e10vq

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NcYV6XV/ph2jjVnOMfkzAURjlcCmR9NZNHp/qPyVyH/gPItmWxPg+/Iv6KJonj4i Gc5l7KWlavvoxmAYib+KzQ== 0000950134-04-016722.txt : 20041108 0000950134-04-016722.hdr.sgml : 20041108 20041108154836 ACCESSION NUMBER: 0000950134-04-016722 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041108 DATE AS OF CHANGE: 20041108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENCORE WIRE CORP /DE/ CENTRAL INDEX KEY: 0000850460 STANDARD INDUSTRIAL CLASSIFICATION: ROLLING DRAWING & EXTRUDING OF NONFERROUS METALS [3350] IRS NUMBER: 752274963 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20278 FILM NUMBER: 041125755 BUSINESS ADDRESS: STREET 1: 1410 MILLWOOD RD STREET 2: P O BOX 1149 CITY: MCKINNEY STATE: TX ZIP: 75069 BUSINESS PHONE: 2145629473 MAIL ADDRESS: STREET 1: 1410 MILLWOOD RD STREET 2: P O BOX 1149 CITY: MCKINNEY STATE: TX ZIP: 75069 10-Q 1 d19811e10vq.htm FORM 10-Q e10vq

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended
September 30, 2004

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _________

Commission File Number: 0-20278

ENCORE WIRE CORPORATION

(Exact name of registrant as specified in its charter)


Delaware (State of Incorporation)		75-2274963 (I.R.S. employer identification number)

1410 Millwood Road McKinney, Texas (Address of principal executive offices)		75069 (Zip code)

Registrant’s telephone number, including area code: (972) 562-9473

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such Reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No

Number of shares of Common Stock outstanding as of October 31, 2004: 23,104,164

Page 1 of 21 Sequentially Numbered Pages
Index to Exhibits on Page 20

FORM 10-Q

ENCORE WIRE CORPORATION

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004


	Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
Consolidated Balance Sheets September 30, 2004 (Unaudited) and December 31, 2003		3
Consolidated Statements of Income (Unaudited) Quarters and Nine Months ended September 30, 2004 and September 30, 2003		5
Consolidated Statements of Cash Flows (Unaudited) Nine Months ended September 30, 2004 and September 30, 2003		6
Notes to Consolidated Financial Statements		7
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk		17
ITEM 4. Controls and Procedures		17
PART II. OTHER INFORMATION
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds		18
ITEM 6. Exhibits		18
Signatures		19
Credit Agreement
Note Purchase Agreement
Certification by Chairman & CEO Pursuant to Section 302
Certification by Vice President, CFO, Treasurer & Secretary Pursuant to Section 302
Certification by Chairman & CEO Pursuant to Section 906
Certification by Vice President, CFO, Treasurer & Secretary Pursuant to Section 906

FORM 10-Q

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

ENCORE WIRE CORPORATION

CONSOLIDATED BALANCE SHEETS


	September 30,		December 31,
	2004		2003
In Thousands of Dollars	(Unaudited)		(See Note)
ASSETS
Current Assets:
Cash	$	4,196	$	391
Accounts receivable (net of allowance of $532 and $490)		117,076		81,430
Inventories (Note 3)		51,746		59,344
Prepaid expenses and other assets		7,925		5,112
Current taxes receivable		4,613		—

Total current assets		185,556		146,277
Property, plant and equipment-on the basis of cost:
Land		5,894		5,858
Construction in progress		6,325		2,396
Buildings and improvements		31,120		30,855
Machinery and equipment		115,747		104,849
Furniture and fixtures		2,992		2,942

Total property, plant, and equipment		162,078		146,900
Accumulated depreciation and amortization		75,672		67,976

		86,406		78,924
Other assets		126		98

Total assets	$	272,088	$	225,299

Note: The consolidated balance sheet at December 31, 2003 as presented, is derived from the audited consolidated financial statements at that date.

See accompanying notes.

FORM 10-Q

ENCORE WIRE CORPORATION

CONSOLIDATED BALANCE SHEETS (continued)


	September 30,			December 31,
	2004			2003
In Thousands of Dollars, Except Share Data	(Unaudited)			(See Notes)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	26,343		$	24,430
Accrued liabilities		11,231			10,432
Current income taxes payable		—			5,158
Current deferred income taxes		1,165			—

Total current liabilities		38,739			40,020
Non-current deferred income taxes		12,157			10,078
Long-term notes payable		69,000			53,425
Stockholders’ equity:
Common stock, $.01 par value:
Authorized 40,000,000 shares; issued 25,863,114 and 25,450,125 shares; outstanding 23,104,164 and 22,691,175 shares		259			255
Additional paid-in capital		36,865			34,108
Treasury stock 2,758,950 and 2,758,950 shares at cost		(15,275	)		(15,275	)
Accumulated other comprehensive income (loss)		239			(492	)
Retained earnings		130,104			103,180

Total stockholders’ equity		152,192			121,776

Total liabilities and stockholders’ equity	$	272,088		$	225,299

Note: The consolidated balance sheet at December 31, 2003, as presented, is derived from the audited consolidated financial statements at that date.

Note: All share and per share data in this Quarterly Report have been restated to reflect the effect of the Company’s 3-for-2 stock split which was effective in August 2004.

See accompanying notes.

FORM 10-Q

ENCORE WIRE CORPORATION

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)


	Quarter Ended				Nine Months Ended
	September 30,				September 30,
In Thousands of Dollars, Except Per Share Data	2004		2003		2004		2003
Net sales	$	158,629	$	113,877	$	455,719	$	261,614
Cost of goods sold		136,859		96,255		379,991		226,534

Gross profit		21,770		17,622		75,728		35,080
Selling, general, and administrative expenses		11,124		8,935		31,260		21,871

Operating income (loss)		10,646		8,687		44,468		13,209
Net interest & other expenses		661		527		2,055		1,712

Income (loss) before income taxes		9,985		8,160		42,413		11,497
Provision (benefit) for income taxes		3,594		2,938		15,489		4,139

Net income (loss)	$	6,391	$	5,222	$	26,924	$	7,358

Net income (loss) per common and common equivalent shares – basic	$	.28	$	.23	$	1.17	$	.32

Weighted average common and common equivalent shares – basic		23,104		22,681		22,989		22,679
Net income (loss) per common and common equivalent shares - diluted	$	.27	$	.23	$	1.14	$	.32

Weighted average common and common equivalent shares - diluted		23,478		22,958		23,545		22,807

Note: All share and per share data in this Quarterly Report have been restated to reflect the effect of the Company’s 3-for-2 stock split which was effective in August 2004.

See accompanying notes.

FORM 10-Q

ENCORE WIRE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


	Nine Months Ended
	September 30,
In Thousands of Dollars	2004			2003
OPERATING ACTIVITIES
Net income (loss)	$	26,924		$	7,358
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Depreciation and amortization		8,619			9,070
Provision for bad debts		255			135
Changes in operating assets and liabilities:
Accounts receivable		(35,902	)		(34,589	)
Inventory		7,598			(5,242	)
Accounts payable and accrued liabilities		3,444			30,526
Other assets and liabilities		(7,507	)		(3,298	)
Current income taxes receivable/payable		(1,914	)		3,771

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		1,517			7,731

INVESTING ACTIVITIES
Purchases of property, plant and equipment		(18,613	)		(3,613	)
Change in long-term investments		(38	)		81
Proceeds from sale of equipment		2,603			117

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		(16,048	)		(3,415	)

FINANCING ACTIVITIES
Borrowings (repayments) under notes payable		15,575			(4,205	)
Proceeds from exercise of stock options		2,761			19
Purchase of treasury stock		—			—

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		18,336			(4,186	)

Net increase (decrease) in cash		3,805			130
Cash at beginning of period		391			160

Cash at end of period	$	4,196		$	290

See accompanying notes.

FORM 10-Q

ENCORE WIRE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 – BASIS OF PRESENTATION

The unaudited consolidated financial statements of Encore Wire Corporation (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles for interim information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for a fair presentation, have been included. All share and per share data in this Quarterly Report have been restated to reflect the effect of the Company’s 3-for-2 stock split which was effective in August 2004. Results of operations for interim periods presented do not necessarily indicate the results that may be expected for the entire year. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

NOTE 2 – STOCK BASED EMPLOYEE COMPENSATION

The Company has a stock option plan for employees that provides for the granting of stock options. The Company accounts for stock-based compensation utilizing the intrinsic value method in accordance with the provisions of Accounting Principles Board Opinion No. 25 (APB 25), “Accounting for Stock Issued to Employees” and related interpretations. Accordingly, no compensation expense is recognized for fixed option plans because the exercise prices of employee stock options equal or exceed the market prices of the underlying stock on the dates of grant.

FORM 10-Q

The following table represents the effect on net income (loss) and earnings per share if the Company had applied the fair value based method and recognition provisions of Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation,” to stock-based Employee compensation: ($’s in 000’s)


	Quarter Ended				Nine Months Ended
	September 30,				September 30,
In Thousands of Dollars, Except Per Share Data	2004		2003		2004		2003
Net income (loss), as reported	$	6,391	$	5,222	$	26,924	$	7,358
Add: Stock-based employee compensation expense included in reported income, net of related tax effects		—		—		—		—
Deduct: Total stock-based employee compensation expense determined under fair value based methods for all awards net of related tax effects		95		95		282		296

Pro forma net income (loss)	$	6,296	$	5,127	$	26,642	$	7,062

Net income (loss) per share
Basic, as reported	$	0.28	$	0.23	$	1.17	$	0.32
Basic, pro forma	$	0.27	$	0.23	$	1.16	$	0.31
Diluted, as reported	$	0.27	$	0.23	$	1.14	$	0.32
Diluted, pro forma	$	0.27	$	0.22	$	1.13	$	0.31

As required, the pro forma disclosures above include options granted since January 1, 1995. Consequently, the effects of applying SFAS 123 for providing pro forma disclosures may not be representative of the effects on reported net income for future years until all options outstanding are included in the pro forma disclosures. For purposes of pro forma disclosures, the estimated fair value of stock-based compensation plans and other options is amortized to expense primarily over the vesting period.

FORM 10-Q

NOTE 3 – INVENTORIES

Inventories are stated at the lower of cost, determined by the last-in, first-out (LIFO) method, or market.

Inventories (in thousands) consisted of the following:


	September 30,			December 31,
	2004			2003
Raw materials	$	9,330		$	12,976
Work-in-process		8,234			5,490
Finished goods		52,322			43,507

		69,886			61,973
Adjust to LIFO cost		(18,140	)		(2,629	)

		51,746			59,344
Lower of Cost or Market Adjustment		—			—

	$	51,746		$	59,344

An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must necessarily be based on management’s estimates of expected year-end inventory levels and costs. Because these are subject to many forces beyond management’s control, interim results are subject to the final year-end LIFO inventory valuation. During the third quarter of 2004, the Company liquidated the LIFO inventory layer established in 2003 and a portion of the layer established in 2002. Under LIFO, these prior year layers were liquidated at historical costs that were substantially less than current cost. The net effect of these prior year inventory layer liquidations was to reduce cost of sales by $3.6 million in the quarter, which resulted in a $2.3 million increase in net income after tax.

NOTE 4 – NET INCOME PER SHARE

Net income (loss) per common and common equivalent share is computed using the weighted average number of shares of common stock and common stock equivalents outstanding during each period. If dilutive, the effect of stock options, treated as common stock equivalents, is calculated using the treasury stock method.

FORM 10-Q

The following table sets forth the computation of basic and diluted net income per share:


	Quarter Ended		Quarter Ended
	9/30/04		9/30/03
Numerator:
Net income	$	6,390,548	$	5,222,122

Denominator:
Denominator for basic earnings per share – weighted average shares		23,104,164		22,680,837
Effect of dilutive securities:
Employee stock options		374,219		277,410

Denominator for diluted earnings per share – weighted average shares		23,478,383		22,958,247

The following table sets forth the computation of basic and diluted earnings per share:


	Nine Months		Nine Months
	Ended		Ended
	9/30/04		9/30/03
Numerator:
Net income	$	26,923,819	$	7,358,378

Denominator:
Denominator for basic earnings per share – weighted average shares		22,988,913		22,679,352
Effect of dilutive securities:
Employee stock options		556,306		127,929

Denominator for diluted earnings per share – weighted average shares		23,545,219		22,807,281

FORM 10-Q

NOTE 5 – LONG TERM NOTE PAYABLE

Effective August 27, 2004, the Company through its indirectly wholly-owned subsidiary, Encore Wire Limited, a Texas Limited partnership (“Encore Wire Limited”), refinanced its unsecured loan facility with two banks (the “Financing Agreement”) and also arranged for a private placement of debt (the “Note Purchase Agreement”). The Company is the guarantor of the indebtedness. Obligations under the Financing Agreement and the Note Purchase Agreement are the only contractual obligations or commercial borrowing commitments of the Company. The term of the Financing Agreement extends through August 27, 2009. The Financing Agreement provides for maximum borrowings of the lesser of $85 million or the amount of eligible accounts receivable plus the amount of eligible finished goods and raw materials, less any reserves established by the banks. The calculated maximum borrowing amount available at September 30, 2004, as computed under the Financing Agreement, was $85 million. The Financing Agreement is with two banks, Bank of America, N.A., as Agent, and Wells Fargo Bank, National Association, and replaces the previous financing agreement that was effective August 31, 1999 and had been extended by amendments through May 31, 2007 with a total credit line of $125 million.

Concurrent with the Financing Agreement, Encore Wire Limited and the Company, through its agent bank, entered into the Note Purchase Agreement with Hartford Life Insurance Company, Great-West Life & Annuity Insurance Company, London Life Insurance Company and London Life and Casualty Reinsurance Corporation (collectively referred to as the “Purchasers”), whereby Encore Wire Limited issued and sold $45 million of 5.27% Senior Notes, Series 2004-A, due August 27, 2011 (the “Senior Notes”) to the Purchasers, the proceeds of which were used to repay a portion of the Company’s outstanding indebtedness under the previous financing agreement. Through its agent bank, the Company then entered into an interest rate swap agreement to convert the fixed rate on the Senior Notes to a variable rate based on LIBOR plus a fixed adder for the seven year duration of these notes.

The Financing Agreement and the Senior Notes are unsecured and contain customary covenants and events of default. The Company was in compliance with these covenants, as of September 30, 2004. Under the Financing Agreement, the Company is allowed to pay cash dividends. At September 30, 2004, the total balance outstanding under the Financing Agreement and the Senior Notes was $69.0 million. Amounts outstanding under the Financing Agreement are payable on August 27, 2009, with interest payments due quarterly. Interest payments on the Senior Notes are due semi-annually.

In December 2001, the Company entered into an interest rate swap agreement on $24.0 million of its variable rate debt in order to hedge against an increase in variable interest rates. The terms of the agreement fix the interest rate on $24.0 million of the Company’s variable rate, long-term note payable to 4.6% per annum plus a variable adder that is based on certain financial ratios contained in the loan covenants. This three-year agreement expires on December 20, 2004. For the nine months ended September 30, 2004, the Company recorded an unrealized gain of $731,032, resulting in a net unrealized gain of $238,578 recorded in accumulated other comprehensive income

FORM 10-Q

(loss) as of September 30, 2004 in the equity section of the balance sheet to account for the net effect of the two interest rate swaps.

NOTE 6 – STOCK REPURCHASE AUTHORIZATION

On November 6, 2001, the Board of Directors of the Company approved a stock repurchase program covering the purchase of up to 450,000 shares of its common stock dependent upon market conditions. Common stock purchases under this program were authorized through December 31, 2002 on the open market or through privately negotiated transactions at prices determined by the Chairman of the Board or the President of the Company. As of December 31, 2002, 225,300 shares had been purchased under this authorization. Early in 2003, the Board of Directors extended this program through December 31, 2003 for the remaining 224,700 shares. There were no repurchases of stock in 2003. In February 2004, the Board of Directors extended this program through December 31, 2004 for the remaining 224,700 shares. There were no repurchases of stock during the first three quarters of 2004.

NOTE 7 – CONTINGENCIES

The Company is a party to litigation and claims that arise out of the ordinary business of the Company. While the results of these matters cannot be predicted with certainty, the Company does not believe the final outcome of such litigation and claims will have a material adverse effect on the financial condition, the results of operation or the cash flows of the Company. The Company also believes that it has adequate insurance to cover any damages that may ultimately be awarded.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The Company is a low-cost manufacturer of copper electrical building wire and cable. The Company is a significant supplier of residential wire for interior wiring in homes, apartments and manufactured housing and commercial wire for commercial and industrial buildings.

The Company’s operating results in any given time period are driven by several key factors, including; the volume of product produced and shipped, the cost of copper and other raw materials, the competitive pricing environment in the wire industry and the resulting influence on gross margins and the efficiency with which the Company’s plant operates during the period, among others. Price competition for electrical wire and cable is intense, and the Company sells its products in accordance with prevailing market prices. Copper is the principal raw material used by the Company in manufacturing its products. Copper accounted for approximately 67.1%, 63.9% and 66.6% of the Company’s cost of goods sold during fiscal 2003, 2002 and 2001, respectively. The price of copper fluctuates, depending on general economic conditions and in relation to supply and demand and other factors, which has caused significant variations in the cost of copper purchased by the Company. The Company cannot predict copper prices in the future or the effect of fluctuations in the cost of copper on the Company’s future operating results.

FORM 10-Q

The following discussion and analysis relates to factors that have affected the operating results of the Company for the quarterly and nine-month periods ended September 30, 2004 and 2003. Reference should also be made to the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

Results of Operations

Quarter Ended September 30, 2004 Compared to Quarter Ended September 30, 2003

Net sales for the third quarter of 2004 amounted to $158.6 million compared with net sales of $113.9 million for the third quarter of 2003. This 39% dollar increase was primarily the result of a 38% increase in the average price of wire sold. The average cost per pound of raw copper purchased increased in the third quarter of 2004 compared to the third quarter of 2003, and was the principal reason the average sales price for wire increased. Fluctuations in sales prices are primarily a result of changing copper raw material prices and product price competition.

Cost of goods sold increased to $136.9 million, or 86.3% of net sales, in the third quarter of 2004, compared to $96.3 million, or 84.5% of net sales, in the third quarter of 2003. Gross profit increased to $21.8 million, or 13.7% of net sales, in the third quarter of 2004 versus $17.6 million, or 15.5% of net sales, in the third quarter of 2003. The increased gross profit dollar increase was primarily the result of the increased prices in 2004 versus 2003 while gross margin percentages were negatively impacted by price competition.

Inventories are stated at the lower of cost, using the last-in, first-out (LIFO) method, or market. The Company maintains only one inventory pool for LIFO purposes as all inventories held by the Company generally relate to the Company’s only business segment, the manufacture and sale of copper building wire products. As permitted by U.S. generally accepted accounting principles, the Company maintains its inventory costs and cost of goods sold on a first-in, first-out (FIFO) basis and makes a quarterly adjustment to adjust total inventory and cost of goods sold from FIFO to LIFO. The Company applies the lower of cost or market (LCM) test by comparing the LIFO cost of its raw materials, work-in-process and finished goods inventories to estimated market values, which are based primarily upon the most recent quoted market price of copper, in pound quantities, as of the end of each reporting period. Additionally, future reductions in the quantity of inventory on hand could cause copper that is carried in inventory at costs different from the cost of copper in the period in which the reduction occurs to be included in costs of goods sold for that period.

Despite increasing copper costs during the third quarter 2004, a LIFO adjustment was recorded decreasing cost of sales by $.8 million. During the quarter, the Company liquidated the LIFO inventory layer established in 2003 and a portion of the layer established in 2002. Under LIFO, these prior year layers were liquidated at historical costs that were substantially less than current cost. The net effect of these prior year inventory layer liquidations was to reduce cost of sales by $3.6 million in the quarter, which resulted in a $2.3 million increase in net income after tax. Based on the current copper prices, there is no LCM adjustment necessary. Future reductions in the price of copper could require the Company to record a LCM adjustment against the related inventory balance, which would result in a negative impact on net income.

FORM 10-Q

Selling expenses for the third quarter of 2004 were $9.3 million, or 5.8% of net sales, compared to $7.1 million, or 6.3% of net sales, in the third quarter of 2003. The percentage decrease was due to the increase in selling prices per pound of wire that reduced the freight costs as a percentage of net sales. General and administrative expenses increased to $1.8 million, or 1.2% of net sales, in the third quarter of 2004 compared to $1.7 million, or 1.5% of net sales, in the third quarter of 2003. The General and Administrative costs are semi-fixed by nature and therefore did not increase proportionately with sales and dropped as a percentage of sales. The provision for bad debts was $45,000 in the third quarter of 2004 versus $45,000 in the third quarter of 2003.

Net interest expense was $661,000 in the third quarter of 2004 compared to $527,000 in the third quarter of 2003. The increase was due to slightly higher average debt balances and interest rates during the third quarter of 2004 than in the comparable period during 2003.

As a result of the foregoing factors, the Company’s net income increased to $6.4 million in the third quarter of 2004 from $5.2 million in the third quarter of 2003.

Nine Months Ended September 30, 2004 compared to Nine Months Ended September 30, 2003

Net sales for the first nine months of 2004 amounted to $455.7 million compared with net sales of $261.6 million for the first nine months of 2003. This dollar increase was the result of a 18% increase in the volume of product shipped, coupled with a 49% increase in the average price of wire sold. Fluctuations in sales prices are primarily a result of changing copper raw material prices and product price competition.

Cost of goods sold increased to $380.0 million in the first nine months of 2004, compared to $226.5 million in the first nine months of 2003. Gross profit increased to $75.7 million, or 16.6% of net sales, in the first nine months of 2004 versus $35.1 million, or 13.4% of net sales, in the first nine months of 2003. The increased gross profit and gross margin percentages were primarily the result of the increased volumes and prices in 2004 versus 2003.

Inventories are stated at the lower of cost, using the last-in, first-out (LIFO) method, or market. The Company maintains only one inventory pool for LIFO purposes as all inventories held by the Company generally relate to the Company’s only business segment, the manufacture and sale of copper building wire products. As permitted by accounting principles generally accepted in the United States, the Company maintains its inventory costs and cost of goods sold on a first-in, first-out (FIFO) basis and makes a quarterly adjustment to adjust total inventory and cost of goods sold from FIFO to LIFO. The Company applies the lower of cost or market test by comparing the LIFO cost of its raw materials, work-in-process and finished goods inventories to estimated market values, which are based primarily upon the most recent quoted market price of copper, in pound quantities, as of the end of each reporting period. Future reductions in the quantity of inventory on hand could cause copper that is carried in inventory at costs different from the cost of copper in the period in which the reduction occurs to be included in costs of goods sold for that period at the different price.

FORM 10-Q

As a result of increasing copper costs during the first nine months of 2004, a LIFO adjustment was recorded increasing cost of sales by $15.5 million during the period. The $15.5 million net LIFO adjustment was partially offset by the $3.6 million effect of the liquidation of the LIFO inventory layer established in 2003 and a portion of the 2002 layer, as discussed in the quarterly section above. Based on the current copper prices, there is no LCM adjustment necessary. Future reductions in the price of copper could require the Company to record a lower of cost or market adjustment against the related inventory balance, which would result in a negative impact on net income.

Selling expenses for the first nine months of 2004 were $25.5 million, or 5.6% of net sales, compared to $16.6 million, or 6.4% of net sales, in the same period of 2003. The percentage decrease was due to a decrease in freight costs as a percentage of net sales, attributable to freight becoming relatively lower as sales prices increased substantially in 2004. General and administrative expenses increased to $5.5 million, or 1.2% of net sales, in the first nine months of 2004 compared to $5.1 million, or 1.9% of net sales, in the same period of 2003. General and administrative costs are semi-fixed in nature and decreased dramatically in percentage terms as the Company dramatically increased sales dollars in 2004 versus 2003. The provision for bad debts was $255,000 in the first nine months of 2004 versus $135,000 in the first nine months of 2003, as the Company added to its provision to reflect the larger accounts receivable balances outstanding consistent with the rapid growth of sales.

Net interest expense was $2,055,000 in the first nine months of 2004 compared to $1,712,000 in the first nine months of 2003. The increase was due to higher average debt balances during the first nine months of 2004 than during the comparable period of 2003.

As a result of the foregoing factors, the Company’s net income increased to $26.9 million in the first nine months of 2004 from $7.4 million in the first nine months of 2003.

Liquidity and Capital Resources

The Company maintains a substantial inventory of finished products to satisfy customer’s prompt delivery requirements. As is customary in the industry, the Company provides payment terms to most of its customers that exceed terms that it receives from its suppliers. Therefore, the Company’s liquidity needs have generally consisted of operating capital necessary to finance these receivables and inventory. Capital expenditures have historically been necessary to expand the production capacity of the Company’s manufacturing operations. The Company has historically satisfied its liquidity and capital expenditure needs with cash generated from operations, borrowings under its revolving credit facilities and sales of its common stock. The Company uses its’ revolving credit facility to manage day to day operating cash needs as required by daily fluctuations in working capital. The total debt balance fluctuates daily as cash inflows differ from cash outflows. The ending balance of debt outstanding at the end of a quarter, coupled with explanations detailing cash flows and changes in the debt balance in these quarterly reports, is representative of the net effect of these cash flows during the period.

FORM 10-Q

for a private placement of debt (the “Note Purchase Agreement”). The Company is the guarantor of the indebtedness. Obligations under the Financing Agreement and the Note Purchase Agreement are the only contractual obligations or commercial borrowing commitments of the Company. The term of the Financing Agreement extends through August 27, 2009. The Financing Agreement provides for maximum borrowings of the lesser of $85 million or the amount of eligible accounts receivable plus the amount of eligible finished goods and raw materials, less any reserves established by the banks. The calculated maximum borrowing amount available at September 30, 2004, as computed under the Financing Agreement, was $85 million. The Financing Agreement is with two banks, Bank of America, N.A., as Agent, and Wells Fargo Bank, National Association, and replaces the previous financing agreement that was effective August 31, 1999 and had been extended by amendments through May 31, 2007 with a total credit line of $125 million.

Cash provided by operations was $1.5 million in the first nine months of 2004 compared to $7.7 million of cash provided by operations in the first nine months of 2003. This decrease in cash provided by operations resulted primarily from a shift in income taxes payable / receivable of $5.7 million from 2003 to 2004. The decrease in taxes payable is primarily the result of the company taking advantage of accelerated depreciation under

FORM 10-Q

current tax laws and changing its’ tax inventory accounting method from FIFO to LIFO. All other items that changed from year to year were associated with the growth in earnings in 2004 and timing differences. Cash used in investing activities increased to $16.0 million in the first nine months of 2004 from $3.4 million in the first nine months of 2003. In 2004, the funds were used primarily to construct the new 162,000 square foot addition to the Company’s distribution center as well as the purchase of associated manufacturing equipment that was part of the Company’s capital plan announced in a press release issued on February 3, 2004. The $18.3 million of cash provided by financing activities in the first nine months of 2004 was a result of the Company’s increase in outstanding bank debt and from the sale of common stock through option exercises.

During the remainder of 2004, the Company expects its capital expenditures will consist of additional plant and equipment for its residential and commercial wire operations. The total capital expenditures associated with these projects are currently estimated to be in the $19.0 to $21.0 million range in 2004. The Company will continue to manage its working capital requirements. These requirements may increase as a result of expected continued sales increases and may be impacted by the price of copper. The Company believes that the cash flow from operations and the financing available under the new Financing Agreement will satisfy working capital and capital expenditure requirements for the next twelve months.

Information Regarding Forward Looking Statements

This report on Form 10-Q contains various “forward-looking statements” (within the meaning of Section 27A of the securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) and information that are based on management’s belief as well as assumptions made by and information currently available to management. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected. Among the key factors that may have a direct bearing on the Company’s operating results are fluctuations in the economy and in the level of activity in the building and construction industry, demand for the Company’s products, the impact of price competition and fluctuations in the price of copper.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes from the information provided in Item 7.A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (the “CEO”) and the Chief Financial Officer (the “CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15 and 15d-15. Based on that

FORM 10-Q

evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures are adequately designed to ensure that the information required to be disclosed in this report has been accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding such required disclosure and that the Company’s disclosure controls and procedures are functioning effectively.

There have been no changes in the Company’s internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the period covered by this report.

Part II. OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Stock Repurchase Program

ITEM 6. EXHIBITS

The information required by this Item 6 is set forth in the Index to Exhibits accompanying this Form 10-Q.

FORM 10-Q

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned thereunto duly authorized.


		ENCORE WIRE CORPORATION

		(Registrant)

Dated: November 8, 2004		/s/ VINCENT A. REGO

		Vincent A. Rego, Chairman of the Board and Chief Executive Officer

Dated: November 8, 2004		/s/ DANIEL L. JONES

		Daniel L. Jones, President and Chief Operating Officer

Dated: November 8, 2004		/s/ FRANK J. BILBAN

		Frank J. Bilban, Vice President – Finance, Treasurer and Secretary Chief Financial Officer

FORM 10-Q

INDEX TO EXHIBITS


Exhibit
Number		Description
3.1		Certificate of Incorporation of Encore Wire Corporation, as amended through July 20, 2004 (filed on Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, and incorporated herein by reference).

3.2		Amended and Restated Bylaws of Encore Wire Corporation, as amended through July 20, 2004 (filed as Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, and incorporated herein by reference).

10.1		Credit Agreement by and among Encore Wire Limited, as Borrower, Bank of America, N.A., as Agent, and Bank of America, N.A. and Wells Fargo Bank, National Association, as Lenders, dated August 27, 2004 (included herein).

10.2		Note Purchase Agreement by and among Encore Wire Limited and Encore Wire Corporation, as Debtors, and Hartford Life Insurance Company, Great-West Life & Annuity Insurance Company, London Life Insurance Company and London Life and Casualty Reinsurance Corporation, as Purchasers, dated August 27, 2004 (included herein).

10.3*		1999 Stock Option Plan, as amended and restated, effective as of October 24, 2001 (filed as Exhibit 99.1 to the Company’s Registration Statement on Form S-8 (No. 333-86620), and incorporated herein by reference).

10.4*		1989 Stock Option Plan, as amended and restated (filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-8 (No. 333-38729), and incorporated herein by reference), terminated except with respect to outstanding options thereunder.

31.1		Certification by Vincent A. Rego, Chairman and Chief Executive Officer of Encore Wire Corporation, dated November 8, 2004 and submitted pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification by Frank J. Bilban, Vice President-Finance, Chief Financial Officer, Treasurer and Secretary of Encore Wire Corporation, dated November 8, 2004 and submitted pursuant to Rule 13a-14(a)/15d-14(a) and pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

FORM 10-Q


Exhibit Number		Description
32.1		Certification by Vincent A. Rego, Chairman and Chief Executive Officer of Encore Wire Corporation, dated November 8, 2004 and submitted as required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification by Frank J. Bilban, Vice President-Finance, Chief Financial Officer, Treasurer and Secretary of Encore Wire Corporation, dated November 8, 2004 as required by 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*		Management contract or compensatory plan.

EX-10.1 2 d19811exv10w1.htm CREDIT AGREEMENT exv10w1

Exhibit 10.1

Published CUSIP Number: 29256UAB9

CREDIT AGREEMENT

by and among

ENCORE WIRE LIMITED

as Borrower,

BANK OF AMERICA, N.A., as Agent,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Syndication Agent and a Lender

and

The Other Lenders Party Thereto

Dated as of August 27, 2004

BANC OF AMERICA SECURITIES LLC,
as Sole Lead Arranger and Sole Book Manager

TABLE OF CONTENTS


ARTICLE I. DEFINITIONS			1
ARTICLE II. REVOLVING CREDIT FACILITY			13
	2.1 Loans		13
	2.2 Interest		13
	2.3 Repayment and Line Termination		13
	2.4 Mandatory Interim Principal Payments		14
	2.5 Borrowing Procedure		14
	2.6 Purpose and Use of Funds		14
	2.7 Borrowing Base		14
	2.8 Commitment Fee		14
	2.9 Reduction of Credit Limit		15
	2.10 Letters of Credit		15
	2.11 Continuing Representations		23
	2.12 Increase in Commitments		23
ARTICLE III. INTEREST			24
	3.1 Interest		24
		3.1.1 Applicable Rate	25
		3.1.2 Election of Eurodollar Rate Loan	25
		3.1.3 Interest Payment Dates	25
	3.2 Compensation for Losses		26
	3.3 Inability to Determine Rates		26
	3.4 Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate Loans		26
	3.5 Matters Applicable to all Requests for Compensation		27
	3.6 Illegality		27
	3.7 Definitions		28
	3.8 Computation of Interest and Fees		30
ARTICLE IV. PAYMENT			30
	4.1 Method of Payment		30
	4.2 Pro Rata Treatment		30
	4.3 Sharing of Payments, Etc		31
	4.4 Non-Receipt of Funds by Agent		31
	4.5 Return of Funds		32
	4.6 Withholding Taxes		32
	4.7 Withholding Tax Exemption		33
ARTICLE V. CONDITIONS			34
	5.1 Items to be Delivered by Borrower		34
	5.2 Loans and Letters of Credit Under Facility		36

-i-


ARTICLE VI. REPRESENTATIONS AND WARRANTIES			36
	6.1 Corporate Name; Trade Names		36
	6.2 Chief Executive Office		36
	6.3 Partnership and Corporate Existence		36
	6.4 Partnership and Corporate Power and Authority; Validity		36
	6.5 No Conflicting Agreements; No Consents		36
	6.6 Share Ownership of Parent		37
	6.7 EWC GP, EWC LP and Aviation		37
	6.8 Ownership of Borrower		37
	6.9 Location of Books and Records		37
	6.10 Receivables, Inventory Free and Clear		37
	6.11 Financial Statements		37
	6.12 Litigation		38
	6.13 Compliance with Laws		38
	6.14 Judgments		38
	6.15 Taxes		38
	6.16 Title to Property		38
	6.17 Consents		38
	6.18 Full Disclosure		38
	6.19 Solvency		38
	6.20 Employee Relations		39
	6.21 Employee Benefit Plan		39
	6.22 Environmental Matters		39
	6.23 Representations and Warranties Cumulative		40
	6.24 No Default		40
	6.25 Insurance		40
	6.26 Margin Regulations; Investment Company Act; Public Utility Company Act		40
ARTICLE VII. COVENANTS			40
	7.1 Compliance Certificate		40
	7.2 Authority		41
	7.3 Books and Records; Inspection		41
		7.3.1 Books and Records	41
		7.3.2 Inspection	41
	7.4 Existence and Maintenance of Properties		41
	7.5 Annual Financial Statements		41
	7.6 Interim Financial Statements		42
	7.7 SEC Filings		42
	7.8 Borrowing Base Reports		42
	7.9 Aging Reports		43
	7.10 Use of Proceeds		43
	7.11 Notification of Contingent Liabilities		44
	7.12 Notification of Material Changes		44
	7.13 Notification Regarding Default		44
	7.14 Payment of Taxes and Other Obligations		44

-ii-


	7.15 Compliance with Laws	45
	7.16 Compliance with Agreements	45
	7.17 Fees, Costs and Expenses	45
	7.18 Subordination Agreements	45
	7.19 Change of Fiscal Year	45
	7.20 Employee Benefit Plans	45
	7.21 Financial Covenants	46
	7.22 No Liens; Inventory	47
	7.23 Insurance	48
	7.24 Sale of Assets	48
	7.25 Dissolution; Liquidation; Merger	48
	7.26 Limitation on Indebtedness	48
	7.27 Limitation on Contingent Liabilities	49
	7.28 Change in Business	49
	7.29 Change in Management	49
	7.30 Dividends, Distributions, Redemptions	49
	7.31 Burdensome Agreements	50
	7.32 Bonuses, Consulting Fees to Shareholders and Directors	50
	7.33 Loans to Employees	50
	7.34 Transactions with Affiliates	51
	7.35 Acquisitions	51
	7.36 Limitation on Investments	51
	7.37 Prepayments	51
	7.38 Amendments to Private Placement Debt	51
	7.39 Further Assurances	51
	7.40 Covenants Cumulative	52
ARTICLE VIII. EVENT OF DEFAULT		52
	8.1 Event of Default	52
ARTICLE IX. REMEDIES		54
	9.1 Refusal of Funding	54
	9.2 Remedies	54
	9.3 Enforcement Costs; Application of Proceeds	54
	9.4 Waiver of Notices	55
	9.5 Setoff	55
	9.6 Performance by Agent and/or Lenders	55
	9.7 Non-waiver	55
	9.8 Application of Payments	55
ARTICLE X. AGENT		56
	10.1 Appointment and Authorization of Administrative Agent	56
	10.2 Delegation of Duties	57
	10.3 Liability of Administrative Agent	57
	10.4 Reliance by Administrative Agent	57
	10.5 Notice of Default	58
	10.6 Credit Decision; Disclosure of Information by Administrative Agent	58

-iii-


	10.7 Indemnification of Administrative Agent	59
	10.8 Agent in its Individual Capacity	59
	10.9 Successor Administrative Agent	60
	10.10 Agent May File Proofs of Claim	60
	10.11 Syndication Agent	61
ARTICLE XI. MISCELLANEOUS		61
	11.1 Effective Date; Termination	61
	11.2 Notices Other Communications; Facsimile Copies	61
	11.3 Use of Proceeds	62
	11.4 Lender’s Records; Account Statements	62
	11.5 Indemnity	63
	11.6 Non-applicability of Chapter 346 of Texas Finance Code	64
	11.7 Judgment Interest	64
	11.8 Interest Limitation	64
	11.9 Successors and Assigns	65
	11.10 Continuing Rights of Agent and Lenders in respect of Obligations	67
	11.11 Fees, Costs and Expenses	68
	11.12 Acceptance and Performance	68
	11.13 Obligations	68
	11.14 WAIVER OF TRIAL BY JURY	68
	11.15 Copies Valid as Financing Statements	68
	11.16 Governing Law	69
	11.17 ENTIRE AGREEMENT	69
	11.18 Amendments	69
	11.19 Accounting Terms	69
	11.20 Exhibits	70
	11.21 Cumulative Rights	70
	11.22 Severability	70
	11.23 Multiple Counterparts	70
	11.24 Survival	70
	11.25 Intentionally Omitted	70
	11.26 Confidentiality	70
	11.27 Payments Set Aside	71
	11.28 USA Patriot Act Notice	71

SCHEDULES AND EXHIBITS

6.7    Subsidiary Information
6.12   Pending Litigation
6.15   Tax Returns or Filings
11.2   Addresses for Notices

Exhibit A   Assignment and Assumption
Exhibit B   Form of Revolving Note
Exhibit C   Form of Guaranty

-iv-

CREDIT AGREEMENT

This Credit Agreement dated as of August 27, 2004 is executed and entered into by and among ENCORE WIRE LIMITED, a Texas limited partnership ("Borrower"), BANK OF AMERICA, N.A. ("Bank of America") and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Wells Fargo"), in their individual capacities as "Lenders" (as such term is defined herein), and BANK OF AMERICA, N.A., as Administrative Agent.

RECITALS

The Borrower has requested that the Lenders provide a revolving credit agreement, and the Lenders are willing to do so on the terms and conditions set forth herein.

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

ARTICLE I. DEFINITIONS

The following definitions shall apply throughout this Agreement:

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

1.2 “Affiliate” includes any Person (i) that directly or indirectly controls or is controlled by Borrower (including without limitation all Subsidiaries), or is under common control with Borrower, or (ii) that directly or indirectly owns or holds five percent (5%) or more of any class of Voting Stock of Borrower or (iii) five percent (5%) or more of the Voting Stock of which is directly or indirectly owned or held by Borrower or (iv) who is an officer, director or partner of Borrower.

1.3 “Affiliate Subordination Agreement” means a subordination agreement respecting officers, directors, shareholders or Affiliates of Borrower as prescribed by paragraph 7.18.

1.4 “Agent” or “Administrative Agent” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

1.5 “Agent-Related Persons” means Agent, together with its Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates.

1.6 “Aggregate Commitments” means the Commitments of all the Lenders. As of the Effective Date, the Aggregate Commitments is $85,000,000.

1.7 “Agreement” means this Credit Agreement and all exhibits and schedules, and any extension, amendment or modification thereof.

1.8 “Applicable Margin” means the following percentages per annum, based upon the Leverage Ratio:


		APPLICABLE			APPLICABLE
		MARGIN FOR			MARGIN FOR
	LEVERAGE	BASE RATE			EURODOLLAR			COMMITMENT
LEVEL	RATIO	LOANS			RATE LOANS			FEE
1	Less than or equal		0	%		0.875	%		0.200	%
	to 1.50 to 1.0
2	Greater than 1.50		0	%		1.125	%		0.250	%
	to 1.0 and less
	than or equal to
	2.25 to 1.0
3	Greater than 2.25		0	%		1.250	%		0.250	%
	to 1.0 and less
	than or equal to
	3.00 to 1.0
4	Greater than 3.00		0.250	%		1.750	%		0.375	%
	to 1.0

The Applicable Margin shall be measured and determined according to the quarterly consolidated financial statements delivered to Agent under paragraph 7.6. Any adjustment in the Applicable Margin after the Effective Date shall be deemed effective as of the date the financial statements referred to in the immediately preceding sentence are due. The Applicable Margin in effect from the Closing Date until the first day following the receipt by the Agent of the quarterly consolidated financial statements referred to above for the quarter ending September 30, 2004 shall be determined based upon Pricing Level 1.

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

1.10 “Assignment and Assumption” means an Assignment and Assumption in substantially the form of Exhibit A hereto.

1.11 “Attorney Costs” means and includes all reasonable fees, expenses and disbursements of any law firm or other external counsel.

1.12 “Auto-Extension Letter of Credit” has the meaning specified in paragraph 2.10(b)(iii).

1.13 “Availability” at any time means (i) the lesser of the Borrowing Base and the Aggregate Commitments, minus (ii) the aggregate principal amount owing under the Facility minus (iii) the L/C Obligations.

1.14 “Aviation” means EWC Aviation, Inc., a Texas corporation.

1.15 “Bank of America” means Bank of America, N.A., a national banking association, in its individual capacity as a Lender.

1.16 “Base Rate” shall have the meaning specified in paragraph 3.7.

1.17 “Base Rate Loan” shall have the meaning specified in paragraph 3.7.

1.18 “Borrower” means Encore Wire Limited, a limited partnership organized under the laws of the State of Texas, whose chief executive office is located at 1410 Millwood Road, P.O. Box 1149, McKinney, Texas 75069-0545.

1.19 “Borrowing Base” means the amount determined from time to time pursuant to paragraph 7.8 which is equal to eighty-five percent (85%) of the net amount of Eligible Accounts plus (ii) sixty-five percent (65%) of the net amount of Eligible Inventory.

1.20 “Borrowing Base Report” means a Borrowing Base Report prescribed by paragraph 7.8.

1.21 “Business Day” means any calendar day except Saturday, Sunday and those legal public holidays specified in 5 U.S.C. §6103(a), as may be amended from time to time.

1.22 “Capital Expenditures” shall have the meaning specified in paragraph 7.21(b).

1.23 “Cash Collateralize” shall have the meaning specified in paragraph 2.10(g).

1.24 “Change of Control” means (i) the Parent shall cease to own, directly or indirectly, all of the capital ownership of EWC GP and EWC LP, (ii) EWC GP shall cease to be the sole general partner of the Borrower or (iii) EWC LP shall cease to be the sole limited partner of the Borrower.

1.25 “Code” means the Uniform Commercial Code in effect in the State of Texas.

1.26 “Compensation Period” shall have the meaning specified in paragraph 4.4(b).

1.27 “Commitment” means, as to any Lender, the obligation of such Lender to make or continue Loans and incur or participate in L/C Obligations hereunder in an aggregate principal amount at any one time outstanding up to but not exceeding the amount set forth opposite the name of such Lender on the signature pages of this Agreement under the heading “Commitment” or, if such Lender is a party to an Assignment and Acceptance, the amount of the “Commitment” set forth in the most recent Assignment and Acceptance of such Lender, as the same may be reduced or terminated pursuant to paragraph 2.9 or 9.2 or increased pursuant to paragraph 2.12.

1.28 “Commitment Percentage” means, as to any Lender, the percentage equivalent of a fraction, the numerator of which is the amount of the outstanding Commitment of such Lender (or, if such Commitment has terminated or expired, the outstanding principal amount of the Loans and L/C Obligations of such Lender) and the denominator of which is the Aggregate

Commitments (or, if the Aggregate Commitments have terminated or expired, the aggregate outstanding principal amount of the Loans and L/C Obligations of all Lenders), as adjusted from time to time in accordance with paragraph 11.9.

1.29 “Contract Term” means the period beginning on the Effective Date and continuing through August 27, 2009.

1.30 “Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

1.31 “Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

1.32 “Default” means an Event of Default or the occurrence of an event or condition which with notice or lapse of time or both would become an Event of Default.

1.33 “Default Rate” means (a) when used with respect to Obligations other than L/C Fees an interest rate equal to (i) the Base Rate plus (ii) the Applicable Margin, if any, applicable to Base Rate Loans plus (iii) 3% per annum; provided, however, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Margin) otherwise applicable to such Loan plus 3% per annum, and (b) when used with respect to L/C Fees, a rate equal to the interest rate otherwise applicable to such Letter of Credit plus 3% per annum, in all cases to the fullest extent permitted by applicable Laws.

1.34 “Defaulting Lender” means any Lender that (a) has failed to fund any portion of the Loans or participations in L/C Obligations required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) has otherwise failed to pay over to Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.

1.35 “Dollars” and “$” means lawful money of the United States of America.

1.36 “EBITDA” shall have the meaning prescribed in paragraph 7.21(b).

1.37 “Effective Date” means the effective date specified in the preamble of this Agreement.

1.38 “Eligible Accounts” means the net amount of the accounts of Borrower which meet each of the following criteria: (a) payment terms are within Borrower’s ordinary course of business, and the account is aged less than one hundred twenty (120) days from the date of invoice and arose in the ordinary course of business from the bona fide sale of Inventory under an enforceable agreement, and such Inventory has been fully delivered thereunder; (b) the title of Borrower to the account is absolute and is not subject to any assignment, claim, lien or security

interest; (c) the full amount shown on the books of Borrower and on the invoice evidencing the account, and on the Borrowing Base Report delivered to Agent, is owing to Borrower, and no partial payment has been made thereon, except as otherwise may be shown on such invoice and disclosed to Agent; (d) the account is not subject to any dispute, claim of reduction, counterclaim, set-off, recoupment or any claim for credits, allowances or adjustments by the account debtor, except for customary discounts allowed for prompt payment as may be noted on the invoice evidencing such account, or as has been disclosed to and approved by Agent; (e) the account is not an account that Agent in its sole discretion determines to be an unacceptable credit risk at the time of such determination; (f) the account debtor has not rejected, returned or refused to accept any Inventory relating to the transaction from which the account arose; (g) the account does not arise out of a contract or purchase order that, by its terms, forbids assignment, conditions assignment on consent by the account debtor or otherwise purports to make an assignment thereof conditional, void or unenforceable; and (h) Borrower has not received any notice and has no knowledge of the dissolution or termination of existence of any corporate account debtor, or the insolvency, business failure or the filing of a petition in bankruptcy by or against any account debtor. Notwithstanding the foregoing, the total amount at any time includable in Eligible Accounts with respect to any account debtor shall not exceed an amount equal to ten percent (10.0%) of the aggregate amount of all of Borrower’s accounts which otherwise meet all criteria for being Eligible Accounts (including those of such account debtor). Eligible Accounts shall not include any of the following: “contra accounts;” accounts subject to credit memos or accounts in connection with “C.O.D.” sales, “bill and hold” sales, guaranteed sales, consignment sales or other special billing arrangements; amounts, if any, excludable in respect of returned inventory; amounts owing by any Affiliate; all amounts owing by any account debtor with respect to which more than twenty five percent (25.0%) of its aggregate amount of accounts owing to Borrower is aged one hundred twenty (120) or more days from the date of invoice; all amounts owing by the United States or any state or local government (unless otherwise expressly agreed by Agent); amounts owing by any account debtor whose principal place of business is located outside the United States.

1.39 “Eligible Assignees” shall have the meaning specified in paragraph 11.9(g).

1.40 “Eligible Inventory” means copper raw material inventory and finished goods inventory owned by Borrower which is wire and cable inventory but unless otherwise agreed by Agent, does not in any event include (a) Inventory which is subject to any security interest, lien, encumbrance or claim by any Person, (b) Inventory acquired by Borrower other than in the ordinary course of business, and (c) Inventory which is damaged or obsolete or which otherwise is not in good saleable condition. Eligible Inventory shall be valued at the lesser of its cost or current market value, in a manner acceptable to Agent. Notwithstanding anything herein to the contrary, in no event shall work-in-progress be included in Eligible Inventory.

1.41 “Environmental Damages” means all costs, judgments, good faith settlements, claims, damages, losses, penalties, fines, liabilities, encumbrances, liens, costs, and expenses, of whatever kind or nature, contingent or otherwise, matured or unmatured, foreseeable or unforeseeable, and any attorneys’ fees costs and expenses in connection therewith, which are incurred at any time as a result of the handling of Hazardous Materials, or the existence of conditions giving rise to a violation of Environmental Requirements resulting from Borrower’s activities, including without limitation (i) all costs incurred in connection with the investigation

or remediation of Hazardous Materials or violations of Environmental Requirements which are necessary to comply with any Environmental Requirements, including, fees incurred for the services of attorneys, consultants, contractors, experts and laboratories, and all other costs incurred in the preparation of any feasibility studies or reports or the performance of any cleanup, remediation, removal, response, abatement, containment, closure, restoration or monitoring work, (ii) damages for personal injury, injury to property or natural resources occurring on or off of affected real property, consequential damages, the cost of demolition and rebuilding of any improvements on real property, and interest and penalties, and (iii) liability to any third party or governmental agency to reimburse, indemnify or provide contribution to such person or agency.

1.42 “Environmental Requirements” means all legislative, regulatory, administrative and common law requirements relating to the protection of human health and safety or the environment, including, without limitation, applicable present and future statutes, regulations, rules, ordinances, codes, licenses, permits, judgments, orders, judicial opinions, approvals, authorizations, concessions, franchises, and similar items issued or promulgated by governmental agencies, departments, commissions, boards, bureaus, or instrumentalities of the United States, any state or any political subdivisions.

1.43 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, together with all regulations issued pursuant thereto.

1.44 “ERISA Affiliate” means any Person which, together with Borrower, would be treated as a single employer under Section 4001 of ERISA or Section 414 of the IRC.

1.45 “Eurodollar Base Rate” has the meaning specified in paragraph 3.7.

1.46 “Eurodollar Business Day” has the meaning specified in paragraph 3.7

1.47 “Eurodollar Rate” has the meaning specified in paragraph 3.7.

1.48 “Eurodollar Reserve Percentage” has the meaning specified in paragraph 3.7.

1.49 “Eurodollar Rate Loan” has the meaning specified in paragraph 3.7.

1.50 “Event of Default” shall have the meaning specified in paragraph 8.1.

1.51 “EWC GP” means EWC GP Corp., a Delaware corporation and the sole general partner of Borrower.

1.52 “EWC LP” means EWC LP Corp., a Delaware corporation and the sole limited partner of Borrower.

1.53 “Facility” means the revolving credit facility established by this Agreement.

1.54 “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the

Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for any day shall be the average rate (rounded upwards, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by Agent.

1.55 “Fiscal Quarter” means any of the following periods of three calendar months: (i) January through March, (ii) April through June, (iii) July through September or (iv) October through December, respectively.

1.56 “Fixed Charge Ratio” shall have the meaning prescribed in paragraph 7.21(b).

1.57 “FRB” means the Board of Governors of the Federal Reserve System of the United States.

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

1.59 “Funded Debt” shall have the meaning prescribed in paragraph 7.21(b).

1.60 “Governmental Authority” means any nation or government, any state, provincial or political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

1.61 “Guarantor(s)” means each of Parent, EWC GP, EWC LP, Aviation and each other Person which from time to time has guaranteed the Obligations or a part thereof.

1.62 “Guaranty(ies)” means each guaranty agreement(s) executed by each Guarantor, substantially in the form Exhibit C hereto.

1.63 “GAAP” means generally accepted accounting principles as promulgated by the American Institute of Certified Public Accountants, consistently applied). The requirement that such principles be consistently applied means that the accounting principles applied in a current period are comparable in all material respects to those applied in a preceding period.

1.64 “Hazardous Materials” means any chemical substances, pollutants, contaminants, materials, or wastes, or combinations thereof, whether solid, liquid or gaseous in nature the presence of which requires or may require investigation or remediation under any federal, state or local statute, regulations, ordinance, order, action, policy or common law or which poses or threatens to pose a hazard to the health or safety of persons on or about real property affected by Borrower’s activities, including without limitation, material (i) which is or becomes defined as “hazardous waste,” “hazardous substance,” “pollutant or contaminant” under any Environmental Requirements, including without limitation, the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. section 9601 et seq.) or the Resource Conservation and Recovery Act (42 U.S.C. section 6901 et seq.) or (ii) which contains gasoline, diesel fuel or

other petroleum hydrocarbons, polychlorinated biphenyls (PCBs), asbestos, urea formaldehyde from insulation, or radon gas.

1.65 “Increase Closing Date” shall have the meaning specified in paragraph 2.12(b).

1.66 “Indemnitees” shall have the meaning specified in paragraph 11.5.

1.67 “Interest Payment Date” shall have the meaning specified in paragraph 3.7.

1.68 “Interest Period” shall have the meaning specified in paragraph 3.7.

1.69 “Inventory” means all of Borrower’s inventory now or hereafter owned or acquired, including raw materials, work in process, finished goods and all other goods held for sale or lease, wherever located. “Inventory” also includes returned inventory.

1.70 “Issuing Bank” means Bank of America, Wells Fargo or such other Lender which is a commercial bank as Borrower and Administrative Agent may mutually designate from time to time which agrees to be the issuer of Letters of Credit, in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.

1.71 “Issuer Documents” means with respect to any Letter of Credit, the L/C Application, and any other document, agreement and instrument entered into by the applicable Issuing Bank and Borrower or in favor of such Issuing Bank and relating to any such Letter of Credit.

1.72 “IRC” means the Internal Revenue Code of 1986, as amended, and regulations promulgated thereunder.

1.73 “Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

1.74 “Lender” and “Lenders” means each of Bank of America and Wells Fargo, in their individual capacities as lenders hereunder, and each other lending institution which may from time to time become a party hereto or any successor or assignee of any thereof.

1.75 “Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify Borrower and Agent.

1.76 “L/C Advance” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Commitment Percentage.

1.77 “L/C Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by any Issuing Bank.

1.78 “L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Loan.

1.79 “L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

1.80 “L/C Expiration Date” means the day that is thirty days prior to the last day of the Contract Term then in effect (or, if such day is not a Business Day, the next preceding Business Day).

1.81 “L/C Fee” has the meaning specified in paragraph 2.10(i).

1.82 “L/C Obligations” means, as at any date of determination, the aggregate undrawn amount of all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

1.83 “L/C Sublimit” means an amount equal to $5,000,000. The L/C Sublimit is part of, and not in addition to, the Aggregate Commitments.

1.84 “Letter of Credit” means any standby letter of credit issued by any Issuing Bank for the account of Borrower pursuant to this Agreement.

1.85 “Leverage Ratio” shall have the meaning prescribed in paragraph 7.21(b).

1.86 “Loan Documents” means this Agreement, the Revolving Notes, the Issuer Documents, the Guaranties and any other documents or agreements executed in connection therewith, and also includes any and all renewals, extensions, modifications or amendments of any of the foregoing.

1.87 “Loan Party” means (a) Borrower, (b) Parent, and (c) any other Person who is or becomes a party to any agreement, document or instrument that guarantees or secures payment or performance of the Obligations or any part thereof.

1.88 “Loans” means as specified in paragraph 2.1, and “Loan” means any of such Loans.

1.89 “Material Adverse Effect” means (i) a materially adverse effect on the business, assets, operations, prospects or condition, financial or otherwise, of Borrower, individually, or Parent and Borrower, on a consolidated basis taken as a whole, (ii) a material impairment of the ability of any Loan Party to perform any obligations under the Loan Documents or (iii) a

materially adverse effect on the rights and remedies of the Agent or the Lenders under the Loan Documents.

1.90 “Maximum Rate” means the greater of (i) the “weekly ceiling” as defined in Section 303.003 of the Texas Finance Code, as amended, or (ii) the maximum rate of interest permitted from day to day by any other applicable state or federal law.

1.91 “Non-Extension Notice Date” has the meaning specified in paragraph 2.10(b)(iii).

1.92 “Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

1.93 “Outstanding Amount” means (i) with respect to Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Loans occurring on such date; and (ii) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date.

1.94 “Note Purchase Agreement” means that certain Note Purchase Agreement, dated as of August 1, 2004, among Borrower, Parent and the purchasers party thereto, in the form in effect as of the date hereof.

1.95 “Parent” means Encore Wire Corporation, a corporation organized under the laws of the State of Delaware, and the sole owner of EWC GP and EWC LP.

1.96 “Parent Voting Stock” means sufficient shares of Parent (however designated) having ordinary voting power for the election of a majority of the members of its board of directors (not including shares having such power only in the event of a contingency).

1.97 “Participant” shall have the meaning specified in paragraph 11.9(d).

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

1.99 “Permitted Encumbrances” shall mean any liens arising by statute for taxes not yet due and payable, and subject to paragraph 8.1, any of the following so long as the validity or amount thereof is being contested in good faith and by appropriate and lawful proceedings diligently conducted, reserve or other appropriate provision (if any) required by GAAP shall have been made, levy and execution thereon shall have been stayed and continue to be stayed,

and provided that any of such encumbrances do not in the aggregate materially detract from the value of Borrower’s property, or materially impair the use thereof in the operation of its business: claims and liens for taxes due and payable; claims and liens upon, and defects of title to, personal property, including any attachment of personal property or other legal process prior to adjudication of a dispute on the merits; claims and liens of mechanics, materialmen, warehousemen, carriers, landlords, or other like liens; and adverse judgments on appeal.

1.100 “Person” means any individual, corporation, joint venture, generator limited partnership, trust, unincorporated organization or governmental entity or agency.

1.101 “Plan” means any (i) any “employee benefit plan,” as defined in Section 3(3) of ERISA, established or maintained by Borrower or any ERISA Affiliate now or during any of the preceding six years, and (ii) any other plan established or maintained now or during any of the preceding six years by Borrower or any ERISA Affiliate for its employees which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the IRC.

1.102 “Principal Office” means the principal office of Agent in Dallas, Texas, presently located at 901 Main Street, 7th Floor, Dallas, Texas 75202, or such other address as Agent may from time to time notify Borrower and Lenders.

1.103 “Private Placement Debt” means unsecured private placement indebtedness of the Borrower in an aggregate principal amount not to exceed $75,000,000 issued pursuant to (a) the terms and conditions set forth in that certain Note Purchase Agreement and (b) any other documentation containing terms and conditions substantially similar to the Note Purchase Agreement.

1.104 “Prohibited Transaction” means any transaction described in Section 406 of ERISA which is not exempt under Section 408 of ERISA and any transaction described in Section 4975(c) of the IRC which is not exempt under Section 4974(c)(2) or Section 4975(d) of the IRC, or by the transitional rules of Section 414(c) and Section 2003(c) of ERISA.

1.105 “Receivables” means all present and future accounts, chattel paper, contract rights, documents, instruments, deposit accounts, and general intangibles now or hereafter owned, held, or acquired by Borrower and includes, without limitation, all of the following: all of Borrower’s accounts receivable, including all rights to payment for goods sold or leased or for services rendered, whether or not earned by performance (and in any case where an account arises from the sale of goods, the interest of Borrower in such goods); lease receivables; license receivables; notes receivable; all other rights to receive payments of money from any Person; documents of title; warehouse receipts; Borrower’s right, title and interest under equipment leases; Borrower’s rights under any service, lease rental, consulting or similar agreements; trademarks, trade names and service marks; rights or claims under contracts; all tax refunds or claims for tax refunds; books of account, customer lists and other records relating in any way to any of the foregoing.

1.106 “Reportable Event” means (i) any transaction described in Section 406 of ERISA or the regulations thereunder for which the 30-day notice is not waived by said regulations, (ii) a

withdrawal from a plan described in Section 4063 or 4064 of ERISA, or (iii) a cessation of operations described in Section 4062(f) of ERISA.

1.107 “Required Lenders” means, at any date of determination, (a) if there are only two Lenders, Lenders having 100% of the Aggregate Commitments (or, if the Commitment of each Lender to make Loans and the obligation of the Issuing Bank to make L/C Credit Extensions shall have terminated or expired, the Total Outstandings) and (b) if there are more than two Lenders, Lenders having in aggregate at least 66-2/3% of the Aggregate Commitments (or, if the Commitment of each Lender to make Loans and the obligation of the Issuing Bank to make L/C Credit Extensions shall have terminated or expired, the Total Outstandings); provided that the Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

1.108 “Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

1.109 “Revolving Notes” means the promissory notes executed by Borrower payable to the order of a Lender evidencing loans under the Facility, as provided in paragraph 2.1 and in the form attached hereto as Exhibit B, and includes any and all renewals, extensions, amendments or modifications thereof.

1.110 “Subsidiaries” at any time means all subsidiary corporations of the Parent or Borrower, as the case may be, that would be appropriate for inclusion in either consolidating or consolidated financial statements of the Parent or Borrower, as the case may be, determined according to GAAP, and “Subsidiary” means any of such corporations.

1.111 “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

1.112 “Swap Obligations” means any and all obligations owed by any Loan Party to any Lender or any Affiliate in respect of a Swap Contract.

1.113 “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

1.114 “Total Outstandings” means the aggregate Outstanding Amount of all Loans and all L/C Obligations.

1.115 “Tranche” shall have the meaning specified in paragraph 3.7.

1.116 “Unreimbursed Amounts” shall have the meaning specified in paragraph 2.10(c)(i).

1.117 “Unused Portion” means an amount equal to the result of (a) the Aggregate Commitments minus (b) the sum of (i) the outstanding Loans and (ii) the outstanding L/C Obligations.

1.118 “Wells Fargo” means Wells Fargo Bank, National Association, in its individual capacity as a Lender.

General terms. Unless expressly provided otherwise, any term which is defined by the Code shall have the same meaning, wherever used in this Agreement, as is prescribed by the Code.

ARTICLE II. REVOLVING CREDIT FACILITY

2.1 Loans. Subject to and on the terms and conditions provided in this Agreement, each Lender hereby approves a revolving credit facility and severally agrees to make one or more loans to Borrower from time to time during the Contract Term in the aggregate amount up to such Lender’s Commitment Percentage times the Availability. Borrower may borrow and repay amounts from time to time under the Facility, subject in all respects to the terms of this Agreement. Loans from time to time made by Lenders to Borrower under the Facility, and all accrued interest thereon, shall be payable as provided in this Agreement and additionally evidenced by the Revolving Notes. Such loans are referred to herein individually as a “Loan” and collectively as the “Loans”.

2.2 Interest. The unpaid principal from day to day outstanding under the Facility shall bear interest as provided in Article III.

2.3 Repayment and Line Termination. Borrower shall make all payments with respect to the Loans to Agent for the account of the Lenders pursuant to the terms of payment as

provided in Article IV. All unpaid principal and accrued interest under the Facility shall be payable as follows: Accrued interest shall be payable as provided in paragraph 3.1.3.; subject to Lender’s rights under Article IX, all unpaid principal borrowed under the Facility and all unpaid accrued interest thereon, and all other amounts payable hereunder relative to the Facility, shall be due and payable to Agent and/or Lenders in full, and the Facility shall terminate, on the last day of the Contract Term. To the extent that any accrued interest is not timely paid when due, Agent may at its option (but with no obligation to do so), debit the amount thereof to, and collect same from, any account maintained by Borrower with Agent, or add such amount to the unpaid principal due by Borrower under the Facility.

2.4 Mandatory Interim Principal Payments. If at any time, from time to time, the Total Outstandings exceeds the Availability, Borrower shall make an immediate payment of principal under the Facility in an amount not less than the amount of such excess. All such amounts, if any, payable by Borrower shall be deemed to be payable on demand, and may be offset by Lenders against any amount owing by Lenders to Borrower, without prior notice to Borrower.

2.5 Borrowing Procedure. Borrower shall give Agent written notice of each borrowing hereunder. Not later than 1:00 p.m. (Dallas, Texas time) on the date specified for each borrowing hereunder (which may be on the same day as Agent’s receipt of the written notice of borrowing with respect to Base Rate Loans and which shall be at least three (3) Business Days after Agent’s receipt of the written notice of borrowing with respect to Eurodollar Rate Loans), each Lender will make available the amount of the Loan to be made by it on such date to Agent, at the Principal Office, in immediately available funds, for the account of Borrower. The amount so received by Agent shall, subject to the terms and conditions of this Agreement, be made available to Borrower by wire transfer of immediately available funds to an account designated by Borrower no later than 2:00 p.m. (Dallas, Texas time) on such day.

2.6 Purpose and Use of Funds. All amounts borrowed under the Facility shall be used by Borrower for (i) working capital and other general corporate purposes, (ii) the acquisition of equipment, in the ordinary course of Borrower’s business, and (iii) dividend of amounts to EWC GP and EWC LP, which shall in turn dividend such amounts to Parent for the purposes provided in paragraph 7.30.

2.7 Borrowing Base. Any request for a Loan under the Facility which, if funded, would result in an aggregate amount outstanding under the Facility in excess of the Availability may be declined by Agent in its sole discretion without prior notice to Borrower.

2.8 Commitment Fee. Subject in all respects to the provisions of paragraph 11.8, Borrower agrees to pay to Agent, for the account of each Lender (based upon their respective Commitment Percentages) a commitment fee equal to the Applicable Margin for the Commitment Fee times the Unused Portion (calculated on a daily basis for the applicable quarterly period or portion thereof), which shall be payable quarterly in arrears on the first day of each April, July, October and January during the term hereof and on the date of termination of the Facility.

2.9 Reduction of Credit Limit. Borrower may reduce the amount of the Aggregate Commitments by any integral multiple of $1,000,000.00, effective not earlier than the expiration of five (5) Business Days prior written notice to Agent; provided, that (i) Borrower may not execute a reduction of the Aggregate Commitments more than one time during any Fiscal Quarter, (ii) Borrower shall not reduce the Aggregate Commitments if, after giving effect thereto and to any concurrent payments hereunder, the Total Outstandings would exceed the Aggregate Commitments, and (iii) if, after giving effect to any reduction of the Aggregate Commitments, the L/C Sublimit exceeds the amount of the Aggregate Commitments, such L/C Sublimit shall be automatically reduced by the amount of such excess and provided further, that the Aggregate Commitments may not be increased following any such reduction.

2.10 Letters of Credit.

(a) (i) Subject to the terms and conditions set forth herein, (A) each Issuing Bank agrees, in reliance upon the agreements of the other Lenders set forth in this paragraph 2.10: (1) from time to time on any Business Day during the period from the Effective Date until the L/C Expiration Date, to issue Letters of Credit for the account of Borrower or its Subsidiaries, and to amend or renew Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drawings under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of Borrower or its Subsidiaries and any drawings thereunder; provided that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (w) the Total Outstandings shall not exceed the Aggregate Commitments, (x) the Total Outstandings shall not exceed the Availability, (y) the aggregate Outstanding Amount of the Loans of any Lender, plus such Lender’s Commitment Percentage of the Outstanding Amount of all L/C Obligations, shall not exceed such Lender’s Commitment, and (z) the Outstanding Amount of the L/C Obligations shall not exceed the L/C Sublimit. Each request by Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by Borrower that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.

(ii) No Issuing Bank shall issue any Letter of Credit, if:

(A) subject to paragraph 2.10(b)(iii), the expiry date of such requested Letter of Credit would occur more than twelve months after the date of issuance or last extension, unless the Required Lenders have approved such expiry date; or

(B) the expiry date of such requested Letter of Credit would occur after the L/C Expiration Date, unless all the Lenders have approved such expiry date.

(iii) No Issuing Bank shall be under any obligation to issue any Letter of Credit if:

(A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the applicable Issuing Bank from issuing such Letter of Credit, or any Law applicable to such Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such Issuing Bank shall prohibit, or request that such Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which such Issuing Bank is not otherwise compensated hereunder) not in effect on the Effective Date, or shall impose upon such Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Effective Date and which such Issuing Bank in good faith deems material to it;

(B) the issuance of such Letter of Credit would violate any Laws or one or more policies of the applicable Issuing Bank;

(C) except as otherwise agreed by Agent and the applicable Issuing Bank, such Letter of Credit is in an initial face amount less than $100,000;

(D) such Letter of Credit is to be denominated in a currency other than Dollars;

(E) a default of any Lender’s obligations to fund under paragraph 2.10(c) exists or any Lender is at such time a Defaulting Lender hereunder, unless the applicable Issuing Bank has entered into satisfactory arrangements with Borrower or such Lender to eliminate such Issuing Bank’s risk with respect to such Lender; or

(F) such Letter of Credit contains any provisions for automatic reinstatement of the stated amount after drawing thereunder.

(iv) No Issuing Bank shall amend any Letter of Credit if the Issuing Bank would not be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof.

(v) No Issuing Bank shall be under any obligation to amend any Letter of Credit if (A) such Issuing Bank would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letter of Credit.

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of Borrower delivered to an Issuing Bank (with a copy to Agent) in the form of a L/C Application, appropriately completed and signed by a Responsible Officer of Borrower. Such L/C Application must be received by the applicable Issuing Bank and Agent not later than 11:00 a.m. at least two Business Days (or such later date and time as such Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such L/C Application shall specify in form and detail satisfactory to such Issuing Bank: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) such other matters as such Issuing Bank may require. In the case of a request for an amendment of any outstanding Letter of Credit, such L/C Application shall specify in form and detail satisfactory to such Issuing Bank (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as such Issuing Bank may require. Additionally, Borrower shall furnish to the applicable Issuing Bank and Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the Issuing Bank or Agent may require.

(ii) Promptly after receipt of any L/C Application at the address set forth in paragraph 11.2 for receiving L/C Applications and related correspondence, the applicable Issuing Bank will confirm with Agent (by telephone or in writing) that Agent has received a copy of such L/C Application from Borrower and, if not, such Issuing Bank will provide Agent with a copy thereof. Unless such Issuing Bank has received written notice from any Lender, Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions in Article V shall not then be satisfied, then, subject to the terms and conditions hereof, such Issuing Bank shall, on the requested date, issue a Letter of Credit for the account of Borrower (or the applicable Subsidiary) or enter into the applicable amendment, as the case may be, in each case in accordance with such Issuing Bank’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the applicable Issuing Bank a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Commitment Percentage times the amount of such Letter of Credit.

(iii) If Borrower so requests in any applicable L/C Application, the applicable Issuing Bank may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit such Issuing Bank to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the applicable Issuing Bank, the Borrower shall not be required to make a specific request to such Issuing Bank for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) such Issuing Bank to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that the Issuing Bank shall not permit any such extension if (A) such Issuing Bank has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of paragraph 2.03(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (2) from the Administrative Agent, any Lender or Borrower that one or more of the applicable conditions specified in paragraph 5.2 is not then satisfied, and in each such case directing the applicable Issuing Bank not to permit such extension.

(iv) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the applicable Issuing Bank will also deliver to Borrower and Agent a true and complete copy of such Letter of Credit or amendment.

(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the Issuing Bank who receives such notice shall notify Borrower and Agent thereof. Not later than 11:00 a.m. on the date of any payment by any Issuing Bank under a Letter of Credit (each such date, an “Honor Date”), Borrower shall reimburse such Issuing Bank through Agent in an amount equal to the amount of such drawing. If Borrower fails to so reimburse such Issuing Bank by such time, Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such Lender’s Commitment Percentage thereof. In such event, Borrower shall be deemed to have requested a borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, subject to the amount of the unutilized portion of the Aggregate Commitments and the conditions set forth in

paragraph 5.2. Any notice given by an Issuing Bank or Agent pursuant to this paragraph 2.10(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

(ii) Each Lender (including Lender acting as an Issuing Bank) shall upon any notice pursuant to paragraph 2.10(c)(i) make funds available to Agent for the account of the applicable Issuing Bank at the Principal Office in an amount equal to its Commitment Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by Agent, whereupon, subject to the provisions of paragraph 2.10(c)(iii), each Lender that so makes funds available shall be deemed to have made a Base Rate Loan to Borrower in such amount. Agent shall remit the funds so received to such Issuing Bank.

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a borrowing of Base Rate Loans because the conditions set forth in paragraph 5.2 cannot be satisfied or for any other reason, Borrower shall be deemed to have incurred from the applicable Issuing Bank an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender’s payment to Agent for the account of such Issuing Bank pursuant to paragraph 2.10(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this paragraph 2.10.

(iv) Until each Lender funds its Loan or L/C Advance pursuant to this paragraph 2.10(c) to reimburse the applicable Issuing Bank for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Commitment Percentage of such amount shall be solely for the account of such Issuing Bank.

(v) Each Lender’s obligation to make Loans or L/C Advances to reimburse each Issuing Bank for amounts drawn under Letters of Credit, as contemplated by this paragraph 2.10(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against an Issuing Bank, Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Loans pursuant to this paragraph 2.10(c) is subject to the conditions set forth in paragraph 5.2. No such making of an L/C Advance shall relieve or otherwise impair the obligation of Borrower to reimburse an Issuing Bank for the amount of any payment made by such Issuing Bank under any Letter of Credit, together with interest as provided herein.

(vi) If any Lender fails to make available to Agent for the account of an Issuing Bank any amount required to be paid by such Lender pursuant to the

foregoing provisions of this paragraph 2.10(c) by the time specified in paragraph 2.10(c)(ii), such Issuing Bank shall be entitled to recover from such Lender (acting through Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to such Issuing Bank at a rate per annum equal to the Federal Funds Rate from time to time in effect. A certificate of such Issuing Bank submitted to any Lender (through Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.

(d) Repayment of Participations.

(i) At any time after an Issuing Bank has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Advance in respect of such payment in accordance with paragraph 2.10(c), if Agent receives for the account of such Issuing Bank any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from Borrower or otherwise, including proceeds of Cash Collateral applied thereto by Agent), Agent will distribute to such Lender its Commitment Percentage thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s L/C Advance was outstanding) in the same funds as those received by Agent.

(ii) If any payment received by Agent for the account of an Issuing Bank pursuant to paragraph 2.10(c)(i) is required to be returned under any of the circumstances described in paragraph 11.27 (including pursuant to any settlement entered into by an Issuing Bank in its discretion), each Lender shall pay to Agent for the account of such Issuing Bank its Commitment Percentage thereof on demand of Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect.

(e) Obligations Absolute. The obligation of Borrower to reimburse an Issuing Bank for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;

(ii) the existence of any claim, counterclaim, set-off, defense or other right that Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), any Issuing Bank or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

(iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

(iv) any payment by any Issuing Bank under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by any Issuing Bank under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or

(v) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, Borrower or any Subsidiary of Borrower.

Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with Borrower’s instructions or other irregularity, Borrower will immediately notify the applicable Issuing Bank. Borrower shall be conclusively deemed to have waived any such claim against each Issuing Bank and its correspondents unless such notice is given as aforesaid.

(f) Role of Issuing Bank. Each Lender and Borrower agree that, in paying any drawing under a Letter of Credit, no Issuing Bank shall have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. No Issuing Bank, any Agent-Related Person nor any of the respective correspondents, participants or assignees of any Issuing Bank shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or L/C Application. Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. No Issuing Bank, any Agent-Related Person, nor any of the respective correspondents, participants or assignees of any Issuing Bank, shall be liable or responsible for any of the matters described in clauses (i) through (v) of paragraph 2.10(e); provided, however, that anything in such clauses to the contrary notwithstanding, Borrower may have a claim against an Issuing Bank, and an Issuing

Bank may be liable to Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by Borrower which Borrower proves were caused by such Issuing Bank’s willful misconduct or gross negligence or such Issuing Bank’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, each Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and no Issuing Bank shall be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

(g) Cash Collateral. Upon the request of Agent, (i) if any Issuing Bank has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the L/C Expiration Date, any Letter of Credit for any reason remains outstanding and partially or wholly undrawn, Borrower shall immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations (in an amount equal to such Outstanding Amount determined as of the date of such L/C Borrowing or the L/C Expiration Date, as the case may be). Paragraph 9.2(c) sets forth certain additional requirements to deliver Cash Collateral hereunder. For purposes hereof, “Cash Collateralize” means to pledge and deposit with or deliver to Agent, for the benefit of each Issuing Bank and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to Agent and each Issuing Bank (which documents are hereby consented to by Lenders). Derivatives of such term have corresponding meanings. Borrower hereby grants to Agent, for the benefit of each Issuing Bank and Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Cash collateral shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America.

(h) Applicability of ISP98. Unless otherwise expressly agreed by any Issuing Bank and Borrower when a Letter of Credit is issued the rules of the ISP shall apply to each Letter of Credit.

(i) L/C Fees. Borrower shall pay to Agent for the account of each Lender in accordance with its Commitment Percentage a Letter of Credit fee (the “L/C Fee”) for each Letter of Credit equal to 1% per annum times the daily maximum amount available to be drawn under such Letter of Credit (whether or not such maximum amount is then in effect under such Letter of Credit). L/C Fees shall be (i) computed on a quarterly basis in arrears and (ii) due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the L/C Expiration Date and thereafter on demand. Notwithstanding anything to the contrary contained herein, upon the request of the Required Lenders, while any Event of Default exists, all L/C Fees shall accrue at the Default Rate.

(j) Fronting Fee and Documentary and Processing Charges Payable to Issuing Bank. Borrower shall pay directly to the applicable Issuing Bank for its own account a fronting fee with respect to each Letter of Credit in an amount equal to 0.125% per annum, payable on the actual daily maximum amount available to be drawn under such Letter of Credit (whether or not such maximum amount is then in effect under such Letter of Credit). Such fronting fee shall be due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the L/C Expiration Date and thereafter on demand. In addition, Borrower shall pay directly to the applicable Issuing Bank for its own account the reasonable and customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of such Issuing Bank relating to letters of credit as from time to time in effect. Such individual customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

(k) Conflict with Issuer Documents. In the event of any conflict between the terms hereof and the terms of any Issuer Documents, the terms hereof shall control.

(l) Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, Borrower shall be obligated to reimburse the applicable Issuing Bank hereunder for any and all drawings under such Letter of Credit. Borrower hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of Borrower, and that Borrower’s business derives substantial benefits from the businesses of such Subsidiaries.

2.11 Continuing Representations. Except as may have been otherwise disclosed to Agent in writing, each request for a Loan under the Facility shall constitute a continuing representation that no event or condition that would be the subject of a required notice under paragraph 7.11 or paragraph 7.12 is in existence as of such time.

2.12 Increase in Commitments.

(a) Provided there exists no Default, upon notice to Agent (which shall promptly notify Lenders), Borrower may from time to time, request an increase in the Commitments by an amount (for all such requests) not exceeding $40,000,000. At the time of sending such notice, Borrower (in consultation with Agent) shall specify the time period within which each Lender is requested to respond (which shall in no event be less than ten Business Days from the date of delivery of such notice to Lender). Each Lender shall notify Agent within such time period whether or not it agrees to increase its Commitment and, if so, whether by an amount equal to, greater than, or less than its pro rata share of such requested increase. Any Lender not responding within such time period shall be deemed to have declined to increase its Commitment. Agent shall notify Borrower and each Lender of Lenders’ responses to each request made hereunder. To achieve the full amount of a requested increase as a result of all or a portion of Lenders at such time not increasing their respective Commitments in an aggregate amount to the increased amount of Commitments requested by Borrower, Borrower may also

invite additional Eligible Assignees to become Lenders pursuant to a joinder agreement in form and substance satisfactory to Agent and its counsel.

(b) If the Aggregate Commitments are increased in accordance with this paragraph 2.12, Agent and Borrower shall determine the closing date (the “Increase Closing Date”) and the final allocation of such increase. Agent shall promptly notify Borrower and Lenders of the final allocation of such increase and the Increase Closing Date. As a condition precedent to such increase, Borrower shall deliver to Agent a certificate of Borrower and each Guarantor dated as of the Increase Closing Date (in sufficient copies for each Lender) signed by an officer of Borrower and each Guarantor (i) certifying and attaching the resolutions adopted by Borrower and each Guarantor approving or consenting to such increase, and (ii) in the case of Borrower, certifying that, before and after giving effect to such increase, (A) the representations and warranties contained in ARTICLE VI and the other Loan Documents are true and correct on and as of such Increase Closing Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and (B) no Default or Event of Default exists or would result therefrom. On the Increase Closing Date, each Lender shall, to the extent necessary, make a payment to Agent in an amount sufficient, upon the application of such payments by all Lenders to the reduction of outstanding Loans held by Lenders, to cause the principal amount of Loans outstanding made by each Lender to be in the amount of its pro rata share (after giving effect to the increase in the Commitments in accordance with this paragraph 2.12) of all outstanding Loans. Borrower hereby irrevocably authorizes each Lender to fund to Agent the payment required to be made pursuant to the immediately preceding sentence for application to the reduction of the outstanding Loans held by the other Lenders. If, as a result of the repayment of Loans provided for in this paragraph 2.12, any payment of Eurodollar Rate Loans occurs on a day which is not the last day of the applicable Interest Period, Borrower will pay to Agent for the benefit of any Lender holding a Eurodollar Rate Loan any loss or cost incurred by such Lender resulting therefrom in accordance with paragraph 3.2 to the extent a Eurodollar Rate Loan is paid on other than the last day of an Interest Period as a result thereof.

(c) Upon the Increase Closing Date and the making of the payments described in paragraph 2.12(b), each new Lender and/or increasing Lender shall be deemed to have irrevocably and unconditionally purchased and received, without recourse or warranty, an undivided participation in all outstanding L/C Obligations in accordance with its Commitment Percentage.

(d) This paragraph shall supersede any provisions in paragraph 4.2 or paragraph 11.18 to the contrary; provided that no Lender shall be obligated to increase its Commitment.

ARTICLE III. INTEREST

3.1 Interest. The unpaid principal from day to day outstanding under the Facility shall bear interest as follows:

3.1.1 Applicable Rate.

(a) Subject to any election by Borrower in respect of the Eurodollar Rate under paragraph 3.1.1(b), the unpaid principal from day to day outstanding under the Facility shall bear interest at the lesser of (i) the Base Rate plus the Applicable Margin or (ii) the Maximum Rate, provided, however that, subject to the provisions of paragraph 11.8, in the event that the Base Rate plus the Applicable Margin shall exceed the Maximum Rate at any time and thereafter the Base Rate plus the Applicable Margin shall be less than the Maximum Rate, the rate of interest applicable hereunder shall remain at the Maximum Rate until the aggregate accrued interest to date under the Facility equals the amount that would have accrued had the Base Rate plus the Applicable Margin at all times remained in effect.

(b) Subject to limitation by the Maximum Rate and the terms and provisions of this Agreement, and in lieu of the rate otherwise applicable under paragraph 3.1.1(a), Borrower shall have the option to elect the Eurodollar Rate as being applicable during any Interest Period to any Tranche of the Facility, provided, that any such Tranche shall be in the minimum amount of $500,000.00, and no more than six (6) separate Tranches may exist in the aggregate at any one time.

(c) Upon written notification to Borrower at any time when any Event of Default exists, the unpaid principal outstanding under the Facility shall bear interest at the Default Rate, beginning on the effective date specified in such written notice (which shall be on or after the date on which any such Event of Default shall have first occurred) and continuing thereafter for so long as any such Event of Default remains uncured or until Lender may agree otherwise, provided, that all past due principal and all past due accrued interest under the Facility shall automatically accrue interest at the Default Rate.

3.1.2 Election of Eurodollar Rate Loan. Borrower may elect a Eurodollar Rate Loan at any time by written notice of election, in form satisfactory to Agent, delivered to Agent no later than 1:00 p.m. Dallas, Texas time on the second Eurodollar Business Day prior to the beginning of the Interest Period to which such Eurodollar Rate Loan shall be applicable, therein stating (i) the Eurodollar Rate Loan elected, (ii) the Interest Period selected, and the date such Interest Period is to begin, and (iii) the principal amount of the Tranche to be subject to such Eurodollar Rate Loan (which shall beat least $500,000.00). Any such written notice of election shall be irrevocable by Borrower. Any unpaid principal under the Facility with respect to which no timely election of an Eurodollar Rate Loan is made shall automatically be deemed to be subject to, and shall accrue interest at, the Base Rate as provided by paragraph 3.1.1(a).

3.1.3 Interest Payment Dates. Accrued interest under the Facility shall be payable on each Interest Payment Date applicable thereto and at such other times as specified herein. Interest hereunder shall be due and payable in accordance with the

terms hereof before and after judgment, and before and after the commencement under any Debtor Relief Law.

3.2 Compensation for Losses. Prepayments of principal under the Facility shall be applied first in reduction of unpaid principal under the Base Rate Loan, and thereafter to any Eurodollar Rate Loan, as designated by Borrower (subject, however to paragraph 9.9). Upon demand of any Lender (with a copy to Agent) from time to time, Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or

(b) any failure by Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by Borrower;

including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing. For purposes of calculating amounts payable by Borrower to Lenders under this paragraph 3.2, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Base Rate used in determining the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded.

3.3 Inability to Determine Rates. If Agent determines in connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof for any reason that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not exist for determining the Eurodollar Base Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan, or (c) that the Eurodollar Base Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, Agent will promptly so notify Borrower and each Lender. Thereafter, the obligation of Lenders to make or maintain Eurodollar Rate Loans shall be suspended until Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, Borrower may revoke any pending request for a borrowing of, conversion to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a borrowing of Base Rate Loans in the amount specified therein.

3.4 Increased Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate Loans. (a) If any Lender determines that as a result of the introduction or phase-in of or any

change in or in the interpretation of any Law after the date hereof, or such Lender’s compliance therewith, there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Loans or (as the case may be) issuing or participating in Letters of Credit, or a reduction in the amount received or receivable by such Lender in connection with any of the foregoing (excluding for purposes of this subsection (a) any such increased costs or reduction in amount resulting from (i) taxes, levies, duties, imposts, assessments or other charges (as to which paragraph 4.6 shall govern), (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or any foreign jurisdiction or any political subdivision of either thereof under the Laws of which such Lender is organized or has its Lending Office, and (iii) reserve requirements utilized in the determination of the Eurodollar Rate), then from time to time upon demand of such Lender (with a copy of such demand to Agent), Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such increased cost or reduction.

(b) If any Lender determines that the introduction or phase-in of any Law regarding capital adequacy or any change therein or in the interpretation thereof after the date hereof, or compliance by such Lender (or its Lending Office) therewith, has the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of such Lender’s obligations hereunder (taking into consideration its policies with respect to capital adequacy and such Lender’s desired return on capital), then from time to time upon demand of such Lender (with a copy of such demand to Agent), Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such reduction.

3.5 Matters Applicable to all Requests for Compensation. A certificate of Agent or any Lender claiming compensation under this Article III and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, Agent or such Lender may use any reasonable averaging and attribution methods.

3.6 Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest rates based upon the Eurodollar Rate, then, on notice thereof by such Lender to Borrower through Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies Agent and Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, Borrower shall, upon demand from such Lender (with a copy to Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any such prepayment or conversion, Borrower shall also pay accrued interest on the amount so prepaid or converted and all amounts due under paragraph 3.2 in accordance with the terms thereof due to such prepayment or conversion. Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender.

3.7 Definitions. The following terms shall be defined as herein provided:

“Base Rate” means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate.” The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

“Base Rate Loan” means a Loan that bears interest based on the Base Rate.

“Eurodollar Base Rate” has the meaning specified in the definition of Eurodollar Rate.

“Eurodollar Business Day” means any Business Day on which dealings in the United States Dollars are conducted in the London interbank market.

“Eurodollar Rate” means for any Interest Period with respect to a Eurodollar Rate Loan, a rate per annum determined by Agent pursuant to the following formula:


Eurodollar Rate	=	Eurodollar Base Rate
		1.00 – Eurodollar Reserve Percentage

Where,

“Eurodollar Base Rate” means, for such Interest Period (rounded upwards, as necessary, to the nearest 1/100 of 1%) the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not available at such time for any reason, then the “Eurodollar Rate” for such Interest Period shall be the rate per annum determined by Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of Eurodollar Rate Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at

approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period.

“Eurodollar Reserve Percentage” means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the Board of Governors of the Federal Reserve System of the United States for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”). The Eurodollar Rate for each outstanding Eurodollar Rate Loan shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.

“Eurodollar Rate Loan” means a Loan that bears interest at a rate based on the Eurodollar Rate.

“Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the last day of the Contract Term and, if applicable, on the day the outstanding Obligations are due and payable pursuant to paragraph 9.3; provided, however, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each March, June, September and December and the last day of the Contract Term and, if applicable, on the day the outstanding Obligations are due and payable pursuant to paragraph 9.3.

“Interest Period” means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months thereafter, as selected by Borrower in its notice to the Agent; provided that:

(i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

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

(iii) no Interest Period shall extend beyond the last day of the Contract Term.

“Tranche” means any portion of the Facility the principal amount of which is subject to the Eurodollar Rate designated as provided by paragraph 3.1.2, provided that no Tranche may exist with respect to any principal amount less than $500,000.00.

3.8 Computation of Interest and Fees. All computations of interest for Base Rate Loans when Base Rate is determined by Bank of America’s “prime rate” shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. Subject to paragraph 11.8, all other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to paragraph 4.1, bear interest for one day. Each determination by Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

ARTICLE IV. PAYMENT

4.1 Method of Payment. All payments of principal, interest, fees and other amounts to be made by Borrower under this Agreement and the other Loan Documents shall be made to Agent at the Principal Office for the account of each Lender in Dollars and in immediately available funds, without setoff deduction or counterclaim, not later than 1:00 p.m. (Dallas, Texas time) on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day). Borrower shall, at the time of making each such payment, specify to Agent the sums payable by Borrower under this Agreement and the other Loan Documents to which such payment is to be applied (and in the event that Borrower fails to so specify, or if an Event of Default has occurred and is continuing, Agent may apply such payment to the Obligations in such order and manner as Agent may elect, subject to paragraph 4.2). Upon the occurrence and during the continuation of an Event of Default, all funds of Borrower or any Guarantor in the possession of Agent or any Lender, may be applied by Agent to the Obligations in such order and manner as Agent may elect, subject to paragraph 4.2. Each payment received by Agent under this Agreement or any other Loan Document for the account of a Lender shall be paid promptly to such Lender, in immediately available funds, for the account of such Lender. Whenever any payment under this Agreement or any other Loan Document shall be stated to be due on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of the payment of interest and commitment fee, as the case may be.

4.2 Pro Rata Treatment. Except to the extent otherwise provided in this Agreement: (a) each Loan shall be made by the Lenders under paragraph 2.1, each payment of commitment fees under paragraph 2.8 shall be made for the account of the Lenders, and each termination or reduction of the Commitments under paragraph 2.9 shall be applied to the Commitments of the

Lenders, pro rata according to the respective unused Commitments; (b) the making, conversion and continuation of Loans of a particular type shall be made pro rata among the Lenders holding Loans of such type according to the amounts of their respective Commitments; (c) each payment and prepayment by Borrower of principal of or interest on Loans of a particular type shall be made to Agent for the account of the Lenders holding Loans of such type pro rata in accordance with the respective unpaid principal amounts of such Loans held by such Lenders; (d) Interest Periods for Loans of a particular type shall be allocated among the Lenders holding Loans of such type pro rata according to the respective principal amounts held by such Lenders; and (e) the Lenders (other than the applicable Issuing Bank) shall purchase participations in the Letters of Credit pro rata in accordance with their Commitment Percentages.

4.3 Sharing of Payments, Etc. If a Lender shall obtain payment of any principal of or interest on any of the Obligations due to such Lender hereunder through the exercise of any right of setoff, banker’s lien, counterclaim or similar right, or otherwise, it shall promptly purchase from the other Lenders participations in the Obligations held by the other Lenders in such amounts, and make such adjustments from time to time, as shall be equitable to the end that all of the Lenders shall share pro rata in accordance with the unpaid principal and interest on the Obligations then due to each of them. To such end, all of the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) if all or any portion of such excess payment is thereafter rescinded or must otherwise be restored. Each of Borrower and each other Loan Party agrees, to the fullest extent it may effectively do so under applicable law, that any Lender so purchasing a participation in the Obligations by the other Lenders may exercise 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 Obligations in the amount of such participation. Nothing contained herein shall require any Lender to exercise any such right 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, liability or obligation of Borrower or any other Loan Party.

4.4 Non-Receipt of Funds by Agent. Unless Borrower or any Lender has notified Agent, prior to the date any payment is required to be made by it to Agent hereunder, that Borrower or such Lender, as the case may be, will not make such payment, Agent may assume that Borrower or such Lender, as the case may be, has timely made such payment and may (but shall not be so required to), in reliance thereon, make available a corresponding amount to the Person entitled thereto. If and to the extent that such payment was not in fact made to Agent in immediately available funds, then:

(a) if Borrower failed to make such payment, each Lender shall forthwith on demand repay to Agent the portion of such assumed payment that was made available to such Lender in immediately available funds, together with interest thereon in respect of each day from and including the date such amount was made available by Agent to such Lender to the date such amount is repaid to Agent in immediately available funds, at the Federal Funds Rate from time to time in effect; and

(b) if any Lender failed to make such payment, such Lender shall forthwith on demand pay to Agent the amount thereof in immediately available funds, together with interest thereon for the period from the date such amount was made available by Agent to

Borrower to the date such amount is recovered by Agent (the “Compensation Period”) at a rate per annum equal to the Federal Funds Rate from time to time in effect. If such Lender pays such amount to Agent, then such amount shall constitute such Lender’s Loan included in the applicable borrowing. If such Lender does not pay such amount forthwith upon Agent’s demand therefor, Agent may make a demand therefor upon Borrower, and Borrower shall pay such amount to Agent, together with interest thereon for the Compensation Period at a rate per annum equal to the rate of interest applicable to the applicable borrowing. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Commitment or to prejudice any rights which Agent or Borrower may have against any Lender as a result of any default by such Lender hereunder.

A notice of Agent to any Lender or Borrower with respect to any amount owing under this paragraph 4.4 shall be conclusive, absent manifest error.

4.5 Return of Funds. If any Lender makes available to Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article IV, and such funds are not made available to Borrower by Agent because the conditions to the applicable Loan or Letter of Credit set forth in Article V are not satisfied or waived in accordance with the terms hereof, Agent shall promptly return such funds (in like funds as received from such Lender) to such Lender, without interest.

4.6 Withholding Taxes.

(a) All payments by Borrower of principal of and interest on the Loans and the L/C Obligations and of all fees and other amounts payable under the Loan Documents shall be made free and clear of, and without deduction by reason of, any present or future taxes, levies, duties, imposts, assessments or other charges levied or imposed by any Governmental Authority (other than taxes on the overall net income of any Lender). If any such taxes, levies, duties, imposts, assessments or other charges are so levied or imposed, Borrower will (i) make additional payments in such amounts so that every net payment of principal of and interest on the Loans and the L/C Obligations and of all other amounts payable by it under the Loan Documents, after withholding or deduction for or on account of any such present or future taxes, levies, duties, imposts, assessments or other charges (including any tax imposed on or measured by net income of a Lender attributable to payments made to or on behalf of a Lender pursuant to this paragraph 4.6 and any penalties or interest attributable to such payments), will not be less than the amount provided for herein or therein absent such withholding or deduction (provided that Borrower shall not have any obligation to pay such additional amounts to any Lender to the extent that such taxes, levies, duties, imposts, assessments or other charges are levied or imposed by reason of the failure of such Lender to comply with the provisions of paragraph 4.7), (ii) make such withholding or deduction and (iii) remit the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law. Without limiting the generality of the foregoing, Borrower will, upon written request of any Lender, reimburse each such Lender for the amount of (A) such taxes, levies, duties, imports, assessments or other charges so levied or imposed by any

Governmental Authority and paid by such Lender as a result of payments made by Borrower under or with respect to the Loans other than such taxes, levies, duties, imports, assessments and other charges previously withheld or deducted by Borrower which have previously resulted in the payment of the required additional amount to such Lender, and (B) such taxes, levies, duties, assessments and other charges so levied or imposed with respect to any Lender reimbursement under the foregoing clause A, so that the net amount received by such Lender (net of payments made under or with respect to the Loans and the L/C Obligations) after such reimbursement will not be less than the net amount such Lender would have received if such taxes, levies, duties, assessments and other charges on such reimbursement had not been levied or imposed. Borrower shall furnish promptly to Agent for distribution to each affected Lender, as the case may be, upon request of such Lender, official receipts evidencing any such payment, withholding or reduction.

(b) Borrower will indemnify Agent and each Lender (without duplication) against, and reimburse Agent and each Lender for, all present and future taxes, levies, duties, imposts, assessments or other charges (including interest and penalties) levied or collected (whether or not legally or correctly imposed, assessed, levied or collected), excluding, however, any taxes imposed on the overall net income of Agent or such Lender or any lending office of Agent or such Lender by any jurisdiction in which Agent or such Lender or any such lending office is located, on or in respect of this Agreement, any of the Loan Documents or the Obligations or any portion thereof (the “reimbursable taxes”). Any such indemnification shall be on an after-tax basis, taking into account any such reimbursable taxes imposed on the amounts paid as indemnity. Payment under this paragraph 4.6(b) shall be made within 30 days after the date Lender or Agent makes demand therefor.

(c) Without prejudice to the survival of any other term or provision of this Agreement, the obligations of Borrower under this paragraph 4.6 shall survive the payment of the Loans and the other Obligations and termination of the Commitments.

4.7 Withholding Tax Exemption. Each Lender that is not incorporated or otherwise formed under the laws of the U.S. or a state thereof agrees that it will, prior to or on or about the Effective Date or the date upon which it becomes a party to this Agreement and if it is legally able to do so, deliver to Borrower and Agent two duly completed copies of U.S. Internal Revenue Service Form W-8BEN or W-8ECI, as appropriate, certifying in any case that such Lender is entitled to receive payments from Borrower under any Loan Document without deduction or withholding of any U.S. federal income taxes. Each Lender which so delivers a Form W-8BEN or W-8ECI further undertakes to deliver to Borrower and Agent two additional copies of such form (or a successor form) on or before the date such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by Borrower or Agent, in each case certifying that such Lender is entitled to receive payments from Borrower under any Loan Document without deduction or withholding

of any U.S. federal income taxes, unless an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender advises Borrower and Agent that it is not capable of receiving such payments without any deduction or withholding of U.S. federal income tax.

ARTICLE V. CONDITIONS

5.1 Items to be Delivered by Borrower. Prior to or simultaneously with execution and delivery hereof, Borrower shall deliver, or cause to be delivered, to Agent the following items:

(a) Certificates of Limited Partnership, Limited Partnership Agreements, Articles of Incorporation and Certificates of Existence. A copy of the certificate of limited partnership and agreement of limited partnership, or articles of incorporation, and all amendments thereto, as appropriate, of Borrower and each Guarantor accompanied by the certificate of the appropriate official of their respective states of organization or incorporation, as appropriate, bearing a date no more than ten (10) days prior to the date hereof, to the effect that such copies, respectively, are correct and complete and that Borrower and each Guarantor, as the case may be, is a limited partnership or corporation, as appropriate, duly incorporated and validly existing in such state, and certified by the corporate secretary of the general partner of Borrower and of each Guarantor, as the case may be, dated the date hereof, as being correct and complete as of the date hereof.

(b) Good Standing. Certification by the appropriate official of the state of incorporation of each Guarantor bearing a date no more than ten (10) days prior to the date hereof, to the effect that each Guarantor is in good standing with respect to payment of franchise and similar taxes, and certification by the Comptroller of Public Accounts of the State of Texas for each Guarantor which is required to be qualified to do business in the State of Texas bearing a date no more than thirty (30) days prior to the date hereof confirming that such Guarantor is duly qualified to transact business in the State of Texas and in good standing. Borrower represents that to the extent required by applicable law, Borrower and each Guarantor each is qualified or licensed to transact business in all jurisdictions in which operates or conducts business.

(c) By-Laws. A copy of the bylaws, and all amendments thereto of each Guarantor, accompanied by certificates from their respective corporate secretary, dated the date hereof, to the effect that such copy is correct and complete as of the date hereof.

(d) Incumbency. Certification of incumbency of all officers of each Guarantor (specifically including those of EWC GP in its capacity as general partner of Borrower), executed by the president or vice president and by the

corporate secretary, as of the effective date hereof, certifying the name and signature of each such officer.

(e) Resolutions. A copy of corporate resolutions of EWC GP as general partner of Borrower and of each other Guarantor approving this Agreement, authorizing the transactions contemplated hereby, and authorizing and directing a named officer or officers to sign and deliver all Loan Documents to be executed, duly adopted by its board of directors, accompanied by the certificate of the corporate secretary thereof, dated the date hereof, that such copy is a true and complete copy of resolutions duly adopted by such board of directors, and that such resolutions have not been amended, modified, or revoked in any respect and are in full force and effect as of the date hereof. Such resolutions shall be in form and substance satisfactory to Agent, and in the case of each Guarantor, shall include a bona fide finding by its board of directors that execution, delivery and performance of each Loan Document to which such Guarantor is a party is expected to directly and indirectly benefit such Guarantor.

(f) Credit Agreement. This Agreement, duly executed.

(g) Revolving Notes. The Revolving Notes to be delivered to all Lenders, duly executed.

(h) Guaranties. The Guaranties, duly executed by each Guarantor.

(i) Responsible Officer Certificate — Closing. A certificate signed by a Responsible Officer of Borrower certifying (A) that the conditions specified in paragraphs 5.2(c) and (d) have been satisfied, and (B) that there has been no event or circumstance since December 31, 2003 that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect.

(j) Insurance. Evidence of insurance in compliance with the requirements of paragraph 7.23.

(k) Affiliate Subordination Agreements. All Affiliate Subordination Agreements, if any, required by Agent under paragraph 7.18.

(l) Opinion of Borrower’s and Guarantors’ Counsel. An opinion of counsel for Borrower and each Guarantor, in form and substance satisfactory to Agent.

(m) Fees. All fees required to be paid on or before the Effective Date shall have been paid.

(n) Note Purchase Agreement. Agent shall have received the executed Note Purchase Agreement, the terms and conditions of which shall be reasonably satisfactory to Agent.

(o) Other Documents. Such other items as Agent may reasonably request in order to perfect or protect its interests and rights under the Loan Documents.

5.2 Loans and Letters of Credit Under Facility. As a condition to each Loan and L/C Credit Extension under the Facility, each of the following requirements must be satisfied in Agent’s discretion: (a) Borrower shall be current with respect to the delivery of Borrowing Base Reports and all items as required under paragraph 5.1, and the Borrowing Base must be confirmed by Agent, (b) the amount of Loans or Letter of Credit requested does not exceed the Availability as of the date of such Loans or Letter of Credit, (c) all representations and warranties contained in Article VI shall be true, correct and complete in all material respects except as supplemented pursuant to paragraph 7.12, and (d) no Default or Event of Default shall have occurred and be continuing, or shall result from such Loans or Letter of Credit, and no other event or condition which is reasonably expected to result in a Material Adverse Effect shall be in existence. Any request for Loans or a Letter of Credit under the Facility at a time when any of the foregoing requirements is not satisfied may be declined by Agent without prior notice.

ARTICLE VI. REPRESENTATIONS AND WARRANTIES

Borrower hereby represents and warrants to Agent and the Lenders as follows:

6.1 Corporate Name; Trade Names. Borrower is conducting, transacting, and carrying on its business under its corporate name as designated in paragraph 1.18, and under the name “Encore Wire,” and is not engaged in business under any other name.

6.2 Chief Executive Office. Borrower’s chief executive office is located at the address specified for Borrower in paragraph 1.18.

6.3 Partnership and Corporate Existence. Borrower is a limited partnership, validly existing under the laws of the State of Texas, and is duly qualified or licensed to transact business in all jurisdictions the laws of which require it to be so qualified or licensed. Each Guarantor is a corporation, duly incorporated, validly existing, and in good standing under the laws of the State of Delaware, and is duly qualified or licensed to transact business in all jurisdictions the laws of which require it to be so qualified or licensed.

6.4 Partnership and Corporate Power and Authority; Validity. Borrower possesses all requisite partnership power and authority to own, lease and operate its properties and to carry on its business and to execute, deliver, and comply with the Loan Documents to which it is a party. Each Guarantor possesses all requisite corporate power and authority to own, lease and operate its properties and to carry on its business and to execute, deliver, and comply with the Loan Documents to which it is a party. Each of the Loan Documents has been duly authorized by all necessary partnership and/or corporate action, as appropriate, and has been duly executed and delivered by Borrower and each Guarantor, as appropriate, and evidences valid and binding obligations of Borrower and each Guarantor, as appropriate, enforceable such Persons in accordance with its respective terms.

6.5 No Conflicting Agreements; No Consents. The execution, delivery and performance of the Loan Documents will not violate its certificate of limited partnership or its

limited partnership agreement or the articles of incorporation or bylaws of any Guarantor, nor constitute a default under, or result in a breach of, any contract, agreement, or other instrument to which any such Person is a party or which is applicable to any such Person’s property. No consents, licenses or approvals not already obtained are required in connection with the execution, delivery and performance by Borrower or any Guarantor, or the validity against Borrower or any Guarantor, of the Loan Documents to which it is a party.

6.6 Share Ownership of Parent. Each of the Parent’s outstanding shares has been duly and validly issued and is fully paid and nonassessable. There are no subscriptions, options to purchase, conversion or exchange rights, warrants or other agreements, claims or commitments of any nature obligating Parent to issue, transfer, deliver or sell additional shares of its capital stock, other than as previously disclosed to Agent in writing.

6.7 EWC GP, EWC LP and Aviation. Schedule 6.7 is a true and correct copy of the following with respect to each of EWC GP, EWC LP and Aviation: (i) jurisdiction of incorporation, (ii) number of shares of stock of each class authorized, (iii) the number of shares of each class of stock outstanding and (iv) the ownership, the number, and the percentage, of each such class of outstanding shares owned. Parent has no Subsidiaries other than Borrower, EWC GP, EWC LP and Aviation. All outstanding shares of stock of each of EWC GP, EWC LP and Aviation have been validly issued and are fully paid and non-assessable, and all such shares are owned by Parent free and clear of any lien, pledge, security interest or other encumbrance.

6.8 Ownership of Borrower. EWC GP owns a one percent (1%) general partnership interest in Borrower and is the sole general partner of Borrower; and, EWC LP owns a ninety-nine percent (99%) limited partnership interest in Borrower and is the sole limited partner of Borrower. Each of EWC GP and EWC LP owns its partnership interest in Borrower free and clear of any lien, pledge, security interest or other encumbrance.

6.9 Location of Books and Records. All of its books and records are located at Borrower’s chief executive office designated in paragraph 1.18, and at such other locations where Inventory is maintained. Borrower agrees that it will notify Agent if it maintains such books and records at any other location, and will provide Agent, upon request, with a report of the location of its Inventory, which report shall be delivered to Agent within fifteen (15) days after such request.

6.10 Receivables, Inventory Free and Clear. No security interests, liens or other encumbrances exist with respect to any of the Receivables or Inventory, except for Permitted Encumbrances.

6.11 Financial Statements. Borrower has delivered to Agent financial statements respecting its financial condition and operations for Agent’s review and reliance in connection with approving the Facility. All of such financial statements were prepared in accordance with GAAP, and are correct and complete, and fairly present the financial condition of Borrower on the respective dates thereof and the results of its operations for the respective periods then ended. There has been no material adverse change in the business, properties or financial condition of Borrower since the dates of such financial statements, respectively.

6.12 Litigation. Other than as disclosed to Agent in Schedule 6.12, neither Borrower nor any Guarantor is a party to any pending lawsuits or proceedings before or by any state or federal court or governmental agency or instrumentality, and is not aware of any threatened or potential lawsuits, proceedings, claims, or investigations with respect to such Persons that could reasonably be expected, if adversely determined, to have a Material Adverse Effect.

6.13 Compliance with Laws. Neither Borrower nor any Guarantor is in violation of any laws, regulations and orders in any respect which will result in or cause, or reasonably would be expected to result in or cause, a Material Adverse Effect.

6.14 Judgments. There are no outstanding or unpaid judgments against Borrower or any Guarantor.

6.15 Taxes. Except as set forth in Schedule 6.15, all tax returns or filings required to be filed by Borrower and each Guarantor have been filed and all taxes imposed upon Borrower and each Guarantor which are due and payable have been paid.

6.16 Title to Property. Borrower has good and marketable title to all property reflected in the financial statements previously delivered to Agent or purported to have been acquired since such date, except property sold or otherwise disposed of subsequent to such date in the ordinary course of business. Borrower possesses all patents, patent rights, licenses, trademarks, trademark rights, trade names, trade name rights, and copyrights which are required to conduct its business as now conducted without any known infringement or conflict by or against the rights of any Person. All such property is owned by Borrower free and clear of any lien, pledge, security interest or other encumbrance except for Permitted Encumbrances and liens for indebtedness permitted by paragraph 7.22.

6.17 Consents. No governmental orders, permissions, consents, approvals or authorizations are required to be obtained and no registrations or declarations are required to be filed in connection with the execution, delivery and performance of the Loan Documents. Borrower and each Guarantor has all required governmental permits and licenses, if any, on account of its operations and activities and is in full compliance with the terms and conditions thereof, and all such permits and licenses are in full force and effect.

6.18 Full Disclosure. Borrower has disclosed to Agent all material facts known to Borrower concerning its and each Guarantor’s financial condition and business operations. All information furnished by Borrower to Agent was true and complete at the time of delivery thereof to Agent, and there has been no material change in any such information except as may have been disclosed by Borrower to Agent in writing. There is no fact known to Borrower which would be reasonably expected to result in a Material Adverse Effect during the term of this Agreement.

6.19 Solvency. (i) the fair saleable value of all assets of Borrower and its Subsidiaries exceeds the amount of all of Borrower’s and its Subsidiaries’ existing debts and liabilities (including contingent liabilities), (ii) the assets of Borrower and its Subsidiaries do not constitute an unreasonably small capital for the operation of Borrower’s and its Subsidiaries’ business as now conducted and as intended to be conducted, taking into account all known or projected

capital requirements for such operations, (iii) neither Borrower nor any of its Subsidiaries intend to incur debts beyond their respective ability to pay as they mature, and (iv) Borrower’s and its Subsidiaries’ consolidated cash flow is sufficient to pay all existing debts and liabilities as they become due.

6.20 Employee Relations. Borrower is not aware of any contemplated, threatened or pending strike, work stoppage or other labor dispute involving its employees or the employees of any Affiliate.

6.21 Employee Benefit Plan. Neither Borrower nor any of its ERISA Affiliates, nor any Plan, is in material violation in form or in operation of any provision of ERISA or any other applicable state or federal law, including the requirements of the IRC. No Prohibited Transaction or Reportable Event has occurred with respect to any Plan which reasonably would be expected to result in a Material Adverse Effect. No notice of intent to terminate a Plan under Title IV of ERISA has been filed within the 24-month period preceding the date hereof, nor has any Plan been terminated under Section 4041(c) of ERISA since September 2, 1974. The PBGC has not instituted proceedings to terminate or appoint a trustee to administer a Plan, and no event has occurred and no condition exists which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan. Neither Borrower nor any ERISA Affiliate has incurred or expects to incur any withdrawal liability to any multiemployer plan within the meaning of Section 3 (37) or Section 3001(a)(3) of ERISA or Section 414 of the IRC. Neither Borrower nor any ERISA Affiliate has any obligation to provide medical benefits or coverage to any former employee other than as required under Section 4980B of the IRC or Part 6 of Title I of ERISA. Each Employee Benefit Plan subject to Section 4980B of the IRC has satisfied the applicable requirements of Section 4980B of the IRC. Each Plan meets the minimum funding requirements of IRC Section 412 and no waiver from the minimum funding requirements has been applied for or approved pursuant to Section 412(d) of the IRC. The reporting and disclosure requirements of each Plan have been timely and completely satisfied. Neither Borrower, any ERISA Affiliate nor any fiduciary of any Plan has engaged in conduct that would be a breach of any duty under Part 4, Subtitle B, Title I of ERISA. There are no actions, suits or claims pending (other than routine claims for benefits) or, to the knowledge of Borrower or any ERISA Affiliate, threatened against, or with respect to, any Plan or its assets, if any. Each Plan which is a “welfare benefit plan,” as described in Section 3(1) of ERISA, may be unilaterally amended or terminated in its entirety without liability except as to benefits accrued prior to such amendment. Termination of employment of any employee of Borrower or any ERISA Affiliate would not result in payments which, in the aggregate, would result in imposition of the sanctions imposed under Section 280G or Section 4999 of the IRC.

6.22 Environmental Matters. To the best of Borrower’s knowledge: (a) all of Borrower’s activities and conduct of business related to the use and handling of Hazardous Materials, comply and have at all times complied in all material respects with all Environmental Requirements; (b) none of the Parent, the Borrower or their Subsidiaries, has received notice or other communication concerning any alleged violation of Environmental Requirements, whether or not corrected to the satisfaction of the appropriate authority, or notice or other communication concerning alleged liability for Environmental Damages, and there exists no writ, injunction, decree, order, judgment or lien, nor any lawsuit, claim, proceeding citation, directive, summons or investigation, pending or threatened, relating to the ownership, use, maintenance or operation

of Borrower’s business or any associated real property, by any Person, or from alleged violation of Environmental Requirements; (c) Borrower has all permits and licenses required to be issued to it by any governmental authority on account of any or all of its activities, and is in compliance in all material respects with the terms and conditions of all such permits and licenses. No change in the facts or circumstances reported or assumed in the application for or granting of any such permits or licenses exists, and such permits and licenses are in full force and effect.

6.23 Representations and Warranties Cumulative. The representations and warranties contained in this Article VI are in addition to all other representations and warranties provided in the Loan Documents.

6.24 No Default. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.

6.25 Insurance. The properties of Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of Borrower, in such amounts, after giving effect to any self-insurance compatible with the following standards, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where Borrower or the applicable Subsidiary operates.

6.26 Margin Regulations; Investment Company Act; Public Utility Company Act.

(a) The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.

(b) None of (i) Borrower, (ii) any Person possessing, directly or indirectly, the power to direct or cause the direction of the management or policies of Borrower, or (iii) any Subsidiary (x) is a “holding company,” or a “subsidiary company” of a “holding company,” or an “affiliate” of a “holding company,” within the meaning of the Public Utility Holding Company Act of 1935, or (y) is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

ARTICLE VII. COVENANTS

Throughout the Contract Term and until payment and performance in full of the Obligations, Borrower agrees as follows (unless otherwise allowed by prior written consent of Agent):

7.1 Compliance Certificate. Within forty-five (45) days following the end of each fiscal quarter, Borrower shall deliver to Agent a certificate signed by the president or chief financial officer of EWC GP in its capacity as the general partner of Borrower certifying to Agent that no event or condition that would be the subject of a required notice under paragraph 7.12 or paragraph 7.13 is in existence as of the date of such certificate. Such certificate shall be deemed to be a continuing representation and warranty pending any subsequent certification or

notification by Borrower respecting its compliance or non-compliance with this Agreement, and Borrower acknowledges that Agent shall rely upon the same in making loans under the Facility.

7.2 Authority. Immediately following any effective change thereof (and at such other times, from time to time, at the request of Agent) Borrower shall certify to Agent the names and signatures of all Persons authorized to execute and deliver Borrowing Base Reports to Agent and any other documentation contemplated by or relating to any of the Loan Documents.

7.3 Books and Records; Inspection.

7.3.1 Books and Records. Borrower shall keep and maintain proper, complete and consistent books of record and account respecting Borrower’s affairs and financial condition in accordance with GAAP consistently applied and in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over Borrower.

7.3.2 Inspection. Agent shall have the right without hindrance or delay to conduct field examinations to inspect, audit and copy Borrower’s books, records, journals, correspondence and other records and data relating to Borrower’s business and its properties. During normal business hours, Agent is authorized to discuss Borrower’s affairs with any Person, including without limitation employees of Borrower, as Agent may deem necessary in relation to Borrower’s financial condition or Agent’s rights under the Loan Documents. To the extent not prohibited under the terms of Borrower’s agreement with any credit reporting service, bureau or similar service, Agent shall have full access to all records available to Borrower from such credit reporting service, bureau or similar service and shall have the right to examine and make copies of any such records. Agent may exhibit a copy of this Agreement to such service and such service shall be entitled to rely on the provisions hereof in providing access to Agent as provided herein. If an Event of Default exists, the Agent may do any of the foregoing at the expense of the Borrower.

7.4 Existence and Maintenance of Properties. Borrower and each Guarantor shall (a) preserve and maintain its partnership or corporate existence, as appropriate, and shall maintain its good standing and authority to transact business in all jurisdictions where necessary for the proper conduct of its business; (b) maintain all of its rights, permits, licenses, privileges and franchises necessary or desirable in the normal conduct of its business; (c) maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; and (d) use the standard of care typical in the industry in the operation and maintenance of its facilities.

7.5 Annual Financial Statements. Borrower shall deliver to Agent, as soon as practicable after the end of each fiscal year, and in any event within one hundred forty-five (145) days thereafter, its unqualified audited consolidated and consolidating balance sheet as of the end of such fiscal year, and its audited consolidated and consolidating statement of income and retained earnings and consolidated and consolidating statements of cash flow, in reasonable detail, prepared in accordance with GAAP and certified by an independent certified public accounting firm acceptable to Agent as fairly presenting Borrower’s financial condition and

results of operations. Such financial statements shall be accompanied by a copy of the report to management delivered to Borrower by such accountants and also by a statement signed by the president or chief financial officer of EWC GP in its capacity as general partner of Borrower representing to Agent that such financial statements are true and complete and fairly present Borrower’s financial condition and results of operation, and that no event or condition that would be the subject of a required notice under paragraph 7.12 or paragraph 7.13 is in existence as of the date of delivery of such statements.

7.6 Interim Financial Statements. Borrower shall deliver to Agent, as soon as practicable after the end of each Fiscal Quarter and in any event within forty-five (45) days thereafter, a consolidated and consolidating balance sheet as of the end of such quarter, and consolidated and consolidating income statement for such quarter and for the period from the beginning of the current fiscal year to the end of such quarter, in reasonable detail and prepared in accordance with GAAP. Such financial statements shall be accompanied by a statement signed by the president or chief financial officer of EWC GP in its capacity as general partner of Borrower representing to Agent that such financial statements are true and complete and fairly present Borrower’s financial condition and results of operations, and that no event or condition that would be the subject of a required notice under paragraph 7.12 or paragraph 7.13 is in existence as of the date of delivery of such statements.

7.7 SEC Filings. Borrower shall deliver to Agent a correct and complete copy of (i) each Form 10-K Report of Parent filed with the Securities and Exchange Commission, which shall be delivered to Agent as soon as possible upon filing thereof and in any event within one hundred forty-five (145) days after the end of each fiscal year of Parent, (ii) each Form 10-Q Report of Parent filed with the Securities and Exchange Commission, which shall be delivered to Agent as soon as possible upon filing thereof and in any event within forty-five (45) days after the end of each fiscal quarter of Parent, (iii) each other filing from time to time to be made with the Securities and Exchange Commission, which shall be delivered to Agent as soon as possible upon filing thereof, and (iv) each IRS Form 8886 or any successor form, which shall be delivered to Agent promptly after the Borrower has notified the Agent of any intention by the Borrower to treat the Loans and/or Letters of Credit and related transactions as being a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4).

7.8 Borrowing Base Reports. No later than the thirtieth (30th) day after the last day of each calendar quarter, and at such other times as Agent may request, Borrower shall execute and deliver to Agent, in form satisfactory to Agent and Borrower, a Borrowing Base Report setting forth a certification of Eligible Accounts and Eligible Inventory as of the last day of such calendar quarter and such other date as may be specified in such other Borrowing Base Reports Borrower may deliver to Agent, and calculation of the Borrowing Base. Each Borrowing Base Report shall include a reconciliation of the calculation of the Borrowing Base as certified in the most recent Borrowing Base Report delivered to Agent, and be accompanied by such documents and supporting information relating to Eligible Accounts and Eligible Inventory as Agent may request. Each Borrowing Base Report shall include a reconciliation of the calculation of the Borrowing Base as certified in the most recent Borrowing Base Report delivered to Agent, and be accompanied by such documents and supporting information relating to Eligible Accounts and Eligible Inventory as Agent may request. Borrower shall maintain, and shall furnish to Agent at Agent’s request, such supporting documents or copies as Agent may require including,

but not limited to: a schedule of Eligible Accounts created, and Eligible Inventory purchased and received, since the previous Borrowing Base Report delivered to Agent; copies of invoices and supporting delivery or service records in connection therewith; a schedule of collections received; copies of credit memos or other advices of credit or reductions against amounts previously billed; and such other reports as Agent may request from time to time. If any of such records or reports are prepared by an accounting service or other agent, Borrower hereby authorizes such service or agent to deliver such records, reports and related documents to Agent. Agent may exhibit a copy of this Agreement to any such service or agent and such service or agent shall be entitled to rely on the provisions hereof in providing such documentation to Agent. Each Borrowing Base Report shall bear a signed statement by an authorized officer of EWC GP in its capacity as general partner of Borrower certifying the accuracy and completeness of all information included therein and shall incorporate therein by reference, as if fully set forth therein, all the terms and provisions hereof. The execution and delivery of a Borrowing Base Report shall in each instance constitute an agreement, representation and warranty by Borrower to Agent that: Borrower is the sole owner of Receivables and Inventory included therein free from any lien, security interest or encumbrance; each account included therein is in existence, unconditional and valid, and arose from a bona fide outright sale of Inventory by Borrower in the ordinary course of business, for liquidated amounts as set forth in the Borrowing Base Report, and such Inventory has been delivered or provided to the respective account debtors; no account included therein arose in connection with a contract or assignment which purports to make an assignment or security interest therein void or conditions such assignment or security interest on consent of the account debtor; no account is subject to any sale, assignment, claim or security interest of any character and Borrower will not make any sale or other assignment thereof or create any other security interest therein; no account is subject to any claim for credit, deduction, allowance, extension or adjustment, defense, dispute, setoff or counterclaim, except for discounts for early payment and volume purchases and credits for returns of merchandise; as allowed by Borrower in the ordinary course of business as previously disclosed to Agent and with respect to early payment discounts, as reflected on the face of the invoice evidencing such account; all Inventory reflected in such Borrowing Base Report is held for sale in the ordinary course of Borrower’s business, and no such Inventory is located at any location in breach of the requirements of this Agreement and no negotiable documents have been issued in respect of any such Inventory; no Inventory reflected in such Borrowing Base Report is returned Inventory subject to the restrictions of paragraph 7.22 unless otherwise disclosed to Agent in writing.

7.9 Aging Reports. Contemporaneously with delivery of each Borrowing Base Report, and in any event within thirty (30) days after the end of each calendar quarter, Borrower shall furnish to Agent an analysis of amounts owing on all accounts included within the Receivables, showing an aging as follows: (i) those aged 60 days or less from date of invoice, (ii) those aged over 60 days, but less than 91 days, from date of invoice, (ii) those aged over 90 days, but less than 121 days, from date of invoice, and (iii) those aged over 120 days from date of invoice. Such analysis shall include a listing of the name and complete address of each account debtor and such other information as Agent may request.

7.10 Use of Proceeds. All amounts borrowed under the Facility shall be used by Borrower in accordance with paragraph 2.6.

7.11 Notification of Contingent Liabilities. Promptly upon receiving notice or otherwise becoming aware thereof, Borrower shall notify Agent of any pending or threatened lawsuit, claim, action, liability, investigation or proceeding against Parent or Borrower, or any other Person included in Parent’s or Borrower’s consolidated financial statements, that would be treated as a contingent liability under GAAP and is in an amount in excess of $100,000.00.

7.12 Notification of Material Changes. Borrower will notify Agent in writing at least thirty (30) days prior to the occurrence of any of the following: (i) change of Borrower’s name, (ii) change of Borrower’s address or principal place of business, (iii) change of the location of Borrower’s books and records, (iv) the opening of any new place of business or the closing of any existing place of business (excluding any such places of business that result solely from arrangements made by Borrower with its sales representatives) in the ordinary course of business, (v) use of any trade name, fictitious name or other assumed name or (vi) any change in accounting policies or financial reporting practices by Parent or any Subsidiary other than standard changes required in accordance with GAAP. Borrower shall promptly notify Agent of any change in any other material fact or circumstance represented or warranted in any of the Loan Documents.

7.13 Notification Regarding Default. Borrower shall immediately notify Agent in writing upon becoming aware of the existence of any condition or event which constitutes an Event of Default or any condition or event which, after notice or lapse of time, or both, would constitute an Event of Default, therein specifying the nature and period of existence thereof and what action Borrower is taking or proposes to take with respect to such condition or event. Borrower shall immediately notify Agent in writing if it knows, or reasonably expects, that an Event of Default will occur, therein specifying the nature of the anticipated Event of Default. Without limiting the foregoing, Borrower will also immediately notify Agent of any of the following: (i) the board of directors of EWC GP in its capacity as general partner of Borrower has authorized the filing by Borrower of a petition in bankruptcy, (ii) Borrower is aware that any covenant under this Agreement has been breached, or reasonably expects that any such covenant will be breached, (iii) Borrower is aware that any account debtor obligated on any Receivables pledge to Agent is in bankruptcy (provided, that no such notice shall be required with respect to any such account debtor (a) from whom the aggregate account balance owing to Borrower is less than ten percent (10%) of the total aggregate amount of Borrower’s accounts and (b) to whom Borrower’s aggregate sales during the preceding twelve (12) calendar months was less than ten percent (10%) of the total aggregate of all of Borrower’s sales during such period), and (iv) repossession or attempted repossession by any Person of any Inventory.

7.14 Payment of Taxes and Other Obligations. Borrower and each Guarantor shall promptly pay, or cause to be paid, when due, any and all taxes except such taxes as may be contested in good faith by appropriate proceedings, provided, that adequate reserves shall be maintained as are appropriate according to GAAP. At Agent’s request pending resolution of any such contest and prior to the delinquency of such tax, Borrower and each Guarantor, as the case may be, shall furnish to Agent a cash reserve in the amount of the tax, together with a reasonable additional sum to pay all projected costs, interest and penalties in connection therewith, conditioned that such tax, together with the applicable interest, cost, and penalties, if any, be timely paid to the extent required upon resolution of such contest. Borrower agrees that it shall immediately notify Agent of the initiation of any such contest and advise Agent from time to

time of the status thereof. Borrower and each Guarantor shall promptly pay any amounts adjudged to be due pursuant to any such contest, with all costs, penalties, and interest thereon, before such judgment becomes final or any writ or order is issued under which Borrower’s or such Guarantor’s property, or any portion thereof, may become subject to any lien or encumbrance.

7.15 Compliance with Laws. Borrower and each Guarantor shall comply with all applicable laws, regulations and orders applicable to it or its property, a violation of which would reasonably be expected to result in a Material Adverse Effect. At Agent’s request, Borrower will provide Agent with evidence of Borrower’s or any Guarantor’s compliance with Environmental Requirements.

7.16 Compliance with Agreements. Borrower shall comply in all material respects with all agreements, indentures, mortgages, or documents binding upon Borrower or affecting its property or business.

7.17 Fees, Costs and Expenses. Borrower agrees to promptly pay upon demand all costs, fees and expenses as provided in paragraph 11.11.

7.18 Subordination Agreements. At Agent’s request, all present and future obligations due by Borrower to Affiliates (excluding ordinary course items such as travel and expense reimbursements and other similar ordinary course items determined by agreement) shall be subordinate in right of payment and claim to the Obligations, pursuant to definitive subordination agreements executed by Borrower and such Affiliates in form satisfactory to Agent.

7.19 Change of Fiscal Year. Borrower shall notify Agent at least ninety (90) days prior to the effective date of any change in its fiscal year.

7.20 Employee Benefit Plans. Borrower shall timely deliver the following to Agent: (a) a copy of any notice of noncompliance received from the PBGC under Section 4041(b)(2)(c), within three (3) days after receipt of such notice; (b) a copy of any notice received by Borrower or any ERISA Affiliate, or the administrator of any Plan, that the PBGC has instituted proceedings to terminate such Plan or to appoint a trustee to administer such Plan, promptly upon receipt and in no event more than three (3) days after the receipt of such notice; (c) a copy of any notice received by Borrower or any ERISA Affiliate concerning the imposition of any withdrawal liability under Section 4202 of ERISA, within ten (10) days after receipt thereof by Borrower or such ERISA Affiliate; (d) a copy of any notification of intention to impose or assert withdrawal liability under ERISA against Borrower or any ERISA Affiliate, promptly upon receipt thereof and in any event within three (days) of receipt thereof; and (e) a copy of any notice from the Internal Revenue Service regarding revocation or investigation of possible revocation of the qualified status of any Plan under the IRC, promptly upon receipt thereof and in any event within three (3) days after receipt thereof. If requested by Agent, Borrower shall timely deliver the following to Agent: (f) a copy of all materials required to be filed with the PBGC with respect to any Reportable Event, within ten (10) days after the earlier of the filing or the occurrence thereof; (g) a copy of any notice sent by Borrower to participants of a Plan of Borrower’s intent to terminate such Plan, no later than the date such notice is required to be provided to participants under Section 4041(a)(2) of ERISA; (h) a copy of each annual and other

report with respect to each Plan or any trustee created thereunder, promptly after the filing thereof with the United States Secretary of Labor or the PBGC; and (i) such additional information concerning any of Borrower’s Employee Benefit Plans as may be requested by Agent. Borrower shall make prompt payment of all contributions required under all Plans to the extent required to meet the minimum funding standard set forth in ERISA with respect to such Plans, but shall reduce contributions or benefits if and to the extent necessary to avoid an Event of Default hereunder to the extent such reduction is not prohibited by applicable provisions of ERISA.

7.21 Financial Covenants.

(a) Borrower agrees that the following financial covenants must be maintained as set forth herein. Borrower’s compliance shall be measured as of the end of each Fiscal Quarter, unless the context provides otherwise.

1. Fixed Charge Ratio. Fixed Charge Ratio shall not at any time be less than 3.50 to 1.00.

2. Leverage Ratio. Leverage Ratio shall not at any time be more than 3.50 to 1.0.

3. Leverage Ratio. Leverage Ratio for more than two consecutive Fiscal Quarters shall not exceed 3.00 to 1.00.

4. Capital Expenditures. Capital Expenditures shall not exceed $25,000,000 during any fiscal year.

(b) For purposes of measuring the financial covenants under this paragraph, the following definitions shall apply, each determined on a consolidated basis for Parent and the Subsidiaries according to GAAP.

1. “Capital Expenditures” means all expenditures which are classified as capital expenditures according to GAAP.

2. “Cash Taxes” means, for any period, all federal, state, local and foreign income taxes paid in cash during such period.

3. “Current Maturities of Long-Term Indebtedness” means, for any period, the scheduled principal payments during such period in respect of indebtedness having a final maturity date of more than one year (excluding indebtedness under the Facility).

4. “EBITDA” means an amount equal to the sum of the following, determined for the preceding four (4) completed Fiscal Quarters: (i) income before provision for income taxes plus (ii) all interest charges paid or accrued plus (iii) depreciation and amortization.

5. “Fixed Charge Ratio” means the ratio of the following, determined for the preceding four (4) Fiscal Quarters: (a) the sum of EBITDA less Cash Taxes less Maintenance Capital Expenditures, (b) divided by the sum of Interest Expense plus Current Maturities of Long-Term Indebtedness plus cash dividends paid by the Parent to its shareholders.

6. “Funded Debt” at any time means an amount equal to the aggregate principal amount outstanding at such time of indebtedness described in clauses (a), (c) and (e) of paragraph 7.26.

7. “Interest Expense” means all interest charges paid or assumed, excluding capitalized interest, if any.

8. “Leverage Ratio” means the ratio of the following: (a) Funded Debt as of the end of a Fiscal Quarter, (b) divided by EBITDA for the preceding four (4) Fiscal Quarters ending with such Fiscal Quarter.

9. “Maintenance Capital Expenditures” means, for any period of four (4) Fiscal Quarters, an amount equal to $6,000,000.

7.22 No Liens; Inventory. Borrower and each Guarantor covenants and agrees that (i) it will not grant, or suffer to exist, any security interest, lien or other encumbrance on any of its assets other than liens with respect to indebtedness permitted by paragraph 7.26(c) and Permitted Encumbrances and (ii) all such assets shall at all times be and remain free and clear of security interests, liens or other encumbrances other than Permitted Encumbrances. Borrower represents and warrants to Agent that all Inventory shall be held for sale in the ordinary course of Borrower’s business, and is and will be fit for such purpose. Borrower will keep the Inventory in good and marketable condition, at its own expense. All sales of Inventory shall be in accordance with applicable law. Borrower will maintain a perpetual inventory system for finished goods at all times. Borrower will conduct a physical count of the Inventory at least once per calendar year and at Agent’s request shall promptly supply Agent with a copy of such count. No negotiable documents have been issued in respect of any Inventory, and none shall be issued without prior written notice to Agent. No Inventory is held by Borrower on consignment or approval, or on a sale or return, bill-and-hold, guaranteed sale, repurchase or similar basis and, no Inventory has been sold or delivered to any Person on consignment or approval, or on a sale or return, bill-and-hold, guaranteed sale, repurchase or similar basis. Borrower will not acquire or accept any Inventory on consignment or approval, or on a sale or return, bill-and-hold, guaranteed sale, repurchase or similar basis without the prior written consent of Agent and Borrower will not sell any Inventory on consignment or approval, or on a sale or return, bill-and-hold, guaranteed sale, repurchase or similar basis without the prior written consent of Agent, provided that, this shall not preclude Borrower from holding at Borrower’s facilities raw materials and other goods owned by suppliers and other third parties (separately identified and segregated from the Inventory), in exchange for such consideration as Borrower deems to be adequate. Unless Agent agrees otherwise, all returned Inventory shall be segregated from all other Inventory, and shall

not be reported as Eligible Inventory, unless and until Borrower demonstrates to Agent’s satisfaction that such returned Inventory is in saleable condition and meets all criteria for Eligible Inventory. Unless otherwise agreed by Agent, the amount of Borrower’s accounts relating to all returned Inventory shall be deemed excluded from Eligible Accounts. Except for sales in the ordinary course of business, Borrower will not deliver possession or control of any Inventory held at Borrower’s chief executive office to any Person without Agent’s prior written consent. At Agent’s request, Borrower will cause the landlord to execute and deliver to Agent a landlord’s waiver with respect to any leased locations where any Inventory will be located, thereby waiving any right to claim a landlord’s lien therein. Borrower shall immediately notify Agent upon receipt of any notice from any Person claiming past due rent, fees or other charges in respect of any Inventory.

7.23 Insurance. Borrower shall keep and maintain adequate insurance with respect to its business and property, written by insurers acceptable to Agent (or, as to workers’ compensation or similar insurance, self-insurance authorized by the jurisdiction in which it operates). Such insurance shall be with respect to loss, damages, and liability of amounts not less than reasonably requested by Agent, and shall include, at minimum, extended coverage insurance, insurance against business interruption, insurance for workers compensation, and insurance for general premises liability, fire, theft, burglary, pilferage, loss in transit, casualty and all risk. Borrower will make timely payment of all premiums required to maintain such insurance in force. Borrower shall deliver copies of each insurance policy to Agent upon request. If Borrower fails to procure such insurance or to pay the premiums therefor when due, Agent shall have the right (but with no obligation) to make such payment, which amount Borrower shall pay to Agent on demand or, at Agent’s option (but with no obligation to do so) Agent may add such amount to the unpaid principal due by Borrower under the Facility, in which event such amount will be deemed paid and the aggregate amount thereof shall be treated as a loan under the Facility.

7.24 Sale of Assets. Borrower will not sell or dispose of any assets other than the sale of Inventory, or disposal or replacement of equipment, in the ordinary course of business.

7.25 Dissolution; Liquidation; Merger. Neither Borrower nor Parent shall dissolve or liquidate, or become a party to any merger or consolidation with any Person.

7.26 Limitation on Indebtedness. Neither Borrower nor any Guarantor will be obligated, directly or indirectly, for borrowed money or otherwise under any promissory note, bond, indenture or similar instrument, other than (a) in favor of Agent and the Lenders hereunder, (b) trade indebtedness incurred in the normal and ordinary course of Borrower’s or such Guarantor’s business and not more than ninety (90) days past due, (c)(i) indebtedness of Borrower or any Guarantor under capitalized leases and (ii) purchase money indebtedness in connection with the purchase of equipment, if the payments required in respect of such capitalized leases and purchase money indebtedness do not exceed $2,100,000.00 in the aggregate during any 12-month period, (d) loans from Borrower to any of the Parent, EWC LP or EWC GP, the proceeds of which shall be used solely for reasonable operating expenses of Parent, EWC LP or EWC GP incurred in the ordinary course of business, provided, however, that the aggregate principal amount of such loans from Borrower to Parent, EWC LP or EWC GP shall at no time during any fiscal year exceed an amount equal to the difference between

$2,000,000 and the dividends permitted and actually paid during such fiscal year under paragraph 7.30(a), (e) the Private Placement Debt, so long as (i) there is no Default or Event of Default immediately before and, on a pro forma basis, after incurrence of such indebtedness and (ii) the aggregate amount of such indebtedness, including the amount to be issued, does not exceed 75% of net consolidated fixed assets of Parent at time of the incurrence of such indebtedness, and (f) obligations (contingent or otherwise) of the Borrower or any Subsidiary existing or arising under any Swap Contract with any Lender or any Affiliate of any Lender, provided that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a “market view;” and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;

7.27 Limitation on Contingent Liabilities. Neither Borrower nor any Guarantor will be directly or indirectly liable in connection with the obligations of any Person, whether by guarantee, surety, endorsement (other than endorsement of negotiable instruments for collection in the ordinary course of business), agreement to purchase or repurchase, agreement to make investments, agreement to provide funds or maintain working capital, or any agreement to assure a credit against loss, other than (a) those in favor of Agent and the Lenders hereunder, and (b) indemnities by Borrower or any Guarantor of liabilities of directors and officers pursuant to provisions contained in Borrower’s partnership agreement or any Guarantor’s governance documents or otherwise permitted by applicable law and other contractual indemnities (such as contractual indemnifications in favor of customers) typically entered into in the normal course of business or in the course of the issuance and sale of securities.

7.28 Change in Business. Borrower shall not discontinue, or make any material change in, its business as currently established, or enter any new or different line of business not directly related to Borrower’s existing line of business.

7.29 Change in Management. There will be no change of the personnel performing the functions of Chairman of the Board and President and Chief Executive Officer of EWC GP as such positions are presently constituted.

7.30 Dividends, Distributions, Redemptions. Borrower will not (i) declare, pay or issue any dividends or other distributions in respect of its partnership interests, (ii) distribute, reserve, secure or otherwise commit distributions in respect of its partnership interests or (iii) make any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination in respect of its partnership interests; provided, however, that if no Default or Event of Default exists or will result therefrom Borrower may make distributions to its shareholders (a) in the aggregate amount equal to or less than $2,000,000 per fiscal year, the proceeds of which shall be used solely for reasonable operating expenses of Parent, EWC LP and EWC GP incurred in the ordinary course of business or to repay intercompany loans permitted under paragraph 7.26(d), and (b) in addition to the distributions permitted under clause (a) of this paragraph, in an aggregate amount during any period of four (4) Fiscal Quarters not to exceed

25% of net income of Borrower during such period, it being agreed that such distributions shall be made to either EWC GP or EWC LP who shall then distribute such distributions to Parent, provided, further, that the proceeds of the distributions permitted under clause (b) above shall be used solely for dividends to the shareholders of the Parent and/or for repurchasing shares of Parent to be held as treasury shares.

7.31 Burdensome Agreements. Borrower shall not, and shall not permit any Subsidiary to enter into any Contractual Obligation (other than this Agreement or any other Loan Document) that (a) limits the ability (i) of any Subsidiary to make dividends or other distributions to Borrower or any Guarantor or otherwise transfer property to Borrower or any Guarantor or (ii) of Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Persons, provided, however, that this clause (ii) shall not prohibit any negative pledge incurred or provided (A) in favor of any holder of indebtedness permitted under paragraph 7.26(c) solely to the extent any negative pledge relates to property financed by or the subject of such indebtedness or, (B) as provided in the documents governing the Private Placement Debt, (C) relating to property existing at the time of the acquisition thereof, so long as the restriction or condition relates only to the property so acquired, (D) in connection with a renewal, extension, refinancing, refund or replacement (or successive extensions, renewals, refinancings, refunds or replacements) of indebtedness issued under an agreement referred to in clauses (A) through (C) above, so long as the restrictions and conditions contained in any such renewal, extension, refinancing, refund or replacement agreement, taken as a whole, are not materially more restrictive that the restrictions and conditions contained in the original agreement, (E) constituting customary provisions restricting subletting or assignment of any leases of Borrower or any Subsidiary or provisions in agreements that restrict the assignment of such agreement or any rights thereunder, (F) constituting restrictions on the sale or other disposition of any property securing indebtedness as a result of a Lien on such property permitted hereunder, (G) constituting customary restrictions on cash, other deposits or assets imposed by customers and other persons under contract entered into in the ordinary course of business, (H) constituting any restriction or condition with respect to property under an agreement that has been entered into for the disposition of such property, provided that such disposition is otherwise permitted hereunder, or (I) constituting any restriction or condition with respect to property under a charter, lease or other agreement that has been entered into for the employment of such property; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person, except as provided herein or in the documents governing the Private Placement Debt.

7.32 Bonuses, Consulting Fees to Shareholders and Directors. Borrower will not declare or pay any bonus compensation, or pay any consulting fees, to any Affiliates in the aggregate for any calendar year in excess of ten percent (10%) of the prior year’s after-tax income.

7.33 Loans to Employees. Except for usual and customary extensions of credit to customers of Borrower made in the ordinary course of its business, Borrower will not make any loans or advances to or for the benefit of any employee or any officer, director or shareholder of Borrower or its corporate general partner or any other Guarantor other than (i) usual expense allowances for employees in the ordinary course of business, and (ii) loans to employees (who

are not executive officers or the equivalent or directors) in excess of an aggregate amount of $200,000 at any one time outstanding.

7.34 Transactions with Affiliates. Borrower will not make any payment on any obligation owing to any Affiliate (excluding reasonable expense reimbursements in the ordinary course of business) unless specifically allowed under any Affiliate Subordination Agreement or otherwise allowed by Agent. Borrower will not enter into any transaction with an Affiliate except in the ordinary course of business on terms no less favorable to Borrower, nor more favorable to such Affiliate, than would be obtainable in a comparable arm’s length transaction with a Person who is not an Affiliate. Borrower will not enter into any transaction with an Affiliate unless such transaction is specifically approved by the board of directors of EWC GP in its capacity as general partner of Borrower as being an arm’s length transaction on terms no less favorable to Borrower, nor more favorable to such Affiliate, than would be obtainable in a comparable arm’s length transaction with a Person who is not an Affiliate.

7.35 Acquisitions. Borrower shall not purchase or otherwise acquire assets from any Person outside the ordinary course of business of Borrower, except for Capital Expenditures permitted pursuant to paragraph 7.21(a).

7.36 Limitation on Investments. Borrower shall not invest in or otherwise purchase or acquire the securities of any Person, except for ordinary course investments in securities of the United States and certificates of deposit issued by commercial banks organized in the United States which have assets in excess of $1,000,000,000.

7.37 Prepayments. Neither Borrower nor any Guarantor shall prepay any Indebtedness if at the time of such proposed prepayment or after giving effect thereto any Default or Event of Default shall exist and be continuing.

7.38 Amendments to Private Placement Debt. Borrower shall not change or permit any Subsidiary to change or amend or accept any waiver or consent with respect to, any document, instrument or agreement relating to the Private Placement Debt or the Note Purchase Agreement that would result in (a) an increase in the principal (above $75,000,000), interest, overdue interest, fees or other amounts payable in respect of the Private Placement Debt, provided however, that notwithstanding the foregoing, the restriction on the increase of interest set forth in clause (a) shall not prohibit the issuance of the Private Placement Debt after the date hereof with a market rate of interest for private placements of companies of similar size and similar credit quality, (b) an acceleration in any date fixed for payment or prepayment of principal, interest, fees or other amounts payable in respect of the Private Placement Debt (including, without limitation, as a result of any redemption) or (c) a change in any covenant, term or provision in the Private Placement Debt or the Note Purchase Agreement which would result in such term or provision being more restrictive than the terms of this Agreement and the other Loan Documents.

7.39 Further Assurances. Parent and Borrower will, and Borrower will cause each Subsidiary to, execute and deliver such further documentation and take such further action as may be reasonably requested by the Agent to carry out the provisions and purposes of the Loan Documents.

7.40 Covenants Cumulative. The covenants contained in this Article VII are in addition to all other covenants provided in the Loan Documents.

ARTICLE VIII. EVENT OF DEFAULT

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

(a) The failure to pay the outstanding principal, accrued interest, fees or other sums constituting a part of the Obligations, or any part thereof, when due in accordance with the terms of the Loan Documents;

(b) Any violation, breach or default of any covenant, agreement or other obligation under this Agreement (not otherwise covered by paragraph 8.1(a)) or any of the Loan Documents and, in the case of any such violation, breach or default under paragraphs 7.1, 7.2, 7.6, 7.7, 7.8, 7.9, 7.10, 7.11, 7.14, 7.17, 7.20 or 7.21, the same is not cured within ten (10) days after the occurrence thereof, and in the case of any such violation, breach or default under paragraphs 7.3.1, 7.4, 7.5, 7.12, 7.15, 7.16, 7.18 or 7.19, the same is not remedied within thirty (30) days after the occurrence thereof.

(c) Any representation or warranty made by Borrower or any Guarantor in the Loan Documents was false in any material respect at the time when made;

(d) The filing of any petition or proceeding by or against Borrower or any Guarantor under the United States Bankruptcy Code, as amended from time to time, or any other applicable state or federal law relating to bankruptcy reorganization or other relief for debtors, or the appointment of a conservator, receiver, trustee, or liquidator of all or a substantial part of the assets of Borrower or any Guarantor; provided that if any such petition, proceeding or appointment is filed or made without the consent of Borrower or any Guarantor, an Event of Default shall not occur unless such petition, proceeding or appointment shall continue undismissed or unstayed for a period of sixty (60) consecutive calendar days;

(e) The use of any finds borrowed from any Lender under this Agreement for any purpose other than as provided in this Agreement;

(f) Any violation, breach or default of any covenant, agreement or other obligation of any Guarantor under any Guaranty or other Loan Document to which it is a party which is not cured within ten (10) days after the occurrence thereof;

(g) Borrower fails to have discharged within a period of thirty (30) days of filing of commencement of any attachment, sequestration, garnishment, execution or other action against or with respect to any of Borrower’s or any

Guarantor’s property if the outcome, pendency or effect thereof is reasonably expected to result in or cause a Material Adverse Effect;

(h) (i) Any breach or default in the payment or performance of any material obligation, or any defined event of default, under the terms, provisions or conditions of any contract or instrument pursuant to which Borrower or any Guarantor has incurred any indebtedness or obligation or other liability to any Person, the effect of which is to have caused, or to create an enforceable right to cause, indebtedness in a principal amount in excess of $1,750,000.00 to be declared to be due and payable prior to stated maturity; (ii) any other event occurs with respect to indebtedness of Borrower or any Guarantor in a principal amount in excess of $1,750,000.00, the effect of which is to cause, or create an enforceable right to cause, such indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed or an offer to repurchase, prepay, defease or redeem to be made, prior to its stated maturity; or (iii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which the Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which the Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Borrower or such Subsidiary as a result thereof is greater than $1,750,000.00

(i) Borrower fails to have discharged within a period of thirty (30) days after the signing or entry of any judgment against Borrower or any Guarantor in an amount equal to or exceeding $1,750,000.00;

(j) The dissolution or liquidation of Borrower or any Guarantor, or the taking of any action by the board of directors, shareholders or any partner of Borrower or any Guarantor to dissolve or liquidate;

(k) A Reportable Event or Prohibited Transaction with respect to a Plan which could, in the opinion of Agent, result in a Material Adverse Effect;

(l) The filing of a notice of intent to terminate a Plan under a distress termination as described in section 4041(c) of ERISA which could, in the opinion of Agent, result in a Material Adverse Effect;

(m) The receipt of a notice by the plan administrator of Borrower that the PBGC has instituted proceedings to terminate a Plan or appoint a trustee to administer a Plan;

(n) The withdrawal by Borrower or any ERISA Affiliate from a multiemployer plan as defined in Section 3(37) or Section 4001(a)(3) of ERISA or Section 414 of the IRC if such action could, in the opinion of Agent, result in a Material Adverse Effect;

(o) The revocation by the Internal Revenue Service of the qualified status of any Employee Benefit Plan if such action could, in the opinion of Agent, result in a Material Adverse Effect;

(p) Any qualification by a certified public accountant relative to any annual audited financial statement delivered to Agent under paragraph 7.5 of this Agreement that is not acceptable to Agent, in its discretion; or

(q) Any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document; or

(r) A Change of Control occurs.

ARTICLE IX. REMEDIES

9.1 Refusal of Funding. No Lender shall have any obligation to make any Loan (i) at any time when any applicable condition for funding prescribed under this Agreement has not been fulfilled to Agent’s satisfaction, (ii) at any time when any Event of Default is in existence, or when any Default exists, (iii) if Agent or any Lender has received any notice under paragraph 7.13 or has knowledge of any event or condition which would be the subject of any notice required thereunder, or (iv) if Borrower has repudiated or made any anticipatory breach of any of its obligations under this Agreement; and any Loan requested by Borrower at any such time may be declined by all or any of the Lenders, in whole or in part, in such Lender’s sole discretion without prior notice.

9.2 Remedies. Should an Event of Default occur at any time, Agent may at its option, and shall if directed by all the Required Lenders, (a) terminate the Commitments upon written notice to Borrower; (b) declare the entire outstanding principal amount and unpaid accrued interest of any part of the Obligations to be immediately due and payable; and (c) require that Borrower Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof); and, in addition, may exercise and avail itself of any and all other remedies as may be available under the Loan Documents or as otherwise may be available according to law; provided, however, upon the occurrence of an Event of Default under paragraph 8.1(d), the Commitments shall automatically terminate, the obligation of Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, and the entire outstanding principal amount and unpaid accrued interest of any part of the Obligations shall automatically become due and payable, without further action by Agent or any Lender.

9.3 Enforcement Costs; Application of Proceeds. Borrower shall pay to Agent and to the Lenders on demand any and all expenses, including legal expenses, reasonable attorneys’ fees, court costs, collection costs, and traveling expenses, incurred or paid by Agent or such Lenders in protecting or enforcing any of its or their rights hereunder. Until reimbursed or

otherwise paid, Agent and the Lenders are hereby authorized to add all such expenses to the principal amount of the Obligations.

9.4 Waiver of Notices. Except as otherwise expressly provided in this Agreement, Borrower expressly waives presentment, demand, notice of intention to accelerate, notice of acceleration, protest and any other notices of any kind with respect to the Obligations.

9.5 Setoff. Borrower irrevocably authorizes Agent and each Lender to charge any account of Borrower maintained with Agent or any Lender with such amount as may be necessary from time to time to pay any Obligations. Borrower agrees that Agent and each Lender shall have a contractual right to setoff any and all deposits or other sums at any time credited by or due from Agent or any such Lender to Borrower against any part of the Obligations. Such right of setoff may be exercised at any time by Agent and/or any Lender without prior notice, irrespective of whether an Event of Default exists or whether Agent or any such Lender has accelerated the Obligations; provided, following any such setoff, Agent or such Lender shall promptly notify Borrower thereof, but failure to give such notice shall not invalidate the setoff or otherwise impair or affect any rights with respect thereto. Upon the occurrence of an Event of Default and for so long as the same shall remain in existence and not cured or waived, each of Agent and any Lender shall be entitled in its discretion to hold any such deposits or other sums pending acceleration of the Obligations.

9.6 Performance by Agent and/or Lenders. Should Borrower fail to perform any covenant, duty, or agreement required by the Loan Documents, Agent and/or any Lender may, at its sole option and election, perform or attempt to perform same on behalf of Borrower at Borrower’s cost and expense, provided that neither Agent not any such Lender shall have an obligation or duty to take any such action. Borrower agrees to reimburse Agent and/or the Lenders for such costs and expenses on demand.

9.7 Non-waiver. Forbearance or indulgence by Agent and Lenders of any Event of Default or any other event or condition which is or would be the subject of a required notice under paragraph 7.13, at any time from time to time, shall not be deemed a waiver of any rights of Agent and Lenders under the Loan Documents. The acceptance by Agent and/or Lender at any time and from time to time of any partial payment of the Obligations shall not be deemed to be a waiver of any Event of Default then existing. No delay or omission by Agent and/or Lenders in exercising any right or remedy shall impair such right or remedy, or be construed as a waiver thereof, nor shall any single or partial exercise of any such rights or remedies preclude other or further exercise thereof. Neither Agent nor any Lender shall not be required or obligated to file suit or otherwise pursue any other Person for enforcement or collection of any of the Obligations.

9.8 Application of Payments. During the continuance of an Event of Default, upon (a) the written direction of the Required Lenders or (b) after the exercise of remedies provided for in Section 9.2 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 9.2), any amounts received on account of the Obligations shall be applied by the Agent in the following order:

First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Agent and amounts payable under Article III) payable to the Agent in its capacity as such;

Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders and the Issuing Banks (including fees, charges and disbursements of counsel to the respective Lenders and the Issuing Banks (including fees and time charges for attorneys who may be employees of any Lender or the Issuing Banks) and amounts payable under Article III), ratably among them in proportion to the amounts described in this clause Second payable to them;

Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans, L/C Borrowings and other Obligations, ratably among the Lenders and the Issuing Banks in proportion to the respective amounts described in this clause Third payable to them;

Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings, ratably among the Lenders and the Issuing Banks in proportion to the respective amounts described in this clause Fourth held by them;

Fifth, to the Agent for the account of the Issuing Banks, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit;

Sixth, to payment of Swap Obligations, ratably among the Guarantied Parties (as defined in the Guaranty Agreement) in proportion to the respective amounts described in this clause Sixth held by them; and

Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.

Subject to Section 2.10(c), amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.

ARTICLE X. AGENT

10.1 Appointment and Authorization of Administrative Agent.

(a) Each Lender hereby irrevocably appoints, designates and authorizes Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere herein or

in any other Loan Document, Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent. Without limiting the generality of the foregoing sentence, the use of the term “agent” herein and in the other Loan Documents with reference to 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 is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

(b) Each Issuing Bank shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the Issuer Documents associated therewith, and each Issuing Bank shall have all of the benefits and immunities (i) provided to Agent in this Article IX with respect to any acts taken or omissions suffered by such Issuing Bank in connection with Letters of Credit issued by it or proposed to be issued by it and the Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in this Article IX and in the definition of “Agent-Related Person” included such Issuing Bank with respect to such acts or omissions, and (ii) as additionally provided herein with respect to such Issuing Bank.

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

10.3 Liability of Administrative Agent. No Agent-Related Person shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct in connection with its duties expressly set forth herein as determined by a final non-appealable judgment by a court of competent jurisdiction), or (b) be responsible in any manner to any Lender or Participant for any recital, statement, representation or warranty made by any Loan Party or any officer thereof, contained herein or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Loan Party or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender or Participant to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any Loan Party or any Affiliate thereof.

10.4 Reliance by Administrative Agent.

(a) Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate,

affidavit, letter, telegram, facsimile, telex or telephone message, electronic mail message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to any Loan Party), independent accountants and other experts selected by Agent. Agent shall be fully justified in failing or refusing to take any action under any Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders (or such greater number of Lenders as may be expressly required hereby in any instance), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders.

(b) The Agent shall not be responsible for or have any duty to ascertain or inquire into the satisfaction of any condition set forth in paragraph 5.1 or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Agent.

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

10.6 Credit Decision; Disclosure of Information by Administrative Agent. Each Lender acknowledges that no Agent-Related Person has made any representation or warranty to it, and that no act by Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of any Loan Party or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender as to any matter, including whether Agent-Related Persons have disclosed material information in their possession. Each Lender represents to Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties and their respective Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrower and the other Loan Parties hereunder. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and

creditworthiness of Borrower and the other Loan Parties. Except for notices, reports and other documents expressly required to be furnished to the Lenders by Agent herein, Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan Parties or any of their respective Affiliates which may come into the possession of any Agent-Related Person.

10.7 Indemnification of Administrative Agent. WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED, THE LENDERS SHALL INDEMNIFY UPON DEMAND EACH AGENT-RELATED PERSON (TO THE EXTENT NOT REIMBURSED BY OR ON BEHALF OF ANY LOAN PARTY AND WITHOUT LIMITING THE OBLIGATION OF ANY LOAN PARTY TO DO SO), PRO RATA, AND HOLD HARMLESS EACH AGENT-RELATED PERSON FROM AND AGAINST ANY AND ALL INDEMNIFIED LIABILITIES INCURRED BY IT; PROVIDED, HOWEVER, THAT NO LENDER SHALL BE LIABLE FOR THE PAYMENT TO ANY AGENT-RELATED PERSON OF ANY PORTION OF SUCH INDEMNIFIED LIABILITIES TO THE EXTENT DETERMINED IN A FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM SUCH AGENT-RELATED PERSON’S OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT; PROVIDED, HOWEVER, THAT NO ACTION TAKEN IN ACCORDANCE WITH THE DIRECTIONS OF THE REQUIRED LENDERS SHALL BE DEEMED TO CONSTITUTE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT FOR PURPOSES OF THIS PARAGRAPH. WITHOUT LIMITATION OF THE FOREGOING, EACH LENDER SHALL REIMBURSE AGENT UPON DEMAND FOR ITS RATABLE SHARE OF ANY COSTS OR OUT-OF-POCKET EXPENSES (INCLUDING ATTORNEY COSTS) INCURRED BY AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR ANY DOCUMENT CONTEMPLATED BY OR REFERRED TO HEREIN, TO THE EXTENT THAT AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY OR ON BEHALF OF BORROWER. THE UNDERTAKING IN THIS PARAGRAPH SHALL SURVIVE TERMINATION OF THE AGGREGATE COMMITMENTS, THE PAYMENT OF ALL OTHER OBLIGATIONS AND THE RESIGNATION OF AGENT.

10.8 Agent in its Individual Capacity. Bank of America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with each of the Loan Parties and their respective Affiliates as though Bank of America were not Agent or an Issuing Bank hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of America or its Affiliates may receive information regarding any Loan Party or its Affiliates (including information that may be subject to confidentiality obligations in favor of such Loan Party or such Affiliate) and acknowledge that Agent shall be under no obligation to provide such information to them. With respect to its Loans, Bank of America shall have the same rights and powers under this Agreement as any other Lender and may exercise such rights and powers as though it were not

Agent or an Issuing Bank, and the terms “Lender” and “Lenders” include Bank of America in its individual capacity.

10.9 Successor Administrative Agent. Agent may resign as Administrative Agent upon 30 days notice to the Lenders; provided that any such resignation by Bank of America shall also constitute its resignation as an Issuing Bank. If Agent resigns under this Agreement, the Required Lenders shall appoint from among the Lenders a successor administrative agent for the Lenders, which successor administrative agent shall be consented to by Borrower at all times other than during the existence of an Event of Default (which consent of Borrower shall not be unreasonably withheld or delayed). If no successor administrative agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with the Lenders and Borrower, a successor administrative agent from among the Lenders. Upon the acceptance of its appointment as successor administrative agent hereunder, the Person acting as such successor administrative agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent and Issuing Bank and the respective terms “Administrative Agent,” “Agent” and “Issuing Bank” shall mean such successor administrative agent and Letter of Credit issuer, and the retiring Administrative Agent’s appointment, powers and duties as Administrative Agent shall be terminated and the retiring Issuing Bank’s rights, powers and duties as such shall be terminated, without any other or further act or deed on the part of such retiring Issuing Bank or any other Lender, other than the obligation of the successor Issuing Bank to issue letters of credit in substitution for the Letters of Credit issued by the retiring Issuing Bank, if any, outstanding at the time of such succession or to make other arrangements satisfactory to the retiring Issuing Bank to effectively assume the obligations of the retiring Issuing Bank with respect to such Letters of Credit. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article X and paragraphs 11.11 and 11.5 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. If no successor administrative agent has accepted appointment as Administrative Agent by the date which is 30 days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.

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

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and Agent and their respective agents and counsel and all other amounts due the Lenders and Agent under paragraphs 2.10(a), 2.8 and 11.11) allowed in such judicial proceeding; and

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

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to Agent and, in the event that Agent shall consent to the making of such payments directly to the Lenders, to pay to Agent any amount due for the reasonable compensation, expenses, disbursements and advances of Agent and its agents and counsel, and any other amounts due Agent under paragraphs 2.8 and 11.1. Nothing contained herein shall be deemed to authorize Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize Agent to vote in respect of the claim of any Lender in any such proceeding.

10.11 Syndication Agent. The Lender identified herein as “Syndication Agent” shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than, in the case of such Lender, those applicable to all Lenders as such. Without limiting the foregoing, the Syndication Agent shall not have or be deemed to have any fiduciary relationship with any Lender.

ARTICLE XI. MISCELLANEOUS

11.1 Effective Date; Termination. This Agreement shall become effective upon acceptance by Agent and each Lender, as of the effective date specified in the preamble of this Agreement and shall continue in effect until expiration of the Contract Term. The Facility and all Commitments hereunder may be terminated by Agent or by the Required Lenders upon written notice to Borrower at any time when an Event of Default is in existence. Notwithstanding any termination or notice of termination, the Obligations and all rights and remedies of Agent and the Lenders hereunder with respect thereto shall remain in full force and effect until the Obligations have been paid in full.

11.2 Notices Other Communications; Facsimile Copies.

(a) General. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including by facsimile transmission). All such written notices shall be mailed, certified or registered mail, faxed or delivered to the applicable address, facsimile number or (subject to subsection (c) below) electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

(i) if to Borrower, Agent or any Issuing Bank, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 11.2 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties;

(ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire or

to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to Borrower, Agent, and the Issuing Banks.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).

(b) Electronic Communications. 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, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Agent that it is incapable of receiving notices under such Article by electronic communication. Agent or Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

(c) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to applicable Law, have the same force and effect as manually-signed originals and shall be binding on all Loan Parties, Agent and the Lenders. Agent may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to request or deliver the same shall not limit the effectiveness of any facsimile document or signature.

(d) Reliance by Agent and Lenders. Agent and the Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. Borrower shall indemnify each Agent-Related Person and each Lender from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of Borrower. All telephonic notices to and other communications with Agent may be recorded by Agent, and each of the parties hereto hereby consents to such recording.

11.3 Use of Proceeds. No portion of the proceeds of any Loans or Letters of Credit under the Facility shall be used to purchase or carry any “margin stock” as defined under Regulation “U” of the Board of Governors of the Federal Reserve System, or to repay or refinance any debt previously incurred by Borrower for such purpose.

11.4 Lender’s Records; Account Statements. Agent’s records in respect of Loans advanced, accrued interest, payments received and applied and other matters in respect of calculation of the amount of the Obligations shall be deemed conclusive absent demonstration of

error. All statements of account rendered by Agent to Borrower relating to principal, accrued interest or costs owing by Borrower under this Agreement shall be presumed to be correct and accurate unless, within thirty (30) days after receipt thereof, Borrower shall notify Agent in writing of any claimed error therein.

11.5 Indemnity. WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED, BORROWER SHALL INDEMNIFY AND HOLD HARMLESS EACH AGENT-RELATED PERSON, EACH LENDER AND THEIR RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, AGENTS AND ATTORNEYS-IN-FACT (COLLECTIVELY THE “INDEMNITEES”) FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS, DEMANDS, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS (INCLUDING ATTORNEY COSTS) OF ANY KIND OR NATURE WHATSOEVER WHICH MAY AT ANY TIME BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST ANY SUCH INDEMNITEE IN ANY WAY RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH (A) THE EXECUTION, DELIVERY, ENFORCEMENT, PERFORMANCE OR ADMINISTRATION OF ANY LOAN DOCUMENT OR ANY OTHER AGREEMENT, LETTER OR INSTRUMENT DELIVERED IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED THEREBY OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY, (B) ANY COMMITMENT, LOAN OR LETTER OF CREDIT OR THE USE OR PROPOSED USE OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY ANY ISSUING BANK TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT), (C) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY CURRENTLY OR FORMERLY OWNED OR OPERATED BY BORROWER, ANY SUBSIDIARY OR ANY OTHER LOAN PARTY, OR ANY ENVIRONMENTAL DAMAGES RELATED IN ANY WAY TO BORROWER, ANY SUBSIDIARY OR ANY OTHER LOAN PARTY, OR (D) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY (INCLUDING ANY INVESTIGATION OF, PREPARATION FOR, OR DEFENSE OF ANY PENDING OR THREATENED CLAIM, INVESTIGATION, LITIGATION OR PROCEEDING) AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO (ALL THE FOREGOING, COLLECTIVELY, THE “INDEMNIFIED LIABILITIES”), IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE NEGLIGENCE OF THE INDEMNITEE; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, CLAIMS, DEMANDS, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM (1) THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR (2) A BREACH IN BAD FAITH OF SUCH INDEMNITEE’S OBLIGATIONS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT. NO INDEMNITEE SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY

OTHERS OF ANY INFORMATION OR OTHER MATERIALS OBTAINED THROUGH INTRALINKS OR OTHER SIMILAR INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT, NOR SHALL ANY INDEMNITEE HAVE ANY LIABILITY FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ARISING OUT OF ITS ACTIVITIES IN CONNECTION HEREWITH OR THEREWITH (WHETHER BEFORE OR AFTER THE EFFECTIVE DATE). ALL AMOUNTS DUE UNDER THIS PARAGRAPH 11.5 SHALL BE PAYABLE WITHIN TEN BUSINESS DAYS AFTER DEMAND THEREFOR. THE AGREEMENTS IN THIS PARAGRAPH SHALL SURVIVE THE RESIGNATION OF AGENT, THE REPLACEMENT OF ANY LENDER, THE TERMINATION OF THE AGGREGATE COMMITMENTS AND THE REPAYMENT, SATISFACTION OR DISCHARGE OF ALL THE OTHER OBLIGATIONS.

11.6 Non-applicability of Chapter 346 of Texas Finance Code. Chapter 346 of the Texas Finance Code shall not be applicable to this Agreement or the Facility.

11.7 Judgment Interest. It is agreed that any judgment entered by a court in favor of Lender against Borrower for payment of the Obligations, or any part thereof, shall provide for post-judgment interest on the amount thereof at a rate equal to the Maximum Rate.

11.8 Interest Limitation. In no contingency or event whatsoever shall the amount of interest under the Loan Documents paid by any Loan Party, received by Agent or any Lender, agreed to be paid by any Loan Party, or requested or demanded to be paid by Agent or any Lender, exceed the Maximum Rate. In the event any such sums paid to Agent or any Lender by any Loan Party would exceed the Maximum Rate, Agent or such Lender, as applicable, shall automatically apply such excess to any unpaid principal or, if the amount of such excess exceeds said unpaid principal, such excess shall be paid to such Loan Party. All sums paid, or agreed to be paid, by any Loan Party which are or hereafter may be construed to be compensation for the use, forbearance, or detention of money shall be amortized, prorated, spread and allocated in respect of the Obligations throughout the full Contract Term until the Obligations are paid in full. Notwithstanding any provisions contained in the Loan Documents, or in any notes or other related documents executed pursuant hereto, neither Agent nor any Lender shall ever be entitled to receive, collect or apply as interest any amount in excess of the Maximum Rate and, in the event Agent or any Lender ever receives, collects, or applies any amount that otherwise would be in excess of the Maximum Rate, such amount shall automatically be deemed to be applied in reduction of the unpaid principal balance of the Obligations and, if such principal balance is paid in full, any remaining excess shall forthwith be paid to the Loan Party which made such excess payment. In determining whether or not the interest paid or payable under any specific contingency exceeds the Maximum Rate, each Loan Party, Agent and each Lender shall, to the maximum extent permitted under applicable law, (i) characterize any non-principal payment as a standby fee, commitment fee, prepayment charge, delinquency charge or reimbursement for a third-party expense rather than as interest, (ii) exclude voluntary prepayments and the effect thereof, and (iii) amortize, prorate, allocate and spread in equal parts throughout the entire period during which the indebtedness was outstanding the total amount of interest at any time contracted for, charged or received. Nothing herein contained shall be construed or so operate as to require any Loan Party to

pay any interest, fees, costs, or charges greater than is permitted by applicable law. Subject to the foregoing, each Loan Party hereby agrees that the actual effective rate of interest from time to time existing with respect to Loans made by any Lender to Borrower, including all amounts agreed to by Borrower or charged or received by any Lender, which may be deemed to be interest under applicable law, shall be deemed to be a rate which is agreed to and stipulated by the Loan Parties, Agent and such Lenders in accordance with applicable law.

11.9 Successors and Assigns.

(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subparagraph (b) of this paragraph, (ii) by way of participation in accordance with the provisions of subparagraph (d) of this paragraph, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subparagraph (f) of this paragraph (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subparagraph (d) of this paragraph and, to the extent expressly contemplated hereby, the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subparagraph (b), participations in L/C Obligations) at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000 unless each of Agent and, so long as no Event of Default has occurred and is continuing, Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned; (iii) any assignment of a Commitment must be approved by Agent and the Issuing Banks unless the Person that is the proposed assignee is itself a Lender (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and (iv) the parties to each assignment shall execute and deliver to Agent an Assignment and Assumption, together with a processing and recordation fee of $2,500. Subject to acceptance and recording thereof by Agent pursuant to subparagraph (c) of this Paragraph, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights

and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of paragraphs 4.6, 3.4, 3.2, 11.11 and 1.5 with respect to facts and circumstances occurring prior to the effective date of such assignment). Upon request, Borrower shall execute and deliver a Revolving Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subparagraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subparagraph (d) of this Paragraph.

(c) Agent, acting solely for this purpose as an agent of Borrower, shall maintain at the Principal Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and Borrower, Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by Borrower, at any reasonable time and from time to time upon reasonable prior notice. In addition, at any time that a request for a consent for a material or other substantive change to the Loan Documents is pending, any Lender wishing to consult with other Lenders in connection therewith may request and receive from Agent a copy of the Register.

(d) Any Lender may at any time, without the consent of, or notice to, Borrower or Agent, sell participations to any Person (other than a natural person or Borrower or any of Borrower’s Affiliates or Subsidiaries (each a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in L/C Obligations) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) Borrower, Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to paragraph 11.18 that directly affects such Participant. Subject to subparagraph (e) of this paragraph, Borrower agrees that each Participant shall be entitled to the benefits of paragraphs 4.6, 3.4 and 3.2 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subparagraph (b) of this paragraph. To the extent permitted by law, each Participant also shall be entitled to the benefits of paragraph 9.5 as though it were a Lender, provided such Participant agrees to be subject to paragraph 4.3 as though it were a Lender.

(e) A Participant shall not be entitled to receive any greater payment under paragraph 4.6 or 3.4 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with Borrower’s prior written consent.

(f) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(g) “Eligible Assignee” as used herein, means (i) a Lender; (ii) an Affiliate of a Lender; (iii) an Approved Fund and (iv) any other Person (other than a natural person) approved by (A) Agent and the Issuing Bank, and (B) unless an Event of Default has occurred and is continuing, Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include Borrower or any of Borrower’s Affiliates or Subsidiaries.

(h) If the consent of Borrower to an assignment to an Eligible Assignee is required hereunder (including a consent to an assignment which does not meet the minimum assignment threshold specified in clause (i) of the proviso to the first sentence of paragraph 11.9(b)), Borrower shall be deemed to have given its consent five Business Days after the date notice thereof has been delivered to Borrower by the assigning Lender (through Agent) unless such consent is expressly refused by Borrower prior to such fifth Business Day.

(i) Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitment and Loans pursuant to subparagraph (b) above, Bank of America may, upon 30 days’ notice to Borrower and the Lenders, resign as an Issuing Bank. In the event of any such resignation as an Issuing Bank, Borrower shall be entitled to appoint from among the Lenders a successor Issuing Bank hereunder; provided, however, that no failure by Borrower to appoint any such successor shall affect the resignation of Bank of America as an Issuing Bank. If Bank of America resigns as an Issuing Bank, it shall retain all the rights and obligations of an Issuing Bank hereunder with respect to all Letters of Credit issued by it and outstanding as of the effective date of its resignation as an Issuing Bank and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to paragraph 2.10(c)).

11.10 Continuing Rights of Agent and Lenders in respect of Obligations. In the event any amount from time to time applied in reduction of the Obligations is subsequently set aside, avoided, declared invalid or recovered by Borrower, or any taxing authority or any trustee or in bankruptcy, or in the event Agent or any Lender is otherwise required to refund or repay any such amount pursuant to any applicable law, then the Obligations shall automatically be deemed to be revived and increased to the extent of such amount as if such amount had not been so applied.

11.11 Fees, Costs and Expenses. Borrower agrees to pay all costs and expenses (a) incurred by Agent in connection with the Loan Documents, including without limitation: (i) negotiation, preparation and closing of the Loan Documents, including reasonable attorneys fees and disbursements, search fees, filing and recording fees and environmental assessment report fees and title policy premiums, (ii) ongoing administration of the Loan Documents, including without limitation, fees and costs incurred in consultation with attorneys, accountants or appraisers or in connection with any factual investigation, and (iii) negotiation, preparation and closing of any amendment, waiver or consent relating to the Loan Documents, including attorneys fees and disbursements, search fees, filing and recording fees, and (b) incurred by Agent and each Lender in enforcing any provision of the Loan Documents, collecting the Obligations, exercising any rights or remedies or pursuing or defending any claim arising out of, or in any way relating to the Loan Documents, including in each case, without limitation, fees and costs of attorneys, experts or other consultants retained by Agent and each Lender in connection therewith and any other fees pursuant to paragraph 9.3. All fees, costs and expenses for which Borrower is obligated under the Loan Documents shall be payable to Agent and each such Lender on demand. At such Lender’s option, the amount of such fees, costs and expenses may be deducted from the proceeds of any Loan hereunder or added to the unpaid principal due by Borrower under the Facility, in which event such fees, costs and expenses will be deemed paid and the amount thereof shall be treated as a Loan under the Facility.

11.12 Acceptance and Performance. This Agreement shall become effective only upon acceptance by Agent at its offices in Dallas, Dallas County, Texas. The Obligations are payable at Agent’s offices in Dallas, Dallas County, Texas. Borrower and Agent each agrees that Dallas County, Texas shall be the exclusive venue for litigation of any dispute or claim arising under or relating to the Loan Documents, and that such county is a convenient forum in which to decide any such dispute. Borrower and Agent each consents to the personal jurisdiction of the state and federal courts located in Dallas County, Texas for the litigation of any such dispute or claim.

11.13 Obligations. Neither Agent’s nor any Lender’s rights in respect of the Obligations shall be impaired by reason that the amount thereof at any time exceeds any stated maximum or other limitation provided herein.

11.14 WAIVER OF TRIAL BY JURY. THE PARTIES HERETO AGREE THAT NO PARTY HERETO SHALL REQUEST A TRIAL BY JURY IN THE EVENT OF LITIGATION BETWEEN OR AMONG THEM CONCERNING THE LOAN DOCUMENTS OR ANY CLAIMS OR TRANSACTIONS IN CONNECTION THEREWITH, IN EITHER A STATE OR FEDERAL COURT, THE RIGHT TO TRIAL BY JURY BEING EXPRESSLY WAIVED BY ALL PARTIES HERETO. AGENT, EACH LENDER AND BORROWER ACKNOWLEDGES THAT SUCH WAIVER IS MADE WITH FULL KNOWLEDGE AND UNDERSTANDING OF THE NATURE OF THE RIGHTS AND BENEFITS WAIVED HEREBY, AND WITH THE BENEFIT OF ADVICE OF COUNSEL OF ITS CHOOSING.

11.15 Copies Valid as Financing Statements. A carbon, photographic or other reproduction, including photocopy, telecopy or electronic transmission, of this Agreement or any financing statement shall be sufficient as a financing statement.

11.16 Governing Law. This Agreement, and all documents and instruments executed in connection herewith, shall be governed by and construed according to the laws of the State of Texas, provided, that to the extent federal law would allow a higher rate of interest than would be allowed by the laws of the State of Texas, then with respect to the provisions of any law which purport to limit the amount of interest that may be contracted for, charged or received in connection with any of the Obligations, such federal law shall apply.

11.17 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, TERM SHEETS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

11.18 Amendments. No amendment or waiver of any provision of this Agreement, the Revolving Notes or any other Loan Document to which any Loan Party is a party, nor any consent to any departure by such Loan Party therefrom, shall in any event be effective unless the same shall be agreed or consented to by the Required Lenders and the applicable Loan Party or Loan Parties in writing, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by all of the Lenders and the applicable Loan Party or Loan Parties, do any of the following: (a) increase the Commitments of the Lenders or subject the Lenders to any additional obligations; (b) reduce the principal of, or interest on, the Loans or any fees or other amounts payable hereunder; (c) postpone any date fixed for any payment (including, without limitation, any mandatory prepayment) of principal of, or interest on, the Loans or any fees or other amounts payable hereunder; (d) waive any of the conditions precedent specified in Article V; (e) change the Commitment Percentages or the aggregate unpaid principal amount of the Loans or the number or interests of the Lenders which shall be required for the Lenders or any of them to take any action under this Agreement; or (f) except as expressly authorized by this Agreement and provided such Guarantor has been, or concurrently with the release of the Lenders, will be released and discharged as guarantor under and in respect of the Private Placement Debt, release any guaranty of all or any portion of the Obligations; and provided further, however, that no amendment, waiver or consent relating to Article X shall require the agreement of any Loan Party. Notwithstanding anything to the contrary contained in this paragraph 11.18, no amendment, waiver or consent shall be made with respect to Article X hereof without the prior written consent of Agent.

11.19 Accounting Terms. Except as otherwise specifically provided herein, all accounting and financial terms used herein, and the compliance with each financial covenant contained herein, shall be determined in accordance with GAAP.

11.20 Exhibits. All exhibits referenced herein, and attached hereto, are incorporated in this Agreement and made a part hereof for all purposes.

11.21 Cumulative Rights. All rights and remedies of Agent and the Lenders under the Loan Documents are cumulative, and are in addition to rights and remedies available to Agent and the Lenders by law. Such rights and remedies may be exercised concurrently or successively, at such times as Agent and the Lenders may determine in their discretion. Borrower waives any right to require marshalling.

11.22 Severability. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under any present or future laws effective during the Contract Term, such provisions shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part of this Agreement. In such case, the remaining provisions of the Agreement shall remain in full force and effect and shall not be effected thereby.

11.23 Multiple Counterparts. This Agreement may be executed simultaneously in one or more multiple originals, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.

11.24 Survival. All covenants, agreements, representations, and warranties made by Borrower herein shall survive the execution, delivery, and closing of this Agreement, and all documents executed in connection herewith, and shall not be affected by any investigation made by any party.

11.25 Intentionally Omitted.

11.26 Confidentiality. Each of the Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereof, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this paragraph, to (i) any assignee of or participant in, or any prospective assignee or proposed participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this paragraph or (y) becomes available to the Agent or any Lender on a nonconfidential basis from a source other than the Borrower. For purposes of this paragraph, “Information” means all information received from any Loan Party relating to any Loan Party or any of their respective businesses, other than any such information

that is available to the Agent or any Lender on a nonconfidential basis prior to disclosure by any Loan Party, provided that, in the case of information received from a Loan Party after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this paragraph shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

11.27 Payments Set Aside. To the extent that any payment by or on behalf of Borrower is made to Agent or any Lender, or Agent or any Lender exercises its right of set-off, and such payment or the proceeds of such set-off or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such set-off had not occurred, and (b) each Lender severally agrees to pay to Agent upon demand its applicable share of any amount so recovered from or repaid by Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect.

11.28 USA Patriot Act Notice. Each Lender and Agent (for itself and not on behalf of any Lender) hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2003)) (the “Act”), it is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow such Lender or the Agent, as applicable, to identify Borrower in accordance with the Act.

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

EXECUTED effective as of the 27th day of August, 2004.


		BORROWER:

		ENCORE WIRE LIMITED

		By: EWC GP Corp., its general partner

		By:		/s/ DANIEL L. JONES

				Daniel L. Jones, President

		Address for Notices:

		1410 Millwood Road, P.O. Box 1149
		McKinney, Texas 75069-0545
		Telecopy: 972-562-4744
		Telephone: 972-562-9473
		Attention:


	AGENT:

	BANK OF AMERICA, N.A.

	By:	/s/ SUZANNE M. PAUL

	Name: Suzanne M. Paul
	Title: Vice-President

	Address for Notices:

	Bank of America, N.A.
	231 S LA SALLE ST, 8th Floor
	CHICAGO IL 60604
	Attn: Rosanne Parsill

	BANK OF AMERICA, N.A., as a Lender

Commitment: $50,000,000

	By:	/s/ STEVEN MACKENZIE

		Steven Mackenzie Senior Vice President

	Address for Notices:

	Bank of America, N.A.
	901 Main Street, 67th Floor
	Dallas, TX 75202
	Attention: Steven Mackenzie


	WELLS FARGO BANK, NATIONAL
	ASSOCIATION, as a Lender

Commitment: $35,000,000

	By:	/s/ RALPH C. HAMM, III

		Name: Ralph C. Hamm, III Title: Vice-President

	Address for Notices:

	Wells Fargo Bank, National Association
	4975 Preston Park Boulevard, Suite 280
	Plano, Texas 75093
	Attention: Ralph C. Hamm, III

EXHIBIT A

FORM OF ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “Assignment”) is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the “Credit Agreement”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by Agent as contemplated below (i) all of the Assignor’s rights and obligations as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including, without limitation, the Letters of Credit and the Guarantees included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, (the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

1. Assignor:

2. Assignee: [and is an Affiliate of [identify Lender]

3. Borrower(s):

4. Administrative Agent:: , as Agent under the Credit Agreement

5. Credit Agreement: Credit Agreement, dated as of August 27, 2004 among Borrower, the Lenders from time to time party thereto, Bank of America, N.A., as Administrative Agent and Issuing Bank

6. Assigned Interest:

Aggregate

Amount of

Percentage

Commitment/Loans

Assigned of

Facility Assigned

For all Lenders*

Assigned*

Commitment/Loans*

CUSIP No.

7. Trade Date: ]

Effective Date: , 20__ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

ASSIGNOR

[NAME OF ASSIGNOR]

By:

Title:

ASSIGNEE

[NAME OF ASSIGNEE]

By:

Title:

[Consented to and] Accepted:

BANK OF AMERICA as

Administrative Agent

By:

Title:

[Consented to:]

By:

Title:

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1. Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to paragraphs 7.5 and 7.6 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on Agent or any other Lender, and (v) if it is a Lender that is not incorporated or otherwise formed under the laws of the U.S. or a state thereof, attached hereto is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on Agent, the Assignor or any other Lender, 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 the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of Texas.

EXHIBIT B

REVOLVING NOTE


$		Effective as of

FOR VALUE RECEIVED, the undersigned, ENCORE WIRE LIMITED, a Texas limited partnership (“Borrower”) hereby promises to pay to the order of , a national bank (“Lender”), at the principal office of Agent at 901 Main Street, 7th Floor, Dallas, Texas 75202 the principal amount of MILLION and NO/100 DOLLARS ($ 000,000.00) or such lesser amount as may from time to time be advanced and remain unpaid and outstanding hereunder, together with accrued interest as provided hereinbelow.

This promissory note is executed and delivered by Borrower pursuant to the certain Credit Agreement dated as of August 27 2004, among Borrower, certain lenders, including Lender, and Bank of America, N.A., as agent for such lenders (as it may be amended, restated or otherwise modified from time to time, hereinafter called the “Credit Agreement”) and is one of the Revolving Notes defined therein. All terms defined in the Credit Agreement, wherever used herein, shall have the same meaning prescribed by the Credit Agreement.

All loans from time to time requested by Borrower hereunder are subject to the terms and provisions of the Credit Agreement. The maximum principal amount at any time outstanding hereunder shall not at any time exceed an amount equal to Lender’s Commitment. The unpaid principal from day to day outstanding under this promissory note shall bear interest at the applicable rate prescribed for the Facility as provided by the Credit Agreement. Lender’s records shall be conclusive proof of loans, payments and interest accruals hereunder, absent proof by Borrower of error.

All unpaid principal and accrued interest under this promissory note shall be payable as follows: (a) accrued interest on Base Rate Loans shall be payable quarterly on the first day of each calendar quarter, and (b) accrued interest on any Eurodollar Rate Loan shall be payable on the last day of the Interest Period applicable thereto, respectively. All unpaid principal borrowed under the Facility and all unpaid accrued interest thereon, and all other amounts payable hereunder relative to the Facility, shall be due and payable to Lender in full, and the Facility shall terminate, on the last day of the Contract Term. To the extent that any accrued interest is not paid on its due date as specified above, Lender may at its option (but with no obligation to do so), debit the amount of such accrued interest against any account maintained by Borrower with Lender or add such amount to the unpaid principal due by Borrower under the Facility.

If at any time, from time to time, the aggregate unpaid principal amount outstanding hereunder exceeds the maximum amount allowed to be outstanding hereunder, Borrower shall make an immediate payment of principal in an amount not less than the amount of such excess. All such amounts, if any, payable by Borrower shall be deemed to be payable on demand, and may be offset by Lender against any amount owing by Lender to Borrower, without prior notice to Borrower.

This promissory note in all respects is subject to the Credit Agreement. Lender and Agent shall have all rights and remedies as provided in the Credit Agreement, specifically including, without limitation, the right of acceleration and all other rights and remedies as are provided by Article IX (“Remedies”) thereof.

No delay by Lender and/or Agent in the exercise of any power or right hereunder shall operate as a waiver or impair Lender’s or Agent’s rights and remedies under this promissory note or the Loan Documents. Borrower and each other party ever liable hereunder severally hereby expressly waives presentment, demand, notice of intention to demand, notice of intention to accelerate, notice of acceleration, protest, notice of protest and any other notice of any kind, and agrees that its liability hereunder shall not be affected by any renewals, extensions or modifications, from time to time, of the time or manner of payment hereof, or by any release or modification of any security for the obligations and indebtedness evidenced hereby.

Borrower hereby promises to pay to Lender and Agent all reasonable fees, costs and expenses incurred by Lender or Agent, as applicable, in enforcement and collection of any amounts under this promissory note, including without limitation, reasonable attorneys fees.

In no contingency or event whatsoever shall the amount of interest under this promissory note paid by Borrower, received by Lender and/or Agent, agreed to be paid by Borrower, or requested or demanded to be paid by Lender or Agent, exceed the Maximum Rate. In the event any such sums paid to Lender and/or Agent by Borrower would exceed the maximum amount permitted by applicable law, Lender and/or Agent, as applicable, shall automatically apply such excess to any unpaid principal or, if the amount of such excess exceeds said unpaid principal, such excess shall be paid to Borrower. All sums paid, or agreed to be paid, by Borrower hereunder which are or hereafter may be construed to be compensation for the use, forbearance, or detention of money shall be amortized, prorated, spread and allocated in respect of the Obligations throughout the full Contract Term until the Obligations are paid in full. Notwithstanding any provisions contained in the Loan Documents or herein, neither Lender nor Agent shall ever be entitled to receive, collect or apply as interest any amount in excess of the Maximum Rate and, in the event Lender and/or Agent ever receives, collects, or applies any amount that otherwise would be in excess of the Maximum Rate, such amount shall automatically be deemed to be applied in reduction of the unpaid principal balance of the Obligations and, if such principal balance is paid in full, any remaining excess shall forthwith be paid to Borrower. In determining whether or not the interest paid or payable under any specific contingency exceeds the Maximum Rate, Borrower, Lender and/or Agent, as applicable, shall, to the maximum extent permitted under applicable law, (i) characterize any non-principal payment as a standby fee, commitment fee, prepayment charge, delinquency charge or reimbursement for a third-party expense rather than as interest, (ii) exclude voluntary prepayments and the effect thereof, and (iii) amortize, prorate, allocate and spread in equal parts throughout the entire period during which the indebtedness was outstanding the total amount of interest at any time contracted for, charged or received. Nothing herein contained shall be construed or so operate as to require Borrower to pay any interest, fees, costs, or charges greater than is permitted by applicable law. Subject to the foregoing, Borrower hereby agrees that the actual effective rate of interest from time to time existing with respect to loans made by Lender to Borrower hereunder, including all amounts agreed to by Borrower or charged or received by Lender and/or Agent,

which maybe deemed to be interest under applicable law, shall be deemed to be a rate which is agreed to and stipulated by Borrower and/or Lender in accordance with applicable law.

This promissory note may not be changed, amended or modified except in writing executed by Lender and Borrower.

This promissory note shall be governed by and construed according to the laws of the State of Texas, except as to provisions relating to the rate of interest to be charged on the unpaid principal hereof, in which case, to the extent federal law otherwise would allow a higher rate of interest than would be allowed by the laws of the State of Texas, such federal law shall apply.

EXECUTED this day of , effective as the date specified above.


		ENCORE WIRE LIMITED

		By: EWC GP CORP., its general partner

		By:

		Name:

		Title:

EXHIBIT C

FORM OF GUARANTY

EXHIBIT C-1

PARENT GUARANTY

GUARANTY (this “Guaranty”), dated as of August 27, 2004, made by Encore Wire Corporation (the “Guarantor”), in favor of the Guarantied Parties referred to below.

W I T N E S S E T H:

WHEREAS, Encore Wire Limited, a Texas limited partnership (the “Borrower”), has entered into a Credit Agreement, dated as of August 27, 2004, among the Lenders party thereto, and Bank of America, N.A., as the Administrative Agent and Issuing Bank (hereinafter, the “Administrative Agent”) for the Lenders, (said Credit Agreement, as it may be amended, supplemented or otherwise modified from time to time, being the “Credit Agreement”, and capitalized terms not defined herein but defined therein being used herein as therein defined); and

WHEREAS, the Guarantor indirectly owns all of the partnership interests in the Borrower, and the Guarantor will derive direct and indirect economic benefit from the Loans and Letters of Credit under the Credit Agreement; and

WHEREAS, it is a condition precedent to the obligation of the Lenders to make Loans and issue or participate in Letters of Credit under the Credit Agreement that the Guarantor shall have executed and delivered this Guaranty; and

WHEREAS, the Lenders, the Administrative Agent, any Lender or Affiliate of any Lender entering into a Swap Contract (provided that such Lender was a Lender at the time such Swap Contract was entered into) with the Borrower or any Affiliate of the Borrower, and the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document are herein referred to as the “Guarantied Parties”;

NOW, THEREFORE, in consideration of the premises and to induce the Lenders to make Loans and the Issuing Bank to issue Letters of Credit, the Guarantors hereby agree as follows:

SECTION 1. Guaranty. The Guarantor hereby unconditionally and irrevocably guarantees the full and prompt payment when due, whether at stated maturity, by acceleration or otherwise, of, and the performance of, (a) the Obligations, whether now or hereafter existing and whether for principal, interest, fees, expenses or otherwise, (b) all Swap Obligations owed to any Lender or any Affiliate of a Lender (provided at the time of execution of the Swap Contract related to such Swap Obligations such Lender is a party to the Credit Agreement, herein called a “Guarantied Swap Contract”), (c) any and all reasonable out-of-pocket expenses (including, without limitation, reasonable expenses and reasonable counsel fees and expenses of the Administrative Agent and the Lenders) incurred by any of the Guarantied Parties in enforcing any rights under this Guaranty and (d) all present and future amounts that would become due but for the operation of any provision of Debtor Relief Laws, and all present and future accrued and unpaid interest, including, without limitation, all post-petition interest if the Borrower or any Guarantor voluntarily or involuntarily becomes subject to any Debtor Relief Laws (the items set forth in clauses (a), (b), (c) and (d) immediately above being herein referred to as the “Guarantied Obligations”). Upon failure of the Borrower to pay any of the Guarantied

Page - 1
Form of Parent Guaranty

Obligations when due after the giving by the Administrative Agent and/or the Lenders of any notice and the expiration of any applicable cure period in each case provided for in the Credit Agreement and other Loan Documents, or any Guarantied Swap Contract (whether at stated maturity, by acceleration or otherwise), the Guarantor hereby further agrees to promptly pay the same after the Guarantor’s receipt of notice from the Administrative Agent of the Borrower’s failure to pay the same, without any other demand or notice whatsoever, including without limitation, any notice having been given to the Guarantor of either the acceptance by the Guarantied Parties of this Guaranty or the creation or incurrence of any of the Guarantied Obligations. This Guaranty is an absolute guaranty of payment and performance of the Guarantied Obligations and not a guaranty of collection, meaning that it is not necessary for the Guarantied Parties, in order to enforce payment by the Guarantor, first or contemporaneously to accelerate payment of any of the Guarantied Obligations, to institute suit or exhaust any rights against any Loan Party, or to enforce any rights against any collateral. Notwithstanding anything herein or in any other Loan Document or Guarantied Swap Contract to the contrary, in any action or proceeding involving any state corporate law, or any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if, as a result of applicable law relating to fraudulent conveyance or fraudulent transfer, including Section 548 of Bankruptcy Code or any applicable provisions of comparable state law (collectively, “Fraudulent Transfer Laws”), the obligations of the Guarantor under this Section 1 would otherwise, after giving effect to (a) all other liabilities of the Guarantor, contingent or otherwise, that are relevant under such Fraudulent Transfer Laws (specifically excluding, however, any liabilities of the Guarantor in respect of intercompany indebtedness to the Borrower to the extent that such indebtedness would be discharged in an amount equal to the amount paid by the Guarantor hereunder) and (b) to the value as assets of the Guarantor (as determined under the applicable provisions of such Fraudulent Transfer Laws) of any rights of subrogation, contribution, reimbursement, indemnity or similar rights held by the Guarantor pursuant to (i) applicable requirements of Law, (ii) Section 10 hereof or (iii) any other contractual obligations providing for an equitable allocation among the Guarantor and other Subsidiaries or Affiliates of the Borrower of obligations arising under this Guaranty or other guaranties of the Guarantied Obligations by such parties, be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under this Section 1, then the amount of such liability shall, without any further action by the Guarantor, any Lender, the Administrative Agent or any other Person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

SECTION 2. Guaranty Absolute. The Guarantor guarantees that the Guarantied Obligations will be paid strictly in accordance with the terms of the Credit Agreement, the Revolving Notes, the other Loan Documents and the Guarantied Swap Contracts, without set-off or counterclaim, and regardless of any Applicable Law (as hereafter defined) now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Guarantied Parties with respect thereto. For purposes hereof, “Applicable Law” means (a) in respect of any Person, all provisions of Laws applicable to such Person, and all orders and decrees of all courts and determinations of arbitrators applicable to such Person and (b) in respect of contracts made or performed in the State of Texas, “Applicable Law” shall also mean the laws of the United States of America, including, without limitation in addition to the foregoing, 12 USC Sections 85 and 86, as amended to the date hereof and as the same may be amended at any time and from time to time hereafter, and any other statute of the United States of America now or at any time hereafter

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Form of Parent Guaranty

prescribing the maximum rates of interest on loans and extensions of credit, and the laws of the State of Texas. The liability of the Guarantor under this Guaranty shall be absolute and unconditional irrespective of:

(a) any lack of validity or enforceability of any provision of any other Loan Document, any Guarantied Swap Contract or any other agreement or instrument relating to any Loan Document, or avoidance or subordination of any of the Guarantied Obligations;

(b) any change in the time, manner or place of payment of, or in any other term of, or any increase in the amount of, all or any of the Guarantied Obligations, or any other amendment or waiver of any term of, or any consent to departure from any requirement of, the Credit Agreement, the Revolving Notes, the Guarantied Swap Contracts or any of the other Loan Documents;

(c) any exchange, release or non-perfection of any lien on any collateral for, or any release of any other Loan Party or amendment or waiver of any term of any other guaranty of, or any consent to departure from any requirement of any other guaranty of, all or any of the Guarantied Obligations;

(d) the absence of any attempt to collect any of the Guarantied Obligations from the Borrower or from any other Loan Party or any other action to enforce the same or the election of any remedy by any of the Guarantied Parties;

(e) any waiver, consent, extension, forbearance or granting of any indulgence by any of the Guarantied Parties with respect to any provision of any Guarantied Swap Contract or any other Loan Document;

(f) the election by any of the Guarantied Parties in any proceeding under any Debtor Relief Law;

(g) any borrowing or grant of a security interest by the Borrower, as debtor-in-possession, under any Debtor Relief Law; or

(h) any other circumstance which might otherwise constitute a legal or equitable discharge or defense of the Borrower or any other Guarantor other than payment or performance of the Guarantied Obligations.

SECTION 3. Waiver.

(a) The Guarantor hereby (i) waives (A) promptness, diligence, and, except as otherwise provided herein, notice of acceptance and any and all other notices except as otherwise expressly provided for in the Loan Documents, including, without limitation, notice of intent to accelerate and notice of acceleration, with respect to any of the Guarantied Obligations or this Guaranty, (B) any requirement that any of the Guarantied Parties protect, secure, perfect or insure any security interest in or other lien on any property subject thereto or exhaust any right or take any action against the Borrower or any other Person or any collateral, (C) the filing of any claim with a court in the event of receivership or bankruptcy of the Borrower or any other Person, (D) except as otherwise provided herein, protest or notice with respect to nonpayment of

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Form of Parent Guaranty

all or any of the Guarantied Obligations, (E) the benefit of any statute of limitation, (F) except as otherwise provided herein, all demands whatsoever (and any requirement that demand be made on the Borrower or any other Person as a condition precedent to the Guarantor’s obligations hereunder), (G) all rights by which the Guarantor might be entitled to require suit on an accrued right of action in respect of any of the Guarantied Obligations or require suit against the Borrower, the Guarantor or any other Person, whether arising pursuant to Section 34.02 of the Texas Business and Commerce Code, as amended, Section 17.001 of the Texas Civil Practice and Remedies Code, as amended, Rule 31 of the Texas Rules of Civil Procedure, as amended, or otherwise, (H) any defense based upon an election of remedies by any Guarantied Party, or (I) notice of any events or circumstances set forth in clauses (a) through (h) of Section 2 hereof; and (ii) covenants and agrees that, except as otherwise agreed by the parties, this Guaranty will not be discharged except by complete payment and performance of the Guarantied Obligations and any other obligations of the Guarantor contained herein.

(b) If, in the exercise of any of its rights and remedies in accordance with the provisions of Applicable Law, any of the Guarantied Parties shall forfeit any of its rights or remedies, including, without limitation, its right to enter a deficiency judgment against the Borrower or any other Person, whether because of any Applicable Law pertaining to “election of remedies” or the like, the Guarantor hereby consents to such action by such Guarantied Party and waives any claim based upon such action. Any election of remedies which, by reason of such election, results in the denial or impairment of the right of such Guarantied Party to seek a deficiency judgment against the Borrower shall not impair the obligation of the Guarantor to pay the full amount of the Guarantied Obligations or any other obligation of the Guarantor contained herein.

(c) The Guarantor agrees that notwithstanding the foregoing and without limiting the generality of the foregoing if, after the occurrence and during the continuance of an Event of Default, the Guarantied Parties are prevented by Applicable Law from exercising their respective rights to accelerate the maturity of the Guarantied Obligations, to collect interest on the Guarantied Obligations, or to enforce or exercise any other right or remedy with respect to the Guarantied Obligations, or the Administrative Agent is prevented from taking any action to realize on any collateral, the Guarantor agrees to pay to the Administrative Agent for the account of the Guarantied Parties, upon demand therefor, for application to the Guarantied Obligations, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Guarantied Parties.

(d) The Guarantor hereby assumes responsibility for keeping itself informed of the financial condition of the Borrower and of each other Loan Party, and of all other circumstances bearing upon the risk of nonpayment of the Guarantied Obligations or any part thereof, that diligent inquiry would reveal. The Guarantor hereby agrees that the Guarantied Parties shall have no duty to advise the Guarantor of information known to any of the Guarantied Parties regarding such condition or any such circumstance. In the event that any of the Guarantied Parties in its sole discretion undertakes at any time or from time to time to provide any such information to the Guarantor, such Guarantied Party shall be under no obligation (i) to undertake any investigation not a part of its regular business routine, (ii) to disclose any information which, pursuant to accepted or reasonable banking or commercial finance practices, such Guarantied Party wishes to maintain as confidential, or (iii) to make any other or future disclosures of such information or any other information to the Guarantor.

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Form of Parent Guaranty

(e) The Guarantor consents and agrees that the Guarantied Parties shall be under no obligation to marshal any assets in favor of the Guarantor or otherwise in connection with obtaining payment of any or all of the Guarantied Obligations from any Person or source.

SECTION 4. Representations and Warranties. The Guarantor hereby represents and warrants to the Guarantied Parties that the representations and warranties set forth in Article VI of the Credit Agreement as they relate to the Guarantor or to the Loan Documents to which the Guarantor is a party are true and correct in all material respects in the manner specified in the Credit Agreement and the Guarantied Parties shall be entitled to rely on each of them as if they were fully set forth herein.

SECTION 5. Amendments, Etc. No amendment or waiver of any provision of this Guaranty nor consent to any departure by the Guarantor herefrom shall in any event be effective unless the same shall be in writing, approved by the Required Lenders (or by all the Lenders where the approval of each Lender is required under the Credit Agreement) and signed by the Administrative Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

SECTION 6. Addresses for Notices. All notices and other communications provided for hereunder shall be effectuated in the manner provided for in Section 11.2 of the Credit Agreement, provided that if a notice or communication hereunder is sent to the Guarantor, said notice shall be addressed to the Guarantor, in care of the Borrower at the Borrower’s then current address (or facsimile number) for notice under the Credit Agreement.

SECTION 7. No Waiver; Remedies.

(a) No failure on the part of any Guarantied Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by Applicable Law or any of the other Loan Documents or Guarantied Swap Contracts.

(b) No waiver by the Guarantied Parties of any default shall operate as a waiver of any other default or the same default on a future occasion, and no action by any of the Guarantied Parties permitted hereunder shall in way affect or impair any of the rights of the Guarantied Parties or the obligations of the Guarantor under this Guaranty, under any Guarantied Swap Contract or under any of the other Loan Documents, except as specifically set forth in any such waiver. Any determination by a court of competent jurisdiction of the amount of any principal and/or interest or other amount constituting any of the Guarantied Obligations shall be conclusive and binding on the Guarantor irrespective of whether the Guarantor was a party to the suit or action in which such determination was made provided that the Borrower was so a party.

SECTION 8. Right of Set-off. Upon the occurrence and during the continuance of any Event of Default under the Credit Agreement, each of the Guarantied Parties is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to set-off and apply any and all deposits (general or special (except trust and escrow accounts), time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Guarantied Party to or for the credit or the account of the Guarantor against any and all of the obligations of the Guarantor now or hereafter existing under this Guaranty, irrespective of

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whether or not such Guarantied Party shall have made any demand under this Guaranty and although such obligations may be contingent and unmatured; provided, however, such Guarantied Party shall promptly notify the Guarantor and the Borrower after such set-off and the application made by such Guarantied Party. The rights of each Guarantied Party under this Section 8 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Guarantied Party may have.

SECTION 9. Continuing Guaranty; Transfer of Revolving Notes. This Guaranty (a)(i) is a continuing guaranty and shall remain in full force and effect until the date upon which all of the Guarantied Obligations are paid in full, the Commitments are terminated and all Letters of Credit have expired (the “Release Date”) and (ii) binding upon the Guarantor, its permitted successors and assigns, and (b) inures to the benefit of and be enforceable by the Guarantied Parties and their respective successors, permitted transferees, and permitted assigns. Without limiting the generality of the foregoing clause (b), each of the Guarantied Parties may assign or otherwise transfer any Revolving Note held by it or the Guarantied Obligations owed to it to any other Person, and such other Person shall thereupon become vested with all the rights in respect thereof granted to such Guarantied Party herein or otherwise with respect to such of the Revolving Notes and the Guarantied Obligations so transferred or assigned, subject, however, to compliance with the provisions of Section 11.9 of the Credit Agreement in respect of assignments. The Guarantor may not assign any of its obligations under this Guaranty without first obtaining the written consent of the Lenders as set forth in the Credit Agreement.

SECTION 10. Reimbursement. To the extent that the Guarantor shall be required hereunder to pay a portion of the Guarantied Obligations exceeding the greater of (a) the amount of the economic benefit actually received by the Guarantor from the Loans and the Letters of Credit and (b) the amount the Guarantor would otherwise have paid if the Guarantor had paid the aggregate amount of the Guarantied Obligations (excluding the amount thereof repaid by the Borrower) in the same proportion as the Guarantor’s net worth at the date enforcement is sought hereunder bears to the aggregate net worth of all the Guarantors (as defined in the Credit Agreement) at the date enforcement is sought hereunder, then such Guarantor shall be reimbursed by such other Guarantors (as defined in the Credit Agreement) for the amount of such excess, pro rata, based on the respective net worths of such other Guarantors (as defined in the Credit Agreement) at the date enforcement hereunder is sought. Notwithstanding anything to the contrary, the Guarantor agrees that the Guarantied Obligations may at any time and from time to time exceed the amount of the liability of the Guarantor hereunder without impairing its guaranty herein or effecting the rights and remedies of the Guarantied Parties hereunder. This Section 10 is intended only to define the relative rights of the Guarantors (as defined in the Credit Agreement), and nothing set forth in this Section 10 is intended to or shall impair the obligations of the Guarantor to pay to the Guarantied Parties the Guarantied Obligations as and when the same shall become due and payable in accordance with the terms hereof.

SECTION 11. Reinstatement. This Guaranty shall remain in full force and effect and continue to be effective should any petition be filed by or against any Loan Party for liquidation or reorganization, should any Loan Party become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of any Loan Party’s assets, and shall, to the fullest extent permitted by Applicable Law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Guarantied Obligations, or any part thereof, is, pursuant to Applicable Law, rescinded or reduced

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in amount, or must otherwise be restored or returned by any obligees of the Guarantied Obligations or such part thereof, whether as a “voidable preference,” “fraudulent transfer,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Guarantied Obligations shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

SECTION 12. GOVERNING LAW.

(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT EACH PARTY SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

(b) The parties hereto agree that Chapter 346 (other than 346.004) of the Texas Finance Code (which regulates certain revolving credit accounts and revolving tri-party accounts) shall not apply to Loans under this Guaranty.

(c) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS SITTING IN DALLAS COUNTY, TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS (DALLAS DIVISION), AND BY EXECUTION, DELIVERY AND ACCEPTANCE OF THIS GUARANTY, THE GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. THE GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

SECTION 13. Waiver of Jury Trial. THE GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY (OR BY ACCEPTANCE HEREOF) EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF ANY ONE OR MORE OF THE GUARANTOR, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH OF THE GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL

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WITHOUT A JURY, AND THAT ANY OF THE GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

SECTION 14. Section Titles. The Section titles contained in this Guaranty are and shall be without substantive meaning or content of any kind whatsoever and are not a part of this Guaranty.

SECTION 15. Execution in Counterparts. This Guaranty may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same Guaranty.

SECTION 16. Miscellaneous. All references herein to the Borrower or to the Guarantor shall include their respective successors and assigns, including, without limitation, a receiver, trustee or debtor-in-possession of or for the Borrower or the Guarantor. All references to the singular shall be deemed to include the plural where the context so requires.

SECTION 17. Subrogation and Subordination.

(a) Subrogation. Notwithstanding any reference to subrogation contained herein to the contrary, until the Release Date, the Guarantor hereby irrevocably waives any claim or other rights which it may have or hereafter acquire against the Borrower that arise from the existence, payment, performance or enforcement of the Guarantor’s obligations under this Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, any right to participate in any claim or remedy of any Lender against the Borrower or any collateral which any Lender now has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under contract, statutes or common law, including without limitation, the right to take or receive from the Borrower, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to the Guarantor in violation of the preceding sentence and the Guarantied Obligations shall not have been paid in full, such amount shall be deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Lenders, and shall forthwith be paid to the Administrative Agent to be credited and applied upon the Guarantied Obligations, whether matured or unmatured, in accordance with the terms of the Credit Agreement. The Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Credit Agreement and that the waiver set forth in this Section 17 is knowingly made in contemplation of such benefits.

(b) Subordination. With respect to the Guarantor, all debt and other liabilities of the Borrower or any other Loan Party to the Guarantor (“Loan Party Debt”) are expressly subordinate and junior to the Guarantied Obligations and any instruments evidencing the Guarantied Obligations to the extent provided below.

(i) Until the Release Date, the Guarantor agrees that it will not request, demand, accept, or receive (by set-off or other manner) any payment amount, credit or

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reduction of all or any part of the amounts owing under the Loan Party Debt or any security therefor, except as specifically allowed pursuant to clause (ii) below;

(ii) Notwithstanding the provisions of clause (i) above, the Borrower and each other Loan Party may pay to the Guarantor and the Guarantor may request, demand, accept and receive and retain from the Borrower payments, credits or reductions of all or any part of the amounts owing under the Loan Party Debt or any security therefor on the Loan Party Debt, provided that the Borrower’s and other Loan Party’s right to pay and such Guarantor’s right to receive any such amount shall automatically and be immediately suspended and cease (A) upon the occurrence and during the continuance of an Event of Default or (B) if, after taking into account the effect of such payment, an Event of Default would occur and be continuing. The Guarantor’s right to receive amounts under this clause (ii) (including any amounts which theretofore may have been suspended) shall automatically be reinstated at such time as the Event of Default which was the basis of such suspension has been cured or waived (provided that no subsequent Event of Default has occurred) or such earlier date, if any, as the Administrative Agent gives notice to the Guarantor of reinstatement by the Required Lenders, in the Required Lenders’ sole discretion;

(iii) If the Guarantor receives any payment on the Borrower Debt in violation of this Guaranty, the Guarantor will hold such payment in trust for the Lenders and will immediately deliver such payment to the Administrative Agent; and

(iv) In the event of the commencement or joinder of any suit, action or proceeding of any type (judicial or otherwise) or proceeding under any Debtor Relief Law against the Borrower or any other Loan Party (an “Insolvency Proceeding”) and subject to court orders issued pursuant to the Bankruptcy Code, the Guarantied Obligations shall first be paid, discharged and performed in full before any payment or performance is made upon the Loan Party Debt notwithstanding any other provisions which may be made in such Insolvency Proceeding. In the event of any Insolvency Proceeding, the Guarantor will at any time prior to the Release Date (A) file, at the request of any Guarantied Party, any claim, proof of claim or similar instrument necessary to enforce the Borrower’s or such other Loan Party’s obligation to pay the Loan Party Debt, and (B) hold in trust for and pay to the Guarantied Parties any and all monies, obligations, property, stock dividends or other assets received in any such proceeding on account of the Loan Party Debt in order that the Guarantied Parties may apply such monies or the cash proceeds of such other assets to the Guarantied Obligations.

SECTION 18. Guarantor Insolvency. Should the Guarantor voluntarily seek, consent to, or acquiesce in the benefits of any Debtor Relief Law or become a party to or be made the subject of any proceeding provided for by any Debtor Relief Law (other than as a creditor or claimant) that could suspend or otherwise adversely affect the rights of any Guarantied Party granted hereunder, then, the obligations of the Guarantor under this Guaranty shall be, as between the Guarantor and such Guarantied Party, a fully-matured, due, and payable obligation of the Guarantor to such Guarantied Party (without regard to whether there is an Event of Default under the Credit Agreement or whether any part of the Guarantied Obligations is then due and owing by the Borrower to such Guarantied Party), payable in full by the Guarantor to such

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Guarantied Party upon demand, which shall be the estimated amount owing in respect of the contingent claim created hereunder.

SECTION 19. Rate Provision. It is not the intention of any Guarantied Party to make an agreement violative of the laws of any applicable jurisdiction relating to usury. Regardless of any provision in this Guaranty, no Guarantied Party shall ever be entitled to contract, charge, receive, collect or apply, as interest on the Guarantied Obligations, any amount in excess of the Maximum Rate. In no event shall the Guarantor be obligated to pay any amount in excess of the Maximum Rate. If from any circumstance the Administrative Agent or any Guarantied Party shall ever receive, collect or apply anything of value deemed excess interest under Applicable Law, an amount equal to such excess shall be applied to the reduction of the principal amount of outstanding Loans and L/C Borrowings, and any remainder shall be promptly refunded to the payor. In determining whether or not interest paid or payable with respect to the Guarantied Obligations, under any specified contingency, exceeds the Maximum Rate, the Guarantor and the Guarantied Parties shall, to the maximum extent permitted by Applicable Law, (a) characterize any non-principal payment as an expense, fee or premium rather than as interest, (b) amortize, prorate, allocate and spread the total amount of interest throughout the full term of such Guarantied Obligations so that the interest paid on account of such Guarantied Obligations does not exceed the Maximum Rate and/or (c) allocate interest between portions of such Guarantied Obligations; provided that if the Guarantied Obligations are paid and performed in full prior to the end of the full contemplated term thereof, and if the interest received for the actual period of existence thereof exceeds the Maximum Rate, the Guarantied Parties shall refund to the payor the amount of such excess or credit the amount of such excess against the total principal amount owing, and, in such event, no Guarantied Party shall be subject to any penalties provided by any laws for contracting for, charging or receiving interest in excess of the Maximum Rate.

SECTION 20. Guarantor’s Covenants. Guarantor covenants to and agrees with Administrative Agent and Lenders as follows:

(a) As long as the Guaranteed Obligations or any part thereof is outstanding or any Lender has any commitment under the Credit Agreement, Guarantor will comply with all covenants set forth in the Credit Agreement specifically applicable to Guarantor, the terms of which are incorporated herein by reference.

(b) Guarantor will not make any payment on account of the purchase, redemption or other acquisition or retirement of any shares of capital stock, provided, that notwithstanding the foregoing, for so long as no Default or Event of Default shall have occurred and be continuing, and no other event or condition which is reasonably expected to result in a Material Adverse Effect is in existence, Guarantor shall not be prohibited from repurchasing shares to be held as treasury shares, provided further that no Default or Event of Default shall result from, or exist immediately following, any such repurchase.

(c) There shall be no change of the personnel performing the functions of Chairman of the Board and President and Chief Executive Officer of Guarantor as such positions are presently constituted.

(d) Guarantor will not declare, pay or issue any dividends or other distributions in respect of its ownership interests, or distribute, reserve, secure or otherwise

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commit distributions in respect thereof, unless no Default or Event of Default shall have occurred and be continuing or would result therefrom.

SECTION 21. Severability. Any provision of this Guaranty which is for any reason prohibited or found or held invalid or unenforceable by any court or governmental agency shall be ineffective to the extent of such prohibition or invalidity or unenforceability, without invalidating the remaining provisions hereof in such jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.

SECTION 22. ENTIRE AGREEMENT. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS. OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed and delivered by its duly authorized officer on the date first above written.


		ENCORE WIRE CORPORATION

		By:

				Name:

				Title:

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Form of Parent Guaranty

EXHIBIT C-2

GUARANTY

GUARANTY (this “Guaranty”), dated as of August 27, 2004, made by each of the parties listed on the signature pages hereof (collectively, the “Guarantors”, and each, a “Guarantor”), in favor of the Guarantied Parties referred to below.

W I T N E S S E T H:

WHEREAS, EWC GP Corp. and EWC LP Corp. collectively own all of the partnership interests in the Borrower, and the Borrower owns all of the capital stock of EWC Aviation Corp., and the Borrower and EWC Aviation Corp. are engaged in operations which require financing on a basis in which credit can be made available from time to time to the Borrower, and the Guarantors will derive direct and indirect economic benefit from the Loans and Letters of Credit under the Credit Agreement; and

WHEREAS, it is a condition precedent to the obligation of the Lenders to make Loans and issue or participate in Letters of Credit under the Credit Agreement that the Guarantors shall have executed and delivered this Guaranty; and

NOW, THEREFORE, in consideration of the premises and to induce the Lenders to make Loans and the Issuing Bank to issue Letters of Credit, the Guarantors hereby agree as follows:

SECTION 1. Guaranty. The Guarantors hereby jointly and severally unconditionally and irrevocably guarantee the full and prompt payment when due, whether at stated maturity, by acceleration or otherwise, of, and the performance of, (a) the Obligations, whether now or hereafter existing and whether for principal, interest, fees, expenses or otherwise, (b) all Swap Obligations owed to any Lender or any Affiliate of a Lender (provided at the time of execution of the Swap Contract related to such Swap Obligations such Lender is a party to the Credit Agreement), (c) any and all reasonable out-of-pocket expenses (including, without limitation, reasonable expenses and reasonable counsel fees and expenses of the Administrative Agent and the Lenders) incurred by any of the Guarantied Parties in enforcing any rights under this Guaranty and (d) all present and future amounts that would become due but for the operation of any provision of Debtor Relief Laws, and all present and future accrued and unpaid interest,

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including, without limitation, all post-petition interest if the Borrower or any Guarantor voluntarily or involuntarily becomes subject to any Debtor Relief Laws (the items set forth in clauses (a), (b), (c) and (d) immediately above being herein referred to as the “Guarantied Obligations”). Upon failure of the Borrower to pay any of the Guarantied Obligations when due after the giving by the Administrative Agent and/or the Lenders of any notice and the expiration of any applicable cure period in each case provided for in the Credit Agreement and other Loan Documents (whether at stated maturity, by acceleration or otherwise), the Guarantors hereby further jointly and severally agree to promptly pay the same after the Guarantors’ receipt of notice from the Administrative Agent of the Borrower’s failure to pay the same, without any other demand or notice whatsoever, including without limitation, any notice having been given to any Guarantor of either the acceptance by the Guarantied Parties of this Guaranty or the creation or incurrence of any of the Guarantied Obligations. This Guaranty is an absolute guaranty of payment and performance of the Guarantied Obligations and not a guaranty of collection, meaning that it is not necessary for the Guarantied Parties, in order to enforce payment by the Guarantors, first or contemporaneously to accelerate payment of any of the Guarantied Obligations, to institute suit or exhaust any rights against any Loan Party, or to enforce any rights against any Collateral. Notwithstanding anything herein or in any other Loan Document to the contrary, in any action or proceeding involving any state corporate law, or any state or federal bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if, as a result of applicable law relating to fraudulent conveyance or fraudulent transfer, including Section 548 of Bankruptcy Code or any applicable provisions of comparable state law (collectively, “Fraudulent Transfer Laws”), the obligations of any Guarantor under this Section 1 would otherwise, after giving effect to (a) all other liabilities of such Guarantor, contingent or otherwise, that are relevant under such Fraudulent Transfer Laws (specifically excluding, however, any liabilities of such Guarantor in respect of intercompany indebtedness to the Borrower to the extent that such indebtedness would be discharged in an amount equal to the amount paid by such Guarantor hereunder) and (b) to the value as assets of such Guarantor (as determined under the applicable provisions of such Fraudulent Transfer Laws) of any rights of subrogation, contribution, reimbursement, indemnity or similar rights held by such Guarantor pursuant to (i) applicable requirements of Law, (ii) Section 10 hereof or (iii) any other contractual obligations providing for an equitable allocation among such Guarantor and other Subsidiaries or Affiliates of the Borrower of obligations arising under this Guaranty or other guaranties of the Guarantied Obligations by such parties, be held or determined to be void, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under this Section 1, then the amount of such liability shall, without any further action by such Guarantor, any Lender, the Administrative Agent or any other Person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

SECTION 2. Guaranty Absolute. Each Guarantor guarantees that the Guarantied Obligations will be paid strictly in accordance with the terms of the Credit Agreement, the Revolving Notes and the other Loan Documents, without set-off or counterclaim, and regardless of any Applicable Law (as defined herein) now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Guarantied Parties with respect thereto. For purposes hereof, “Applicable Law” means (a) in respect of any Person, all provisions of Laws applicable to such Person, and all orders and decrees of all courts and determinations of arbitrators applicable to such Person and (b) in respect of contracts made or performed in the State of Texas,

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“Applicable Law” shall also mean the laws of the United States of America, including, without limitation in addition to the foregoing, 12 USC Sections 85 and 86, as amended to the date hereof and as the same may be amended at any time and from time to time hereafter, and any other statute of the United States of America now or at any time hereafter prescribing the maximum rates of interest on loans and extensions of credit, and the laws of the State of Texas. The liability of each Guarantor under this Guaranty shall be absolute and unconditional irrespective of:

(a) any lack of validity or enforceability of any provision of any other Loan Document or any other agreement or instrument relating to any Loan Document, or avoidance or subordination of any of the Guarantied Obligations;

(e) any waiver, consent, extension, forbearance or granting of any indulgence by any of the Guarantied Parties with respect to any provision of any other Loan Document;

(f) the election by any of the Guarantied Parties in any proceeding under any Debtor Relief Law;

(g) any borrowing or grant of a security interest by the Borrower, as debtor-in-possession, under any Debtor Relief Law; or

SECTION 3. Waiver.

(a) Each Guarantor hereby (i) waives (A) promptness, diligence, and, except as otherwise provided herein, notice of acceptance and any and all other notices, except as otherwise expressly provided for in the Loan Documents, including, without limitation, notice of intent to accelerate and notice of acceleration, with respect to any of the Guarantied Obligations or this Guaranty, (B) any requirement that any of the Guarantied Parties protect, secure, perfect or insure any security interest in or other lien on any property subject thereto or exhaust any right

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or take any action against the Borrower or any other Person or any collateral, (C) the filing of any claim with a court in the event of receivership or bankruptcy of the Borrower or any other Person, (D) except as otherwise provided herein, protest or notice with respect to nonpayment of all or any of the Guarantied Obligations, (E) the benefit of any statute of limitation, (F) except as otherwise provided herein, all demands whatsoever (and any requirement that demand be made on the Borrower or any other Person as a condition precedent to such Guarantor’s obligations hereunder), (G) all rights by which any Guarantor might be entitled to require suit on an accrued right of action in respect of any of the Guarantied Obligations or require suit against the Borrower or any other Guarantor or Person, whether arising pursuant to Section 34.02 of the Texas Business and Commerce Code, as amended, Section 17.001 of the Texas Civil Practice and Remedies Code, as amended, Rule 31 of the Texas Rules of Civil Procedure, as amended, or otherwise, (H) any defense based upon an election of remedies by any Guarantied Party, or (I) notice of any events or circumstances set forth in clauses (a) through (h) of Section 2 hereof; and (ii) covenants and agrees that, except as otherwise agreed by the parties, this Guaranty will not be discharged except by complete payment and performance of the Guarantied Obligations and any other obligations of such Guarantor contained herein.

(b) If, in the exercise of any of its rights and remedies in accordance with the provisions of Applicable Law, any of the Guarantied Parties shall forfeit any of its rights or remedies, including, without limitation, its right to enter a deficiency judgment against the Borrower or any other Person, whether because of any Applicable Law pertaining to “election of remedies” or the like, each Guarantor hereby consents to such action by such Guarantied Party and waives any claim based upon such action. Any election of remedies which, by reason of such election, results in the denial or impairment of the right of such Guarantied Party to seek a deficiency judgment against the Borrower shall not impair the obligation of such Guarantor to pay the full amount of the Guarantied Obligations or any other obligation of such Guarantor contained herein.

(c) Each Guarantor agrees that notwithstanding the foregoing and without limiting the generality of the foregoing if, after the occurrence and during the continuance of an Event of Default, the Guarantied Parties are prevented by Applicable Law from exercising their respective rights to accelerate the maturity of the Guarantied Obligations, to collect interest on the Guarantied Obligations, or to enforce or exercise any other right or remedy with respect to the Guarantied Obligations, or the Administrative Agent is prevented from taking any action to realize on any collateral, such Guarantor agrees to pay to the Administrative Agent for the account of the Guarantied Parties, upon demand therefor, for application to the Guarantied Obligations, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Guarantied Parties.

(d) Each Guarantor hereby assumes responsibility for keeping itself informed of the financial condition of the Borrower and of each other Loan Party, and of all other circumstances bearing upon the risk of nonpayment of the Guarantied Obligations or any part thereof, that diligent inquiry would reveal. Each Guarantor hereby agrees that the Guarantied Parties shall have no duty to advise any Guarantor of information known to any of the Guarantied Parties regarding such condition or any such circumstance. In the event that any of the Guarantied Parties in its sole discretion undertakes at any time or from time to time to provide any such information to any Guarantor, such Guarantied Party shall be under no obligation (i) to undertake any investigation not a part of its regular business routine, (ii) to disclose any information which,

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pursuant to accepted or reasonable banking or commercial finance practices, such Guarantied Party wishes to maintain as confidential, or (iii) to make any other or future disclosures of such information or any other information to such Guarantor.

(e) Each Guarantor consents and agrees that the Guarantied Parties shall be under no obligation to marshal any assets in favor of any Guarantor or otherwise in connection with obtaining payment of any or all of the Guarantied Obligations from any Person or source.

SECTION 4. Representations and Warranties. Each Guarantor hereby represents and warrants to the Guarantied Parties that the representations and warranties set forth in Article VI of the Credit Agreement as they relate to such Guarantor or to the Loan Documents to which such Guarantor is a party are true and correct in all material respects in the manner specified in the Credit Agreement and the Guarantied Parties shall be entitled to rely on each of them as if they were fully set forth herein.

SECTION 5. Amendments, Etc. No amendment or waiver of any provision of this Guaranty nor consent to any departure by any Guarantor herefrom shall in any event be effective unless the same shall be in writing, approved by the Required Lenders (or by all the Lenders where the approval of each Lender is required under the Credit Agreement) and signed by the Administrative Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

SECTION 6. Addresses for Notices. All notices and other communications provided for hereunder shall be effectuated in the manner provided for in Section 11.2 of the Credit Agreement, provided that if a notice or communication hereunder is sent to a Guarantor, said notice shall be addressed to such Guarantor, in care of the Borrower at the Borrower’s then current address (or facsimile number) for notice under the Credit Agreement.

SECTION 7. No Waiver; Remedies.

(b) No waiver by the Guarantied Parties of any default shall operate as a waiver of any other default or the same default on a future occasion, and no action by any of the Guarantied Parties permitted hereunder shall in way affect or impair any of the rights of the Guarantied Parties or the obligations of any Guarantor under this Guaranty or under any of the other Loan Documents, except as specifically set forth in any such waiver. Any determination by a court of competent jurisdiction of the amount of any principal and/or interest or other amount constituting any of the Guarantied Obligations shall be conclusive and binding on each Guarantor irrespective of whether such Guarantor was a party to the suit or action in which such determination was made provided that the Borrower was so a party.

Page - 5
Form of Subsidiary Guaranty

to set-off and apply any and all deposits (general or special (except trust and escrow accounts), time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Guarantied Party to or for the credit or the account of each Guarantor against any and all of the obligations of such Guarantor now or hereafter existing under this Guaranty, irrespective of whether or not such Guarantied Party shall have made any demand under this Guaranty and although such obligations may be contingent and unmatured; provided, however, such Guarantied Party shall promptly notify such Guarantor and the Borrower after such set-off and the application made by such Guarantied Party. The rights of each Guarantied Party under this Section 8 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Guarantied Party may have.

SECTION 9. Continuing Guaranty; Transfer of Revolving Notes. This Guaranty (a)(i) is a continuing guaranty and shall remain in full force and effect until the date upon which all of the Guarantied Obligations are paid in full, the Commitments are terminated and all Letters of Credit have expired (the “Release Date”) and (ii) binding upon each Guarantor, its permitted successors and assigns, and (b) inures to the benefit of and be enforceable by the Guarantied Parties and their respective successors, permitted transferees, and permitted assigns. Without limiting the generality of the foregoing clause (b), each of the Guarantied Parties may assign or otherwise transfer any Revolving Note held by it or the Guarantied Obligations owed to it to any other Person, and such other Person shall thereupon become vested with all the rights in respect thereof granted to such Guarantied Party herein or otherwise with respect to such of the Revolving Notes and the Guarantied Obligations so transferred or assigned, subject, however, to compliance with the provisions of Section 11.9 of the Credit Agreement in respect of assignments. No Guarantor may assign any of its obligations under this Guaranty without first obtaining the written consent of the Lenders as set forth in the Credit Agreement.

SECTION 10. Reimbursement. To the extent that any Guarantor shall be required hereunder to pay a portion of the Guarantied Obligations exceeding the greater of (a) the amount of the economic benefit actually received by such Guarantor from the Loans and the Letters of Credit and (b) the amount such Guarantor would otherwise have paid if such Guarantor had paid the aggregate amount of the Guarantied Obligations (excluding the amount thereof repaid by the Borrower) in the same proportion as such Guarantor’s net worth at the date enforcement is sought hereunder bears to the aggregate net worth of all the Guarantors at the date enforcement is sought hereunder, then such Guarantor shall be reimbursed by such other Guarantors for the amount of such excess, pro rata, based on the respective net worths of such other Guarantors at the date enforcement hereunder is sought. Notwithstanding anything to the contrary, each Guarantor agrees that the Guarantied Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing its guaranty herein or effecting the rights and remedies of the Guarantied Parties hereunder. This Section 10 is intended only to define the relative rights of the Guarantors, and nothing set forth in this Section 10 is intended to or shall impair the obligations of the Guarantors, jointly and severally, to pay to the Guarantied Parties the Guarantied Obligations as and when the same shall become due and payable in accordance with the terms hereof.

Page - 6
Form of Subsidiary Guaranty

any Loan Party’s assets, and shall, to the fullest extent permitted by Applicable Law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Guarantied Obligations, or any part thereof, is, pursuant to Applicable Law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligees of the Guarantied Obligations or such part thereof, whether as a “voidable preference,” “fraudulent transfer,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Guarantied Obligations shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

SECTION 12. GOVERNING LAW.

(c) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS SITTING IN DALLAS COUNTY, TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS (DALLAS DIVISION), AND BY EXECUTION, DELIVERY AND ACCEPTANCE OF THIS GUARANTY, EACH GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO. EACH GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.

SECTION 13. Waiver of Jury Trial. EACH GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY (OR BY ACCEPTANCE HEREOF) EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF ANY ONE OR MORE OF EACH GUARANTOR, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR

Page - 7
Form of Subsidiary Guaranty

OTHERWISE; AND EACH OF THE GUARANTORS, THE ADMINISTRATIVE AGENT AND EACH LENDER 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 OF THE GUARANTORS, THE ADMINISTRATIVE AGENT AND EACH LENDER MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF EACH GUARANTOR, THE ADMINISTRATIVE AGENT AND EACH LENDER TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

SECTION 14. Section Titles. The Section titles contained in this Guaranty are and shall be without substantive meaning or content of any kind whatsoever and are not a part of this Guaranty.

SECTION 16. Miscellaneous. All references herein to the Borrower or to any Guarantor shall include their respective successors and assigns, including, without limitation, a receiver, trustee or debtor-in-possession of or for the Borrower or such Guarantor. All references to the singular shall be deemed to include the plural where the context so requires.

SECTION 17. Subrogation and Subordination.

(a) Subrogation. Notwithstanding any reference to subrogation contained herein to the contrary, until the Release Date, each Guarantor hereby irrevocably waives any claim or other rights which it may have or hereafter acquire against the Borrower that arise from the existence, payment, performance or enforcement of such Guarantor’s obligations under this Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, any right to participate in any claim or remedy of any Lender against the Borrower or any collateral which any Lender now has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under contract, statutes or common law, including without limitation, the right to take or receive from the Borrower, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Guarantor in violation of the preceding sentence and the Guarantied Obligations shall not have been paid in full, such amount shall be deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Lenders, and shall forthwith be paid to the Administrative Agent to be credited and applied upon the Guarantied Obligations, whether matured or unmatured, in accordance with the terms of the Credit Agreement. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Credit Agreement and that the waiver set forth in this Section 17 is knowingly made in contemplation of such benefits.

(b) Subordination. With respect to each Guarantor, all debt and other liabilities of the Borrower or any other Loan Party to such Guarantor (“Loan Party Debt”) are expressly subordinate and junior to the Guarantied Obligations and any instruments evidencing the Guarantied Obligations to the extent provided below.

Page - 8
Form of Subsidiary Guaranty

(i) Until the Release Date, each Guarantor agrees that it will not request, demand, accept, or receive (by set-off or other manner) any payment amount, credit or reduction of all or any part of the amounts owing under the Loan Party Debt or any security therefor, except as specifically allowed pursuant to clause (ii) below;

(ii) Notwithstanding the provisions of clause (i) above, the Borrower and each other Loan Party may pay to such Guarantor and such Guarantor may request, demand, accept and receive and retain from the Borrower payments, credits or reductions of all or any part of the amounts owing under the Loan Party Debt or any security therefor on the Loan Party Debt, provided that the Borrower’s and other Loan Party’s right to pay and such Guarantor’s right to receive any such amount shall automatically and be immediately suspended and cease (A) upon the occurrence and during the continuance of an Event of Default or (B) if, after taking into account the effect of such payment, an Event of Default would occur and be continuing. Such Guarantor’s right to receive amounts under this clause (ii) (including any amounts which theretofore may have been suspended) shall automatically be reinstated at such time as the Event of Default which was the basis of such suspension has been cured or waived (provided that no subsequent Event of Default has occurred) or such earlier date, if any, as the Administrative Agent gives notice to the Guarantors of reinstatement by the Required Lenders, in the Required Lenders’ sole discretion;

(iii) If any Guarantor receives any payment on the Borrower Debt in violation of this Guaranty, such Guarantor will hold such payment in trust for the Lenders and will immediately deliver such payment to the Administrative Agent; and

(iv) In the event of the commencement or joinder of any suit, action or proceeding of any type (judicial or otherwise) or proceeding under any Debtor Relief Law against the Borrower or any other Loan Party (an “Insolvency Proceeding”) and subject to court orders issued pursuant to the Bankruptcy Code, the Guarantied Obligations shall first be paid, discharged and performed in full before any payment or performance is made upon the Loan Party Debt notwithstanding any other provisions which may be made in such Insolvency Proceeding. In the event of any Insolvency Proceeding, each Guarantor will at any time prior to the Release Date (A) file, at the request of any Guarantied Party, any claim, proof of claim or similar instrument necessary to enforce the Borrower’s or such other Loan Party’s obligation to pay the Loan Party Debt, and (B) hold in trust for and pay to the Guarantied Parties any and all monies, obligations, property, stock dividends or other assets received in any such proceeding on account of the Loan Party Debt in order that the Guarantied Parties may apply such monies or the cash proceeds of such other assets to the Guarantied Obligations.

SECTION 18. Guarantor Insolvency. Should any Guarantor voluntarily seek, consent to, or acquiesce in the benefits of any Debtor Relief Law or become a party to or be made the subject of any proceeding provided for by any Debtor Relief Law (other than as a creditor or claimant) that could suspend or otherwise adversely affect the rights of any Guarantied Party granted hereunder, then, the obligations of such Guarantor under this Guaranty shall be, as between such Guarantor and such Guarantied Party, a fully-matured, due, and payable obligation of such Guarantor to such Guarantied Party (without regard to whether there is an Event of Default under the Credit Agreement or whether any part of the Guarantied Obligations is then

Page - 9
Form of Subsidiary Guaranty

due and owing by the Borrower to such Guarantied Party), payable in full by such Guarantor to such Guarantied Party upon demand, which shall be the estimated amount owing in respect of the contingent claim created hereunder.

SECTION 19. Rate Provision. It is not the intention of any Guarantied Party to make an agreement violative of the laws of any applicable jurisdiction relating to usury. Regardless of any provision in this Guaranty, no Guarantied Party shall ever be entitled to contract, charge, receive, collect or apply, as interest on the Guarantied Obligations, any amount in excess of the Maximum Rate. In no event shall any Guarantor be obligated to pay any amount in excess of the Maximum Rate. If from any circumstance the Administrative Agent or any Guarantied Party shall ever receive, collect or apply anything of value deemed excess interest under Applicable Law, an amount equal to such excess shall be applied to the reduction of the principal amount of outstanding Revolving Loans, Swing Line Loans and L/C Borrowings, and any remainder shall be promptly refunded to the payor. In determining whether or not interest paid or payable with respect to the Guarantied Obligations, under any specified contingency, exceeds the Maximum Rate, the Guarantors and the Guarantied Parties shall, to the maximum extent permitted by Applicable Law, (a) characterize any non-principal payment as an expense, fee or premium rather than as interest, (b) amortize, prorate, allocate and spread the total amount of interest throughout the full term of such Guarantied Obligations so that the interest paid on account of such Guarantied Obligations does not exceed the Maximum Rate and/or (c) allocate interest between portions of such Guarantied Obligations; provided that if the Guarantied Obligations are paid and performed in full prior to the end of the full contemplated term thereof, and if the interest received for the actual period of existence thereof exceeds the Maximum Rate, the Guarantied Parties shall refund to the payor the amount of such excess or credit the amount of such excess against the total principal amount owing, and, in such event, no Guarantied Party shall be subject to any penalties provided by any laws for contracting for, charging or receiving interest in excess of the Maximum Rate.

SECTION 20. Guarantor’s Covenants. Guarantor covenants to and agrees with Administrative Agent and Lenders that as long as the Guaranteed Obligations or any part thereof is outstanding or any Lender has any commitment under the Credit Agreement, Guarantor will comply with all covenants set forth in the Credit Agreement specifically applicable to Guarantor, the terms of which are incorporated herein by reference.

Page - 10
Form of Subsidiary Guaranty

REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

Page - 11
Form of Subsidiary Guaranty

IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed and delivered by its duly authorized officer on the date first above written.


		EWC GP CORP.

		By:

				Name:

				Title:


		EWC LP CORP.

		By:

				Name:

				Title:


		EWC AVIATION CORP.

		By:

				Name:

				Title:

Page - 12
Form of Subsidiary Guaranty

Schedule 6.7

Subsidiary Information


	State of
	Incorporation	Authorized	Outstanding
	/Formation	Capital	Capital	Ownership
Encore Wire Limited	Texas	N/A	N/A	99% EWC LP Corp.

EWC GP Corp.	Delaware	1,000 shares of Common Stock, par value $.01	1,000 shares of Common Stock, par value $.01	1% EWC GP Corp. 100% by Encore Wire Corporation

EWC LP Corp.	Delaware	1,000 shares of Common Stock, par value $.01	1,000 shares of Common Stock, par value $.01	100% by Encore Wire Corporation

EWC Aviation Corp.	Texas	50,000 shares of Common Stock, par value $.01	1,000 share of Common Stock, par value $.01	100% by Encore Wire Corporation

Schedule 6.12

Pending Litigation

None.

Schedule 6.15

Tax Returns or Filings

None.

Schedule 11.2

Addresses for Notices

Borrower:

Encore Wire Limited
1410 Millwood Road, P.O. Box 1149
McKinney, Texas 75069-0545
Telecopy: 972-562-4744
Telephone: 972-562-9473
Attention: Frank Bilban

Agent:

Bank of America, N.A.
231 S LA SALLE ST, 8th Floor
CHICAGO IL 60604
Attn: Rosanne Parsill

Issuing Bank:

Bank of America, N.A.
Trade Operations-Los Angeles #22621
333 S. Beaudry Avenue, 19th Floor
Mail Code: CA9-703-19-23
Los Angeles, CA 90017-1466
Attention: Sandra Leon

Vice President

Telephone: 213.345.5231
Telecopier: 213.345.6694
Electronic Mail: Sandra.Leon@bankofamerica.com

EX-10.2 3 d19811exv10w2.htm NOTE PURCHASE AGREEMENT exv10w2

Exhibit 10.2

ENCORE WIRE CORPORATION
ENCORE WIRE LIMITED

$45,000,000
5.27% Senior Notes, Series 2004-A,
due August 27, 2011

NOTE PURCHASE AGREEMENT

Dated as of August 1, 2004

PPN: 29263@ AA 7

TABLE OF CONTENTS


	Section		Page
1.	AUTHORIZATION OF NOTES			1
	1.1.	Description of the Notes		1
	1.2.	Guaranties; Release of Subsidiary Guaranty		1
2.	SALE AND PURCHASE OF NOTES			2
3.	CLOSING			2
4.	CONDITIONS TO CLOSING			3
	4.1.	Representations and Warranties		3
	4.2.	Performance; No Default		3
	4.3.	Compliance Certificates		3
	4.4.	Opinions of Counsel		3
	4.5.	Purchase Permitted By Applicable Law, etc		4
	4.6.	Sale of Other Notes		4
	4.7.	Payment of Special Counsel Fees		4
	4.8.	Private Placement Number		4
	4.9.	Changes in Corporate Structure		4
	4.10.	Guaranties		4
	4.11.	Credit Agreement		5
	4.12.	Funding Instructions		5
	4.13.	Proceedings and Documents		5
5.	REPRESENTATIONS AND WARRANTIES OF THE COMPANY			5
	5.1.	Organization; Power and Authority		5
	5.2.	Authorization, etc		5
	5.3.	Disclosure		6
	5.4.	Organization and Ownership of Shares of Subsidiaries		6
	5.5.	Financial Statements		7
	5.6.	Compliance with Laws, Other Instruments, etc		7
	5.7.	Governmental Authorizations, etc		8
	5.8.	Litigation; Observance of Statutes and Orders		8
	5.9.	Taxes		9
	5.10.	Title to Property; Leases		9
	5.11.	Licenses, Permits, etc		9
	5.12.	Compliance with ERISA		10
	5.13.	Private Offering by the Company		11
	5.14.	Use of Proceeds; Margin Regulations		11
	5.15.	Existing Debt		11
	5.16.	Foreign Assets Control Regulations, Anti-Terrorism Order, etc		12
	5.17.	Status under Certain Statutes		12
	5.18.	Environmental Matters		12
	5.19.	Solvency of Subsidiary Guarantors		13


	Section		Page
6.	REPRESENTATIONS OF THE PURCHASERS			13
	6.1.	Purchase for Investment		13
	6.2.	Source of Funds		13
7.	INFORMATION AS TO THE PARENT AND THE COMPANY			15
	7.1.	Financial and Business Information		15
	7.2.	Officer’s Certificate		18
	7.3.	Inspection		18
8.	PREPAYMENT OF THE NOTES			19
	8.1.	No Scheduled Prepayments		19
	8.2.	Optional Prepayments with Make-Whole Amount		19
	8.3.	Allocation of Partial Prepayments		19
	8.4.	Maturity; Surrender, etc		20
	8.5.	Purchase of Notes		20
	8.6.	Make-Whole Amount		20
9.	AFFIRMATIVE COVENANTS			22
	9.1.	Compliance with Law		22
	9.2.	Insurance		22
	9.3.	Maintenance of Properties		22
	9.4.	Payment of Taxes		22
	9.5.	Corporate Existence, etc		23
	9.6.	Additional Subsidiary Guarantors		23
	9.7.	Ranking of Notes		23
10.	NEGATIVE COVENANTS			24
	10.1.	Consolidated Debt		24
	10.2.	Interest Coverage		24
	10.3.	Priority Debt		24
	10.4.	Liens.		24
	10.5.	Mergers, Consolidations, etc		26
	10.6.	Sale of Assets		27
	10.7.	Designation of Restricted and Unrestricted Subsidiaries		27
	10.8.	Nature of Business		28
	10.9.	Transactions with Affiliates		28
11.	EVENTS OF DEFAULT			29
12.	REMEDIES ON DEFAULT, ETC			31
	12.1.	Acceleration		31
	12.2.	Other Remedies		32
	12.3.	Rescission		32
	12.4.	No Waivers or Election of Remedies, Expenses, etc		32
13.	REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES			32
	13.1.	Registration of Notes		32


	Section		Page
	13.2.	Transfer and Exchange of Notes		33
	13.3.	Restriction on Transfer to Competitor		33
	13.4.	Replacement of Notes		33
14.	PAYMENTS ON NOTES			34
	14.1.	Place of Payment		34
	14.2.	Home Office Payment		34
15.	EXPENSES, ETC			35
	15.1.	Transaction Expenses		35
	15.2.	Survival		35
16.	SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT			35
17.	AMENDMENT AND WAIVER			36
	17.1.	Requirements		36
	17.2.	Solicitation of Holders of Notes		36
	17.3.	Binding Effect, etc		36
	17.4.	Notes held by Company, etc		37
18.	NOTICES			37
19.	REPRODUCTION OF DOCUMENTS			37
20.	CONFIDENTIAL INFORMATION			38
21.	SUBSTITUTION OF PURCHASER			39
22.	MISCELLANEOUS			39
	22.1.	Successors and Assigns		39
	22.2.	Payments Due on Non-Business Days		39
	22.3.	Severability		39
	22.4.	Construction		40
	22.5.	Counterparts		40
	22.6.	Governing Law		40
	22.7.	Limitation on Interest		40

iii


SCHEDULE A	—	Information Relating to Purchasers
SCHEDULE B	—	Defined Terms

SCHEDULE 5.4	—	Subsidiaries and Ownership of Subsidiary Stock
SCHEDULE 5.5	—	Financial Statements
SCHEDULE 5.14	—	Use of Proceeds
SCHEDULE 5.15	—	Debt

EXHIBIT 1.1	—	Form of Series 2004-A Senior Note
EXHIBIT 1.2(a)	—	Form of Parent Guaranty
EXHIBIT 1.2(b)	—	Form of Subsidiary Guaranty
EXHIBIT 4.4(a)	—	Form of Opinion of Counsel for the Company
EXHIBIT 4.4(b)	—	Form of Opinion of Special Counsel to the Purchasers

ENCORE WIRE CORPORATION
ENCORE WIRE LIMITED
1410 Millwood Road
McKinney, TX 75069
(972) 562-9473
Fax: (972) 562-4744

$45,000,000
5.27% Senior Notes, Series 2004-A,
due August 27, 2011

Dated as of August 1, 2004

TO EACH OF THE PURCHASERS LISTED IN

THE ATTACHED SCHEDULE A:

Ladies and Gentlemen:

ENCORE WIRE LIMITED, a Texas limited partnership (the “Company”), and ENCORE WIRE CORPORATION, a Delaware corporation (the “Parent”), agree with you as follows:

1. AUTHORIZATION OF NOTES.

1.1. Description of the Notes.

The Company has authorized the issue and sale of $45,000,000 aggregate principal amount of its 5.27% Senior Notes, Series 2004-A, due August 27, 2011 (the “Notes,” such term to include any Notes issued in substitution therefor pursuant to Section 13 of this Agreement). The Notes shall be substantially in the form set out in Exhibit 1.1, with such changes therefrom, if any, as may be approved by you, the Other Purchasers and the Company. Certain capitalized terms used in this Agreement are defined in Schedule B; references to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement.

1.2. Guaranties; Release of Subsidiary Guaranty.

(a) Guaranties. The Notes will be guaranteed (i) by the Parent pursuant to a guaranty in substantially the form of Exhibit 1.2(a) (the “Parent Guaranty”) and (ii) by the Subsidiary Guarantors pursuant to a guaranty in substantially the form of Exhibit 1.2(b) (the “Subsidiary Guaranty,” and, together with the Parent Guaranty, the “Guaranties”).

(b) Release of Subsidiary Guaranty. Each holder of a Note agrees to release and discharge a Subsidiary Guarantor from the Subsidiary Guaranty upon written request of the Company, provided that (i) such Subsidiary has been, or concurrently with the release by the holders of Notes, will be released and discharged as guarantor under and in respect of the Credit Agreement and any other Senior Debt; (ii) such release and discharge is not part of a plan of financing that contemplates such Subsidiary Guarantor guaranteeing any other Debt of the Company or becoming a borrower under the Credit Agreement; (iii) no Default or Event of Default exists or will exist immediately following such release and discharge; (iv) if any fee or other consideration is paid or given to any holder of Debt in connection with such release, other than the repayment of all or a portion of such Debt, each holder of a Note receives equivalent consideration on a pro rata basis; and (v) at the time of such written request, the Company delivers to each holder of Notes a certificate of a Responsible Officer certifying the matters set forth in clauses (i) through (iv).

2. SALE AND PURCHASE OF NOTES.

Subject to the terms and conditions of this Agreement, the Company will issue and sell to you and each of the other purchasers named in Schedule A (the “Other Purchasers”), and you and the Other Purchasers will purchase from the Company, at the Closing provided for in Section 3, Notes in the principal amount and series specified opposite your names in Schedule A at the purchase price of 100% of the principal amount thereof. Your obligation hereunder and the obligations of the Other Purchasers are several and not joint obligations and you shall have no liability to any Person for the performance or non-performance by any Other Purchaser hereunder.

3. CLOSING.

The sale and purchase of the Notes to be purchased by you and the Other Purchasers shall occur at the offices of Gardner, Carton & Douglas LLP, Suite 3700, 191 North Wacker Drive, Chicago, Illinois 60606 at 9:00 a.m., Chicago time, at a closing on August 27, 2004 (the “Closing”) or on such other Business Day thereafter, not later than August 31, 2004, as may be agreed upon by the Company and the purchasers that are scheduled to purchase Notes at such Closing. At the Closing, the Company will deliver to you the Notes to be purchased by you in the form of a single Note (or such greater number of Notes in denominations of at least $100,000 as you may request) dated the date of Closing and registered in your name (or in the name of your nominee), against delivery by you to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Company to account number 4779592667 at Bank of America, N.A., 901 Main Street, 67th Floor, Dallas TX, ABA No. 111 0000 25. If at the Closing the Company fails to tender such Notes to you as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to your satisfaction, you shall, at your election, be relieved of all further obligations under this Agreement, without thereby waiving any rights you may have by reason of such failure or such nonfulfillment.

4. CONDITIONS TO CLOSING.

Your obligation to purchase and pay for the Notes to be sold to you at the Closing is subject to the fulfillment to your satisfaction, prior to or at the Closing, of the following conditions:

4.1. Representations and Warranties.

The representations and warranties of the Parent and the Company in this Agreement shall be correct when made and at the time of the Closing.

4.2. Performance; No Default.

The Parent and the Company shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by them prior to or at the Closing and after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof as contemplated by Schedule 5.14) no Default or Event of Default shall have occurred and be continuing. Neither the Parent nor any Subsidiary, including the Company, shall have entered into any transaction since the date of the Memorandum that would have been prohibited by Sections 10, had such Section applied since such date.

4.3. Compliance Certificates.

(a) Officer’s Certificate. The Parent and the Company each shall have delivered to you an Officer’s Certificate, dated the date of such Closing, certifying that the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.

(b) Secretary’s Certificate. The Parent, the Company and each Subsidiary Guarantor shall have delivered to you a certificate certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Notes and the Agreement.

4.4. Opinions of Counsel.

You shall have received opinions in form and substance reasonably satisfactory to you, dated the date of the Closing (a) from Thompson & Knight LLP, counsel for the Parent, the Company and the Subsidiary Guarantors, covering the matters set forth in Exhibit 4.4(a) and covering such other matters incident to the transactions contemplated hereby as you or your counsel may reasonably request (and the Parent and the Company instruct their counsel to deliver such opinion to you) and (b) from Gardner Carton & Douglas LLP, your special counsel in connection with such transactions, substantially in the form set forth in Exhibit 4.4(b) and covering such other matters incident to such transactions as you may reasonably request.

4.5. Purchase Permitted By Applicable Law, etc.

On the date of the Closing your purchase of Notes shall (i) be permitted by the laws and regulations of each jurisdiction to which you are subject, without recourse to provisions (such as section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (ii) not violate any applicable law or regulation (including Regulation U, T or X of the Board of Governors of the Federal Reserve System) and (iii) not subject you to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof. If requested by you, you shall have received an Officer’s Certificate certifying as to such matters of fact as you may reasonably specify to enable you to determine whether such purchase is so permitted.

4.6. Sale of Other Notes.

Contemporaneously with the Closing the Company shall sell to the Other Purchasers and the Other Purchasers shall purchase the Notes to be purchased by them at the Closing as specified in Schedule A.

4.7. Payment of Special Counsel Fees.

Without limiting the provisions of Section 15.1, the Company shall have paid on or before the Closing the fees, charges and disbursements of your special counsel referred to in Section 4.4, to the extent reflected in a reasonably detailed statement of such counsel rendered to the Company at least one Business Day prior to the Closing.

4.8. Private Placement Number.

A Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners) shall have been obtained by Gardner Carton & Douglas LLP for the Notes.

4.9. Changes in Corporate Structure.

Neither the Parent nor the Company shall have changed its jurisdiction of incorporation or been a party to any merger or consolidation and shall not have succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in Schedule 5.5.

4.10. Guaranties.

The Parent shall have executed and delivered the Parent Guaranty and each Subsidiary Guarantor shall have executed and delivered the Subsidiary Guaranty.

4.11. Credit Agreement.

You and your special counsel shall have been provided with a copy of the executed Credit Agreement by the Company or the Parent.

4.12. Funding Instructions.

At least three Business Days prior to the date of the Closing, each Purchaser shall have received written instructions signed by a Responsible Officer on letterhead of the Company confirming the information specified in Section 3 including (i) the name and address of the transferee bank, (ii) such transferee bank’s ABA number and (iii) the account name and number into which the purchase price for the Notes is to be deposited.

4.13. Proceedings and Documents.

All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be reasonably satisfactory to you and your special counsel, and you and your special counsel shall have received all such counterpart originals or certified or other copies of such documents as you or they may reasonably request.

5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

Each of the Company and the Parent represents and warrants to you that:

5.1. Organization; Power and Authority.

Each of the Company and the Parent is a limited partnership or corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign limited partnership or corporation and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each of the Company and the Parent has the limited partnership or corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Agreement, the Parent Guaranty (in the case of the Parent) and the Notes (in the case of the Company) and to perform the provisions hereof and thereof.

5.2. Authorization, etc.

This Agreement and the Notes have been duly authorized by all necessary limited partnership action on the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization,

moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

The Guaranties have been duly authorized by all necessary corporate action on the part of the Parent or each Subsidiary Guarantor, as the case may be, and upon execution and delivery thereof will constitute the legal, valid and binding obligation of the Parent and each Subsidiary Guarantor, enforceable against the Parent or each Subsidiary Guarantor, as the case may be, in accordance with their respective terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

5.3. Disclosure.

The Parent and the Company, through their agent, Banc of America Securities LLC, have delivered to you and each Other Purchaser a copy of a Private Placement Memorandum, dated July 2004 (the “Memorandum”), relating to the transactions contemplated hereby. The Memorandum fairly describes, in all material respects, the general nature of the business and principal properties of the Parent and its Subsidiaries, including the Company. This Agreement, the Memorandum, the documents, certificates or other writings delivered to you by or on behalf of the Company in connection with the transactions contemplated hereby and the financial statements listed in Schedule 5.5, taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made. Except as disclosed in the Memorandum, or in one of the documents, certificates or other writings identified therein, or in the financial statements listed in Schedule 5.5, since December 31, 2003, there has been no change in the financial condition, operations, business or properties of the Parent or any Subsidiary, including the Company, except changes that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect. There is no fact known to the Parent or the Company that could reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the Memorandum or in the other documents, certificates and other writings delivered to you by or on behalf of the Parent or the Company specifically for use in connection with the transactions contemplated hereby.

5.4. Organization and Ownership of Shares of Subsidiaries.

(a) Schedule 5.4 contains (except as noted therein) complete and correct lists of (i) the Parent’s Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Parent and each other Subsidiary, including the Company, (ii) the Parent’s Affiliates, other than Subsidiaries, and (iii) the Parent’s and the Company’s directors and senior officers.

(b) All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the Parent and its Subsidiaries, including the Company, have been validly issued, are fully paid and nonassessable and are owned by the Parent or another Subsidiary, including the Company, free and clear of any Lien (except as otherwise disclosed in Schedule 5.4).

(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact.

(d) No Subsidiary is a party to, or otherwise subject to any legal restriction or any agreement (other than this Agreement, the agreements listed on Schedule 5.4 and customary limitations imposed by corporate, partnership or limited liability company law statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries that owns outstanding shares of capital stock or similar equity interests of such Subsidiary.

5.5. Financial Statements.

The Parent has delivered to you and each Other Purchaser copies of the consolidated financial statements of the Parent and its Subsidiaries, including the Company, listed on Schedule 5.5. All of said financial statements (including in each case the related schedules and notes) fairly present in all material respects the consolidated financial position of the Parent and its Subsidiaries, including the Company, as of the respective dates specified in such Schedule and the consolidated results of their operations and cash flows for the respective periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments and to the absence of footnotes).

5.6. Compliance with Laws, Other Instruments, etc.

The execution, delivery and performance by the Company and the Parent of this Agreement and by the Company of the Notes will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Parent or any Subsidiary, including the Company, under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other Material agreement or instrument to which the Parent or any Subsidiary, including the Company, is bound or by which any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or

ruling of any court, arbitrator or Governmental Authority applicable to the Parent or any Subsidiary, including the Company, or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Parent or any Subsidiary, including the Company.

The execution, delivery and performance by each of the Parent and each Subsidiary Guarantor of the Guaranty to which it is a party will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Parent or such Subsidiary Guarantor under, any agreement, or corporate charter or by-laws, to which the Parent or such Subsidiary Guarantor is bound or by which the Parent or such Subsidiary Guarantor or any of their properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Parent or such Subsidiary Guarantor or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Parent or such Subsidiary Guarantor.

5.7. Governmental Authorizations, etc.

No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by the Company of this Agreement or the Notes or the execution, delivery or performance by the Parent of this Agreement or the Parent Guaranty or by each Subsidiary Guarantor of the Subsidiary Guaranty.

5.8. Litigation; Observance of Statutes and Orders.

(a) There are no actions, suits or proceedings pending or, to the knowledge of the Parent or the Company, threatened against or affecting the Parent or any Subsidiary, including the Company, or any property of the Parent or any Subsidiary, including the Company, in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(b) Neither the Parent nor any Subsidiary, including the Company, is in default under any term of any agreement or instrument to which it is a party or by which it is bound, or any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance, rule or regulation (including Environmental Laws and the USA Patriot Act) of any Governmental Authority, which default or violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

5.9. Taxes.

The Parent and its Subsidiaries, including the Company, have filed all tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon them or their

properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (i) the amount of which is not individually or in the aggregate Material or (ii) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Parent or a Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. Neither the Parent nor the Company knows of any basis for any other tax or assessment that could reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Parent and its Subsidiaries, including the Company, in respect of Federal, state or other taxes for all fiscal periods are, in the good faith judgment of the Parent, adequate. The federal income tax liabilities of the Parent and its Subsidiaries, including the Company, have been determined by the Internal Revenue Service and paid for all fiscal years up to and including the fiscal year ended December 31, 2001.

5.10. Title to Property; Leases.

The Parent and its Subsidiaries, including the Company, have good and defensible title to their respective Material properties, including all such properties reflected in the most recent audited balance sheet referred to in Section 5.5 or acquired by the Company or any Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of Liens prohibited by this Agreement. All leases that individually or in the aggregate are Material are valid and subsisting and are in full force and effect in all material respects.

5.11. Licenses, Permits, etc.

(a) the Parent and its Subsidiaries, including the Company, own or possess all licenses, permits, franchises, authorizations, patents, copyrights, service marks, trademarks and trade names, or rights thereto necessary for the conduct of their businesses without known conflict with the rights of others;

(b) to the knowledge of the Parent and the Company, no product of the Parent or any Subsidiary, including the Company, infringes any license, permit, franchise, authorization, patent, copyright, service mark, trademark, trade name or other right owned by any other Person; and

(c) to the knowledge of the Parent, there is no violation by any Person of any right of the Parent or any of its Subsidiaries, including the Company, with respect to any patent, copyright, service mark, trademark, trade name or other right owned or used by the Parent or any of its Subsidiaries, including the Company;

except, in each instance, for the lack of ownership or possession, conflicts or violations that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

5.12. Compliance with ERISA.

(a) The Parent and each ERISA Affiliate, including the Company, have operated and administered each Plan in compliance with all applicable laws except for such instances of noncompliance as have not resulted in and could not reasonably be expected to result in a Material Adverse Effect. Neither the Parent nor any ERISA Affiliate, including the Company, has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in Section 3 of ERISA), and no event, transaction or condition has occurred or exists that could reasonably be expected to result in the incurrence of any such liability by the Parent or any ERISA Affiliate, including the Company, or in the imposition of any Lien on any of the rights, properties or assets of the Parent or any ERISA Affiliate, including the Company, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than such liabilities or Liens as could not be individually or in the aggregate Material.

(b) The present value of the aggregate benefit liabilities under each of the Plans (other than Multiemployer Plans), determined as of the end of such Plan’s most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes in such Plan’s most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities. The term “benefit liabilities” has the meaning specified in section 4001 of ERISA and the terms “current value” and “present value” have the meaning specified in section 3 of ERISA.

(c) The Parent and its ERISA Affiliates, including the Company, have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material.

(d) The expected postretirement benefit obligation (determined as of the last day of the Parent’s most recently ended fiscal year in accordance with Financial Accounting Standards Board Statement No. 106, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of the Parent and its ERISA Affiliates, including the Company, is not Material.

(e) The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by the Parent and the Company in the first sentence of this Section 5.12(e) is made in reliance upon and subject to the accuracy of your representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the Notes to be purchased by you.

5.13. Private Offering by the Company.

None of the Parent, the Company or anyone acting on their behalf has offered the Notes or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any Person other than you, the Other Purchasers and not more than two other Institutional Investors, each of which has been offered the Notes at a private sale for investment. None of the Parent, the Company or anyone authorized to act on their behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of Section 5 of the Securities Act.

5.14. Use of Proceeds; Margin Regulations.

The Company will apply the proceeds of the sale of the Notes to repay Debt as set forth in Schedule 5.14 and for general corporate purposes. No part of the proceeds from the sale of the Notes will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock does not constitute more than 5% of the value of the consolidated assets of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute more than 5% of the value of such assets. As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U.

5.15. Existing Debt.

(a) Except as described therein, Schedule 5.15 sets forth a complete and correct list of all outstanding Debt of the Parent and its Subsidiaries, including the Company, as of June 30, 2004, since which date there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Debt of the Company or its Subsidiaries. Neither the Parent nor any Subsidiary, including the Company, is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Debt of the Parent or such Subsidiary, including the Company, and no event or condition exists with respect to any Debt of the Parent or any Subsidiary, including the Company, that would permit (or that with notice or the lapse of time, or both, could permit) one or more Persons to cause such Debt to become due and payable before its stated maturity or before its regularly scheduled dates of payment.

(b) Except as disclosed in Schedule 5.15, neither the Parent nor any Subsidiary, including the Company, has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 10.4.

5.16. Foreign Assets Control Regulations, Anti-Terrorism Order, etc.

Neither the sale of the Notes by the Company hereunder nor its use of the proceeds thereof will violate (a) the Trading with the Enemy Act, as amended, (b) any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto, (c) the Anti-Terrorism Order or (d) the United States Foreign Corrupt Practices Act of 1997, as amended. Without limiting the foregoing, neither Company nor any Subsidiary (i) is a blocked person described in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order or (ii) engages in any dealings or transactions, or is otherwise associated, with any such person.

5.17. Status under Certain Statutes.

Neither the Parent nor any Subsidiary, including the Company, is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended, the Interstate Commerce Act, as amended by the ICC Termination Act, as amended, or the Federal Power Act, as amended.

5.18. Environmental Matters.

Neither the Parent nor any Subsidiary, including the Company, has knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted raising any claim against the Parent or any of its Subsidiaries, including the Company, or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect. Except as otherwise disclosed to you in writing,

(a) neither the Parent nor any Subsidiary, including the Company, has knowledge of any facts which could give rise to any claim, public or private, of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly owned, leased or operated by any of them or to other assets or their use, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect;

(b) neither the Parent nor any Subsidiary, including the Company, has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them and has not disposed of any Hazardous Materials in a manner contrary to any Environmental Laws in each case in any manner that could reasonably be expected to result in a Material Adverse Effect; and

(c) all buildings on all real properties now owned, leased or operated by the Parent or any of its Subsidiaries, including the Company, are in compliance with applicable Environmental Laws, except where failure to comply could not reasonably be expected to result in a Material Adverse Effect.

5.19. Solvency of Subsidiary Guarantors.

After giving effect to the transactions contemplated herein and after giving due consideration to any rights of contribution (i) each Subsidiary Guarantor has received fair consideration and reasonably equivalent value for the incurrence of its obligations under the Subsidiary Guaranty, (ii) the fair value of the assets of each Subsidiary Guarantor (both at fair valuation and at present fair saleable value) exceeds its liabilities, (iii) each Subsidiary Guarantor is able to and expects to be able to pay its debts as they mature, and (iv) each Subsidiary Guarantor has capital sufficient to carry on its business as conducted and as proposed to be conducted.

6. REPRESENTATIONS OF THE PURCHASERS.

6.1. Purchase for Investment.

You represent that you are purchasing the Notes for your own account or for one or more separate accounts maintained by you or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of your or their property shall at all times be within your or their control. You understand that the Notes have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Company is not required to register the Notes. You represent that you are an “accredited investor” within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 of Regulation D under the Securities Act.

6.2. Source of Funds.

You represent that at least one of the following statements is an accurate representation as to each source of funds (a “Source”) to be used by you to pay the purchase price of the Notes to be purchased by you hereunder:

(a) the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the National Association of Insurance Commissioners (the “NAIC Annual Statement”)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile; or

(b) the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or

(c) the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1 (issued January 29, 1990), or (ii) a bank collective investment fund, within the meaning of PTE 91-38 (issued August 12, 1991) and, except as you have disclosed to the Obligors in writing pursuant to this paragraph (c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or

(d) the Source constitutes assets of an “investment fund” (within the meaning of Part V of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part V of the QPAM Exemption), no employee benefit plan’s assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM (applying the definition of “control” in Section V(e) of the QPAM Exemption) owns a 5% or more interest in any Obligor and (i) the identity of such QPAM and (ii) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Obligors in writing pursuant to this clause (d); or

(e) the Source constitutes assets of a “plan(s)” (within the meaning of Section IV of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV of the INHAM exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in Section IV(h) of the INHAM Exemption) owns a 5% or more interest in any Obligor and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Obligors in writing pursuant to this clause (e); or

(f) the Source is a governmental plan; or

(g) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Obligors in writing pursuant to this paragraph (g); or

(h) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA.

As used in this Section 6.2, the terms “employee benefit plan”, “governmental plan” and “separate account” shall have the respective meanings assigned to such terms in section 3 of ERISA.

7. INFORMATION AS TO THE PARENT AND THE COMPANY.

7.1. Financial and Business Information.

The Parent will deliver to each holder of Notes that is an Institutional Investor:

(a) Quarterly Statements — within 60 days (or such other shorter period within which Quarterly Reports on Form 10-Q are required to be timely filed with the Securities and Exchange Commission, including any extension permitted by Rule 12b-25 of the Exchange Act) after the end of each quarterly fiscal period in each fiscal year of the Parent (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of,

(i) a consolidated balance sheet of the Parent and its Subsidiaries, including the Company, as at the end of such quarter,

(ii) consolidated statements of income and shareholders’ equity of the Parent and its Subsidiaries, including the Company, for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter, and

(iii) consolidated statements of cash flows of the Parent and its Subsidiaries, including the Company, for such quarter or (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter,

setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments, provided that delivery within the time period specified above of copies of the Parent’s Quarterly Report on Form 10-Q prepared in compliance with the requirements therefor and filed with the Securities and Exchange Commission shall be deemed to satisfy the requirements of this Section 7.1(a);

(b) Annual Statements — within 105 days (or such other shorter period within which Annual Reports on Form 10-K are required to be timely filed with the Securities and Exchange Commission, including any extension permitted by Rule 12b-25 of the Exchange Act) after the end of each fiscal year of the Parent, duplicate copies of,

(i) a consolidated balance sheet of the Parent and its Subsidiaries, including the Company, as at the end of such year, and

(ii) consolidated statements of income, shareholders’ equity and cash flows of the Parent and its Subsidiaries, including the Company, for such year,

setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion thereon of independent certified public accountants of recognized regional or national standing, which opinion shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances; provided that the delivery within the time period specified above of the Parent’s Annual Report on Form 10-K for such fiscal year (together with the Parent’s annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements therefor and filed with the Securities and Exchange Commission shall be deemed to satisfy the requirements of this Section (b);

(c) Unrestricted Subsidiaries — if, at the time of delivery of any financial statements pursuant to Section 7.1(a) or (b), Unrestricted Subsidiaries account for more than 10% of (i) the consolidated total assets of the Parent and its Subsidiaries, including the Company, reflected in the consolidated balance sheet included in such financial statements or (ii) the consolidated revenues of the Parent and its Subsidiaries, including the Company, reflected in the consolidated statement of income included in such financial statements, an unaudited balance sheet for all Unrestricted Subsidiaries taken as whole as at the end of the fiscal period included in such financial statements and the related unaudited statements of income, stockholders’ equity and cash flows for such Unrestricted Subsidiaries for such period, together with consolidating statements reflecting all eliminations or adjustments necessary to reconcile such group financial statements to the consolidated financial statements of the Parent and its Subsidiaries, including the Company, shall be delivered together with the financial statements required pursuant to Sections 7.1(a) and (b);

(d) SEC and Other Reports — promptly upon their becoming available, one copy of (i) each financial statement, report, notice or proxy statement sent by the Parent or any Subsidiary, including the Company, to public securities holders generally, and (ii) each regular or periodic report, each registration statement that shall have become effective (without exhibits except as expressly requested by such holder), and each final prospectus and all amendments thereto filed by the Parent or any Subsidiary, including the Company, with the Securities and Exchange Commission and of all press releases and other statements made available generally by the Company or any Subsidiary to the public concerning developments that are Material;

(e) Notice of Default or Event of Default — promptly, and in any event within five Business Days after a Responsible Officer becoming aware of the existence of any Default or Event of Default, a written notice specifying the nature and period of existence thereof and what action the Parent or the Company is taking or proposes to take with respect thereto;

(f) ERISA Matters — promptly, and in any event within five Business Days after a Responsible Officer becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Parent or an ERISA Affiliate, including the Company, proposes to take with respect thereto:

(i) with respect to any Plan, any reportable event, as defined in section 4043(b) of ERISA and the regulations thereunder, for which notice thereof has not been waived pursuant to such regulations as in effect on the date hereof; or

(ii) the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Parent or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or

(iii) any event, transaction or condition that could result in the incurrence of any liability by the Parent or an ERISA Affiliate, including the Company, pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the Parent or an ERISA Affiliate, including the Company, pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, could reasonably be expected to have a Material Adverse Effect;

(g) Notices from Governmental Authority — promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Company or any Subsidiary from any Federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation that could reasonably be expected to have a Material Adverse Effect; and

(h) Requested Information — with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Parent or any of its Subsidiaries, including the Company, or relating to the ability of the Parent or the Company to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of Notes.

7.2. Officer’s Certificate.

Each set of financial statements delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate of a Senior Financial Officer setting forth:

(a) Covenant Compliance — the information (including detailed calculations) required in order to establish whether the Parent was in compliance with the requirements of Section 10.1 through Section 10.9, inclusive, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence); and

(b) Event of Default — a statement that such officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Parent and its Subsidiaries, including the Company, from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including any such event or condition resulting from the failure of the Parent or any Subsidiary, including the Company, to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Parent or the Company shall have taken or proposes to take with respect thereto.

7.3. Inspection.

The Parent and the Company will permit the representatives of each holder of Notes that is an Institutional Investor:

(a) No Default — if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Parent or the Company, to visit the principal executive office of the Parent or the Company, to discuss the affairs, finances and accounts of the Parent and its Subsidiaries, including the Company, with the Parent’s and the Company’s officers, and (with the consent of the Parent and the Company, which consent will not be unreasonably withheld) its independent public accountants, and (with the consent of the Parent and the Company which consent will not be unreasonably withheld), to visit the other offices and properties of the Parent and each Subsidiary, including the Company, all at such reasonable times and as often as may be reasonably requested in writing; and

(b) Default — if a Default or Event of Default then exists, at the expense of the Company, to visit and inspect any of the offices or properties of the Parent or any Subsidiary, including the Company, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss

their respective affairs, finances, and accounts with their respective officers and independent public accountants (and by this provision the Parent and the Company authorize said accountants to discuss the affairs, finances and accounts of the Parent and its Subsidiaries, including the Company), all at such times and as often as may be requested.

8. PREPAYMENT OF THE NOTES.

8.1. No Scheduled Prepayments.

No regularly scheduled prepayments are due on the Notes prior to their stated maturity.

8.2. Optional Prepayments with Make-Whole Amount.

The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes in an amount not less than $1,000,000 in the aggregate in the case of a partial prepayment, at 100% of the principal amount so prepaid, plus the Make-Whole Amount determined for the prepayment date with respect to such principal amount. The Company will give each holder of Notes written notice of each optional prepayment under this Section 8.2 not less than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each such notice shall specify such date, the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be prepaid (determined in accordance with Section 8.3), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, the Company shall deliver to each holder of Notes a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date.

8.3. Allocation of Partial Prepayments.

In the case of each partial prepayment of the Notes, the principal amount of the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.

8.4. Maturity; Surrender, etc.

In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-

Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and canceled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.

8.5. Purchase of Notes.

Neither the Parent nor the Company will, and will not permit any Affiliate to, purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except (a) upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes or (b) pursuant to an offer to purchase made by the Company or an Affiliate pro rata to the holders of all Notes at the time outstanding upon the same terms and conditions. Any such offer shall provide each holder with sufficient information to enable it to make an informed decision with respect to such offer, and shall remain open for at least 30 Business Days. If the holders of more than 25% of the principal amount of the Notes then outstanding accept such offer, the Company shall promptly notify the remaining holders of such fact and the expiration date for the acceptance by holders of Notes of such offer shall be extended by the number of days necessary to give each such remaining holder at least ten Business Days from its receipt of such notice to accept such offer. The Company will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes.

8.6. Make-Whole Amount.

The term “Make-Whole Amount” means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:

“Called Principal” means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.

“Discounted Value” means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.

“Reinvestment Yield” means, with respect to the Called Principal of any Note, .50% over the yield to maturity implied by (i) the yields reported, as of 10:00 A.M. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as the “PX1 Screen” on the Bloomberg Financial Market Service (or such other display as may replace the PX1 Screen on Bloomberg Financial Market Service) for actively traded U.S. Treasury

securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable, the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between (1) the actively traded U.S. Treasury security with the maturity closest to and greater than the Remaining Average Life and (2) the actively traded U.S. Treasury security with the maturity closest to and less than the Remaining Average Life.

“Remaining Average Life” means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.

“Remaining Scheduled Payments” means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that could be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.2 or 12.1.

“Settlement Date” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.

9. AFFIRMATIVE COVENANTS.

Each of the Parent and the Company covenants that so long as any of the Notes are outstanding:

9.1. Compliance with Law.

The Parent and the Company will, and will cause each other Subsidiary to, comply with all laws, ordinances or governmental rules or regulations to which each of them is

subject, including, Environmental Laws, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

9.2. Insurance.

The Parent and the Company will, and will cause each Restricted Subsidiary to, maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if customary reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated.

9.3. Maintenance of Properties.

The Parent and the Company will, and will cause each Restricted Subsidiary to, maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, provided that this Section shall not prevent the Parent or any Subsidiary, including the Company, from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Parent has concluded that such discontinuance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

9.4. Payment of Taxes.

The Parent and the Company will, and will cause each other Subsidiary to, file all tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges, or levies imposed on them or any of their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, and all claims for which sums have become due and payable that have or might become a Lien on properties or assets of the Parent or any Subsidiary, including the Company, provided that neither the Parent nor any Subsidiary, including the Company, need pay any such tax or assessment or claims if (i) the amount, applicability or validity thereof is contested by the Parent or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Parent or a Subsidiary, including the Company, has established adequate reserves therefor in accordance with GAAP on the books of the Parent or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in the aggregate could not reasonably be expected to have a Material Adverse Effect.

9.5. Corporate Existence, etc.

Each of the Parent and the Company will at all times preserve and keep in full force and effect its corporate existence. Subject to Sections 10.5 and 10.6, the Parent and the Company will at all times preserve and keep in full force and effect the corporate existence of each Restricted Subsidiary (unless merged into the Parent or a Wholly Owned Restricted Subsidiary, including the Company) and all rights and franchises of the Parent and its Restricted Subsidiaries, including the Company, unless, in the good faith judgment of the Parent, the termination of or failure to preserve and keep in full force and effect each corporate existence, right or franchise could not, individually or in the aggregate, have a Material Adverse Effect.

9.6. Additional Subsidiary Guarantors.

The Parent and the Company will cause any Subsidiary that (whether or not required by the terms of the Credit Agreement) is to become a party to, or guarantee, Debt in respect of the Credit Agreement or any other Senior Debt, to enter into the Subsidiary Guaranty concurrently therewith and as a part thereof to deliver to each of the holders:

(a) a copy of an executed joinder to the Subsidiary Guaranty;

(b) a certificate signed by a Responsible Officer confirming the accuracy of the representations and warranties in Sections 5.2, 5.6, 5.7 and 5.19, with respect to such Subsidiary and the Subsidiary Guaranty as it relates to such Subsidiary, as applicable; and

(c) an opinion of counsel (who may be counsel for the Company) reasonably satisfactory to the Required Holders addressed to each holder of the Notes to the effect that the Subsidiary Guaranty of such Person has been duly authorized, executed and delivered and that the Subsidiary Guaranty constitutes the legal, valid and binding contract and agreement of such Person enforceable in accordance with its terms, except as an enforcement of such terms may be limited by bankruptcy, insolvency, fraudulent conveyance and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.

9.7. Ranking of Notes.

The Debt evidenced by the Notes will at all times rank at least pari passu with all of the Company’s outstanding unsecured Senior Debt.

10. NEGATIVE COVENANTS.

Each of the Parent and the Company covenants that so long as any of the Notes are outstanding:

10.1. Consolidated Debt.

The Parent will not permit the ratio of Consolidated Debt (as of the end of any fiscal quarter of the Parent) to Consolidated EBITDA (for the Parent’s then most recently

completed four fiscal quarters) (a) to be greater than 3.50 to 1.00 at any time or (b) to be greater than 3.25 to 1.00 for more than two consecutive fiscal quarters.

10.2. Interest Coverage.

The Parent will not permit the ratio of Consolidated EBIT to Consolidated Interest Expense (in each case for the Parent’s then most recently completed four fiscal quarters) to be less than 2.0 to 1.0 at any time.

10.3. Priority Debt.

The Parent and the Company will not permit Priority Debt to exceed 20% of Consolidated Net Worth (determined as of the end of the Parent’s most recently completed fiscal quarter) at any time.

10.4. Liens.

The Parent and the Company will not, and will not permit any Restricted Subsidiary to, permit to exist, create, assume or incur, directly or indirectly, any Lien on its properties or assets, whether now owned or hereafter acquired, unless the Notes are equally and ratably secured by a Lien on the same property and assets pursuant to an agreement reasonably acceptable to the Required Holders, except:

(a) Liens for taxes, assessments or governmental charges not then due and delinquent or the nonpayment of which is permitted by Section 9.4;

(b) Liens incidental to the conduct of business or the ownership of properties and assets (including landlords’, lessors’, carriers’, operators’, warehousemen’s, mechanics’, materialmen’s and other similar Liens) and Liens to secure the performance of bids, tenders, leases or trade contracts, or to secure statutory obligations (including obligations under workers compensation, unemployment insurance and other social security legislation), surety or appeal bonds or other Liens of like general nature incurred in the ordinary course of business and not in connection with the borrowing of money;

(c) encumbrances in the nature of leases, subleases, zoning restrictions, easements, rights of way and other rights and restrictions of record on the use of real property and defects in title arising or incurred in the ordinary course of business, which, individually and in the aggregate, do not materially impair the use or value of the property or assets subject thereto;

(d) any attachment or judgment Lien, unless the judgment it secures has not, within 60 days after the entry thereof, been discharged or execution thereof stayed pending appeal, or has not been discharged within 60 days after the expiration of any such stay;

(e) Liens securing Debt of a Restricted Subsidiary to the Parent or to another Restricted Subsidiary, including the Company;

(f) Liens (i) existing on property at the time of its acquisition by the Parent or a Restricted Subsidiary, including the Company, and not created in contemplation thereof, whether or not the Debt secured by such Lien is assumed by the Parent or a Restricted Subsidiary; including the Company, or (ii) on property created contemporaneously with its acquisition or within 365 days of the acquisition or completion of construction or development thereof to secure or provide for all or a portion of the purchase price or cost of the acquisition, construction or development of such property after the date of Closing; or (iii) existing on property of a Person at the time such Person is merged or consolidated with, or becomes a Restricted Subsidiary of, or substantially all of its assets are acquired by, the Parent or a Restricted Subsidiary, including the Company, and not created in contemplation thereof; provided that in the case of clauses (i), (ii) and (iii) such Liens do not extend to additional property of the Parent or any Restricted Subsidiary, including the Company, (other than property that is an improvement to or is acquired for specific use in connection with the subject property) and that the aggregate principal amount of Debt secured by each such Lien does not exceed the fair market value (determined in good faith by one or more officers of the Parent to whom authority to enter into such transaction has been delegated by the board of directors of the Parent) of the property subject thereto;

(g) Liens resulting from extensions, renewals or replacements of Liens permitted by paragraphs (e), (f) and (g), provided that (i) there is no increase in the principal amount or decrease in maturity of the Debt secured thereby at the time of such extension, renewal or replacement, (ii) any new Lien attaches only to the same property theretofore subject to such earlier Lien and (iii) immediately after such extension, renewal or replacement no Default or Event of Default would exist; and

(h) Liens securing Debt not otherwise permitted by paragraphs (a) through (g) of this Section 10.4, provided that Priority Debt does not exceed 20% of Consolidated Net Worth at any time.

10.5. Mergers, Consolidations, etc.

The Parent and the Company will not, and will not permit any Restricted Subsidiary to, consolidate with or merge with any other Person or convey, transfer, sell or lease all or substantially all of its assets in a single transaction or series of transactions to any Person except that:

(a) the Company may consolidate or merge with the Parent or convey, transfer, sell or lease all or substantially all of its assets in a single transaction or series of transactions to the Parent, provided that the Parent is the successor or survivor; and

(b) the Parent may consolidate or merge with any other Person or convey, transfer, sell or lease all or substantially all of its assets in a single transaction or series of transactions to any Person, provided that:

(i) the successor formed by such consolidation or the survivor of such merger or the Person that acquires by conveyance, transfer, sale or lease of all or substantially all of the assets of the Parent as an entirety, as the case may be, shall be a solvent corporation organized and existing under the laws of the United States or any state thereof (including the District of Columbia), and, if the Parent is not such corporation, such corporation (y) shall have executed and delivered to each holder of any Notes its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement and the Parent Guaranty and (z) shall have caused to be delivered to each holder of any Notes an opinion of outside counsel reasonably satisfactory to the Required Holders, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof; and

(ii) after giving effect to such transaction, no Default or Event of Default shall exist; and

(c) any Restricted Subsidiary other than the Company may (x) merge into the Parent or the Company (provided that the Parent or the Company is the surviving entity) or another Restricted Subsidiary or (y) sell, transfer or lease all or any part of its assets to the Parent or the Company or another Restricted Subsidiary, or (z) merge or consolidate with, or sell, transfer or lease all or substantially all of its assets to, any Person in a transaction that is permitted by Section 10.6 or, as a result of which, such Person becomes a Restricted Subsidiary; provided in each instance set forth in clauses (x) through (z) that, immediately after giving effect thereto, there shall exist no Default or Event of Default;

No such conveyance, transfer, sale or lease of all or substantially all of the assets of the Parent shall have the effect of releasing the Parent or any successor corporation that shall theretofore have become such in the manner prescribed in this Section 10.5 from its liability under this Agreement or the Notes.

10.6. Sale of Assets.

Except as permitted by Section 10.5, the Parent and the Company will not, and will not permit any Restricted Subsidiary to, sell, lease, transfer or otherwise dispose of, including by way of merger (collectively a “Disposition”), any assets, including capital stock of Subsidiaries, in one or a series of transactions, to any Person, other than:

(a) Dispositions in the ordinary course of business;

(b) Dispositions by a Restricted Subsidiary, including the Company, to the Parent or another Restricted Subsidiary, including the Company;

(c) Dispositions not otherwise permitted by clauses (a) or (b) of this Section 10.6, provided that the aggregate net book value of all assets so disposed of in any fiscal year pursuant to this Section 10.6(c) does not exceed 10% of Consolidated Total Assets as of the end of the immediately preceding fiscal year.

Notwithstanding the foregoing provisions of this Section 10.6, the Parent may, or may permit any Restricted Subsidiary, including the Company to, make a Disposition and the assets subject to such Disposition shall not be subject to or included in any of the limitations or the computation contained in foregoing Section 10.6(c) of the preceding sentence if:

(A) such assets are leased back by the Parent or any Restricted Subsidiary, including the Company, as lessee, within 365 days of the original acquisition or construction thereof by the Parent or such Restricted Subsidiary, including the Company; or

(B) the net proceeds from such Disposition are within 365 days of such Disposition:

(i) reinvested in productive assets used in carrying on the business of the Parent and its Restricted Subsidiaries, including the Company; or

(ii) applied to the payment or prepayment of any outstanding Senior Debt (including the Notes) of the Parent or any Restricted Subsidiary, including the Company.

Any prepayment of Notes pursuant to this Section 10.6 shall be in accordance with Sections 8.2 and 8.3, without regard to the minimum prepayment requirements of Section 8.2.

10.7. Designation of Restricted and Unrestricted Subsidiaries.

The Parent may designate any Restricted Subsidiary as an Unrestricted Subsidiary and any Unrestricted Subsidiary as a Restricted Subsidiary by notice in writing given to the holders of the Notes; provided that,

(a) if such Subsidiary initially is designated a Restricted Subsidiary, then such Restricted Subsidiary may be subsequently designated as an Unrestricted Subsidiary and such Unrestricted Subsidiary may be subsequently designated as a Restricted Subsidiary, but no further changes in designation may be made;

(b) if such Subsidiary initially is designated an Unrestricted Subsidiary, then such Unrestricted Subsidiary may be subsequently designated as a Restricted Subsidiary and such Restricted Subsidiary may be subsequently designated as an Unrestricted Subsidiary, but no further changes in designation may be made;

(c) the Parent may not designate a Restricted Subsidiary as an Unrestricted Subsidiary unless: (i) such Restricted Subsidiary does not own, directly or indirectly, any

Debt or capital stock of the Parent or any other Restricted Subsidiary, including the Company, (ii) such designation, considered as a sale of assets, is permitted pursuant to Section 10.6, and (iii) immediately before and after such designation there exists no Default or Event of Default;

(d) notwithstanding Section 10.4(g), if an Unrestricted Subsidiary is designated as a Restricted Subsidiary, all outstanding Debt and Liens of such Subsidiary shall be deemed to have been incurred as of the date of such designation; and

(e) the Parent may not designate the Company or any Subsidiary Guarantor an Unrestricted Subsidiary.

10.8. Nature of Business.

The Parent and the Company will not, and will not permit any other Restricted Subsidiary to, engage in any business if, as a result, the general nature of the business in which the Parent and its Restricted Subsidiaries, including the Company, taken as a whole, would then be engaged would be substantially changed from the general nature of the business of the Parent and its Restricted Subsidiaries, including the Company, taken as a whole, as described in the Memorandum.

10.9. Transactions with Affiliates.

The Parent and the Company will not, and will not permit any other Restricted Subsidiary to, enter into directly or indirectly any Material transaction or Material group of related transactions (including the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate (other than the Parent, the Company or another Restricted Subsidiary), except in the ordinary course and pursuant to the reasonable requirements of the Parent’s, the Company’s or such Restricted Subsidiary’s business and upon fair and reasonable terms no less favorable to the Parent, the Company or such Restricted Subsidiary than would be obtainable in a comparable arm’s-length transaction with a Person not an Affiliate.

11. EVENTS OF DEFAULT.

An “Event of Default” shall exist if any of the following conditions or events shall occur and be continuing:

(a) the Company defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or

(b) the Company defaults in the payment of any interest on any Note for more than five Business Days after the same becomes due and payable; or

(c) the Parent or the Company defaults in the performance of or compliance with any term contained in Sections 10.1, 10.2, 10.3, 10.4, 10.5 or 10.6; or

(d) the Parent or the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in paragraphs (a), (b) and (c) of this Section 11) and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Parent or the Company receiving written notice of such default from any holder of a Note; or

(e) any representation or warranty made in writing by or on behalf of the Company or any Guarantor or by any officer of the Company or any Guarantor in this Agreement, the Parent Guaranty, the Subsidiary Guaranty or in any writing furnished in connection with the transactions contemplated hereby or thereby proves to have been false or incorrect in any material respect on the date as of which made; or

(f) (i) the Company, any Guarantor or any Restricted Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest in excess of $50,000 on any Debt that is outstanding in an aggregate principal amount exceeding $5,000,000 beyond any period of grace provided with respect thereto, or (ii) the Company or any Restricted Subsidiary is in default in the performance of or compliance with any term of any evidence of any Debt that is outstanding in an aggregate principal amount exceeding $5,000,000 or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Debt has become, or has been declared, or one or more Persons are entitled to declare such Debt to be, due and payable before its stated maturity or before its regularly scheduled dates of payment, or (iii) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Debt to convert such Debt into equity interests), (x) the Company, any Guarantor or any Restricted Subsidiary has become obligated to purchase or repay Debt in an aggregate principal amount exceeding $5,000,000 before its regular maturity or before its regularly scheduled dates of payment, or (y) one or more Persons have the right to require the Company, any Guarantor or any Restricted Subsidiary so to purchase or repay such Debt; or

(g) the Company, any Guarantor or any Material Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or

(h) a court or governmental authority of competent jurisdiction enters an order appointing, without consent by the Company, any Guarantor or any Material Subsidiary, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or

approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company, any Guarantor or any Material Subsidiary, or any such petition shall be filed against the Company, any Guarantor or any Material Subsidiary and such petition shall not be dismissed within 60 days; or

(i) a final judgment or judgments for the payment of money aggregating in excess of $5,000,000 are rendered against one or more of the Company, any Guarantor and any Restricted Subsidiaries, which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay; or

(j) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Parent, the Company or any other ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the aggregate “amount of unfunded benefit liabilities” (within the meaning of section 4001(a)(18) of ERISA) under all Plans determined in accordance with Title IV of ERISA, shall exceed $5,000,000, (iv) the Parent, the Company or any other ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (v) the Parent, the Company or any other ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Parent or any Restricted Subsidiary, including the Company, establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Parent or any Restricted Subsidiary, including the Company, thereunder; and any such event or events described in clauses (i) through (vi) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect; or

(k) any Guarantor defaults in the performance of or compliance with any term contained in either of the Guaranties or either of the Guaranties ceases to be in full force and effect, except as provided in Section 1.2(b), or is declared to be null and void in whole or in material part by a court or other governmental or regulatory authority having jurisdiction or the validity or enforceability thereof shall be contested by any of the Parent, the Company or any Subsidiary Guarantor or any of them renounces any of the same or denies that it has any or further liability thereunder.

As used in Section 11(j), the terms “employee benefit plan” and “employee welfare benefit plan” shall have the respective meanings assigned to such terms in section 3 of ERISA.

12. REMEDIES ON DEFAULT, ETC.

12.1. Acceleration.

(a) If an Event of Default with respect to the Parent or the Company described in paragraph (g) or (h) of Section 11 (other than an Event of Default described in clause (i) of paragraph (g) or described in clause (vi) of paragraph (g) by virtue of the fact that such clause encompasses clause (i) of paragraph (g)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable.

(b) If any other Event of Default has occurred and is continuing, any holder or holders of more than 65% in principal amount of the Notes at the time outstanding may at any time at its or their option, by notice or notices to the Company, declare all the Notes then outstanding to be immediately due and payable.

(c) If any Event of Default described in paragraph (a) or (b) of Section 11 has occurred and is continuing, any holder or holders of Notes at the time outstanding affected by such Event of Default may at any time, at its or their option, by notice or notices to the Company, declare all the Notes held by it or them to be immediately due and payable.

Upon any Notes becoming due and payable under this Section 12.1, whether automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest thereon and (y) the Make-Whole Amount determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived. The Company acknowledges, and the parties hereto agree, that each holder of a Note has the right to maintain its investment in the Notes free from repayment by the Company (except as herein specifically provided for) and that the provision for payment of a Make-Whole Amount by the Company in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances.

12.2. Other Remedies.

If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under Section 12.1, the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.

12.3. Rescission.

At any time after any Notes have been declared due and payable pursuant to clause (b) or (c) of Section 12.1, the holders of more than 65% in principal amount of the Notes then outstanding, by written notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes, all principal of and Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest in respect of the Notes, at the Default Rate, (b) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 17, and (c) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this Section 12.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon.

12.4. No Waivers or Election of Remedies, Expenses, etc.

No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder’s rights, powers or remedies. No right, power or remedy conferred by this Agreement or by any Note upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Company under Section 15, the Company will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all reasonable costs and expenses of such holder incurred in any enforcement or collection under this Section 12, including reasonable attorneys’ fees, expenses and disbursements.

13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

13.1. Registration of Notes.

The Company shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. The Company shall give to any holder of a Note that is an Institutional Investor, promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes.

13.2. Transfer and Exchange of Notes.

Upon surrender of any Note at the principal executive office of the Company for registration of transfer or exchange (and in the case of a surrender for registration of transfer,

duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or his attorney duly authorized in writing and accompanied by the address for notices of each transferee of such Note or part thereof), the Company shall execute and deliver within five Business Days, at the Company’s expense (except as provided below), one or more new Notes (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of Exhibit 1(a). Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than $500,000, provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than $500,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representation set forth in Section 6.2.

13.3. Restriction on Transfer to Competitor.

So long as no Event of Default has occurred and is continuing, you and each subsequent holder of a Note agree not to transfer all or any portion of a Note to any Competitor of the Company. As used herein, the term “Competitor” means any Person (including any Subsidiary or Affiliate thereof) primarily engaged in the residential and commercial electrical copper wire industry; provided that such term shall not include any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form.

13.4. Replacement of Notes.

Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and

(a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser or another Institutional Investor holder of a Note with a minimum net worth of at least $50,000,000, such Person’s own unsecured agreement of indemnity shall be deemed to be satisfactory), or

(b) in the case of mutilation, upon surrender and cancellation thereof,

the Company at its own expense shall execute and deliver within five Business Days, in lieu thereof, a new Note, dated and bearing interest from the date to which interest shall have been

paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon.

14. PAYMENTS ON NOTES.

14.1. Place of Payment.

Subject to Section 14.2, payments of principal, Make-Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in Chicago, Illinois at the principal office of Bank of America, N.A. in such jurisdiction. The Company may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Company in such jurisdiction or the principal office of a bank or trust company in such jurisdiction.

14.2. Home Office Payment.

So long as you or your nominee shall be the holder of any Note, and notwithstanding anything contained in Section 14.1 or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, and interest by the method and at the address specified for such purpose below your name in Schedule A, or by such other method or at such other address as you shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, you shall surrender such Note for cancellation, reasonably promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant to Section 14.1. Prior to any sale or other disposition of any Note held by you or your nominee you will, at your election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes pursuant to Section 13.2. The Company will afford the benefits of this Section 14.2 to any Institutional Investor that is the direct or indirect transferee of any Note purchased by you under this Agreement and that has made the same agreement relating to such Note as you have made in this Section 14.2.

15. EXPENSES, ETC.

15.1. Transaction Expenses.

Whether or not the transactions contemplated hereby are consummated, the Parent or the Company will pay all reasonable costs and expenses (including reasonable attorneys’ fees of a special counsel and, if reasonably required, local or other counsel) incurred by you and each Other Purchaser or holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of this Agreement, the Notes or the Guaranties (whether or not such amendment, waiver or consent becomes effective), including: (a) the costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement, the Notes or the Guaranties or in responding

to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement, the Notes or the Guaranties, or by reason of being a holder of any Note, (b) the costs and expenses, including financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of the Parent or any Restricted Subsidiary, including the Company, or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes and (c) the costs and expenses incurred in connection with the initial filing of this Agreement and all related documents and financial information, and all subsequent annual and interim filings of documents and financial information related to this Agreement, with the Securities Valuation Office of the National Association of Insurance Commissioners or any successor organization succeeding to the authority thereof. The Parent or the Company will pay, and will save you and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses if any, of brokers and finders (other than those retained by you).

15.2. Survival.

The obligations of the Parent and the Company under this Section 15 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement or the Notes, and the termination of this Agreement.

16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer by you of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of you or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of the Parent or the Company pursuant to this Agreement or the Guaranties shall be deemed representations and warranties of the Parent and the Company under this Agreement. Subject to the preceding sentence, this Agreement, the Notes and the Guaranties embody the entire agreement and understanding between you and the Parent and the Company and supersede all prior agreements and understandings relating to the subject matter hereof.

17. AMENDMENT AND WAIVER.

17.1. Requirements.

This Agreement, the Notes, the Parent Guaranty and the Subsidiary Guaranty may be amended, and the observance of any term hereof or of the Notes may be waived (either retroactively or prospectively), with (and only with) the written consent of the Parent, the Company and the Subsidiary Guarantors, if parties thereto, and the Required Holders, except that (a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it is used therein), will be effective as to you unless consented to by you in writing, and (b) no such amendment or waiver may, without the written consent of the holder of each Note at the time outstanding affected thereby, (i) subject to the provisions of Section 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment

of principal of, or reduce the rate or change the time of payment or method of computation of interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.

17.2. Solicitation of Holders of Notes.

(a) Solicitation. The Parent and the Company will provide each holder of the Notes (irrespective of the amount of Notes then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes. The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 17 to each holder of outstanding Notes promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of Notes.

(b) Payment. The Parent and the Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security, to any holder of Notes as consideration for or as an inducement to the entering into by any holder of Notes or any waiver or amendment of any of the terms and provisions hereof unless such remuneration is concurrently paid, or security is concurrently granted, on the same terms, ratably to each holder of Notes then outstanding even if such holder did not consent to such waiver or amendment.

17.3. Binding Effect, etc.

Any amendment or waiver consented to as provided in this Section 17 applies equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Parent, the Company and the Subsidiaries (in each case, if a party thereto) without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between the Parent or the Company and the holder of any Note nor any delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of any holder of such Note. As used herein, the term “this Agreement” or “the Agreement” and references thereto shall mean this Agreement as it may from time to time be amended or supplemented.

17.4. Notes held by Company, etc.

Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement or the Notes, or have directed the taking of any action provided herein or in the Notes to be taken upon the direction of

the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding.

18. NOTICES.

All notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid). Any such notice must be sent:

(i) if to you or your nominee, to you or it at the address specified for such communications in Schedule A, or at such other address as you or it shall have specified to the Company in writing,

(ii) if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing, or

(iii) if to the Company, the Parent or any Subsidiary Guarantor, to the Company at its address set forth at the beginning hereof to the attention of the Chief Financial Officer, or at such other address as the Company shall have specified to the holder of each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.

19. REPRODUCTION OF DOCUMENTS.

This Agreement and all documents relating thereto, including (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by you at the Closing (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to you, may be reproduced by you by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and you may destroy any original document so reproduced. The Company agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by you in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This Section 19 shall not prohibit the Company or any holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction.

20. CONFIDENTIAL INFORMATION.

For the purposes of this Section 20, “Confidential Information” means information delivered to you by or on behalf of the Parent, the Company or any Subsidiary in

connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by you as being confidential information of the Parent, the Company or such Subsidiary, provided that such term does not include information that (a) was publicly known or otherwise known to you prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by you or any Person acting on your behalf, (c) otherwise becomes known to you other than through disclosure by the Parent, the Company or any Subsidiary, or (d) constitutes financial statements delivered to you under Section 7.1 that are otherwise publicly available. You will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by you in good faith to protect confidential information of third parties delivered to you, provided that you may deliver or disclose Confidential Information to (i) your directors, trustees, officers, employees, agents, attorneys and Affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by your Notes), (ii) your financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor to which you sell or offer to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20), (v) any Person from which you offer to purchase any security of the Parent or the Company (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20), (vi) any federal or state regulatory authority having jurisdiction over you, (vii) the National Association of Insurance Commissioners or any similar organization, or any nationally recognized rating agency that requires access to information about your investment portfolio or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to you, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which you are a party or (z) if an Event of Default has occurred and is continuing, to the extent you may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under your Notes and this Agreement. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 20 as though it were a party to this Agreement. On reasonable request by the Company in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Company embodying the provisions of this Section 20.

21. SUBSTITUTION OF PURCHASER.

You shall have the right to substitute any one of your Affiliates as the purchaser of the Notes that you have agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both you and such Affiliate, shall contain such Affiliate’s agreement to be bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with respect to it of the representations set forth in Section 6. Upon receipt of such notice, wherever the word “you” is used in this Agreement (other than in this Section 21), such word

shall be deemed to refer to such Affiliate in lieu of you. In the event that such Affiliate is so substituted as a purchaser hereunder and such Affiliate thereafter transfers to you all of the Notes then held by such Affiliate, upon receipt by the Company of notice of such transfer, wherever the word “you” is used in this Agreement (other than in this Section 21), such word shall no longer be deemed to refer to such Affiliate, but shall refer to you, and you shall have all the rights of an original holder of the Notes under this Agreement.

22. MISCELLANEOUS.

22.1. Successors and Assigns.

All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including any subsequent holder of a Note) whether so expressed or not.

22.2. Payments Due on Non-Business Days.

Anything in this Agreement or the Notes to the contrary notwithstanding, any payment of principal of or Make-Whole Amount or interest on any Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day.

22.3. Severability.

Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.

22.4. Construction.

Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.

22.5. Counterparts.

This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.

22.6. Governing Law.

This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of Illinois excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.

22.7. Limitation on Interest.

You and the Other Purchasers, other holders of the Notes, the Company, Parent, the Subsidiary Guarantors, and any other parties to the Note Documents intend to contract in strict compliance with applicable usury law from time to time in effect. In furtherance thereof such Persons stipulate and agree that none of the terms and provisions contained herein or in the Notes shall ever be construed to create a contract to pay, for the use, forbearance or detention of money, interest in excess of the maximum amount of interest permitted to be charged by applicable law from time to time in effect. Neither the Company, nor Parent, nor the Subsidiary Guarantors nor any present or future guarantors, endorsers, or other Persons hereafter becoming liable for payment of any Obligation shall ever be liable for unearned interest thereon or shall ever be required to pay interest thereon in excess of the maximum amount that may be lawfully contracted for, charged, or received under applicable law from time to time in effect, and the provisions of this section shall control over all other provisions of the Note Documents which may be in conflict or apparent conflict herewith. You and the Other Purchasers and other holders of the Notes expressly disavow any intention to contract for, charge, or collect excessive unearned interest or finance charges in the event the maturity of any Note is accelerated. If (a) the maturity of any Note is accelerated for any reason, (b) any Note is prepaid and as a result any amounts held to constitute interest are determined to be in excess of the legal maximum, or (c) you or any Other Purchaser or any other holder of any Note shall otherwise collect moneys that are determined to constitute interest that would otherwise increase the interest on any or all of the Notes to an amount in excess of that permitted to be charged by applicable law then in effect, then all sums determined to constitute interest in excess of such legal limit shall, without penalty, be promptly applied to reduce the then outstanding principal of the related Notes or, at such Purchaser’s or holder’s option, promptly returned to the Company or other payor thereof upon such determination. In determining whether or not the interest paid or payable, under any specific circumstance, exceeds the maximum amount permitted under applicable law, you and the Other Purchasers, other holders of the Notes, the Company, Parent, the Subsidiary Guarantors (and any other payors thereof) shall to the greatest extent permitted under applicable law, (i) characterize any non-principal payment as an expense, fee or premium rather than as interest, (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and spread the total amount of interest throughout the entire contemplated term of the instruments evidencing the Notes in accordance with the amounts outstanding from time to time thereunder and the maximum legal rate of interest from time to time in effect under applicable law in order to lawfully contract for, charge, or receive the maximum amount of interest permitted under applicable law. In the event applicable law provides for an interest ceiling under Chapter 303 of the Texas Finance Code (the “Texas Finance Code”) as amended, to the extent that the Texas Finance Code is mandatorily applicable to you or any Other Purchaser or any other

holder of any Note, for that day, the ceiling shall be the “weekly ceiling” as defined in the Texas Finance Code, provided that if any applicable law permits greater interest, the law permitting the greatest interest shall apply.

22.8. Submission to Jurisdiction.

Any litigation based hereon, or arising out of, under or in connection with this Agreement or the Notes, may be brought and maintained in the courts of the State of Illinois or in the United States District Court for the Northern District of Illinois. Each of the Company and the Parent expressly and irrevocably submits to the jurisdiction of the courts of the State of Illinois and of the United States District Court for the Northern District of Illinois for the purpose of any such litigation as set forth above. Each of the Company and the Parent further irrevocably consents to the service of process by registered mail, postage prepaid, to the address specified in Section 18 or by personal service within or without the State of Illinois. Each of the Company and the Parent expressly and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any such litigation brought in any such court referred to above and any claim that any such litigation has been brought in an inconvenient forum.

22.9. Waiver of Jury Trial.

Each of the Company and the Parent waives any right to a trial by jury in any action or proceeding to enforce or defend any rights under this Agreement or under any amendment, instrument, document or Agreement delivered or that may in the future be delivered in connection herewith and agrees that any such action or proceeding shall be tried before a court and not before a jury.

* * * * *

If you are in agreement with the foregoing, please sign the form of agreement on the accompanying counterpart of this Agreement and return it to the Company, whereupon the foregoing shall become a binding agreement between you, the Company and the Parent.


		Very truly yours,

		ENCORE WIRE LIMITED
		By its General Partner, EWC GP CORP.

		By: /s/ DANIEL L. JONES
		Name: Daniel L. Jones
		Title: President

		ENCORE WIRE CORPORATION

		By: /s/ DANIEL L. JONES
		Name: Daniel L. Jones
		Title: President

S-1

The foregoing is agreed to as of the date thereof.

HARTFORD LIFE INSURANCE COMPANY
By: Hartford Investment Services, Inc.
Its Agent and Attorney-in-Fact

By: /s/ RONALD A. MENDEL
Name: Ronald A. Mendel
Title: Managing Director

S-2

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY

By: /s/ TAD ANDERSON
Name: Tad Anderson
Title: Manager, Investments

By: /s/ J.G. LOWERY
Name: J.G. Lowery
Title: Assistant Vice President, Investments

LONDON LIFE INSURANCE COMPANY

By: /s/ B.R. ALLISON
Name: B.R. Allison
Title: Senior Vice-President

By: /s/ D.B.E. AYERS
Name: D.B.E. Ayers
Title: Manager

LONDON LIFE AND CASULATY REINSURANCE CORPORATION

By: Orchard Capital Management, LLC as Investment Advisor

By: /s/ TAD ANDERSON
Name: Tad Anderson
Title: Manager, Investments

By: /s/ J.G. LOWERY
Name: J.G. Lowery
Title: Assistant Vice President, Investments

S-3

SCHEDULE A

INFORMATION RELATING TO PURCHASERS


	Principal Amount of
Name of Purchaser	Notes to be Purchased
Hartford Life Insurance Company	$	5,000,000
	$	5,000,000

(1) Payment shall be made by bank wire transfer of immediately available federal funds, providing sufficient information to identify the source of the transfer, the amount of interest and/or principal and the series of Notes, to:

JP Morgan Chase
4 New York Plaza
New York, New York 10004
Bank ABA No. 021000021
Chase NYC/Cust
A/C # 900-9-000200 for F/C/T G06609-LCA
Attn: Bond Interest/Principal — Encore Wire Ltd.
5.27% Senior Notes Series 2004-A due August 27, 2011

PPN # 29263@ AA 7 Prin $ Int $

(2) All notices with respect to confirmation of payments on account of the Notes shall be delivered or mailed to:

Hartford Investment Management Company
c/o Portfolio Support
P.O. Box 1744
Hartford, Connecticut 06144-1744
Telefacsimile: (860) 297-8875/8876

(3) All other communications shall be delivered or mailed to:

Hartford Investment Management Company
c/o Investment Department-Private Placements
P.O. Box 1744
Hartford, Connecticut 06144-1744
Telefacsimile: (860) 297-8884

Schedule A

(4) Notes are to be delivered to:

JP Morgan Chase
North America Insurance
3 Chase MetroTech Center- 5^th Floor South
Brooklyn, New York 11245
Attn: Bettye Carrera
Custody Account Number: G06609-LCA must appear on outside of envelope

Tax ID No. 06-0974148

Schedule A

INFORMATION RELATING TO PURCHASERS


	Principal Amount of
Name of Purchaser	Notes to be Purchased
Hartford Life Insurance Company	$	5,000,000
	$	5,000,000
	$	5,000,000

JP Morgan Chase
4 New York Plaza
New York, New York 10004
Bank ABA No. 021000021
Chase NYC/Cust
A/C # 900-9-000200 for F/C/T G06610-LFA
Attn: Bond Interest/Principal — Encore Wire Ltd.
5.27% Senior Notes Series 2004-A due August 27, 2011

PPN # 29263@ AA 7 Prin $__________ Int $____________

(2) All notices with respect to confirmation of payments on account of the Notes shall be delivered or mailed to:

Hartford Investment Management Company
c/o Portfolio Support
P.O. Box 1744
Hartford, Connecticut 06144-1744
Telefacsimile: (860) 297-8875/8876

(3) All other communications shall be delivered or mailed to:

Hartford Investment Management Company
c/o Investment Department-Private Placements
P.O. Box 1744
Hartford, Connecticut 06144-1744
Telefacsimile: (860) 297-8884

Schedule A

(4) Notes are to be delivered to:

JP Morgan Chase
North America Insurance
3 Chase MetroTech Center- 5^th Floor South
Brooklyn, New York 11245
Attn: Bettye Carrera
Custody Account Number: G06610-LFA must appear on outside of envelope

Tax ID No. 06-0974148

Schedule A

INFORMATION RELATING TO PURCHASERS


	Principal Amount of
Name of Purchaser	Notes to be Purchased
Great-West Life & Annuity Insurance Company	$	4,000,000


		ABA #021-000-018 BKofNYC/CTR/BBK=IOC566
		P&I Department — GWL #640935

		Special Instructions:		1) security description (PPN# 29263@ AA 7),
				2) allocation of payment between principal and interest, and
				3) confirmation of principal balance.

(2) All notices with respect to confirmation of payments on account of the Notes shall be delivered or mailed to:

The Bank of New York
Institutional Custody Department, 14^th Floor
One Wall Street
New York, New York 10286
Telecopier: (212) 635-8844

(3) All other communications shall be delivered or mailed to:

Great-West Life & Annuity Insurance Company
Attention: Investments Division
8515 East Orchard Road, 3T2
Greenwood Village, Colorado 80111
Telecopier: (303) 737-6193

Schedule A

(4) Notes are to be delivered to:

The Bank of New York
3^rd Floor, Window A
One Wall Street
New York, New York 10286
Attention: Receive/Deliver Department — GWL #640935

Tax ID No. 84-0467907

Schedule A

INFORMATION RELATING TO PURCHASERS


	Principal Amount of
Name of Purchaser	Notes to be Purchased
Great-West Life & Annuity Insurance Company	$	6,000,000


		ABA #021-000-018 BKofNYC/CTR/BBK=IOC566
		P&I Department — GWL #140677
		GWLA HEALTH ACCOUNT #140677

		Special Instructions:		1) security description (PPN# 29263@ AA 7),
				2) allocation of payment between principal and interest, and
				3) confirmation of principal balance.

(2) All notices with respect to confirmation of payments on account of the Notes shall be delivered or mailed to:

The Bank of New York
Attention: GWL&A Administrator
Institutional Custody Department, 14^th Floor
One Wall Street
New York, New York 10286
Telecopier: (212) 635-8844

(3) All other communications shall be delivered or mailed to:

Great-West Life & Annuity Insurance Company
Attention: Investments Division
8515 East Orchard Road, 3T2
Greenwood Village, Colorado 80111
Facsimile: (303) 737-6193

Schedule A

(4) Notes are to be delivered to:

The Bank of New York
3^rd Floor, Window A
One Wall Street
New York, New York 10286
Attention: Receive/Deliver Department — GWLA #140677

Tax ID No. 84-0467907

Schedule A

INFORMATION RELATING TO PURCHASERS


	Principal Amount of
Name of Purchaser	Notes to be Purchased
London Life Insurance Company	$	7,000,000


		Pay Through:		Wachovia Bank NA
				New York
				SWIFT Code: PNBPUS3NNYC
				Fed Routing: 026005092

		Intermediary Institution:		Bank of Montreal
				SWIFT BIC Address: BOFMCAT2FXM
				ACCOUNT No.: 2000192009836
				CHIPS UID: 192531

		Account with Institution:		Bank of Montreal
				335 Main Street, Winnipeg, Manitoba, Canada R3C 2R6
				Canadian Direct Payment Routing Number: 000105797
				Bank of Montreal: 0001
				Branch Transit Number: 05797

		Beneficiary:		Transit No. & Account No.: 05794700026
				London Life Insurance Company
				100 Osborne Street North
				Winnipeg, Manitoba, Canada R3C 3A5

		Special Instructions:		1) security description (PPN# 29263@ AA 7),
				2) allocation of payment between principal and interest, and
				3) confirmation of principal balance.

Schedule A

(2) All notices with respect to confirmation of payments on account of the Notes shall be delivered or mailed to:

Bank of Montreal
335 Main Street
Winnipeg, Manitoba
Canada R3C 2R6
Facsimile: (204) 985-2123

(3) All other communications shall be delivered or mailed to:

London Life Insurance Company
Great-West Life Centre
100 Osborne Street North
Winnipeg, Manitoba
Canada R3C 3A5
Attention: Securities Administration -2C
Facsimile: (204) 946-8395

pc: Great-West Life & Annuity Insurance Company
Attention: Investments Division
8515 E. Orchard Road, 3T2
Greenwood Village, Colorado 80111
Facsimile: (303) 737-6193

(4) Notes are to be delivered to:

London Life Insurance Company
Great-West Life Centre
100 Osborne Street North
Winnipeg, Manitoba
Canada R3C 3A5
Attention: Securities Administration -2C

Schedule A

INFORMATION RELATING TO PURCHASERS


	Principal Amount of
Name of Purchaser	Notes to be Purchased
London Life and Casualty Reinsurance Corporation	$	3,000,000

ABA #011500010 Fleet Inv Services/A/C 050031338100101/
FBO LLCRC Life/0008843610


		Special Instructions:		1) security description (PPN# 29263@ AA 7),
				2) allocation of payment between principal and interest, and
				3) confirmation of principal balance.

(2) All notices with respect to confirmation of payments on account of the Notes shall be delivered or mailed to:

Fleet Bank
One Federal Street
Mail Code 10305A
Boston, Massachusetts 02210
Attention: Carol Carbone
Facsimile: (401) 278-3792

(3) All other communications shall be delivered or mailed to:

London Life and Casualty Reinsurance Corporation
c/o Orchard Capital Management, LLC
Attention: Investments Division
8515 East Orchard Road, 3T2
Greenwood Village, Colorado 80111
Facsimile: (303) 737-6193

Schedule A

(4) Notes are to be delivered to:

Fleet Bank
159 East Main Street
Mail Code NYUT37403D
Rochester, New York 14692
Attention: Mary Jo Didia

Tax ID No. 98-0107585

Schedule A

SCHEDULE B

DEFINED TERMS

As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term:

“Affiliate” means, at any time, and with respect to any Person, (a) any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person, and (b) any Person beneficially owning or holding, directly or indirectly, 15% or more of any class of voting or equity interests of the Company or any Subsidiary or any corporation of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 15% or more of any class of voting or equity interests. As used in this definition, “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Unless the context otherwise clearly requires, any reference to an “Affiliate” is a reference to an Affiliate of the Parent or the Company.

“Anti-Terrorism Order” means Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)).

“Business Day” means (a) for the purposes of Section 8.6 only, any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed, and (b) for the purposes of any other provision of this Agreement, any day other than a Saturday, a Sunday or a day on which commercial banks in Chicago, Illinois or New York City are required or authorized to be closed.

“Capital Lease” means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP.

“Closing” is defined in Section 3.

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

“Company” means Encore Wire Limited, a Texas limited partnership.

“Confidential Information” is defined in Section 20.

“Consolidated Debt” means, as of any date, outstanding Debt of the Parent and its Restricted Subsidiaries, including the Company, as of such date, determined on a consolidated basis in accordance with GAAP.

Schedule B

“Consolidated EBIT” means, for any period, the sum of Consolidated Net Income for such period, plus, to the extent deducted in determining such Consolidated Net Income, (i) Consolidated Interest Expense, (ii) federal, state, local and foreign income, franchise, value added and similar taxes, and (iii) other non-cash charges, except depreciation and amortization expense.

“Consolidated EBITDA” means, for any period, the sum of Consolidated Net Income for such period, plus, to the extent deducted in determining such Consolidated Net Income, (i) Consolidated Interest Expense, (ii) federal, state, local and foreign income, franchise, value added and similar taxes, (iii) depreciation and amortization expense and (iv) other non-cash charges. If, during the period for which Consolidated EBITDA is being calculated, the Parent or a Restricted Subsidiary, including the Company, has acquired one or more Persons (or the assets thereof) or divested one or more Restricted Subsidiaries (or the assets thereof), Consolidated EBITDA shall be calculated on a pro forma basis as if all of such acquisitions (other than acquisitions by or resulting in Unrestricted Subsidiaries) and divestitures had occurred on the first day of such period.

“Consolidated Interest Expense” means, for any period, the consolidated interest expense of the Parent and its Restricted Subsidiaries, including the Company, for such period determined in accordance with GAAP.

“Consolidated Net Income” means, for any period, the net income or loss of the Parent and its Restricted Subsidiaries, including the Company, for such period determined on a consolidated basis in accordance with GAAP.

“Consolidated Net Worth” means, as of any date, the consolidated stockholders’ equity of the Parent and its Restricted Subsidiaries, including the Company, as of such date, determined in accordance with GAAP, less minority interests.

“Consolidated Total Assets” means, as of any date, the assets and properties of the Parent and its Restricted Subsidiaries, including the Company, as of such date, determined on a consolidated basis in accordance with GAAP.

“Credit Agreement” means the Credit Agreement dated as of August 27, 2004 by and among the Company, Bank of America, N.A., as agent, and Wells Fargo Bank, N.A., as a lender and the other lenders party thereto, as such agreement may be hereafter amended, modified, restated, supplemented, refinanced, increased or reduced from time to time, and any successor credit agreement or similar facilities.

“Debt” with respect to any Person means, at any time, without duplication,

(a) its liabilities for borrowed money;

Schedule B

(b) its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable and other accrued liabilities arising in the ordinary course of business but including all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property);

(d) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities);

(e) its redemption liabilities under mandatorily redeemable preferred stock, to the extent such obligations arise prior to the stated maturity of the Notes; and

(f) any Guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (e) hereof.

“Default” means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default.

“Default Rate” means that rate of interest that is the greater of (i) 2% per annum above the rate of interest stated in clause (a) of the first paragraph of the Notes or (ii) 2% over the rate of interest publicly announced by Bank of America, N.A. as its “base” or “prime” rate.

“Disposition” is defined in Section 10.6

“Environmental Laws” means any and all federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including but not limited to those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.

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

“ERISA Affiliate” means any trade or business (whether or not incorporated) that is treated as a single employer together with the Company under section 414 of the Code.

“Event of Default” is defined in Section 11.

”Exchange Act” means the Securities Exchange Act of 1934, as amended.

Schedule B

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

“Governmental Authority” means

(a) the government of

(i) the United States of America or any state or other political subdivision thereof, or

(ii) any jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company or any Subsidiary, or

(b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.

“Guaranty” means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any debt, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including obligations incurred through an agreement, contingent or otherwise, by such Person:

(a) to purchase such debt or obligation or any property constituting security therefor;

(b) to advance or supply funds (i) for the purchase or payment of such debt or obligation, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such debt or obligation;

(c) to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such debt or obligation of the ability of any other Person to make payment of the debt or obligation; or

(d) otherwise to assure the owner of such debt or obligation against loss in respect thereof.

In any computation of the debt or other liabilities of the obligor under any Guaranty, the debt or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor.

“Guaranties” is defined in Section 1.2(a).

Schedule B

“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or any other substances that might pose a hazard to health or safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage, or filtration of which is or shall be restricted, prohibited or penalized by any applicable law (including, asbestos, urea formaldehyde foam insulation and polycholorinated biphenyls).

“holder” means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Company pursuant to Section 13.1.

“INHAM Exemption” is defined in Section 6.2(e).

“Institutional Investor” means (a) any original purchaser of a Note, (b) any holder of $5,000,000 or more in aggregate principal amount of the Notes and (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form.

“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of stock, stockholder agreements, voting trust agreements and all similar arrangements).

“Make-Whole Amount” is defined in Section 8.6.

“Material” means material in relation to the business, operations, affairs, financial condition, assets or properties of the Parent and its Subsidiaries, including the Company, taken as a whole.

“Material Adverse Effect” means a material adverse effect on (a) the business, operations, affairs, financial condition, assets or properties of the Parent and its Subsidiaries, including the Company, taken as a whole, (b) the ability of the Company to perform its obligations under this Agreement and the Notes, (c) the ability of the Parent to perform its obligations under this Agreement or the Parent Guaranty, (d) the ability of any Subsidiary Guarantor to perform its obligations under the Subsidiary Guaranty, or (e) the validity or enforceability of this Agreement, the Notes, the Parent Guaranty or the Subsidiary Guaranty.

“Material Subsidiary” means, at any time, any Restricted Subsidiary that would at such time account for more than 10% of (i) Consolidated Total Assets as of the end of the most recently completed fiscal quarter or (ii) consolidated revenue of the Parent and its

Schedule B

Restricted Subsidiaries, including the Company, for the four fiscal quarters ending as of the end of the most recently completed fiscal quarter.

“Memorandum” is defined in Section 5.3.

“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term is defined in section 4001(a)(3) of ERISA).

“Notes” is defined in Section 1.1.

“Officer’s Certificate” means a certificate of a Senior Financial Officer or of any other officer of the Parent whose responsibilities extend to the subject matter of such certificate.

“Other Purchasers” is defined in Section 2.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto.

“Parent” means Encore Wire Corporation, a Delaware corporation.

“Parent Guaranty” is defined in Section 1.2(a).

“Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, or a government or agency or political subdivision thereof.

“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA) that is or, within the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five years, have been made or required to be made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability.

“Priority Debt” means, as of any date, the sum (without duplication) of (a) Debt of the Parent or a Restricted Subsidiary, including the Company, secured by Liens not otherwise permitted by Sections 10.4(a) through (g), and (b) unsecured Debt of a Restricted Subsidiary other than (i) the Notes, (ii) Debt owed to the Parent or any other Restricted Subsidiary, including the Company, (iii) any guarantee of the Notes pursuant to the Subsidiary Guaranty, (iv) Debt of a Person (other than an Unrestricted Subsidiary) outstanding at the time such Person became a Restricted Subsidiary, provided that such Debt was not incurred in contemplation of such Person becoming a Restricted Subsidiary and (v) Debt of the Company under the Credit Agreement.

“property” or “properties” means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate.

Schedule B

“Purchaser” means each purchaser listed in Schedule A.

“QPAM Exemption” is defined in Section 6.2(d).

“Required Holders” means, at any time, the holders of more than 65% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates).

“Responsible Officer” means any Senior Financial Officer and any other officer of the Parent with responsibility for the administration of the relevant portion of this agreement.

“Restricted Subsidiary” means any Subsidiary (a) of which at least a majority of the voting securities are owned by the Parent and/or one or more Restricted Subsidiaries and (b) that the Parent has not designated an Unrestricted Subsidiary by notice in writing given to the holders of the Notes pursuant to Section 10.7.

“Securities Act” means the Securities Act of 1933, as amended from time to time.

“Senior Debt” means, at any time, all Consolidated Debt other than Subordinated Debt.

“Senior Financial Officer” means the chief financial officer, principal accounting officer, treasurer or comptroller of the Parent.

“Source” is defined in Section 6.2.

“Subordinated Debt” means any Debt that is in any manner subordinated in right of payment or security in any respect to Debt evidenced by the Notes

“Subsidiary” means, as to any Person, any corporation, association or other business entity in which such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such entity, and any partnership, joint venture or limited liability company if more than a 50% interest in the profits or capital thereof is owned by such Person or one or more of its Subsidiaries or such Person and one or more of its Subsidiaries (unless such partnership or limited liability company can and does ordinarily take major business actions without the prior approval of such Person or one or more of its Subsidiaries). Unless the context otherwise clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary of the Parent.

“Subsidiary Guarantor” means EWC GP Corp., EWC LP Corp., EWC Aviation Corp. and any other Subsidiary that hereafter becomes a party to the Subsidiary Guaranty.

Schedule B

“Subsidiary Guaranty” is defined in Section 1.2(a).

“this Agreement” or “the Agreement” is defined in Section 17.3.

“Unrestricted Subsidiary” means any Subsidiary of the Parent, other than the Company, that has been so designated by notice in writing given by the Parent to the holders of the Notes.

“USA Patriot Act” means Public Law 107-56 of the United States of America, United and Strengthening America by Providing Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001.

“Wholly Owned Restricted Subsidiary” means, at any time, any Restricted Subsidiary 100% of all of the equity interests (except directors’ qualifying shares) and voting interests of which are owned by any one or more of the Parent and the Parent’s other Wholly Owned Restricted Subsidiaries, including the Company, at such time.

Schedule B

SCHEDULE 5.4

SUBSIDIARIES AND OWNERSHIP OF SUBSIDIARY STOCK

Subsidiaries

EWC GP Corp., a Delaware corporation

100% of outstanding shares owned by Parent

EWC LP Corp., a Texas corporation
100% of outstanding shares owned by Parent

ENCORE WIRE LIMITED, a Texas limited partnership
1% general partnership interest owned by EWC GP Corp.
99% limited partnership interest owned by EWC LP Corp.

EWC AVIATION Corp., a Texas corporation
100% of outstanding shares owned by Parent

Affiliates

Capital Southwest Corporation
(beneficial owner of more than 15% of outstanding capital stock of Parent)

Directors and Officers of Parent and the Company

Directors of Parent:
Vincent A Rego, Donald E. Courtney, Daniel L. Jones, Scott D. Weaver,
William R. Thomas, John H. Wilson, Joseph M. Brito, Thomas L. Cunningham

Senior Officers of Parent:
Vincent A. Rego, Chairman of the Board and CEO
Daniel L. Jones, President and COO
Frank J. Bilban, Vice President-Finance, CFO, Treasurer and Secretary
David K. Smith, Vice President-Operations

Directors of EWC GP Corp., general partner of the Company:
Vincent A. Rego, Daniel L. Jones, Frank J. Bilban

Senior Officers of EWC GP Corp., general partner of the Company:
Vincent A. Rego, Chairman of the Board and CEO
Daniel L. Jones, President and COO

Schedule 5.4

Frank J. Bilban, Vice President-Finance, CFO, Treasurer and Secretary
David K. Smith, Vice President-Operations

Schedule 5.4

SCHEDULE 5.5

FINANCIAL STATEMENTS

Consolidated financial statements of the Parent contained in Parent’s Form 10-K for the year ended December 31, 2003.

Consolidated financial statements of the Parent contained in Parent’s Form 10-Q for the quarter ended March 31, 2004.

Consolidated financial statements of the Parent contained in Parent’s Form 10-Q for the quarter ended June 30, 2004.

Financial statements of the Parent and its Subsidiaries contained in the Offering Memorandum dated July 2004.

Schedule 5.11

SCHEDULE 5.14

USE OF PROCEEDS

The Company will apply all proceeds of the sale of the Notes to repay outstanding Debt under that certain Financing Agreement dated August 31, 1999 among the Company, Bank of America, N.A., as administrative agent, and the lenders named therein, as amended.

Schedule 5.14

SCHEDULE 5.15

DEBT

As of June 30, 2004:

$72,500,000 of outstanding principal Debt under Financing Agreement dated August 31, 1999 among the Company, Bank of America, N.A., as administrative agent, and the lenders named therein, as amended, maturing 5/31/97, LIBOR plus.

As of closing (after giving effect to application of proceeds of the Notes):

Approximately $21,450,000 of outstanding principal Debt under the Credit Agreement, maturing 8/31/2009, LIBOR plus.

Schedule 5.15

EXHIBIT 1.1

[FORM OF SERIES 2004-A SENIOR NOTE]

ENCORE WIRE LIMITED

5.27% Senior Note, Series 2004-A
due August 27, 2011


No. AR-[ ] $[ ]		[Date] PPN: 29263@ AA 7

FOR VALUE RECEIVED, the undersigned, ENCORE WIRE LIMITED (herein called the “Company”), a limited partnership organized and existing under the laws of the State of Texas, promises to pay to [ ], or registered assigns, the principal sum of $[ ] on August 27, 2011, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 5.27% per annum from the date hereof, payable semiannually, on February 27 and August 27 in each year, commencing with the February 27 or August 27 next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreement referred to below), payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 7.27% or (ii) 2% over the rate of interest publicly announced by Bank of America, N.A. from time to time in Chicago, Illinois as its “base” or “prime” rate.

Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at the principal office of Bank of America, N.A. in Chicago, Illinois or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.

This Note is one of Senior Notes (herein called the “Notes”) issued pursuant to a Note Purchase Agreement dated as of August 1, 2004 (as from time to time amended, the “Note Purchase Agreement”), between the Company, Encore Wire Corporation and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement, (ii) to have made the representation set forth in Section 6.2 of the Note Purchase Agreement and (iii) to have agreed to the restriction on transfer of this Note set forth in Section 13.3 of the Note Purchase Agreement.

Exhibit 1.1

This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder’s attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.

This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement but not otherwise.

If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.

Payment of the principal of, and interest and Make-Whole Amount, if any, on this Note, and all other amounts due under the Note Purchase Agreement, is guaranteed pursuant to the terms of Guaranties dated as of August 1, 2004 of the Parent and certain Subsidiaries of the Company.*

This Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of Illinois excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.


		ENCORE WIRE LIMITED
		By its General Partner,
		GWC GP, Inc.

		By:

		Name:

		Title:

This paragraph must be modified at such time as there are no Subsidiary Guarantors.

Exhibit 1.1

EXHIBIT 1.2(a)

PARENT GUARANTY

THIS GUARANTY (this “Guaranty”) dated as of August 1, 2004 is made by Encore Wire Corporation, a Delaware corporation (the “Guarantor”), in favor of the holders from time to time of the Notes hereinafter referred to, including each purchaser named in the Note Purchase Agreement hereinafter referred to, and their respective successors and assigns (collectively, the “Holders” and each individually, a “Holder”).

W I T N E S S E T H:

WHEREAS, Encore Wire Limited, a Texas limited partnership (the “Company”), the Guarantor and the initial Holders have entered into a Note Purchase Agreement dated as of August 1, 2004 (the Note Purchase Agreement as amended, supplemented, restated or otherwise modified from time to time in accordance with its terms and in effect, the “Note Purchase Agreement”);

WHEREAS, the Note Purchase Agreement provides for the issuance by the Company of $45,000,000 aggregate principal amount of Notes (as defined in the Note Purchase Agreement) in series;

WHEREAS, the Company is a Wholly Owned Restricted Subsidiary of the Guarantor and the Guarantor will derive substantial benefits from the purchase by the Holders of the Company’s Notes;

WHEREAS, it is a condition precedent to the obligation of the Holders to purchase the Notes that the Guarantor shall have executed and delivered this Guaranty to the Holders; and

WHEREAS, the Guarantor desires to execute and deliver this Guaranty to satisfy the conditions described in the preceding paragraph;

NOW, THEREFORE, in consideration of the premises and other benefits to the Guarantor, and of the purchase of the Company’s Notes by the Holders, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Guarantor makes this Guaranty as follows:

SECTION 1. Definitions. Any capitalized terms not otherwise herein defined shall have the meanings ascribed to them in the Note Purchase Agreement.

SECTION 2. Guaranty. The Guarantor unconditionally and irrevocably guarantees to the Holders the due, prompt and complete payment by the Company of the principal of, Make-Whole Amount, if any, and interest on, and each other amount due under, the Notes or the Note

Exhibit 1.2(a)

Purchase Agreement, when and as the same shall become due and payable (whether at stated maturity or by required or optional prepayment or by declaration or otherwise) in accordance with the terms of the Notes and the Note Purchase Agreement (the Notes and the Note Purchase Agreement being sometimes hereinafter collectively referred to as the “Note Documents” and the amounts payable by the Company under the Note Documents, and all other monetary obligations of the Company thereunder (including any reasonable attorneys’ fees and expenses), being sometimes collectively hereinafter referred to as the “Obligations”). This Guaranty is a guaranty of payment and not just of collectibility and is in no way conditioned or contingent upon any attempt to collect from the Company or upon any other event, contingency or circumstance whatsoever. If for any reason whatsoever the Company shall fail or be unable duly, punctually and fully to pay such amounts as and when the same shall become due and payable, the Guarantor, without demand, presentment, protest or notice of any kind, will forthwith pay or cause to be paid such amounts to the Holders under the terms of such Note Documents, in lawful money of the United States, at the place specified in the Note Purchase Agreement, or perform or comply with the same or cause the same to be performed or complied with, together with interest (to the extent provided for under such Note Documents) on any amount due and owing from the Company. The Guarantor, promptly after demand, will pay to the Holders the reasonable costs and expenses of collecting such amounts or otherwise enforcing this Guaranty, including, without limitation, the reasonable fees and expenses of counsel.

SECTION 3. Guarantor’s Obligations Unconditional. The obligations of the Guarantor under this Guaranty shall be primary, absolute and unconditional obligations of the Guarantor, shall not be subject to any counterclaim, set-off, deduction, diminution, abatement, recoupment, suspension, deferment, reduction or defense based upon any claim the Guarantor or any other person may have against the Company or any other person, and to the full extent permitted by applicable law shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected by, any circumstance or condition whatsoever (whether or not the Guarantor or the Company shall have any knowledge or notice thereof), including:

(a) any termination, amendment or modification of or deletion from or addition or supplement to or other change in any of the Note Documents or any other instrument or agreement applicable to any of the parties to any of the Note Documents;

(b) any furnishing or acceptance of any security, or any release of any security, for the Obligations, or the failure of any security or the failure of any person to perfect any interest in any collateral;

(c) any failure, omission or delay on the part of the Company to conform or comply with any term of any of the Note Documents or any other instrument or agreement referred to in paragraph (a) above, including, without limitation, failure to give notice to the Guarantor of the occurrence of a “Default” or an “Event of Default” under any Note Document;

Exhibit 1.2(a)

(d) any waiver of the payment, performance or observance of any of the obligations, conditions, covenants or agreements contained in any Note Document, or any other waiver, consent, extension, indulgence, compromise, settlement, release or other action or inaction under or in respect of any of the Note Documents or any other instrument or agreement referred to in paragraph (a) above or any obligation or liability of the Company, or any exercise or non-exercise of any right, remedy, power or privilege under or in respect of any such instrument or agreement or any such obligation or liability;

(e) any failure, omission or delay on the part of any of the Holders to enforce, assert or exercise any right, power or remedy conferred on such Holder in this Guaranty, or any such failure, omission or delay on the part of such Holder in connection with any Note Document, or any other action on the part of such Holder;

(f) any voluntary or involuntary bankruptcy, insolvency, reorganization, arrangement, readjustment, assignment for the benefit of creditors, composition, receivership, conservatorship, custodianship, liquidation, marshaling of assets and liabilities or similar proceedings with respect to the Company, the Guarantor or to any other person or any of their respective properties or creditors, or any action taken by any trustee or receiver or by any court in any such proceeding;

(g) any discharge, termination, cancellation, frustration, irregularity, invalidity or unenforceability, in whole or in part, of any of the Note Documents or any other agreement or instrument referred to in paragraph (a) above or any term hereof;

(h) any merger or consolidation of the Company or the Guarantor into or with any other corporation, or any sale, lease or transfer of any of the assets of the Company or the Guarantor to any other person;

(i) any change in the ownership of any shares of capital stock of the Company or any change in the corporate relationship between the Company and the Guarantor, or any termination of such relationship;

(j) any release or discharge, by operation of law, of any other guarantor from the performance or observance of any obligation, covenant or agreement contained in any other guarantee of the Note Documents or the Obligations; or

(k) any other occurrence, circumstance, happening or event whatsoever, whether similar or dissimilar to the foregoing, whether foreseen or unforeseen, and any other circumstance which might otherwise constitute a legal or equitable defense or discharge of the liabilities of a guarantor or surety or which might otherwise limit recourse against the Guarantor.

Exhibit 1.2(a)

SECTION 4. Full Recourse Obligations. The obligations of the Guarantor set forth herein constitute the full recourse obligations of the Guarantor enforceable against it to the full extent of all its assets and properties.

SECTION 5. Waiver. The Guarantor unconditionally waives, to the extent permitted by applicable law, (a) notice of any of the matters referred to in Section 3, (b) notice to the Guarantor of the incurrence of any of the Obligations, notice to the Guarantor or the Company of any breach or default by the Company with respect to any of the Obligations or any other notice that may be required, by statute, rule of law or otherwise, to preserve any rights of the Holders against the Guarantor, (c) presentment to or demand of payment from the Company or the Guarantor with respect to any amount due under any Note Document or protest for nonpayment or dishonor, (d) any right to the enforcement, assertion or exercise by any of the Holders of any right, power, privilege or remedy conferred in the Note Purchase Agreement or any other Note Document or otherwise, (e) any requirement of diligence on the part of any of the Holders, (f) any requirement to exhaust any remedies or to mitigate the damages resulting from any default under any Note Document, (g) any notice of any sale, transfer or other disposition by any of the Holders of any right, title to or interest in the Note Purchase Agreement or in any other Note Document and (h) any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge, release or defense of a guarantor or surety or which might otherwise limit recourse against the Guarantor.

SECTION 6. Subrogation, Contribution, Reimbursement or Indemnity. Until one year and one day after all Obligations have been paid in full, the Guarantor agrees not to take any action pursuant to any rights which may have arisen in connection with this Guaranty to be subrogated to any of the rights (whether contractual, under the United States Bankruptcy Code, as amended, including section 509 thereof, under common law or otherwise) of any of the Holders against the Company or against any collateral security or guaranty or right of offset held by the Holders for the payment of the Obligations. Until one year and one day after all Obligations have been paid in full, the Guarantor agrees not to take any action pursuant to any contractual, common law, statutory or other rights of reimbursement, contribution, exoneration or indemnity (or any similar right) from or against the Company which may have arisen in connection with this Guaranty. So long as the Obligations remain, if any amount shall be paid by or on behalf of the Company to the Guarantor on account of any of the rights waived in this paragraph, such amount shall be held by the Guarantor in trust, segregated from other funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to the Holders (duly endorsed by the Guarantor to the Holders, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Holders may determine. The provisions of this paragraph shall survive the term of this Guaranty and the payment in full of the Obligations.

Exhibit 1.2(a)

the Holder upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company or any other person, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to the Company or other person or any substantial part of its property, or otherwise, all as though such payment had not been made. If an event permitting the acceleration of the maturity of the principal amount of the Notes shall at any time have occurred and be continuing, and such acceleration shall at such time be prevented by reason of the pendency against the Company or any other person of a case or proceeding under a bankruptcy or insolvency law, the Guarantor agrees that, for purposes of this Guaranty and its obligations hereunder, the maturity of the principal amount of the Notes and all other Obligations shall be deemed to have been accelerated with the same effect as if any Holder had accelerated the same in accordance with the terms of the Note Purchase Agreement or other applicable Note Document, and the Guarantor shall forthwith pay such principal amount, Make-Whole Amount, if any, and interest thereon and any other amounts guaranteed hereunder without further notice or demand.

SECTION 8. Term of Agreement. This Guaranty and all guaranties, covenants and agreements of the Guarantor contained herein shall continue in full force and effect and shall not be discharged until such time as all of the Obligations shall be paid and performed in full and all of the agreements of the Guarantor hereunder shall be duly paid and performed in full.

SECTION 9. Notices. All notices and communications provided for hereunder shall be in writing and sent by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or by registered or certified mail with return receipt requested (postage prepaid), or by a recognized overnight delivery service (with charges prepaid) (a) if to the Company or any Holder at the address set forth in the Note Purchase Agreement or (b) if to the Guarantor, in care of the Company at the Company’s address set forth in the Note Purchase Agreement, or in each case at such other address as the Company, any Holder or such Guarantor shall from time to time designate in writing to the other parties. Any notice so addressed shall be deemed to be given when actually received.

SECTION 10. Survival. All warranties, representations and covenants made by the Guarantor herein or in any certificate or other instrument delivered by it or on its behalf hereunder shall be considered to have been relied upon by the Holders and shall survive the execution and delivery of this Guaranty, regardless of any investigation made by any of the Holders. All statements in any such certificate or other instrument shall constitute warranties and representations by such Guarantor hereunder.

SECTION 11. Submission to Jurisdiction. Any litigation based hereon, or arising out of, under or in connection with this Guaranty, may be brought and maintained in the courts of the State of Illinois or in the United States District Court for the Northern District of Illinois. The Guarantor expressly and irrevocably submits to the jurisdiction of the courts of the State of Illinois and of the United States District Court for the Northern District of Illinois for the purpose of any such litigation as set forth above. The Guarantor further irrevocably consents to the service of process by registered mail, postage prepaid,

Exhibit 1.2(a)

to the address specified in Section 9 or by personal service within or without the State of Illinois. The Guarantor expressly and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any such litigation brought in any such court referred to above and any claim that any such litigation has been brought in an inconvenient forum.

SECTION 12. Waiver of Jury Trial. The Guarantor waives any right to a trial by jury in any action or proceeding to enforce or defend any rights under this Guaranty or under any amendment, instrument, document or agreement delivered or that may in the future be delivered in connection herewith and agrees that any such action or proceeding shall be tried before a court and not before a jury.

SECTION 13. Miscellaneous. Any provision of this Guaranty that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating 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. To the extent permitted by applicable law, the Guarantor hereby waives any provision of law that renders any provisions hereof prohibited or unenforceable in any respect. The terms of this Guaranty shall be binding upon, and inure to the benefit of, the Guarantor and the Holders and their respective successors and assigns. No term or provision of this Guaranty may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the Guarantor and the Required Holders. The section and paragraph headings in this Guaranty and the table of contents are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof, and all references herein to numbered sections, unless otherwise indicated, are to sections in this Guaranty. This Guaranty shall in all respects be governed by, and construed in accordance with, the laws of the State of Illinois excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.

Exhibit 1.2(a)

IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly executed as of the day and year first above written.


		ENCORE WIRE CORPORATION

		By:

		Name:

		Title:

Exhibit 1.2(a)

EXHIBIT 1.2(b)

[FORM OF SUBSIDIARY GUARANTY]

THIS GUARANTY (this “Guaranty”) dated as of August 1, 2004 is made by the undersigned (each, a “Guarantor”), in favor of the holders from time to time of the Notes hereinafter referred to, including each purchaser named in the Note Purchase Agreement hereinafter referred to, and their respective successors and assigns (collectively, the “Holders” and each individually, a “Holder”).

W I T N E S S E T H:

WHEREAS, Encore Wire Limited, a Texas limited partnership (the “Company”), Encore Wire Corporation, a Delaware corporation (the “Parent”), and the initial Holders have entered into a Note Purchase Agreement dated as of August 1, 2004 (the Note Purchase Agreement as amended, supplemented, restated or otherwise modified from time to time in accordance with its terms and in effect, the “Note Purchase Agreement”);

WHEREAS, the Note Purchase Agreement provides for the issuance by the Company of $45,000,000 aggregate principal amount of Notes (as defined in the Note Purchase Agreement);

WHEREAS, the Parent owns, directly or indirectly, all of the issued and outstanding capital stock or partnership interests of each Guarantor and, by virtue of such ownership and otherwise, each Guarantor will derive substantial benefits from the purchase by the Holders of the Company’s Notes;

WHEREAS, it is a condition precedent to the obligation of the Holders to purchase the Notes that each Guarantor shall have executed and delivered this Guaranty to the Holders; and

WHEREAS, each Guarantor desires to execute and deliver this Guaranty to satisfy the conditions described in the preceding paragraph;

NOW, THEREFORE, in consideration of the premises and other benefits to each Guarantor, and of the purchase of the Company’s Notes by the Holders, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, each Guarantor makes this Guaranty as follows:

SECTION 1. Definitions. Any capitalized terms not otherwise herein defined shall have the meanings attributed to them in the Note Purchase Agreement.

SECTION 2. Guaranty. Each Guarantor, jointly and severally with each other Guarantor, unconditionally and irrevocably guarantees to the Holders the due, prompt and complete payment by the Company of the principal of, Make-Whole Amount, if any, and interest on, and each other amount due under, the Notes or the Note Purchase Agreement, when and as the same shall become due and payable (whether at stated maturity or by required or optional prepayment or by

Exhibit 1.2(b)

declaration or otherwise) in accordance with the terms of the Notes and the Note Purchase Agreement (the Notes and the Note Purchase Agreement being sometimes hereinafter collectively referred to as the “Note Documents” and the amounts payable by the Company under the Note Documents, and all other monetary obligations of the Company thereunder (including reasonable attorneys’ fees and expenses), being sometimes collectively hereinafter referred to as the “Obligations”). This Guaranty is a guaranty of payment and not just of collectibility and is in no way conditioned or contingent upon any attempt to collect from the Company or upon any other event, contingency or circumstance whatsoever. If for any reason whatsoever the Company shall fail or be unable duly, punctually and fully to pay such amounts as and when the same shall become due and payable, each Guarantor, without demand, presentment, protest or notice of any kind, will forthwith pay or cause to be paid such amounts to the Holders under the terms of such Note Documents, in lawful money of the United States, at the place specified in the Note Purchase Agreement, or perform or comply with the same or cause the same to be performed or complied with, together with interest (to the extent provided for under such Note Documents) on any amount due and owing from the Company. Each Guarantor, promptly after demand, will pay to the Holders the reasonable costs and expenses of collecting such amounts or otherwise enforcing this Guaranty, including, without limitation, the reasonable fees and expenses of counsel. Notwithstanding the foregoing, the right of recovery against each Guarantor under this Guaranty is limited to the extent it is judicially determined with respect to any Guarantor that entering into this Guaranty would violate Section 548 of the United States Bankruptcy Code or any comparable provisions of any state law, in which case such Guarantor shall be liable under this Guaranty only for amounts aggregating up to the largest amount that would not render such Guarantor’s obligations hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provisions of any state law.

SECTION 3. Guarantor’s Obligations Unconditional. The obligations of each Guarantor under this Guaranty shall be primary, absolute and unconditional obligations of each Guarantor, shall not be subject to any counterclaim, set-off, deduction, diminution, abatement, recoupment, suspension, deferment, reduction or defense based upon any claim each Guarantor or any other person may have against the Company or any other person, and to the full extent permitted by applicable law shall remain in full force and effect without regard to, and shall not be released, discharged or in any way affected by, any circumstance or condition whatsoever (whether or not each Guarantor or the Company shall have any knowledge or notice thereof), including:

(c) any failure, omission or delay on the part of the Company or the Parent to conform or comply with any term of any of the Note Documents or any other instrument

Exhibit 1.2(b)

or agreement referred to in paragraph (a) above, including, without limitation, failure to give notice to any Guarantor of the occurrence of a “Default” or an “Event of Default” under any Note Document;

(d) any waiver of the payment, performance or observance of any of the obligations, conditions, covenants or agreements contained in any Note Document, or any other waiver, consent, extension, indulgence, compromise, settlement, release or other action or inaction under or in respect of any of the Note Documents or any other instrument or agreement referred to in paragraph (a) above or any obligation or liability of the Company or the Parent, or any exercise or non-exercise of any right, remedy, power or privilege under or in respect of any such instrument or agreement or any such obligation or liability;

(f) any voluntary or involuntary bankruptcy, insolvency, reorganization, arrangement, readjustment, assignment for the benefit of creditors, composition, receivership, conservatorship, custodianship, liquidation, marshaling of assets and liabilities or similar proceedings with respect to the Company, the Parent, any Guarantor or to any other person or any of their respective properties or creditors, or any action taken by any trustee or receiver or by any court in any such proceeding;

(h) any merger or consolidation of the Company or the Parent or any Guarantor into or with any other corporation, or any sale, lease or transfer of any of the assets of the Company or the Parent or any Guarantor to any other person;

(i) any change in the ownership of any shares of capital stock of the Company or the Parent or any change in the corporate relationship between the Company or the Parent and any Guarantor, or any termination of such relationship;

(j) any release or discharge, by operation of law, of any other Guarantor from the performance or observance of any obligation, covenant or agreement contained in this Guaranty; or

Exhibit 1.2(b)

discharge of the liabilities of a guarantor or surety or which might otherwise limit recourse against any Guarantor.

SECTION 4. Full Recourse Obligations. The obligations of each Guarantor set forth herein constitute the full recourse obligations of such Guarantor enforceable against it to the full extent of all its assets and properties.

SECTION 5. Waiver. Each Guarantor unconditionally waives, to the extent permitted by applicable law, (a) notice of any of the matters referred to in Section 3, (b) notice to such Guarantor of the incurrence of any of the Obligations, notice to such Guarantor or the Company of any breach or default by such Company with respect to any of the Obligations or any other notice that may be required, by statute, rule of law or otherwise, to preserve any rights of the Holders against such Guarantor, (c) presentment to or demand of payment from the Company or the Guarantor with respect to any amount due under any Note Document or protest for nonpayment or dishonor, (d) any right to the enforcement, assertion or exercise by any of the Holders of any right, power, privilege or remedy conferred in the Note Purchase Agreement or any other Note Document or otherwise, (e) any requirement of diligence on the part of any of the Holders, (f) any requirement to exhaust any remedies or to mitigate the damages resulting from any default under any Note Document, (g) any notice of any sale, transfer or other disposition by any of the Holders of any right, title to or interest in the Note Purchase Agreement or in any other Note Document and (h) any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge, release or defense of a guarantor or surety or which might otherwise limit recourse against such Guarantor.

SECTION 6. Subrogation, Contribution, Reimbursement or Indemnity. Until one year and one day after all Obligations have been paid in full, each Guarantor agrees not to take any action pursuant to any rights which may have arisen in connection with this Guaranty to be subrogated to any of the rights (whether contractual, under the United States Bankruptcy Code, as amended, including Section 509 thereof, under common law or otherwise) of any of the Holders against the Company or against any collateral security or guaranty or right of offset held by the Holders for the payment of the Obligations. Until one year and one day after all Obligations have been paid in full, each Guarantor agrees not to take any action pursuant to any contractual, common law, statutory or other rights of reimbursement, contribution, exoneration or indemnity (or any similar right) from or against the Company which may have arisen in connection with this Guaranty. So long as the Obligations remain, if any amount shall be paid by or on behalf of the Company to any Guarantor on account of any of the rights waived in this paragraph, such amount shall be held by such Guarantor in trust, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Holders (duly endorsed by such Guarantor to the Holders, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Holders may determine. The provisions of this paragraph shall survive the term of this Guaranty and the payment in full of the Obligations.

Exhibit 1.2(b)

SECTION 7. Effect of Bankruptcy Proceedings, etc. This Guaranty shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the sums due to any of the Holders pursuant to the terms of the Note Purchase Agreement or any other Note Document is rescinded or must otherwise be restored or returned by such Holder upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company or any other person, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to the Company or other person or any substantial part of its property, or otherwise, all as though such payment had not been made. If an event permitting the acceleration of the maturity of the principal amount of the Notes shall at any time have occurred and be continuing, and such acceleration shall at such time be prevented by reason of the pendency against the Company or any other person of a case or proceeding under a bankruptcy or insolvency law, each Guarantor agrees that, for purposes of this Guaranty and its obligations hereunder, the maturity of the principal amount of the Notes and all other Obligations shall be deemed to have been accelerated with the same effect as if any Holder had accelerated the same in accordance with the terms of the Note Purchase Agreement or other applicable Note Document, and such Guarantor shall forthwith pay such principal amount, Make-Whole Amount, if any, and interest thereon and any other amounts guaranteed hereunder without further notice or demand.

SECTION 8. Term of Agreement. This Guaranty and all guaranties, covenants and agreements of each Guarantor contained herein shall continue in full force and effect and shall not be discharged until the earlier to occur of (i) such time as all of the Obligations shall be paid and performed in full and all of the agreements of such Guarantor hereunder shall be duly paid and performed in full and (ii) such Guarantor is released by the Holders pursuant to Section 1.2(b) of the Note Purchase Agreement.

SECTION 9. Representations and Warranties. Each Guarantor represents and warrants to each Holder that:

(a) such Guarantor is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has the power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact,;

(b) such Guarantor has the power and authority to execute and deliver this Guaranty and to perform the provisions hereof, and this Guaranty has been duly authorized by all necessary action on the part of such Guarantor;

(c) this Guaranty constitutes the legal, valid and binding obligation of such Guarantor enforceable against such Guarantor in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law);

Exhibit 1.2(b)

(d) the execution, delivery and performance of this Guaranty will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of such Guarantor under, any agreement, or corporate charter or by-laws to which such Guarantor is bound or by which such Guarantor or any of its properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to such Subsidiary Guarantor or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to such Guarantor;

(e) except as disclosed in Section 5.7 to the Note Purchase Agreement, no consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by such Guarantor of this Guaranty, and all such consents, approvals, authorizations, registrations, filings or declarations listed in Schedule 5.7 have been obtained or made;

(f) except as disclosed in Section 5.8 of the Note Purchase Agreement, there are no actions, suits or proceedings pending or, to the knowledge of such Guarantor, threatened against or affecting such Guarantor, or any property of such Guarantor, in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect;

(g) after giving effect to the transactions contemplated in the Note Purchase Agreement and after giving due consideration to any rights of contribution (i) such Guarantor has received fair consideration and reasonably equivalent value for the incurrence of its obligations hereunder, (ii) the fair value of the assets of such Guarantor (both at fair valuation and at present fair saleable value) exceeds its liabilities, (iii) such Guarantor is able to and expects to be able to pay its debts as they mature, and (iv) such Guarantor has capital sufficient to carry on its business as conducted and as proposed to be conducted.

SECTION 10. Notices. All notices and communications provided for hereunder shall be in writing and sent by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or by registered or certified mail with return receipt requested (postage prepaid), or by a recognized overnight delivery service (with charges prepaid) (a) if to the Company or any Holder at the address set forth in the Note Purchase Agreement or (b) if to a Guarantor, in care of the Company at the Company’s address set forth in the Note Purchase Agreement, or in each case at such other address as the Company, any Holder or such Guarantor shall from time to time designate in writing to the other parties. Any notice so addressed shall be deemed to be given when actually received.

Exhibit 1.2(b)

SECTION 11. Survival. All warranties, representations and covenants made by each Guarantor herein or in any certificate or other instrument delivered by it or on its behalf hereunder shall be considered to have been relied upon by the Holders and shall survive the execution and delivery of this Guaranty, regardless of any investigation made by any of the Holders. All statements in any such certificate or other instrument shall constitute warranties and representations by such Guarantor hereunder.

SECTION 12. Submission to Jurisdiction. Any litigation based hereon, or arising out of, under or in connection with this Guaranty, may be brought and maintained in the courts of the State of Illinois or in the United States District Court for the Northern District of Illinois. Each Guarantor expressly and irrevocably submits to the jurisdiction of the courts of the State of Illinois and of the United States District Court for the Northern District of Illinois for the purpose of any such litigation as set forth above. Each Guarantor further irrevocably consents to the service of process by registered mail, postage prepaid, to the address specified in Section 9 or by personal service within or without the State of Illinois. Each Guarantor expressly and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any such litigation brought in any such court referred to above and any claim that any such litigation has been brought in an inconvenient forum.

SECTON 13. Waiver of Jury Trial. Each Guarantor waives any right to a trial by jury in any action or proceeding to enforce or defend any rights under this Guaranty or under any amendment, instrument, document or agreement delivered or that may in the future be delivered in connection herewith and agrees that any such action or proceeding shall be tried before a court and not before a jury.

SECTION 14. Miscellaneous. Any provision of this Guaranty which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating 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. To the extent permitted by applicable law, each Guarantor hereby waives any provision of law that renders any provisions hereof prohibited or unenforceable in any respect. The terms of this Guaranty shall be binding upon, and inure to the benefit of, each Guarantor and the Holders and their respective successors and assigns. No term or provision of this Guaranty may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by each Guarantor and the Required Holders. The section and paragraph headings in this Guaranty are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions hereof, and all references herein to numbered sections, unless otherwise indicated, are to sections in this Guaranty. This Guaranty shall in all respects be governed by, and construed in accordance with, the laws of the State of Illinois, excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.

Exhibit 1.2(b)

IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed as of the day and year first above written.


		EWC GP Corp.

		By:

		Name:

		Title:


		EWC LP Corp.

		By:

		Name:

		Title:


		EWC AVIATION Corp.

		By:

		Name:

		Title:

Exhibit 1.2(b)

FORM OF JOINDER TO SUBSIDIARY GUARANTY

The undersigned (the “Guarantor”), joins in the Subsidiary Guaranty dated as of August 1, 2004 from the Guarantors named therein in favor of the Holders, as defined therein, and agrees to be bound by all of the terms thereof and represents and warrants to the Holders that:

Exhibit 1.2(b)

court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect;

(g) after giving effect to the transactions contemplated by the giving of this Joinder and giving due consideration to any rights of contribution (i) such Guarantor has received fair consideration and reasonably equivalent value for the incurrence of its obligations hereunder, (ii) the fair value of the assets of such Guarantor (both at fair valuation and at present fair saleable value) exceeds its liabilities, (iii) such Guarantor is able to and expects to be able to pay its debts as they mature, and (iv) such Guarantor has capital sufficient to carry on its business as conducted and as proposed to be conducted.

Capitalized Terms used but not defined herein have the meanings ascribed in the Subsidiary Guaranty.

IN WITNESS WHEREOF, the undersigned has caused this Joinder to Subsidiary Guaranty to be duly executed as of , .


		[Name of Guarantor]

		By:

		Name:

		Title:

Exhibit 1.2(b)

EXHIBIT 4.4(a)

FORM OF OPINION OF COUNSEL
FOR THE COMPANY

The opinion of Thompson & Knight LLP, counsel for the Parent, the Company and the Subsidiary Guarantors, shall be to the effect that:

1. The Company is a limited partnership validly existing and in good standing under the laws of the State of Texas. Each of the Parent, EWC GP Corp. and EWC LP Corp. is a corporation validly existing and in good standing under the laws of the State of Delaware. EWC Aviation Corp. is a corporation validly existing and in good standing under the laws of the State of Texas.

2. Each of the Company, the Parent and each Subsidiary Guarantor has the corporate or partnership power to execute and deliver the Agreement, the Notes and the Guaranty (the “Note Documents”), in each case to which it is a party, and to perform its obligations thereunder. The execution, delivery and performance of each Note Document has been duly authorized by all necessary corporate or partnership proceedings on the part of each Client a party thereto. Each Client has duly executed and delivered each Note Document to which it is a party.

3. If, notwithstanding the choice of Illinois law contained in the Note Documents, Texas law were applied to such instruments, each Note Document would constitute the legal, valid and binding obligation of the Company, the Parent and each Subsidiary Guarantor (to the extent a party thereto) under Texas law, enforceable against each in accordance with its terms.

4. The execution, delivery and performance by each of the Company, the Parent and each Subsidiary Guarantor of the Note Documents to which it is a party, and the consummation of the transactions contemplated thereby, will not:

(a) violate any provision of its organizational documents, or

(b) breach or result in a default under or result in the maturing of any of indebtedness, or create any lien, security interest or other encumbrance, on any of its property pursuant to, the agreements and instruments listed on Schedule C hereto, which have been identified by it as all indentures, mortgages, deeds of trust and other Material agreements and instruments to which it is a party; or

(c) result in a violation of any federal or state law, rule or regulation or, to our knowledge, any judgment, order, decree, determination or award of any federal or state court or governmental authority which is now in effect and applicable to such it or any of its properties.

5. To the knowledge of such counsel, no consent, approval, waiver, license, authorization or action by or filing with or notice to any federal or state court or governmental

Exhibit 4.4(a)

authority or any third party is required for the execution and delivery by any of the Company, the Parent or any Subsidiary Guarantor of any Note Document to which it is a party or the consummation of the transactions contemplated thereby.

6. Assuming the accuracy of the representations and warranties made by the Company in Paragraph 5.14 of the Agreement, the extension of credit to the Company pursuant to the Agreement, and the use of the proceeds therefrom by the Company as represented and warranted by the Company in such Paragraph 5.14 of the Agreement, do not violate Regulations T, U or X promulgated by the Board of Governors of the Federal Reserve System..

7. None of the Company, the Parent or any Subsidiary is (a) an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, (b) a “public utility” within the meaning of the Federal Power Act, as amended, or (c) a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of a “holding company” within the meaning of the Public Utility Holding Company Act of 1935, as amended.

8. Assuming (a) the accuracy of the representations and warranties made by the Company and the Parent in Section 5.13 of the Agreement and by each Purchaser in Section 6.1 of the Agreement, (b) the due performance by the Company and the Parent of the covenants set forth in Section 5.13 of the Agreement (and that no one acting on their behalf has taken any action prohibited therein), and (c) each Purchaser’s compliance with the offering procedures and restrictions described in the Private Placement Memorandum dated July, 2004 relating to the offering of the Notes, it is not necessary in connection with the offering, issuance, sale and delivery of the Notes under the circumstances contemplated by the Agreement to register the Notes under the Securities Act of 1933, as amended, or to qualify an indenture with respect to the Notes under the Trust Indenture Act of 1939, as amended. Such counsel need not opine as to when or under what circumstances any Notes initially sold to the Purchasers may be reoffered or resold.

The opinion of Thompson & Knight LLP, shall cover such other matters relating to the sale of the Notes as the Purchasers may reasonably request. With respect to matters of fact on which such opinion is based, such counsel shall be entitled to rely on appropriate certificates of public officials and officers of the Company and with respect to matters governed by the laws of any jurisdiction other than the United States of America, the laws of the State of Texas or the Delaware General Corporation Law, such counsel may rely upon the opinions of counsel deemed (and stated in their opinion to be deemed) by them to be competent and reliable. The opinions shall state that subsequent transferees and assignees of the Notes may rely thereon.

Exhibit 4.4(a)

EXHIBIT 4.4(b)

FORM OF OPINION OF SPECIAL COUNSEL
TO THE PURCHASERS

The opinion of Gardner Carton & Douglas LLP, special counsel to the Purchasers, shall be to the effect that:

1. The Agreement and the Notes constitute the legal, valid and binding agreements of the Company and the Parent, as the case may be, enforceable in accordance with their terms, except to the extent that enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of general application relating to or affecting the enforcement of the rights of creditors or by equitable principles, regardless of whether enforcement is sought in a proceeding in equity or at law.

2. The Guaranties constitute the legal, valid and binding obligation of the Parent and each Subsidiary Guarantor, enforceable in accordance with their terms, except to the extent the enforcement thereof may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws of general application relating to or affecting the enforcement of the rights of creditors or by equitable principles, regardless of whether enforcement is sought in a proceeding in equity or at law.

3. Based upon the representations set forth in the Agreement, the offering, sale and delivery of the Notes and the execution and delivery of the Guaranties do not require the registration of the Notes or the Guaranties under the Securities Act of 1933, as amended, nor the qualification of an indenture under the Trust Indenture Act of 1939, as amended.

4. No approval, consent or withholding of objection on the part of, or filing, registration or qualification with, any governmental body, Federal or state, is necessary in connection with the execution and delivery of the Agreement or the Notes.

Gardner Carton & Douglas LLP may rely upon the opinion of Thompson & Knight LLP (i) as to the due authorization, execution and delivery by the Parent, the Company and the Subsidiary Guarantors of Agreement, the Notes and the Guaranties to which they are parties, and (ii) as to all matters of Texas law. The opinion of Gardner Carton & Douglas LLP shall state that the opinion of Thompson & Knight LLP is satisfactory in form and scope to Gardner Carton & Douglas, and, in its opinion, the Purchasers and it are justified in relying thereon. The opinion shall state that subsequent transferees and assignees of the Notes may rely thereon and shall cover such other matters relating to the sale of the Notes as the Purchasers may reasonably request.

Exhibit 4.4(b)

EX-31.1 4 d19811exv31w1.htm CERTIFICATION BY CHAIRMAN & CEO PURSUANT TO SECTION 302 exv31w1

FORM 10-Q

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Vincent A. Rego, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Encore Wire Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), for the registrant and have;

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

c. disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

FORM 10-Q

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2004


		/s/ VINCENT A. REGO

		Vincent A. Rego
		Chairman of the Board and
		Chief Executive Officer

EX-31.2 5 d19811exv31w2.htm CERTIFICATION BY VICE PRESIDENT, CFO, TREASURER & SECRETARY PURSUANT TO SECTION 302 exv31w2

FORM 10-Q

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Frank J. Bilban, certify that:

FORM 10-Q

Date: November 8, 2004


		/s/ FRANK J. BILBAN

		Frank J. Bilban
		Vice President – Finance, Chief Financial
		Officer, Treasurer and Secretary

EX-32.1 6 d19811exv32w1.htm CERTIFICATION BY CHAIRMAN & CEO PURSUANT TO SECTION 906 exv32w1

FORM 10-Q

Exhibit 32.1

CERTIFICATION FURNISHED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report of Encore Wire Corporation (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Vincent A. Rego, Chairman and Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 8, 2004


		/s/ VINCENT A. REGO

		Vincent A. Rego
		Chairman of the Board and
		Chief Executive Officer

EX-32.2 7 d19811exv32w2.htm CERTIFICATION BY VICE PRESIDENT, CFO, TREASURER & SECRETARY PURSUANT TO SECTION 906 exv32w2

FORM 10-Q

Exhibit 32.2

CERTIFICATION FURNISHED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report of Encore Wire Corporation (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frank J. Bilban, Vice-President—Finance, Chief Financial Officer, Treasurer and Secretary of the Company, certify pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

Date: November 8, 2004


		/s/ FRANK J. BILBAN

		Frank J. Bilban
		Vice President – Finance, Chief Financial
		Officer, Treasurer and Secretary

-----END PRIVACY-ENHANCED MESSAGE-----

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Note:	The consolidated balance sheet at December 31, 2003 as presented, is derived from the audited consolidated financial statements at that date.


Note:	All share and per share data in this Quarterly Report have been restated to reflect the effect of the Company’s 3-for-2 stock split which was effective in August 2004.

	1.		Fixed Charge Ratio. Fixed Charge Ratio shall not at any time be less than 3.50 to 1.00.

	2.		Leverage Ratio. Leverage Ratio shall not at any time be more than 3.50 to 1.0.

	3.		Leverage Ratio. Leverage Ratio for more than two consecutive Fiscal Quarters shall not exceed 3.00 to 1.00.

	4.		Capital Expenditures. Capital Expenditures shall not exceed $25,000,000 during any fiscal year.

	1.		“Capital Expenditures” means all expenditures which are classified as capital expenditures according to GAAP.

	2.		“Cash Taxes” means, for any period, all federal, state, local and foreign income taxes paid in cash during such period.

	3.		“Current Maturities of Long-Term Indebtedness” means, for any period, the scheduled principal payments during such period in respect of indebtedness having a final maturity date of more than one year (excluding indebtedness under the Facility).

	4.		“EBITDA” means an amount equal to the sum of the following, determined for the preceding four (4) completed Fiscal Quarters: (i) income before provision for income taxes plus (ii) all interest charges paid or accrued plus (iii) depreciation and amortization.

	5.		“Fixed Charge Ratio” means the ratio of the following, determined for the preceding four (4) Fiscal Quarters: (a) the sum of EBITDA less Cash Taxes less Maintenance Capital Expenditures, (b) divided by the sum of Interest Expense plus Current Maturities of Long-Term Indebtedness plus cash dividends paid by the Parent to its shareholders.

	6.		“Funded Debt” at any time means an amount equal to the aggregate principal amount outstanding at such time of indebtedness described in clauses (a), (c) and (e) of paragraph 7.26.

	7.		“Interest Expense” means all interest charges paid or assumed, excluding capitalized interest, if any.

	8.		“Leverage Ratio” means the ratio of the following: (a) Funded Debt as of the end of a Fiscal Quarter, (b) divided by EBITDA for the preceding four (4) Fiscal Quarters ending with such Fiscal Quarter.

	9.		“Maintenance Capital Expenditures” means, for any period of four (4) Fiscal Quarters, an amount equal to $6,000,000.


pc:	Great-West Life & Annuity Insurance Company Attention: Investments Division 8515 E. Orchard Road, 3T2 Greenwood Village, Colorado 80111 Facsimile: (303) 737-6193

1.		I have reviewed this quarterly report on Form 10-Q of Encore Wire Corporation;

2.		Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.		Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), for the registrant and have;

a.		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b.		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and

c.		disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

a.		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

1.		The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.		The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.