investment, LLC, a Delaware limited liability company and stockholder of the Company (the “Parent”).

WHEREAS, the Company desires to grant to the Employee an Option (as defined below) to purchase Nine Hundred Thousand (900,000) shares of its Non-Voting Common Stock, $0.01 par value per share (the “Shares”), under and for the purposes set forth in the Company’s 2006 Employee, Director and Consultant Stock Plan, as amended from time to time (the “Plan”);

WHEREAS, the Company and the Employee understand and agree that any terms used and not defined herein have the same meanings as in the Plan; and

WHEREAS, the Company and the Employee each intend that the Option granted herein qualify as an ISO to the extent of the maximum number of Shares granted under this Option legally qualify as ISO’s, and that to the extent the Shares granted under this Option exceed the maximum number of Shares that legally qualify as ISO’s, the Option granted herein shall be deemed to be an Option for Non-Qualified Options.

NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

1. GRANT OF OPTION.

(a) As of the Effective Date (as such term is defined in the Confidential Employment Agreement dated as of January 17, 2011, by and between Latrobe Steel Company, a Pennsylvania corporation (“Latrobe”) and Employee, as the same may be amended from time to time (the “Employment Agreement”), but subject to Section 1(b), the Company hereby grants to the Employee the right and option to purchase all or any part of an aggregate of Nine Hundred Thousand (900,000) Shares, on the terms and conditions and subject to all the limitations set forth herein, under United States securities and tax laws, and in the Plan, which is incorporated herein by reference. The Employee acknowledges receipt of a copy of the Plan.

(b) The Company and the Parent hereby agree to use their respective commercially reasonable efforts to obtain the requisite board and stockholder approval to increase the number of authorized shares of Non-Voting Common Stock in the Company’s organization documents and the Plan and to file the requisite amendments with the Secretary of the State of Delaware to effectuate the increase of the number of authorized shares of Non-Voting Common Stock to such

amount that at least allows the issuance of the Shares covered by the Option as soon as reasonably practicable.

2. PURCHASE PRICE.

The purchase price of the Shares covered by the Option shall be $2.82 per Share, subject to adjustment, as provided in the Plan, in the event of a stock split, reverse stock split or other events affecting the holders of Shares after the date hereof (the “Purchase Price”). Payment shall be made in accordance with Paragraph 8 of the Plan.

3. EXERCISABILITY OF OPTION.

Subject to the terms and conditions set forth in this Agreement and the Plan, the Option granted hereby shall become exercisable as follows:

On January 17, 2012	up to 25% of the Shares covered by the Option
On January 17, 2013	up to an additional 25% of the Shares covered by the Option
On January 17, 2014	up to an additional 25% of the Shares covered by the Option
On January 17, 2015	the remainder of the Shares covered by the Option

provided, however, that upon the consummation of a Change of Control on or prior to January 17, 2012, the Option granted hereby shall become exercisable with respect to up to 50% of the Shares covered by the Option, and the Option for the remaining 50% of the Shares covered by the Option shall become exercisable as follows:

On January 17, 2012	up to 25% of the remaining 50% of the Shares covered by the Option
On January 17, 2013	up to 25% of the remaining 50% of the Shares covered by the Option
On January 17, 2014	up to 25% of the remaining 50% of the Shares covered by the Option
On January 17, 2015	the remainder of the Shares covered by the Option

provided, further, that upon the consummation of a Change of Control on or after January 17, 2012, the Option granted hereby shall become exercisable as to 100% of the Shares covered by the Option. As used herein, the term “Change of Control” means the consummation of one of the following events: (i) a merger, consolidation or sale of equity securities of the Company or Latrobe (other than an initial public offering of the equity securities of the Company or Latrobe) other than one which would result in the voting securities of the Company or Latrobe outstanding immediately prior thereto continuing to represent (either by remaining outstanding

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or by being converted into voting securities of the surviving entity or the parent of such corporation) more than 50% of the total voting power represented by the voting securities of the Company, Latrobe, the other surviving entity, or a parent of either of the foregoing, as applicable, outstanding immediately after such merger, consolidation or sale of equity securities; or (ii) the sale or disposition by the Company or Latrobe of all or substantially all of their respective assets.

In the event of a Public Offering, if the closing or last price of the Company’s stock on the composite tape or other comparable reporting system equals or exceeds 90% of the offering price per share of the stock offered to be sold in such Public Offering for 20 out of the 30 trading days (a) at any time during the Lock-Up Period (as defined in Section 12.9 below), (b) at any time after the expiration of the Lock-Up Period or (c) at any time commencing during the Lock-Up Period and ending after the expiration of the Lock-Up Period, then on the first business day following the later of the expiration of (x) such 30 day trading period, or (y) the Lock-Up Period, the Option granted hereby shall become exercisable with respect to up to 50% of the Shares covered by the Option for which the Option had not become exercisable prior to the consummation of the Public Offering.

In the event of a Public Offering followed by an acceleration of the exercisability of the Option in accordance with the foregoing sentence, the Option for any Shares covered by the Option which at the time of such acceleration have not yet become exercisable in accordance this Section 3 (which Shares are referred to in the following table as the “Remaining Shares”) shall become exercisable as follows:

If such acceleration occurs on or prior to January 17, 2012,

On January 17, 2012	up to 25% of the Remaining Shares
On January 17, 2013	up to an additional 25% of the Remaining Shares
On January 17, 2014	up to an additional 25% of the Remaining Shares
On January 17, 2015	the remainder of the Remaining Shares

If such acceleration occurs after January 17, 2012 and on or prior to January 17, 2013,

On January 17, 2013	up to 33% of the Remaining Shares
On January 17, 2014	up to an additional 33% of the Remaining Shares
On January 17, 2015	the remainder of the Remaining Shares

If such acceleration occurs after January 17, 2013 and on or prior to January 17, 2014,

On January 17, 2014	up to 50% of the Remaining Shares
On January 17, 2015	the remainder of the Remaining Shares

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If such acceleration occurs after January 17, 2014 and on or prior to January 17, 2015,

On January 17, 2015 the remainder of the Remaining Shares.

The foregoing rights are cumulative and are subject to the other terms and conditions of this Agreement and the Plan.

For the avoidance of doubt, when the Option becomes exercisable for up to 25% of the Shares covered by the Option, the Employee has the right to exercise 25% of the Shares covered by the Option or such lesser amount as the Employee determines in accordance with Section 6.

4. TERM OF OPTION.

The Option shall terminate ten years from the date of this Agreement or, if the Employee owns as of the date hereof more than 10% of the total combined voting power of all classes of capital stock of the Company or an Affiliate, five years from the date of this Agreement, but shall be subject to earlier termination as provided herein or in the Plan.

If the Employee ceases to be an employee of the Company or of an Affiliate (for any reason other than the death or Disability of the Employee or termination of the Employee’s employment for “Cause” (as defined in the Employment Agreement), the Option may be exercised, if it has not previously terminated, within three months after the date the Employee ceases to be an employee of the Company or an Affiliate, or within the originally prescribed term of the Option, whichever is earlier, but may not be exercised thereafter. In such event, the Option shall be exercisable only to the extent that the Option has become exercisable and is in effect at the date of such cessation of employment.

Notwithstanding the foregoing, in the event of the Employee’s Disability or death within three months after the termination of employment, the Employee or the Employee’s Survivors may exercise the Option within one year after the date of the Employee’s termination of employment, but in no event after the date of expiration of the term of the Option.

In the event the Employee’s employment is terminated by the Employee’s employer for “Cause,” the Employee’s right to exercise any unexercised portion of this Option shall cease immediately as of the time the Employee is notified his or her employment is terminated for “Cause,” and this Option shall thereupon terminate. Notwithstanding anything herein to the contrary, if subsequent to the Employee’s termination as an employee, but prior to the exercise of the Option, the Board of Directors of the Company determines that, either prior or subsequent to the Employee’s termination, the Employee engaged in conduct which would constitute “Cause,” then the Employee shall immediately cease to have any right to exercise the Option and this Option shall thereupon terminate.

In the event of the Disability of the Employee, as determined in accordance with the Plan, the Option shall be exercisable within one year after the Employee’s termination of employment or, if earlier, within the term originally prescribed by the Option. In such event, the Option shall be exercisable:

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(a) to the extent that the Option has become exercisable but has not been exercised as of the date of Disability; and

(b) in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of Disability of any additional vesting rights that would have accrued on the next vesting date had the Employee not become Disabled. The proration shall be based upon the number of days accrued in the current vesting period prior to the date of Disability.

In the event of the death of the Employee while an employee of the Company or of an Affiliate, the Option shall be exercisable by the Employee’s Survivors within one year after the date of death of the Employee or, if earlier, within the originally prescribed term of the Option. In such event, the Option shall be exercisable:

(x) to the extent that the Option has become exercisable but has not been exercised as of the date of death; and

(y) in the event rights to exercise the Option accrue periodically, to the extent of a pro rata portion through the date of death of any additional vesting rights that would have accrued on the next vesting date had the Employee not died. The proration shall be based upon the number of days accrued in the current vesting period prior to the Employee’s date of death.

5. METHOD OF EXERCISING OPTION.

Subject to the terms and conditions of this Agreement, the Option may be exercised by written notice to the Company or its designee, in substantially the form of Exhibit A attached hereto. Such notice shall state the number of Shares with respect to which the Option is being exercised and shall be signed by the person exercising the Option. Payment of the purchase price for such Shares shall be made in accordance with Paragraph 8 of the Plan. The Company shall deliver such Shares as soon as practicable after the notice shall be received, provided, however, that the Company may delay issuance of such Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including, without limitation, state securities or “blue sky” laws). The Shares as to which the Option shall have been so exercised shall be registered in the Company’s share register in the name of the person so exercising the Option (or, if the Option shall be exercised by the Employee and if the Employee shall so request in the notice exercising the Option, shall be registered in the name of the Employee and another person jointly, with right of survivorship) and shall be delivered as provided above to or upon the written order of the person exercising the Option. In the event the Option shall be exercised, pursuant to Section 4 hereof, by any person other than the Employee, such notice shall be accompanied by appropriate proof of the right of such person to exercise the Option. All Shares that shall be purchased upon the exercise of the Option as provided herein shall be fully paid and nonassessable.

6. PARTIAL EXERCISE.

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Exercise of this Option to the extent above stated may be made in part at any time and from time to time within the above limits, except that no fractional share shall be issued pursuant to this Option.

7. NON-ASSIGNABILITY.

The Option shall not be transferable by the Employee otherwise than by will or by the laws of descent and distribution. The Option shall be exercisable, during the Employee’s lifetime, only by the Employee (or, in the event of legal incapacity or incompetency, by the Employee’s guardian or representative) and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. Any attempted transfer, assignment, pledge, hypothecation or other disposition of the Option or of any rights granted hereunder contrary to the provisions of this Section 7, or the levy of any attachment or similar process upon the Option shall be null and void.

8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.

The Employee shall have no rights as a stockholder with respect to Shares subject to this Agreement until registration of the Shares in the Company’s share register in the name of the Employee. Except as is expressly provided in the Plan with respect to certain changes in the capitalization of the Company, no adjustment shall be made for dividends or similar rights for which the record date is prior to the date of such registration.

9. ADJUSTMENTS.

The Plan contains provisions covering the treatment of Options in a number of contingencies such as stock splits and mergers. Provisions in the Plan for adjustment with respect to stock subject to Options and the related provisions with respect to successors to the business of the Company are hereby made applicable hereunder and are incorporated herein by reference.

10. TAXES.

The Employee acknowledges that any income or other taxes due from him with respect to this Option or the Shares issuable pursuant to this Option shall be the Employee’s responsibility.

In the event of a Disqualifying Disposition (as defined in Section 15 below) or if the Option is converted into a Non-Qualified Option and such Non-Qualified Option is exercised, the Company may withhold from the Employee’s remuneration, if any, the minimum statutory amount of federal, state and local withholding taxes attributable to such amount that is considered compensation includable in such person’s gross income. At the Company’s discretion, the amount required to be withheld may be withheld in cash from such remuneration, or in kind from the Shares otherwise deliverable to the Employee on exercise of the Option. The Employee further agrees that, if the Company does not withhold an amount from the Employee’s

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remuneration sufficient to satisfy the Company’s income tax withholding obligation, the Employee will reimburse the Company on demand, in cash, for the amount under-withheld.

11. PURCHASE FOR INVESTMENT.

Unless the offering and sale of the Shares to be issued upon the particular exercise of the Option shall have been effectively registered under the Securities Act of 1933, as now in force or hereafter amended (the “1933 Act”), the Company shall be under no obligation to issue the Shares covered by such exercise unless and until the following conditions have been fulfilled:

(a) The person(s) who exercise the Option shall warrant to the Company, at the time of such exercise, that such person(s) are acquiring such Shares for their own respective accounts, for investment, and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall be endorsed upon any certificate(s) evidencing the Shares issued pursuant to such exercise:

“The shares represented by this certificate have been purchased for investment and they may not be sold or otherwise transferred by any person, including a pledgee, unless (1) either (a) a Registration Statement with respect to such shares shall be effective under the Securities Act of 1933, as amended, or (b) the Company shall have received an opinion of counsel satisfactory to it that an exemption from registration under such Act is then available, and (2) there shall have been compliance with all applicable state securities laws;” and

(b) If the Company so requires, the Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise in compliance with the 1933 Act without registration thereunder. Without limiting the generality of the foregoing, the Company may delay issuance of the Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including without limitation state securities or “blue sky” laws).

12. COMPANY’S REPURCHASE RIGHT; RESTRICTIONS ON TRANSFER OF SHARES.

12.1 The Shares acquired by the Employee pursuant to the exercise of the Option granted hereby may not be transferred by the Employee except as permitted herein.

12.2 In the event that the Employee’s employment with the Company or its Affiliates is terminated for any reason, the Company (or its designee) shall have the option, but not the obligation, to purchase from the Employee (or the Employee’s Survivor), and, in the event the Company exercises such option, the Employee (or the Employee’s Survivor) shall be obligated to sell to the Company (or its designee), all or any part of the Shares (the “Repurchase Right”).

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In the event the Company does not, upon the termination of employment of the Employee (as described above), exercise its option pursuant to this Section 12.2, the restrictions set forth in the balance of this Agreement shall not thereby lapse, and the Employee for himself, his heirs, legatees, executors, administrators and other successors in interest, agrees that the Shares shall remain subject to such restrictions. The following provisions shall apply to a repurchase under this Section 12.2:

(i) The per share repurchase price of the Shares to be sold to the Company upon exercise of its option under this Section 12.2 shall be equal to the fair market value of each such Share as of the date of termination of employment as determined by an independent investment bank or accounting firm of national standing having particular expertise in the valuation of businesses comparable to the Company mutually selected by the Company and the Employee, which determination shall be binding on the parties; provided, however, in the event of a termination by the Company for “Cause”, the per share repurchase price of the Shares to be sold to the Company upon exercise of its option under this Section 12.2 shall be equal to the per share Purchase Price.

(ii) The Company’s option to repurchase the Employee’s Shares in the event of termination of employment shall be valid for a period of one hundred eighty (180) days commencing with the date of such termination of employment.

(iii) In the event the Company shall be entitled to and shall elect to exercise its option to repurchase the Employee’s Shares under this Section 12.2, the Company shall notify the Employee, or in case of death, his Survivor, in writing of its intent to repurchase the Shares. Such written notice may be mailed by the Company up to and including the last day of the time period provided for in Section 12.2(ii) for exercise of the Company’s option to repurchase.

(iv) The written notice to the Employee shall specify the address at, and the time and date on, which payment of the repurchase price is to be made (the “Closing”) and the number of Shares with respect to which the Company is exercising the Repurchase Right. The date specified shall not be less than ten days nor more than 60 days from the date of the mailing of the notice, and the Employee or his successor in interest with respect to the Shares shall have no further rights as the owner thereof from and after the date specified in the notice. At the Closing, the repurchase price shall be delivered to the Employee or his or her successor in interest in cash and the Shares being purchased, duly endorsed for transfer, shall, to the extent that they are not then in the possession of the Company, be delivered to the Company by the Employee or his successor in interest.

12.3 It shall be a condition precedent to the validity of any sale or other transfer of any Shares by the Employee that the following restrictions be complied with (except as hereinafter otherwise provided):

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(i) No Shares may be sold, transferred, assigned, hypothecated, pledged, encumbered or otherwise disposed of (including by gift or devise), whether voluntarily or by operation of law, except in accordance with the terms and conditions hereinafter set forth.

(ii) Before selling or otherwise transferring all or part of the Shares, the Employee shall give written notice of such intention to the Company, which notice shall include the name of the proposed transferee, the proposed purchase price per share, the terms of payment of such purchase price and all other matters relating to such sale or transfer and shall be accompanied by a copy of the binding written agreement of the proposed transferee to purchase the Shares of the Employee. Such notice shall constitute a binding offer by the Employee to sell to the Company such number of the Shares then held by the Employee as are proposed to be sold in the notice at the monetary price per share designated in such notice, payable on the terms offered to the Employee by the proposed transferee (provided, however, that the Company shall not be required to meet any non-monetary terms of the proposed transfer, including, without limitation, delivery of other securities in exchange for the Shares proposed to be sold). The Company shall give written notice to the Employee as to whether such offer has been accepted in whole by the Company within 60 days after its receipt of written notice from the Employee. The Company may only accept such offer in whole and may not accept such offer in part. Such acceptance notice shall fix a time, location and date for the Closing on such purchase (“Closing Date”) which shall not be less than ten nor more than sixty days after the giving of the acceptance notice, provided, however, if any of the Shares to be sold pursuant to this Section 12.3 have been held by the Employee for less than six months, then the Closing Date may be extended by the Company until no more than ten days after such Shares have been held by the Employee for six months if required under applicable accounting rules in effect at the time. The place for such Closing shall be at the Company’s principal office. At such Closing, the Employee shall accept payment as set forth herein and shall deliver to the Company in exchange therefor certificates for the number of Shares stated in the notice accompanied by duly executed instruments of transfer.

(iii) If the Company shall fail to accept any such offer, the Employee shall be free to sell all, but not less than all, of the Shares set forth in his or her notice to the designated transferee at the price and terms designated in the Employee’s notice, provided that (i) such sale is consummated within six months after the giving of notice by the Employee to the Company as aforesaid, and (ii) the transferee first agrees in writing to be bound by the provisions of this Section 12 so that such transferee (and all subsequent transferees) shall thereafter only be permitted to sell or transfer the Shares in accordance with the terms hereof. After the expiration of such six months, the provisions of this Section 12.3 shall again apply with respect to any proposed voluntary transfer of the Employee’s Shares.

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(iv) The restrictions on transfer contained in this Section 12.3 shall not apply to (a) transfers by the Employee to his or her spouse or children or to a trust for the benefit of his or her spouse or children, (b) transfers by the Employee to his or her guardian or conservator, and (c) transfers by the Employee, in the event of his or her death, to his or her executor(s) or administrator(s) or to trustee(s) under his or her will (collectively, “Permitted Transferees”); provided however, that in any such event the Shares so transferred in the hands of each such Permitted Transferee shall remain subject to this Agreement, and each such Permitted Transferee shall so acknowledge in writing as a condition precedent to the effectiveness of such transfer.

(v) The provisions of this Section 12.3 may be waived by the Company. Any such waiver may be unconditional or based upon such conditions as the Company may impose.

12.4 The certificates representing all Shares acquired by the Employee hereunder shall be delivered to the Company and the Company shall hold such Shares in escrow as provided in this Subsection 12.4. In the event of (a) a repurchase by the Company of Shares pursuant to Section 12.2, or (b) a termination of the provisions of Sections 12.1, 12.2 and 12.3 pursuant to Section 12.8, the Company shall release from escrow and/or cancel, as applicable, a certificate for the applicable number of Shares. Any securities distributed in respect of the Shares held in escrow, including, without limitation, shares issued as a result of stock splits, stock dividends or other recapitalizations, shall also be held in escrow in the same manner as the Shares.

12.5 If the Company shall pay a stock dividend or declare a stock split on or with respect to any of its Non-Voting Common Stock, or otherwise distribute securities of the Company to the holders of its Non-Voting Common Stock, the number of shares of stock or other securities of the Company issued with respect to the shares then subject to the restrictions contained in this Agreement shall be added to the Shares subject to the Company’s rights to repurchase pursuant to this Agreement. If the Company shall distribute to its stockholders shares of stock of another corporation, the shares of stock of such other corporation, distributed with respect to the Shares then subject to the restrictions contained in this Agreement, shall be added to the Shares subject to the Company’s rights to repurchase pursuant to this Agreement.

12.6 If the outstanding shares of Non-Voting Common Stock of the Company shall be subdivided into a greater number of shares or combined into a smaller number of shares, or in the event of a reclassification of the outstanding shares of Non-Voting Common Stock of the Company, or if the Company shall be a party to a merger, consolidation or capital reorganization, there shall be substituted for the Shares then subject to the restrictions contained in this Agreement such amount and kind of securities as are issued in such subdivision, combination, reclassification, merger, consolidation or capital reorganization in respect of the Shares subject immediately prior thereto to the Company’s rights to repurchase pursuant to this Agreement.

12.7 In the event that the Shares to be repurchased by the Company under this Agreement are not in the Company’s possession pursuant to Subsection 12.4 above or otherwise and the Employee or the Employee’s Survivor fails to deliver such Shares to the Company (or its

10

designee), the Company may elect (i) to establish a segregated account in the amount of the repurchase price, such account to be turned over to the Employee or the Employee’s Survivor upon delivery of such Shares, and (ii) immediately to take such action as is appropriate to transfer record title of such Shares from the Employee to the Company (or its designee) and to treat the Employee and such Shares in all respects as if delivery of such Shares had been made as required by this Agreement. The Employee hereby irrevocably grants the Company a power of attorney which shall be coupled with an interest for the purpose of effectuating the preceding sentence. The Company shall not be required to transfer any Shares on its books which shall have been sold, assigned or otherwise transferred in violation of this Agreement, or to treat as owner of such Shares, or to accord the right to vote as such owner or to pay dividends to, any person or organization to which any such Shares shall have been so sold, assigned or otherwise transferred, in violation of this Agreement.

12.8 The provisions of Sections 12.1, 12.2 and 12.3 shall terminate immediately prior to the consummation of a public offering of any of the Company’s securities pursuant to a registration statement filed with the Securities and Exchange Commission pursuant to the 1933 Act (a “Public Offering”) or Change of Control.

12.9 The Employee agrees that in the event the Company proposes to offer for sale to the public any of its equity securities and such Employee is requested by the Company and any underwriter engaged by the Company in connection with such offering to sign an agreement restricting the sale or other transfer of Shares, then it will promptly sign such agreement and will not transfer, whether in privately negotiated transactions or to the public in open market transactions or otherwise, any Shares or other securities of the Company held by him or her during such period as is determined by the Company and the underwriters, not to exceed 180 days following the closing of the offering, plus such additional period of time as may be required to comply with Marketplace Rule 2711 of the National Association of Securities Dealers, Inc. or similar rules thereto (such period, the “Lock-Up Period”). Such agreement shall be in writing and in form and substance reasonably satisfactory to the Company and such underwriter and pursuant to customary and prevailing terms and conditions. Notwithstanding whether the Employee has signed such an agreement, the Company may impose stop-transfer instructions with respect to the Shares or other securities of the Company subject to the foregoing restrictions until the end of the Lock-Up Period.

12.10 The Employee acknowledges and agrees that neither the Company, its shareholders nor its directors and officers, has any duty or obligation to disclose to the Employee any material information regarding the business of the Company or affecting the value of the Shares before, at the time of, or following a termination of the employment of the Employee by the Company, including, without limitation, any information concerning plans for the Company to make a public offering of its securities or to be acquired by or merged with or into another firm or entity.

12.11 All certificates representing the Shares to be issued to the Employee pursuant to this Agreement shall have endorsed thereon a legend substantially as follows: “The shares represented by this certificate are subject to restrictions set forth in a Stock Option Agreement

11

dated as of January 17, 2011 with this Company, a copy of which Agreement is available for inspection at the offices of the Company or will be made available upon request.”

13. TAKE-ALONG AND BRING-ALONG.

13.1 In the event that the Parent or the members of the Parent (the “Members”) receive a bona fide offer from a third party or parties other than any Affiliate of the Parent (the “Buyer”) to purchase 50.1% or more of the shares of the Company’s Common Stock (or securities convertible into the Company’s Common Stock) owned by the Parent or membership interests of Parent owned by the Members (the “Take-Along Securities”), for a specified price payable in cash or otherwise and on specified terms and conditions (the “Take-Along Offer”), and the Parent or the Members, as applicable, propose to sell or otherwise transfer the Take-Along Securities to the Buyer pursuant to the Take-Along Offer, the Employee shall have the right to sell to the Buyer, at the same price per share of Common Stock proposed to be sold (directly or beneficially, as the case may be) and otherwise on the same terms and conditions as stated in the Take Along Offer, such number of Shares as is equal to the Take-Along Securities multiplied by the fully-diluted percentage beneficial ownership of the Company represented by the Shares then owned by the Employee. Parent shall take such steps as are reasonably necessary to give effect to the provisions of this Section 13.1 as applicable to the Members.

13.2 The Parent shall provide notice to the Employee stating the name of the Buyer, the terms of the Take-Along Offer and the period of time available to the Employee for notifying the Parent of its intent to participate in the sale (the “Notice Period”). The Parent shall, if reasonably possible, provide the Employee with a Notice Period of up to thirty (30) days, but in no event will the Parent provide the Employee with a Notice Period of less than ten (10) days. If the Employee wishes to participate in any sale pursuant to Section 13.1, the Employee shall notify the Parent in writing of such intention as soon as practicable after receipt of the notice from the Parent and in any event within the Notice Period. If the Parent does not receive such notice from the Employee within the Notice Period, the Parent shall be free to consummate the proposed transaction without any obligation to include the Employee’s Shares in such transaction.

13.3 The Employee, if participating in the Take-Along Offer, shall sell to the Buyer all, or at the option of the Buyer, any part of the Shares proposed to be sold by it at not less than the price and upon other terms and conditions, if any, not more favorable to the Buyer than those stated in the Take-Along Offer; provided, however, that any purchase of less than all of the Common Stock (or securities convertible into the Company’s Common Stock) of the Company by the Buyer shall be made from the Employee pro rata based upon the relative fully-diluted beneficial ownership of the Company represented by the Employee’s Shares.

13.4 In the event that (i) any person or group (as such term is defined in Section 13(d) of the Securities Exchange Act of 1934, as amended) desires to acquire 50.1% or more of the capital stock of the Company or equity interests in the Parent, whether directly or indirectly, by way of sale, assignment or other transfer (in one transaction or a series of related transactions) or by way of merger, consolidation, combination, exchange or any similar transaction, (ii) the Parent, or its successor-in-interest, or the Members, as applicable, desire to so transfer such

12

capital stock to such person or group and (iii) the Management Committee of the Parent approves such transaction and recommends it to the stockholders of the Company, the Employee agrees to sell, assign or transfer to, or exchange with, such third party on the terms offered by such third party, a percentage of the Shares owned by it equal to the percentage of the outstanding fully-diluted beneficial ownership of the Company being sold.

13.5 The Employee hereby agrees on behalf of itself and any permitted transferee or assignee of any Shares, to hold all of such Shares registered in its name subject to, and to vote such Shares as instructed by the Parent at any regular or special meeting (or by written consent in lieu thereof) of stockholders of the Company, for any purpose whatsoever, ordinary or extraordinary, including, without limitation, (i) amending or restating the Certificate of Incorporation or By-laws of the Company; (ii) approving any merger, consolidation, recapitalization, reorganization of the Company in which all holders of Common Stock are treated in the same manner or any sale, assignment or exchange of all or any part of the assets of the Company, and taking any and all action in connection therewith that may be properly taken by the stockholders of the Company; (iii) electing the directors of the Company and increasing or decreasing the number of directors constituting the entire board of directors of the Company; and (iv) approving any stock option or similar plan presented to the stockholders of the Company for approval.

13.6 The Employee hereby grants to the Parent a proxy coupled with an interest in all Shares owned from time to time by the Employee, which proxy shall be irrevocable until it terminates in accordance with the terms hereof, to vote all such Shares in the manner provided in Section 13.5.

13.7 The provisions of 13.1 through 13.6 of this Section 13 shall terminate upon the consummation of a Public Offering or Change of Control.

14. NO OBLIGATION TO EMPLOY.

The Company is not by the Plan or this Option obligated to continue the Employee as an employee of the Company or an Affiliate. The Employee acknowledges: (i) that the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (ii) that the grant of the Option is a one-time benefit which does not create any contractual or other right to receive future grants of options, or benefits in lieu of options; (iii) that all determinations with respect to any such future grants, including, but not limited to, the times when options shall be granted, the number of shares subject to each option, the option price, and the time or times when each option shall be exercisable, will be at the sole discretion of the Company; (iv) that the Employee’s participation in the Plan is voluntary; (v) that the value of the Option is an extraordinary item of compensation which is outside the scope of the Employee’s employment contract, if any; and (vi) that the Option is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.

15. PORTION OF OPTION IS INTENDED TO BE AN ISO.

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The parties each intend that the Option be an ISO to the extent of the maximum number of Shares granted under this Option that legally qualify as ISO’s, and that to the extent the Shares granted under this Option exceed the maximum number of Shares that may legally qualify as ISO’s, the Option granted herein shall be deemed to be an Option for Non-Qualified Options. The portion of the Option (plus any other outstanding incentive stock options granted to the Employee) that is an ISO is limited to the number of Shares which when first exercisable in any calendar year has a value (measured by the exercise price) that is no more than $100,000. The ISO portion of the Option is so that the Employee (or the Employee’s Survivors) may qualify for the favorable tax treatment provided to holders of Options that meet the standards of Section 422 of the Code. Any provision of this Agreement or the Plan which conflicts with the Code so that this Option would not be deemed an ISO (other than as to the limit on the maximum number of Shares granted under this Option that may legally qualify as ISO’s), is null and void and any ambiguities shall be resolved so that the Option qualifies as an ISO. Nonetheless, if the Option is determined not to be an ISO, the Employee understands that neither the Company nor any Affiliate is responsible to compensate him or her or otherwise make up for the treatment of the Option as a Non-Qualified Option and not as an ISO. The Employee should consult with the Employee’s own tax advisors regarding the tax effects of the Option and the requirements necessary to obtain favorable tax treatment under Section 422 of the Code, including, but not limited to, holding period requirements.

16. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

The Employee agrees to notify the Company in writing immediately after the Employee makes a Disqualifying Disposition of any of the Shares acquired pursuant to the exercise of the Option to the extent it is intended to qualify, and it legally qualifies, for ISO treatment. A Disqualifying Disposition is defined in Section 424(c) of the Code and includes any disposition (including any sale) of such Shares before the later of (a) two years after the date the Employee was granted the Option or (b) one year after the date the Employee acquired Shares by exercising the Option, except as otherwise provided in Section 424(c) of the Code. If the Employee has died before the Shares are sold, these holding period requirements do not apply and no Disqualifying Disposition can occur thereafter.

17. NOTICES.

Any notices required or permitted by the terms of this Agreement or the Plan shall be given by recognized courier service, facsimile, registered or certified mail, return receipt requested, addressed as follows:

If to the Company or Parent:
	Toolrock Holding, Inc.
	c/o Latrobe Specialty Steel Company
	2626 Ligonier Street
	Latrobe, PA 15650
	Attn: Chief Financial Officer

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If to the Employee:
	B. Christopher DiSantis
	8059 Long Forest Drive
	Brecksville, OH 44141

or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given upon the earlier of receipt, one business day following delivery to a recognized courier service or three business days following mailing by registered or certified mail.

18. GOVERNING LAW.

This Agreement shall be construed and enforced in accordance with the law of the State of Delaware, without giving effect to the conflict of law principles thereof. For the purpose of litigating any dispute that arises under this Agreement, whether at law or in equity, the parties hereby consent to exclusive jurisdiction in State of Delaware and agree that such litigation shall be conducted in the courts of Newcastle County, Delaware or the federal courts of the United States for the District of Delaware.

19. BENEFIT OF AGREEMENT.

Subject to the provisions of the Plan and the other provisions hereof, this Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, successors and permitted assigns of the parties hereto. Subject to the provisions of the Plan and the other provisions hereof, the Employee may not assign his rights or obligations under this Agreement without the consent of the Company.

20. ENTIRE AGREEMENT.

This Agreement, together with the Plan, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in this Agreement shall affect or be used to interpret, change or restrict, the express terms and provisions of this Agreement, provided, however, in any event, this Agreement shall be subject to and governed by the Plan.

21. SEVERABILITY.

If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, then such provision or provisions shall be modified to the extent necessary to make such provision valid and enforceable, and to the extent that this is impossible, then such provision shall be deemed to be excised from this Agreement, and the validity, legality and enforceability of the rest of this Agreement shall not be affected thereby.

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22. AMENDMENTS, WAIVERS AND CONSENTS.

The terms and provisions of this Agreement may be amended, waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.

23. DATA PRIVACY.

By entering into this Agreement, the Employee: (i) authorizes the Company and each Affiliate, and any agent of the Company or any Affiliate administering the Plan or providing Plan recordkeeping services, to disclose to the Company or any of its Affiliates such information and data as the Company or any such Affiliate shall request in order to facilitate the grant of Shares covered by the Option and the administration of the Plan; (ii) waives any data privacy rights he may have with respect to such information for the sole purpose of facilitating the issuance of the Shares covered by the Option; and (iii) authorizes the Company and each Affiliate to store and transmit such information in electronic form. The Company agrees that the access to and use of the information in this Section 23 by the Company or any of its Affiliates shall be limited to authorized users for permitted purposes solely limited to the purpose of facilitating the issuance of the Shares covered by the Option.

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24. CONSENT OF SPOUSE.

If the Employee is married as of the date of this Agreement, the Employee’s spouse shall execute a Consent of Spouse in the form of Exhibit B hereto, effective as of the date hereof. Such consent shall not be deemed to confer or convey to the spouse any rights in the Shares that do not otherwise exist by operation of law or the agreement of the parties. If the Employee marries or remarries subsequent to the date hereof, the Employee shall, not later than 60 days thereafter, obtain his new spouse’s acknowledgement of and consent to the existence and binding effect of Section 12.2 of this Agreement by such spouse’s executing and delivering a Consent of Spouse in the form of Exhibit B.

25. EQUITABLE RELIEF

The Employee specifically acknowledges and agrees that in the event of a breach or threatened breach of the provisions of this Agreement, including the attempted transfer of the Shares by the Employee in violation of this Agreement, monetary damages may not be adequate to compensate the Company or the Parent, as applicable, and, therefore, in the event of such a breach or threatened breach, in addition to any right to damages, the Company and the Parent shall be entitled to equitable relief in any court having competent jurisdiction. Nothing herein shall be construed as prohibiting the Company or the Parent from pursuing any other remedies available to it for any such breach or threatened breach.

26. COUNTERPARTS

This Agreement may be executed in one or more counterparts, and by different parties hereto on separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Employee has hereunto set his or her hand, all as of the day and year first above written.

TOOLROCK HOLDING, INC.
By:	/s/ Dale B. Mikus
	Name: Dale B. Mikus
	Title: Vice President and Chief Financial Officer
/s/ B. Christopher DiSantis
B. Christopher DiSantis

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Exhibit A

NOTICE OF EXERCISE OF STOCK OPTION

[Form for Unregistered Shares]

To: Toolrock Holding, Inc.

Ladies and Gentlemen:

I hereby exercise my Option to purchase ___________ shares (the “Shares”) of the Non-Voting Common Stock, $0.01 par value, of Toolrock Holding, Inc. (the “Company”), at the exercise price of $2.82 per share, pursuant to and subject to the terms of that certain Stock Option Agreement between the undersigned and the Company dated as of January 17, 2011.

This exercise election shall be allocated between ISO and Non-Qualified Options as follows:

ISO Shares _______________________ and

Non-Qualified Option Shares _______________________.

I am aware that the Shares have not been registered under the Securities Act of 1933, as amended (the “1933 Act”), or any state securities laws. I understand that the reliance by the Company on exemptions under the 1933 Act is predicated in part upon the truth and accuracy of the statements by me in this Notice of Exercise.

I hereby represent and warrant that (1) I have been furnished with all information which I deem necessary to evaluate the merits and risks of the purchase of the Shares; (2) I have had the opportunity to ask questions concerning the Shares and the Company and all questions posed have been answered to my satisfaction; (3) I have been given the opportunity to obtain any additional information I deem necessary to verify the accuracy of any information obtained concerning the Shares and the Company; and (4) I have such knowledge and experience in financial and business matters that I am able to evaluate the merits and risks of purchasing the Shares and to make an informed investment decision relating thereto.

I hereby represent and warrant that I am purchasing the Shares for my own personal account for investment and not with a view to the sale or distribution of all or any part of the Shares.

I understand that because the Shares have not been registered under the 1933 Act, I must continue to bear the economic risk of the investment for an indefinite time and the Shares cannot be sold unless the Shares are subsequently registered under applicable federal and state securities laws or an exemption from such registration requirements is available.

A-1

I agree that I will in no event sell or distribute or otherwise dispose of all or any part of the Shares unless (1) there is an effective registration statement under the 1933 Act and applicable state securities laws covering any such transaction involving the Shares or (2) the Company receives an opinion of my legal counsel (concurred in by legal counsel for the Company) stating that such transaction is exempt from registration or the Company otherwise satisfies itself that such transaction is exempt from registration.

I consent to the placing of a legend on my certificate for the Shares stating that the Shares have not been registered and setting forth the restriction on transfer contemplated hereby and to the placing of a stop transfer order on the books of the Company and with any transfer agents against the Shares until the Shares may be legally resold or distributed without restriction.

I understand that at the present time Rule 144 of the Securities and Exchange Commission (the “SEC”) may not be relied on for the resale or distribution of the Shares by me. I understand that the Company has no obligation to me to register the sale of the Shares with the SEC and has not represented to me that it will register the sale of the Shares.

I understand the terms and restrictions on the right to dispose of the Shares set forth in the 2006 Employee, Director and Consultant Stock Plan and the Stock Option Agreement, both of which I have carefully reviewed. I consent to the placing of a legend on my certificate for the Shares referring to such restriction and the placing of stop transfer orders until the Shares may be transferred in accordance with the terms of such restrictions.

I have considered the Federal, state and local income tax implications of the exercise of my Option and the purchase and subsequent sale of the Shares.

I am paying the option exercise price for the Shares as follows:

Please issue the stock certificate for the Shares (check one):

¨ to me; or

¨ to me and ________________, as joint tenants with right of survivorship

and mail the certificate to me at the following address:

A-2

My mailing address for shareholder communications, if different from the address listed above is:

Very truly yours,

Employee (signature)

Print Name

Date

Social Security Number

A-3

Exhibit A

NOTICE OF EXERCISE OF STOCK OPTION

[Form For Registered Shares]

TO: Toolrock Holding, Inc.

IMPORTANT NOTICE: This form of Notice of Exercise may only be used at such time as the Company has filed a Registration Statement with the Securities and Exchange Commission under which the issuance of the Shares for which this exercise is being made is registered and such Registration Statement remains effective.

Ladies and Gentlemen:

I hereby exercise my Option to purchase _________ shares (the “Shares”) of the Non-Voting Common Stock, $0.01 par value, of Toolrock Holding, Inc. (the “Company”), at the exercise price of $ 2.82 per share, pursuant to and subject to the terms of that certain Stock Option Agreement between the undersigned and the Company dated as of January 17, 2011.

This exercise election shall be allocated between ISO and Non-Qualified Options as follows:

ISO Shares _______________________ and

Non-Qualified Option Shares _______________________.

I understand the nature of the investment I am making and the financial risks thereof. I am aware that it is my responsibility to have consulted with competent tax and legal advisors about the relevant national, state and local income tax and securities laws affecting the exercise of the Option and the purchase and subsequent sale of the Shares.

I am paying the option exercise price for the Shares as follows:

Please issue the Shares (check one):

¨ to me; or

¨ to me and ____________________________, as joint tenants with right of survivorship,

A-1

at the following address:

My mailing address for shareholder communications, if different from the address listed above, is:

Very truly yours,

Employee (signature)

Print Name

Date

Social Security Number

A-2

Exhibit B

CONSENT OF SPOUSE

I, ____________________________, spouse of _____________________________, acknowledge that I have read the Stock Option Agreement dated as of January 17, 2011 (the “Agreement”) to which this Consent is attached as Exhibit B and that I know its contents. Capitalized terms used and not defined herein shall have the meanings assigned to such terms in the Agreement. I am aware that by its provisions the Shares granted to my spouse pursuant to the Agreement are subject to a right of repurchase in favor of Toolrock Holding, Inc. (the “Company”) and that, accordingly, the Company has the right to repurchase up to all of the Shares of which I may become possessed as a result of a gift from my spouse or a court decree and/or any property settlement in any domestic litigation.

I hereby agree that my interest, if any, in the Shares subject to the Agreement shall be irrevocably bound by the Agreement and further understand and agree that any community property interest I may have in the Shares shall be similarly bound by the Agreement.

I agree to the Repurchase Right described in the Agreement and I hereby consent to the repurchase of the Shares by the Company and the sale of the Shares by my spouse or my spouse’s legal representative in accordance with the provisions of the Agreement. Further, as part of the consideration for the Agreement, I agree that at my death, if I have not disposed of any interest of mine in the Shares by an outright bequest of the Shares to my spouse, then the Company shall have the same rights against my legal representative to exercise its rights of repurchase with respect to any interest of mine in the Shares as it would have had pursuant to the Agreement if I had acquired the Shares pursuant to a court decree in domestic litigation.

I AM AWARE THAT THE LEGAL, FINANCIAL AND RELATED MATTERS CONTAINED IN THE AGREEMENT ARE COMPLEX AND THAT I AM FREE TO SEEK INDEPENDENT PROFESSIONAL GUIDANCE OR COUNSEL WITH RESPECT TO THIS CONSENT. I HAVE EITHER SOUGHT SUCH GUIDANCE OR COUNSEL OR DETERMINED AFTER REVIEWING THE AGREEMENT CAREFULLY THAT I WILL WAIVE SUCH RIGHT.

Dated as of the _______ day of ________________, 20__.

Print name:

B-1

EX-21.1

Exhibit 21.1

LATROBE SPECIALTY METALS, INC.

SUBSIDIARIES

Subsidiary	State or Other Jurisdiction of Incorporation
Latrobe Specialty Metals Company	Pennsylvania
Latrobe Specialty Metals Distribution, Inc.	Delaware
Latrobe Specialty Metals Europe, Inc.	Delaware
Latrobe Specialty Steel Distribution Inc. (a/k/a Distribution D’Acier Spécialisé Latrobe Inc.)	Ontario, Canada
Specialty Steel Supply, Inc.	Texas

EX-23.1

Exhibit 23.1

Report and Consent of Independent Registered Public Accounting Firm

The Board of Directors

Latrobe Specialty Metals, Inc.:

We consent to the use of our report dated December 20, 2010, with respect to the consolidated balance sheets of Latrobe Specialty Metals, Inc. and subsidiaries (formerly known as Toolrock Holding, Inc.) as of September 30, 2010 and 2009, and the related consolidated statements of operations, stockholders’ equity and comprehensive income (loss) and cash flows for each of the years in the three-year period ended September 30, 2010, included herein and to the reference to our firm under the heading “Experts” herein.

/s/ KPMG LLP

Pittsburgh, Pennsylvania

May 24, 2011