S-4

As filed with the Securities and Exchange Commission on March 31, 2006

Registration No. 333-            

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-4

REGISTRATION STATEMENT UNDER

THE SECURITIES ACT OF 1933

FLAG INTERMEDIATE HOLDINGS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	5051	20-3779375
(State or other jurisdiction of Incorporation)	(Primary Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

John A. Hageman, Esq.

Senior Vice President and Chief Legal Officer

One Riverway, Suite 1100

Houston, Texas 77056

(713) 965-0990

(Address, including zip code, and telephone number,

Including area code, of registrant’s principal executive offices)

METALS USA, INC.

(Exact name of registrant as specified in its charter)

Delaware	5051	76-0533626
(State or other jurisdiction of Incorporation)	(Primary Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

John A. Hageman, Esq.

Senior Vice President and Chief Legal Officer

One Riverway, Suite 1100

Houston, Texas 77056

(713) 965-0990

(Address, including zip code, and telephone number,

Including area code, of registrant’s principal executive offices)

SEE TABLE OF ADDITIONAL REGISTRANT GUARANTORS

Copies to:

J. Vincent Kendrick

Akin Gump Strauss Hauer & Feld LLP

1111 Louisiana Street, Suite 4400

Houston, Texas 77002

(713) 220-5839

Approximate date of commencement of proposed sale of securities to the public: As promptly as practicable after the effective date of this registration statement

If the securities being registered on this Form are offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.    o

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

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

CALCULATION OF REGISTRATION FEE

		Proposed	Proposed
Title of Each Class of	Amount to Be	Maximum Offering	Maximum Aggregate	Amount Of
Securities to Be Registered	Registered	Price per Unit(1)	Offering Price	Registration Fee(1)
111/8 % Senior Notes due 2015	$275,000,000	100%	$275,000,000	$29,425
Guarantees of the 111/8 % Senior Notes due 2015(3)				None(2)

(1)	Determined in accordance with Rule 457(f) promulgated under the Securities Act of 1933
(2)	Pursuant to Rule 457(n) under the Securities Act, no separate fee is payable for the guarantees of the notes being registered.
(3)	Flag Intermediate Holdings Corporation and each subsidiary of Metals USA, Inc. listed on the table of Additional Registrant Guarantors on the following page has guaranteed the notes being registered hereby.

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

TABLE OF ADDITIONAL REGISTRANT GUARANTORS

		State or Other
		Jurisdiction of	I.R.S. Employer	Primary Standard
		Incorporation or	Identification	Industrial
Name		Organization	Number	Classification Code
Subsidiary Guarantors:
	Allmet GP, Inc.	Delaware	75-2858998		5051
	Allmet LP, Inc.	Delaware	75-2859000		5051
	Interstate Steel Supply Co. of Maryland, Inc.	Maryland	52-1684672		5051
	Intsel GP, Inc.	Delaware	98-0165917		5051
	Intsel LP, Inc.	Delaware	98-0165916		5051
	I-Solutions Direct, Inc.	Delaware	23-3026655		5051
	Jeffreys Real Estate Corporation	Delaware	72-1396636		5051
	Jeffreys Steel Holdings, L.L.C	Alabama	None		5051
	Levinson Steel GP, Inc.	Delaware	25-1862440		5051
	Levinson Steel LP, Inc.	Delaware	25-1862437		5051
	Metals Receivables Corporation	Delaware	76-0593300		5051
	Metals USA Building Products, L.P.	Texas	75-2585164		5051
	Metals USA Carbon Flat Rolled Inc.	Ohio	34-0891223		5051
	Metals USA Finance Corp.	Delaware	76-0549340		5051
	Metals USA Flat Rolled Central Inc.	Missouri	43-1186503		5051
	Metals USA Management Co., L.P.	Delaware	76-0541394		5051
	Metals USA Plates and Shapes Southcentral, Inc.	Oklahoma	73-1309371		5051
	Metals USA Plates and Shapes Southeast, Inc.	Alabama	63-0518679		5051
	Metals USA Plates and Shapes Southwest, Limited Partnership	Connecticut	98-0166286		5051
	Metals USA Plates and Shapes Northeast, L.P.	Delaware	25-1807253		5051
	Metals USA Realty Company	Delaware	76-0655830		5051
	Metals USA Specialty Metals Northcentral, Inc.	Delaware	36-4219582		5051
	MUSA GP, Inc.	Delaware	76-0541470		5051
	MUSA LP, Inc.	Delaware	76-0541471		5051
	MUSA Newark, L.L.C	Delaware	30-0345285		5051
	Queensboro, L.L.C	North Carolina	56-2186693		5051

*  The name, address of the principal executive office, including zip code, and telephone number, including area code, of the agent for service of each additional registrant is c/o Metals USA, Inc., John A. Hageman, Esq., Senior Vice President and Chief Legal Officer; One Riverway, Suite 1100, Houston, Texas 77056; The telephone number there is (713) 965-0990.

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

Subject to completion, dated March 31, 2006.

Flag Intermediate Holdings Corporation

and

Metals USA, Inc.

        $275,000,000 aggregate principal amount of our 11¹/8% Senior Secured Notes Due 2015, which have been registered under the Securities Act of 1933 for $275,000,000 aggregate principal amount of our 11¹/8% Senior Secured Notes Due 2015

      We hereby offer, upon the terms and subject to the conditions set forth in this prospectus and the accompanying letter of transmittal (which together constitute the “exchange offer”), to exchange up to $275,000,000 aggregate principal amount of our 11¹/8% Senior Secured Notes Due 2015, which we refer to as the exchange notes, for a like principal amount of our outstanding 11¹/8 % Senior Secured Notes Due 2015, which we refer to as the old notes. We refer to the old notes and the exchange notes collectively as the notes. The terms of the exchange notes are identical to the terms of the old notes in all material respects, except for the elimination of some transfer restrictions, registration rights and additional interest provisions relating to the old notes. The exchange notes will be issued under the same indenture as the old notes.

      We will exchange any and all old notes that are validly tendered and not validly withdrawn prior to 5:00 p.m. (New York City time) on                     , 2006, unless extended.

      We will not receive any cash proceeds from the exchange offer. You will be required to make the representations described on page 31. We have not applied, and do not intend to apply, for listing the notes on any national securities exchange or automated quotation system.

      Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for old notes where such old notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days after the expiration date of the exchange offer, we will make this prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”

       See “Risk Factors” beginning on page 18 of this prospectus for a discussion of certain risks that you should consider before participating in this exchange offer.

       NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

      The date of this prospectus is                     , 2006.

TABLE OF CONTENTS

	Page
ADDITIONAL INFORMATION		ii
NOTICE TO NEW HAMPSHIRE RESIDENTS		ii
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS		iii
INDUSTRY AND MARKET DATA		iv
SUMMARY		1
RISK FACTORS		18
THE EXCHANGE OFFER		31
USE OF PROCEEDS		41
CAPITALIZATION		42
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION		43
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA		45
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		48
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA		62
BUSINESS		63
DESCRIPTION OF THE TRANSACTIONS		76
MANAGEMENT		78
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		86
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		87
DESCRIPTION OF CERTAIN INDEBTEDNESS		87
DESCRIPTION OF THE NOTES		89
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES		162
PLAN OF DISTRIBUTION		163
INTERNAL CONTROL OVER FINANCIAL REPORTING		164
LEGAL MATTERS		164
EXPERTS		164
AVAILABLE INFORMATION		164
FINANCIAL STATEMENTS		F-1
Agreement and Plan of Merger
Amended and Restated Certificate of Incorporation
Amended and Restated Bylaws
Certificate of Incorporation
Bylaws
Form of Common Stock Certificate
Loan and Security Agreement dated 11/30/2005
Indenture dated 11/30/2005
Registration Rights Agreement dated 11/30/2005
Supplemental Indenture dated 11/30/2005
Second Supplemental Indenture
Opinion of Akin Gump Strauss Hauer & Feld LLP
Employment Agreement - C. Lourenco Goncalves
Employment Agreement - John A. Hageman
Employment Agreement - Robert C. McPherson, III
Severance Agreement - Roger Krohn
Severance Agreement - David Martens
Severance Agreement - Joe Longo
2005 Stock Incentive Plan
Management Agreement dated 11/30/2005
Director Compensation Plan
Statement re Computation of Ratios
List of Subsidiaries
Consent of Deloitte & Touche LLP
Statement of Eligibility on Form T-1
Letter of Transmittal
Notice of Guaranteed Delivery

i

ADDITIONAL INFORMATION

      We have filed with the Securities and Exchange Commission a registration statement on Form S-4 under the Securities Act relating to the exchange offer. This prospectus, which is part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits to the registration statement. For further information with respect to us and the notes, you should refer to the registration statement and the exhibits filed as a part of the registration statement. If we have made references in this prospectus to any contracts, agreements or other documents and also filed any of those contracts, agreements or other documents as exhibits to the registration statement, you should read the relevant exhibit for a more complete understanding of the document or the matter involved.

      You may obtain copies of the information and documents referenced in this prospectus and included as exhibits to the registration statement at no charge by writing or telephoning us at the following address or telephone number: Metals USA, Inc., One Riverway, Suite 1100, Houston, Texas 77056, Attention: Investor Relations, telephone number 713-965-0990 or 1-888-871-8701.

      To obtain timely delivery of any of our filings, agreements or other documents, you must make your request to us no later than                     , 2006. In the event that we extend the exchange offer, you must submit your request at least five business days before the expiration date of the exchange offer, as extended. We may extend the exchange offer in our sole discretion. See “Exchange Offer” for more detailed information.

      You should rely only upon the information provided in this prospectus. We have not authorized anyone to provide you with different information. You should not assume that the information in this prospectus is accurate as of any date other than the date of this prospectus.

NOTICE TO NEW HAMPSHIRE RESIDENTS

      NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

ii

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

      This prospectus contains “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” or “anticipates” or similar expressions that relate to our strategy, plans or intentions. All statements we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results or to our expectations regarding future industry trends are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those that we expected. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are based upon information available to us on the date of this prospectus.

      Important factors that could cause actual results to differ materially from our expectations (“cautionary statements”) are disclosed under “Risk Factors” and elsewhere in this prospectus, including, without limitation, in conjunction with the forward-looking statements included in this prospectus. All forward-looking information in this prospectus and subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Some of the factors that we believe could affect our results include:

•  our substantial indebtedness described in this prospectus;

•  supply, demand, prices and other market conditions for steel and other commodities;

•  the timing and extent of changes in commodity prices;

•  the effects of competition in our business lines;

•  the condition of the steel and metal markets generally, which will be affected by interest rates, foreign currency fluctuations and general economic conditions;

•  the ability of our counterparties to satisfy their financial commitments;

•  tariffs and other government regulations relating to our products and services;

•  operational factors affecting the ongoing commercial operations of our facilities, including catastrophic weather-related damage, regulatory approvals, permit issues, unscheduled blackouts, outages or repairs, unanticipated changes in fuel costs or availability of fuel emission credits or workforce issues;

•  our ability to operate our businesses efficiently, manage capital expenditures and costs (including general and administrative expenses) tightly and generate earnings and cash flow; and

•  general political conditions and developments in the United States and in foreign countries whose affairs affect supply, demand and markets for steel, metals and metal products.

      We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this prospectus may not in fact occur. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

iii

INDUSTRY AND MARKET DATA

      This prospectus includes industry data that we obtained from periodic industry publications and internal company surveys. Industry publications and surveys generally state that the information contained therein has been obtained from sources believed to be reliable. In addition, this prospectus includes market share and industry data that we prepared primarily based on our knowledge of the industry and industry data. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our market position relative to our competitors are approximated and based on the above-mentioned third-party data and internal analysis and estimates and have not been verified by independent sources. Unless otherwise noted, all information regarding our market share is based on the latest available data, which in some cases may be several years old.

iv

SUMMARY

      This summary highlights information appearing elsewhere in this prospectus. This summary is not complete and may not contain all of the information that you should consider before investing in the exchange notes. You should carefully read the entire prospectus, including the financial data and related notes and the information presented under the caption “Risk Factors.”

      On November 30, 2005, Flag Acquisition Corporation, a Delaware corporation (“Flag Acquisition”) formed by Apollo Management V, L.P. (“Apollo Management”, together with its affiliated investment management entities, “Apollo V”), merged with and into Metals USA, Inc (“Metals USA” or “the Company”), with Metals USA as the surviving company (the “Merger”). Metals USA is wholly-owned by Flag Intermediate Holdings Corporation, a Delaware corporation (“Flag Intermediate”) and an indirect wholly-owned subsidiary of Flag Holdings Corporation, a Delaware corporation (“Flag Holdings”). Except as otherwise indicated herein or as the context otherwise requires, (i) references in this prospectus to “Metals,” “we,” “our,” and “us” refer to Metals USA and its consolidated subsidiaries, prior to the consummation of the Merger and to Flag Intermediate and Metals USA and its subsidiaries after the consummation of the Merger, (ii) references to “the guarantors” refer to Flag Intermediate and each of our domestic subsidiaries that guarantee the notes (such subsidiaries are all of our domestic operating subsidiaries as of the date of this prospectus and we do not have foreign subsidiaries as of the date of this prospectus), (iii) references to the “exchange notes” refer to the 11¹/8% Senior Secured Notes Due 2015 offered hereby, (iv) references to the “old notes” refer to our outstanding 11¹/8% Senior Secured Notes Due 2015 for which the exchange notes offered hereby are offered for exchange, (v) references to the “notes” refer to both the exchange notes and the old notes and (vi) references to the “ABL facility” refer to the six-year $450.0 million senior secured asset-based revolving credit facility entered into on the effective time of the Merger. Flag Intermediate was formed solely for the purpose of consummating the Transactions, and it has no assets, obligations, employees or operations other than those resulting from the Transactions — its equity interest in Metals USA and its guarantee of the notes and certain other indebtedness of Metals USA. All of our assets, obligations, employees and operations are in Metals. All references to market shares refer to both revenue and volume, where published. Financial information identified in this prospectus as “pro forma” gives effect to the consummation of the Transactions.

Our Company — Metals

      As one of the largest metal service center businesses in the United States, we are a leading provider and distributor of value-added processed carbon steel, stainless steel, aluminum, red metals and manufactured metal components. We are an important intermediary between primary metal producers that produce and sell large volumes of metals in a limited number of sizes and configurations to end-users, such as contractors and original equipment manufacturers, or OEMs, that require smaller quantities of more customized products delivered on a just-in-time basis. We earn a margin over the cost of metal based upon value-added processing enhancements, which adds stability to our financial results and significantly reduces our earnings volatility relative to metal producers. In addition to our metal service center and distribution activities, we have a building products business, which supplies a range of products to the residential remodeling market. We serve more than 30,000 customers annually from 75 operating locations throughout the United States. Our business is primarily divided into three operating groups: Plates and Shapes Group; Flat Rolled Group; and Building Products Group.

      Plates and Shapes Group. We believe we are one of the largest distributors of metal plates and shapes in the United States. We sell products such as wide-flange beams, plate, tubing, angles, bars and other structural shapes in a number of alloy grades and sizes. A substantial number of our products undergo additional processing prior to being delivered to our customers, such as blasting and painting, tee-splitting, cambering, leveling, cutting, sawing, punching, drilling, beveling, surface grinding, bending, shearing and cutting-to-length. We sell the majority of our products to a fragmented customer base that consists of a large number of small customers who purchase products in small order sizes and require just-in-time delivery. The customers of our Plates and Shapes Group are primarily in the fabrication,

1

construction, machinery and equipment, transportation and energy industries. We serve our customers, who generally operate in a limited geographic region, from 21 metal service centers located primarily in the eastern half of the United States. Each metal service center is located in close proximity to our metal suppliers and our customers.

      Flat Rolled Group. The Flat Rolled Group sells a number of products, including carbon and stainless steel, aluminum, brass and copper in a number of alloy grades and sizes. As relatively few end-user customers can handle carbon steel in the form generally shipped by steel mills (sizes less than a quarter of an inch in thickness in continuous coils that typically weigh 40,000 to 60,000 pounds each), substantially all of the carbon steel material, as well as the nonferrous materials sold by our Flat Rolled Group, undergo additional processing prior to delivery to the customer. We provide a broad range of value-added processing services including precision blanking, slitting, shearing, cutting-to-length, punching, bending and leveling. Our customers are primarily in the electrical manufacturing, fabrication, furniture, appliance manufacturing, machinery and equipment and transportation industries and include many larger customers who value the high quality products that we provide together with our customer service and reliability. We serve our customers from 12 metal service centers in the midwestern and southern regions of the United States. Each metal service center is located in close proximity to our metal suppliers and our customers.

      Building Products Group. The Building Products Group provides diversification to our overall business as both its operations and the end-markets are significantly different from those of our metal service center business. The Building Products Group manufactures and sells sunrooms, roofing products, awnings and solariums for use in residential applications and large area covered canopies, awnings and covered walkways for use in commercial applications. Approximately 95% of our Building Products Group sales are attributable to the residential remodeling market with the remaining sales attributable to commercial applications. Because building products business is primarily focused on the residential remodeling market, its sales are not correlated to housing starts or interest rates, nor are they subject to fluctuations in the demand or price of metal. The customers of our Building Products Group are predominantly in the home improvement, construction, wholesale trade and building material industries. We primarily distribute our products through a network of independent distributors and home improvement contractors. We believe we are one of only a few suppliers with national scale across our market segments. We operate through 17 manufacturing locations and 25 sales and distribution facilities throughout the southern and western regions of the United States.

Our Competitive Strengths

      Margin Over Metal Creates Financial Stability. Our metal service centers are an integral intermediary between large metal producers and smaller end-users, which allows us to utilize a “cost plus” business model. Through our cost plus business model, we earn a margin over the cost of metal which varies according to the extent of value-added processing enhancements we add to our products. As a result, over time, we are able to pass along changes in metal prices to our customers. Given that metal costs typically represent approximately 75% of our net sales, our ability to pass through changes in pricing and our “cost plus” business model significantly reduce the volatility of our earnings and free cash flow relative to metal producers.

      Skilled Inventory Management. We manage our inventory to minimize our investment in working capital while maintaining sufficient stock to respond quickly to customer orders. We tailor our inventory and processing services at each service center location to the needs of that particular market with branch management teams responsible for determining the inventory mix at each of our locations. All of our groups utilize management information systems and computer-aided manufacturing technology, which enable us to track and allocate inventory among all of our locations on a real-time basis, providing our salespeople and operating employees with visibility into in-process orders and allowing us to provide just-in-time delivery. We believe that the combination of our decentralized inventory management and the monitoring by our senior management with their global market insights has allowed us to react more

2

quickly than many of our competitors to changing metals prices and customer needs, and to optimize our use of working capital. Also, due to the countercyclical nature of cash flows in our business, by proactively managing inventory we are able to generate significant earnings during rising metal price environments and generate significant free cash flow for debt paydown in declining metal price environments.

      Strong Relationships with Key Suppliers. In the metal service center industry, where “buying right” is critical to a company’s success, we have established strong relationships with large domestic and international metal suppliers. We are a significant customer of our major suppliers in each of our core products, enabling us to obtain volume discounts and source materials in periods of tight supply. For instance, our strong relationships and large purchasing volumes enabled us to maintain ample access to metal when supply became constrained during 2004. Our negotiation of purchase agreements with suppliers is centralized to leverage our buying power and global market insights.

      Geographically Diversified Network of Strategically Located Facilities. Our 75 operating facilities are strategically located throughout the United States, providing a number of advantages over smaller, locally-focused service centers. The majority of our service centers are located within 150–250 miles of our customers, which enables us to deliver products within one day of receiving an order. The proximity of our facilities to our customers allows us to provide critical, value-added services such as just-in-time delivery to both larger customers with multiple locations and smaller single-site customers. Our service centers also have the ability to share inventory between facilities, which improves inventory management and customer service. The geographically diverse network of facilities provides protection against regional fluctuations in demand and prices as we are not dependent on one geographical region or customer.

      Broad Product Offering with Superior Customer Service. We provide a broad range of high quality products which, together with customized valued-added services, enable us to offer one-stop shopping to our customers. We believe that our broad product offering and value-added services provide a significant competitive advantage over smaller service centers that generally stock fewer products than we do. As a result of the regular interaction between our field sales force and our customers, we have developed strong relationships with our customers, which allows us to identify and assess their supply chain requirements in a more accurate and timely manner. This ability in turn enables us to offer just-in-time delivery and to respond to short lead time orders. Further, because our local managers have significant operational control, our service centers can react quickly to changes in local markets and customer demands. We believe that the quality of our products and timeliness of service have increased the loyalty of our customers and have assisted our marketing efforts to new customers.

3

      Diversified Customer Base and End-Markets. Our three groups supply a broad range of products to a large diversified customer base which serves a diverse set of end-markets. We serve more than 30,000 customers annually across a broad range of industries including machining, furniture, transportation equipment, power and process equipment, industrial/commercial construction, fabrication, consumer durables, electrical equipment industries, machinery and equipment manufacturers, home improvement and building materials. The automotive sector, in which we sell only to primary and secondary suppliers, represented less than 4% of our net sales in 2005. No single customer accounted for more than 3% of our net sales in 2005, while our ten largest customers represented less than 12% of our net sales in 2005. Further, the breakdown of our 2005 net sales by industry is:

      State-of-the-Art Processing Facilities. Our state-of-the-art processing facilities provide a significant advantage over smaller metal service centers that do not have the necessary capital resources to invest in such equipment, thereby limiting the range of products they offer. Our facilities are capable of quickly and efficiently processing metals to precise length, width, shape and surface quality required to satisfy individual customer specifications. In addition, we provide value-added services such as applications engineering and custom machining, in order to enable our customers to reduce their total cost of manufacturing.

      Experienced and Proven Management Team. We have a seasoned senior management team which, on average, has over 20 years of experience in the metals industry. Our CEO, C. Lourenço Gonçalves, has 25 years of experience in the metals industry. Since he became President and CEO, we have implemented a number of operational and safety improvements which have significantly improved the performance of our business and our safety record.

Our Strategy

      Increase Our Market Share of Higher Margin Products. Our management team intends to continue its focus on selling higher margin products such as non-ferrous metals as well as those products that require significant value-added processing or which are highly customized. This focus will enable us to further leverage our state-of-the-art processing facilities and provide higher margin value-added processing functions such as precision blanking, laser cutting and painting. We believe that our ability to perform these types of processing functions will also enable us to fulfill a greater proportion of our customers’ processing requirements, providing them with a more complete product and allowing them to achieve their objective of outsourcing a greater proportion of their processing requirements. We further believe that our ability to perform these types of processing functions will lead to an increased stability in the demand for our products.

      Expand Value-Added Services Provided to Customers. We are focused on expanding the range of value-added services that we offer to enhance our strong, long-standing relationships with our existing customers and to build new customer relationships. Our customers are continually seeking new ways to

4

operate more efficiently and generate higher returns, including the outsourcing of customized metals processing and inventory management requirements. We believe our ability to provide value-added services, such as new supply chain solutions, is attractive to customers. We also believe that there are significant opportunities to expand the range of value-added services that we offer in areas such as processing equipment, inventory management and logistics systems. We believe that our size and operating expertise enable us to better provide these value-added services and therefore, further differentiate ourselves from smaller metal service centers.

      Maintain Strong Focus on Inventory Management. We will continue managing our inventory to maximize our profitability and cash flow while maintaining sufficient inventory to respond quickly to customer orders. We intend to continue to manage our inventory through a combination of local management of inventory requirements at each service center location and the centralized monitoring of inventory by our senior management team to leverage our buying power and global market insights. In addition, we intend to further integrate our salespeople and operating employees into the operations of our customers to enhance our visibility into in-process orders and to allow us to continue to improve our just-in-time delivery and overall level of customer service. We expect our continued focus on inventory management to improve gross profit margins as well as further differentiate us from our smaller competitors. We believe it will also improve performance throughout the metal price cycle by ensuring that we will have ample supply to satisfy customer demand in rising price and constrained supply environments as well as enabling us to generate significant free cash flow in declining metal price environments.

      Capitalize on Changing Market Dynamics and Increasing Demands. While steel producers have undergone significant consolidation, end-customer segments of the market remain highly fragmented. Therefore, while steel producers continue to seek long-term relationships with metal service centers that have access to numerous end-user customers, end-user customers are also seeking relationships with metal service centers that can provide a reliable source of high quality products combined with value-added services. As one of the largest metal service centers in the U.S., we intend to use our significant resources to exploit the opportunities presented by this market dynamic. In addition, we believe that, in light of current economic conditions, demand for the products manufactured by our customers will continue to be robust. We believe this increase in end-market demand will help drive increased sales of our products and, combined with the initiatives we have proactively taken to reduce our cost structure, should further enhance our profitability and cash flow.

      Continue to Focus on Improving the Performance of Our Building Products Group. In August 2004, we undertook a restructuring of our Building Products Group to focus the group on the steadily growing residential remodeling market. In addition, we closed 11 underperforming sales locations, expanded our production capabilities and reduced the operating cost structure of the group. Since this time, the financial performance of the group has improved significantly and we expect it to become an increasingly larger part of our business in the future as we continue to capitalize on the benefits resulting from the restructuring and take advantage of the attractive fundamentals of the residential remodeling industry.

5

Risk Factors

      Despite our competitive strengths discussed elsewhere in this prospectus, investing in our notes involves substantial risk. In addition, our ability to execute our strategy is subject to certain risks. The risks described under the heading “Risk Factors” immediately following this summary may cause us not to realize the full benefits of our strengths or may cause us to be unable to successfully execute all or part of our strategy. You should carefully consider all the information in this prospectus, including matters set forth under the heading “Risk Factors.”

The Transactions

      On November 30, 2005, Flag Acquisition merged with and into Metals USA, with Metals USA as the surviving company. Metals USA is wholly-owned by Flag Intermediate, which is wholly-owned by Flag Holdings. As of December 31, 2005, investment funds affiliated with Apollo Management (together with Apollo Management, “Apollo V”) owned approximately 97% and the management participants owned approximately 3% of Flag Holdings, respectively. The issuance of the old notes, borrowings under the ABL facility, the equity investment and participation described above, the Merger and other related transactions are collectively referred to in this prospectus as the “Transactions.” For a more complete description of the Transactions, see “— Ownership and Corporate Structure,” “Description of the Transactions,” “Description of Certain Indebtedness” and “Description of the Notes.”

Ownership and Corporate Structure

      The following diagram sets forth our ownership and debt structure.

(1)	The ABL facility provides for up to $450.0 million of senior secured revolving credit borrowings and letters of credit, subject to a borrowing base determined primarily by the value of our eligible receivables and eligible inventory, subject to certain reserves. Our borrowing base under the ABL facility was approximately $384.7 million on December 31, 2005, of which $191.4 million was drawn.
(2)	The notes are guaranteed on a senior secured basis by the guarantors. The notes and the related guarantees will be secured on a first-priority lien basis by substantially all of the assets (other than accounts, inventory, cash and proceeds and products of the foregoing and certain assets related thereto) of Metals USA and the guarantors and on a second-priority lien basis by the accounts,

6

inventory, cash and proceeds and products of the foregoing and certain assets related thereto of Metals USA and the guarantors.

(3)  Consists of an Industrial Revenue Bond (IRB) with $5.7 million principal amount outstanding as of December 31, 2005, which is payable on May 1, 2016 in one lump sum payment and $1.4 million in vendor financing and purchase money notes.

Use of Proceeds

      We will not receive any cash proceeds from the issuance of the exchange notes. In consideration for issuing the exchange notes, we will receive in exchange the old notes in like principal amount, which will be cancelled and as such will not result in any increase in our indebtedness.

      The net proceeds from the offering of the old notes, after deducting the initial purchasers’ fees and expenses of the offering, was $268.0 million. We used these proceeds to fund the Transactions and pay related fees and expenses.

      The following table sets forth the sources and uses of funds in connection with the Transactions.

Sources and Uses of Funds (in millions)
ABL facility(1)		$	225.4
Old notes			275.0
Debt Assumed			7.2
Contributed equity(2)			134.0
Warrants Payable			6.4
	Total Sources	$	648.0
Merger consideration(3)		$	458.7
Refinance existing debt			152.5
Transaction expenses(4)			36.8
	Total Uses	$	648.0

(1)	The ABL facility provides for up to $450.0 million of senior secured revolving credit borrowings and letters of credit, subject to a borrowing base determined primarily by the value of our eligible receivables and eligible inventory, subject to certain reserves.
(2)	Consists of approximately $136.1 million of cash equity contributed by investment funds associated with Apollo V, plus approximately $3.9 million of equity from management participants less $6.0 million of transaction fees paid to Apollo and accounted for as a reduction in capital.
(3)	Represents payments made to or for the account of our existing equity and warrant holders.
(4)	Includes underwriting discounts, professional fees, transaction fees and other payments made in connection with the Transactions.

Apollo

      Apollo was founded in 1990 and is among the most active and successful private equity investment firms in the United States in terms of both number of investment transactions completed and aggregate dollars invested. Since its inception, Apollo has managed the investment of an aggregate of more than $12.0 billion in capital in corporate transactions in a wide variety of industries, both domestically and internationally. Companies owned or controlled by Apollo or in which Apollo has a significant equity investment include, among others, Educate, Inc., Goodman Global Holdings, Hexion Specialty Chemicals, Inc., Nalco Company and United Agri Products.

7

Metals USA and Flag Intermediate

      Metals USA was incorporated in Delaware on July 3, 1996, and began operations upon completion of an initial public offering on July 11, 1997. On November 14, 2001, our predecessor company filed for voluntary protection from its creditors under Chapter 11 of the United States Bankruptcy laws. We emerged from bankruptcy on October 31, 2002. The principal executive offices of Metals USA, Inc. is One Riverway, Suite 1100, Houston, Texas 77056, and our telephone number there is (713) 965-0990.

      Flag Intermediate was incorporated in Delaware on November 3, 2005 in connection with the Transactions. The principal executive office and the telephone number of Flag Intermediate is the same as Metals USA.

8

Summary of Terms of the Exchange Offer

      In connection with the Merger, we entered into a registration rights agreement with the initial purchasers of the old notes. Under the agreement, we agreed to deliver to you this prospectus and to consummate the exchange offer by September 26, 2006. You are entitled to exchange in the exchange offer your old notes for exchange notes which are identical in all material respects to the old notes except that:

•  the exchange notes have been registered under the Securities Act and will be freely tradable by persons who are not affiliated with us;

•  the exchange notes are not entitled to registration rights which are applicable to the old notes under the registration rights agreement; and

•  our obligation to pay additional interest on the old notes if the exchange offer is not consummated by September 26, 2006 does not apply to the exchange notes.

The Exchange Offer	We are offering to exchange up to $275,000,000 aggregate principal amount of our registered 111/8% Senior Secured Notes Due 2015, for a like principal amount of our 111/8 % Senior Secured Notes Due 2015, which were issued on November 30, 2005. Old notes may be exchanged only in integral multiples of $1,000.
Resales	Based on an interpretation by the staff of the SEC set forth in no-action letters issued to third parties, we believe that the exchange notes issued pursuant to the exchange offer in exchange for old notes may be offered for resale, resold and otherwise transferred by you (unless you are our “affiliate” within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that you:
	• are acquiring the exchange notes in the ordinary course of business; and
	• have not engaged in, do not intend to engage in, and have no arrangement or understanding with any person or entity, including any of our affiliates, to participate in, a distribution of the exchange notes.
	In addition, each participating broker-dealer that receives exchange notes for its own account pursuant to the exchange offer in exchange for old notes that were acquired as a result of market-making or other trading activity must also acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. For more information, see “Plan of Distribution.”
	Any holder of old notes, including any broker-dealer, who
	• is our affiliate,
	• does not acquire the exchange notes in the ordinary course of its business, or
	• tenders in the exchange offer with the intention to participate, or for the purpose of participating, in a distribution of exchange notes,

9

	cannot rely on the position of the staff of the Commission expressed in Exxon Capital Holdings Corporation, Morgan Stanley & Co., Incorporated or similar no-action letters and, in the absence of an exemption, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with the resale of the exchange notes.
Expiration date; Withdrawal of tenders	The exchange offer will expire at 5:00 p.m. (New York City time) on                     , 2006, or such later date and time to which we extend it. We do not currently intend to extend the expiration date. A tender of old notes pursuant to the exchange offer may be withdrawn at any time prior to the expiration date. Any old notes not accepted for exchange for any reason will be returned without expense to the tendering holder promptly after the expiration or termination of the exchange offer.
Conditions to the Exchange Offer	The exchange offer is subject to customary conditions, some of which we may waive. For more information, see “The Exchange Offer — Certain Conditions to the Exchange Offer.”
Procedures for tendering old notes	If you wish to accept the exchange offer, you must complete, sign and date the accompanying letter of transmittal, or a copy of the letter of transmittal, according to the instructions contained in this prospectus and the letter of transmittal. You must also mail or otherwise deliver the letter of transmittal, or the copy, together with the old notes and any other required documents, to the exchange agent at the address set forth on the cover of the letter of transmittal. If you hold old notes through The Depository Trust Company, or DTC, and wish to participate in the exchange offer, you must comply with the Automated Tender Offer Program procedures of DTC, by which you will agree to be bound by the letter of transmittal.
	By signing or agreeing to be bound by the letter of transmittal, you will represent to us that, among other things:
	• any exchange notes that you receive will be acquired in the ordinary course of your business;
	• you have no arrangement or understanding with any person or entity, including any of our affiliates, to participate in the distribution of the exchange notes;
	• if you are a broker-dealer that will receive exchange notes for your own account in exchange for old notes that were acquired as a result of market-making activities, that you will deliver a prospectus, as required by law, in connection with any resale of the exchange notes; and
	• you are not our “affiliate” as defined in Rule 405 under the Securities Act, or, if you are an affiliate, you will comply with any applicable registration and prospectus delivery requirements of the Securities Act.
Guaranteed delivery procedures	If you wish to tender your old notes and your old notes are not immediately available or you cannot deliver your old notes, the

10

	letter of transmittal or any other documents required by the letter of transmittal or comply with the applicable procedures under DTC’s Automated Tender Offer Program prior to the expiration date, you must tender your old notes according to the guaranteed delivery procedures set forth in this prospectus under “The Exchange Offer — Guaranteed Delivery Procedures.”
Effect on holders of old notes	As a result of the making of, and upon acceptance for exchange of all validly tendered old notes pursuant to the terms of, the exchange offer, we will have fulfilled a covenant contained in the registration rights agreement and, accordingly, we will not be obligated to pay additional interest as described in the registration rights agreement. If you are a holder of old notes and do not tender your old notes in the exchange offer, you will continue to hold such old notes and you will be entitled to all the rights and limitations applicable to the old notes in the indenture, except for any rights under the registration rights agreement that by their terms terminate upon the consummation of the exchange offer.
Consequences of failure to exchange	All untendered old notes will continue to be subject to the restrictions on transfer provided for in the old notes and in the indenture. In general, the old notes may not be offered or sold unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, we do not currently anticipate that we will register the old notes under the Securities Act.
Material United States Federal Income tax consequences	The exchange of old notes for exchange notes in the exchange offer should not be a taxable event for U.S. federal income tax purposes. For more information, see “Material United States Federal Income Tax Consequences.”
Use of proceeds	We will not receive any cash proceeds from the issuance of the exchange notes in the exchange offer.
Exchange agent	Wells Fargo Bank, N.A. is the exchange agent for the exchange offer. The address and telephone number of the exchange agent are set forth in the section captioned “The Exchange Offer — Exchange Agent.”

11

Summary of Terms of the Exchange Notes

      The following summary highlights all material information contained elsewhere in this prospectus but does not contain all the information that you should consider before participating in the exchange offer. We urge you to read this entire prospectus, including the “Risk Factors” section and the consolidated financial statements and related notes.

Issuer	Metals USA, Inc.
Securities Offered	$275,000,000 aggregate principal amount of 111/8 % Senior Secured Notes Due 2015.
Maturity Date	The exchange notes mature on December 1, 2015.
Interest	The exchange notes bear interest at a rate per annum equal to 111/8 %, payable semi-annually in arrears, on June 1 and December 1 of each year, commencing on June 1, 2006.
Guarantees	The exchange notes, like the old notes, will be jointly and severally, irrevocably and unconditionally guaranteed on a senior secured basis, subject to certain limitations described herein, by the guarantors. Under certain circumstances, subsidiaries may be released from these guarantees without the consent of the holders of the notes. See “Description of the Notes — Guarantees.”
	On a pro forma basis after giving effect to the Transactions, our non-guarantor subsidiaries had no net sales and operating income for the year ended December 31, 2005 and no assets or liabilities (excluding intercompany liabilities of non-guarantor subsidiaries) as of December 31, 2005.
Collateral	The exchange notes, like the old notes, and the guarantees will be secured by a first-priority lien (subject to certain exceptions and permitted liens) on substantially all our tangible and intangible assets and those of the guarantors (in each case, other than accounts, inventory, cash and proceeds and products of the foregoing and certain assets related thereto in each case held by us and the guarantors, which will secure the ABL facility on a first-priority lien basis and the notes and the guarantees on a second-priority lien basis), including the following:
	• all the capital stock of Metals USA; and
	• all of the capital stock held by Metals USA, Flag Intermediate and any subsidiary guarantor (which, in the case of any first-tier foreign subsidiary, will be limited to 100% of the non-voting stock (if any) and 65% of the voting stock of such first-tier foreign subsidiary).
	Like with the old notes, the collateral securing the exchange notes on a first-priority lien basis will not include (i) the collateral securing the ABL facility on a first-priority lien basis, (ii) certain excluded assets, (iii) those assets as to which the collateral agent representing the holders of the exchange notes reasonably determines that the costs of obtaining such a security interest are excessive in relation to the value of the security to be afforded thereby, (iv) the property securing our outstanding

12

Industrial Revenue Bonds and the letter of credit reimbursement obligations relating thereto and (v) the property securing certain capital leases existing on the issue date or incurred thereafter and certain purchase money obligations existing on the issue date or incurred thereafter.

	The exchange notes, like the old notes, and the guarantees will also be secured by a second-priority lien (subject to certain exceptions and permitted liens) on all accounts, inventory, cash and proceeds and products of the foregoing and certain assets related thereto, in each case held by us and the guarantors. See “Description of the Notes — Security for the Notes.”
Ranking	The exchange notes, like the old notes, and the guarantees will be our senior secured obligations. The indebtedness evidenced by the exchange notes, like the old notes, and the guarantees will rank:
	• equally with all of our and the guarantors’ existing and future senior indebtedness;
	• junior in priority as to collateral that secures the ABL facility on a first-priority lien basis with respect to our and the guarantors’ obligations under the ABL facility, any other debt incurred after November 30, 2005 that has a priority security interest relative to the notes in the collateral that secures the ABL facility, any hedging obligations related to the foregoing debt and all cash management obligations incurred with any lender under the ABL facility;
	• equal in priority as to collateral that secures the notes and the guarantees on a first-priority lien basis with respect to our and the guarantors’ obligations under any other pari passu lien obligations incurred after November 30, 2005; and
	• senior to all of our and the guarantors’ existing and future subordinated indebtedness.
	The exchange notes, like the old notes, will also be effectively junior to the liabilities of our non-guarantor subsidiaries.
	As of December 31, 2005:
	• Flag Intermediate, we and our subsidiaries had $466.4 million in aggregate principal amount of senior indebtedness (including the old notes and the guarantees) outstanding (excluding unused commitments);
	• our non-guarantor subsidiaries did not have any liabilities (excluding intercompany liabilities of non-guarantor subsidiaries).
	See “Description of the Notes — Ranking.”
Optional Redemption	Prior to December 1, 2010, we may redeem some or all of the exchange notes at a redemption price equal to 100% of the principal amount of the exchange notes plus accrued and unpaid interest and additional interest, if any, to the applicable redemption date plus the applicable “make-whole” premium.

13

	We may redeem some or all of the exchange notes at any time on or after December 1, 2010 at the respective redemption prices described in this prospectus, plus accrued and unpaid interest and additional interest, if any, to the redemption date.
	In addition, on or prior to December 1, 2008, we may redeem up to 35% of the aggregate principal amount of the exchange notes with the net proceeds of certain equity offerings at a redemption price equal to 111.13% of the principal amount of the exchange notes plus accrued and unpaid interest and additional interest, if any, to the applicable redemption date.
Change of Control	If we experience a change of control and we do not redeem the exchange notes, we will be required to make an offer to repurchase the exchange notes at a price equal to 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the date of repurchase.
Intercreditor Agreement	We, the guarantors, the trustee of the exchange notes, the collateral agent representing the holders of the exchange notes and the collateral agent representing the lenders under the ABL facility entered into an intercreditor agreement on November 30, 2005. Pursuant to the terms of the intercreditor agreement, the collateral agent representing the holders of the exchange notes will determine the time and method by which the security interests in the collateral securing the exchange notes on a first-priority lien basis will be enforced and the collateral agent representing the lenders under the ABL facility will determine the time and method by which the security interests in the collateral securing the ABL facility on a first-priority lien basis will be enforced. The trustee, the collateral agent representing the holders of the exchange notes and the holders of the exchange notes will not be permitted to enforce the security interests in the collateral securing the exchange notes on a second-priority lien basis even if an event of default has occurred and the exchange notes have been accelerated except in certain specified circumstances. The collateral agent representing the lenders under the ABL facility will be subject to similar restrictions with respect to its ability to enforce its second-priority security interests in the collateral securing the exchange notes on a first-priority lien basis. See “Description of the Notes — Security Documents and Certain Related Intercreditor Provisions — Intercreditor Agreement” and “Risk Factors — Risks Related to an Investment in the Notes.”
Restrictive Covenants	The indenture governing the exchange notes contains covenants that, among other things, limit our ability and the ability of certain of our subsidiaries, to:
	• incur or guarantee additional indebtedness or issue disqualified or preferred stock;
	• repurchase or redeem capital stock or subordinated indebtedness;
	• pay dividends or make distributions to our stockholders;

14

• incur restrictions on the ability of our subsidiaries to pay dividends or to make other payments to us;

• transfer or sell assets;

• enter into transactions with our affiliates;

• grant liens on assets;

• make investments or acquisitions;

• enter into sale/leaseback transactions;

• materially impair the security interest with respect to the collateral for the benefit of the trustee and the holders of the exchange notes; and

• merge or consolidate with other companies or transfer all or substantially all of our assets.

These covenants are subject to a number of important limitations and exceptions as described under “Risk Factors — Risks Related to an Investment in the Notes — There may not be sufficient collateral to pay all or any of the notes,” and “Description of the Notes — Certain Covenants.”

15

Summary Historical and Pro Forma Condensed Combined Financial Data

      Set forth below is summary historical consolidated financial data and summary unaudited pro forma condensed combined financial data of our business, as of the dates and for the periods indicated. The summary historical consolidated financial data as of December 31, 2004 and 2005 and for each of the three years in the period ended December 31, 2005 have been derived from our audited consolidated financial statements and related notes included elsewhere in this prospectus. The summary historical consolidated financial data as of December 31, 2003 presented in this table have been derived from our audited consolidated financial statements not included in this prospectus.

      The summary unaudited pro forma condensed combined statements of operations and other financial data give effect to the Transactions as if they had occurred on January 1, 2005. The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable.

      The summary unaudited pro forma condensed combined financial data are for informational purposes only and do not purport to represent what our results of operations or financial position actually would have been if the Transactions had occurred at any date, and such data do not purport to project the results of operations for any future period.

      On May 18, 2005, Flag Holdings and its indirect wholly owned subsidiary, Flag Acquisition, entered into an agreement and plan of merger with Metals USA. On November 30, 2005, Flag Acquisition merged with and into Metals USA, with Metals USA being the surviving corporation. Flag Intermediate and Flag Acquisition conducted no operations during the period May 9, 2005 (date of inception) to November 30, 2005. As a result of the Merger, Metals USA was delisted from the NASDAQ and withdrew its registration under the Exchange Act.

      After the consummation of the Merger, Flag Intermediate and its wholly owned subsidiary Metals USA (along with its consolidated subsidiaries) are referred to collectively herein as the “Successor Company”. Prior to the consummation of the Merger, Metals USA (along with its consolidated subsidiaries) is referred to collectively herein as the “Predecessor Company.” We applied Statement of Financial Accounting Standards No. 141, “Business Combinations” on the merger date, and as a result, the merger consideration was allocated to the respective values of the assets acquired and liabilities assumed from the Predecessor Company. As a result of the application of purchase accounting, the Successor Company balances and amounts presented in the consolidated financial statements and footnotes are not comparable with those of Predecessor Company.

16

      The summary historical and unaudited pro forma consolidated financial data should be read in conjunction with “Unaudited Pro Forma Condensed Combined Financial Information,” “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors” and our consolidated financial statements and related notes included elsewhere in this prospectus.

														Pro
		Historical												Forma
											Successor
		Predecessor Company									Company
											Period from
								Period from			May 9, 2005
		Year Ended						January 1,			(Date of
		December 31,						2005 to			Inception) to
								November 30,			December 31,
		2003			2004			2005			2005			2005
		(In millions)									(In millions)
Operations Data:
	Net sales	$	963.2		$	1,509.8		$	1,522.1		$	116.9		$	1,639.0
Costs and expenses:
	Cost of sales (exclusive of operating and delivery, and depreciation and amortization shown below)		731.6			1,080.1			1,189.3			92.5			1,277.7
	Operating and delivery		127.7			144.4			139.1			12.8			151.9
	Selling, general and administrative		87.0			109.6			108.5			9.3			118.9
	Depreciation and amortization(1)		0.5			2.0			3.1			1.4			16.2
Operating income (loss)			16.4			173.7			82.1			0.9			74.3
	Interest expense		5.7			8.4			12.0			4.1			47.9
	Other (income) expense		(2.0	)		(2.5	)		(0.1	)		—			(0.1	)
Income (loss) before taxes and discontinued operations			12.7			167.8			70.2			(3.2	)		26.5
Provision (benefit) for income taxes			5.1			63.3			26.7			(1.2	)		17.2
Net income (loss) before discontinued operations			7.6			104.5			43.5			(2.0	)		15.9
Income (loss) from discontinued operations, net of taxes			(0.1	)		—			—			—			—
Net income (loss)		$	7.5		$	104.5		$	43.5		$	(2.0	)	$	15.9

	Predecessor				Successor
	Company				Company
	As of
	December 31,				As of
					December 31,
	2003		2004		2005
	(In millions)				(In millions)
Balance Sheet Data:
Cash	$	11.4	$	12.6	$	11.3
Total assets		407.2		710.0		795.3
Total debt		118.7		270.6		473.5
Total liabilities		206.6		381.8		663.3
Stockholders’ equity		200.6		328.2		132.0

(1)  Excludes depreciation expense reflected in cost of sales for the Building Products Group.

17

RISK FACTORS

      Investing in our notes involves a high degree of risk. You should carefully consider the risk factors set forth below as well as the other information contained in this prospectus before investing in our notes, or deciding whether you will or will not participate in our exchange offer. The risks described below are not the only risks facing us. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our business, financial condition or results of operations. Any of the following risks could materially and adversely affect our business, financial condition or results of operations. In such a case, you may lose all or part of your original investment.

Risks Related to an Investment in the Notes

Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations under the notes.

      We are highly leveraged. As of December 31, 2005, our total indebtedness was $473.5 million, including the old notes. We also had an additional $166.8 million available for borrowing under the ABL facility at that date. Our ability to generate sufficient cash flow from operations to make scheduled payments on our debt depends on a range of economic, competitive and business factors, many of which are outside our control. Our business may not generate sufficient cash flow from operations to meet our debt service and other obligations, and currently anticipated operating improvements and cost efficiencies from inventory management may not be realized on schedule, or at all. If we are unable to meet our expenses and debt service obligations, we may need to refinance all or a portion of our indebtedness on or before maturity, sell assets or raise equity on commercially reasonable terms, which could cause us to default on our obligations and impair our liquidity. Our inability to generate sufficient cash flow to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms, could have a material adverse effect on our business, financial condition and results of operations.

      Our substantial indebtedness could have important consequences for you, including:

•  it may limit our ability to borrow money or sell equity for our working capital, capital expenditures, dividend payments, debt service requirements, strategic initiatives or other purposes;

•  it may limit our flexibility in planning for, or reacting to, changes in our operations or business;

•  it may increase the amount of our interest expense, because certain of our borrowings are at variable rates of interest, which, if interest rates increase, could result in higher interest expense;

•  we will be more highly leveraged than some of our competitors, which may place us at a competitive disadvantage;

•  it may make us more vulnerable to downturns in our business or the economy;

•  the debt service requirements of our other indebtedness could make it more difficult for us to make payments on the notes;

•  a substantial portion of our cash flow from operations will be dedicated to the repayment of our indebtedness and will not be available for other purposes;

•  it may restrict us from making strategic acquisitions, introducing new technologies or exploring business opportunities;

•  it may make it more difficult for us to satisfy our obligations with respect to our existing indebtedness;

•  it may limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds or dispose of assets; and

18

•  there would be a material adverse effect on our business and financial condition if we were unable to service our indebtedness or obtain additional financing, as needed.

      We and our subsidiaries may be able to incur substantial additional indebtedness in the future, subject to the restrictions contained in the ABL facility and the indenture governing the notes. These restrictions are subject to many significant exceptions and the amount of debt we may incur in the future could be substantial. If new indebtedness is added to our current debt levels, the related risks that we now face could intensify.

      As of December 31, 2005, we had $191.4 million of floating rate debt under the ABL facility. A 1% increase in the interest rate on our floating rate debt would increase our fiscal 2006 interest expense under the ABL facility by approximately $1.9 million.

      Our debt agreements contain restrictions that limit our flexibility in operating our business and, in the event that we default on our obligations under our debt agreements, we may not be able to make payments on the notes.

      The ABL facility and the indenture governing the notes contains various covenants that limit our ability to engage in specified types of transactions. Except in limited circumstances, Flag Intermediate is not subject to any of the restrictive or other covenants in the indenture governing the notes. These covenants limit our and our restricted subsidiaries’ ability to, among other things:

•  incur or guarantee additional indebtedness or issue certain preferred shares;

•  pay dividends on, repurchase or make distributions in respect of our capital stock or make other restricted payments;

•  make certain loans, acquisitions, capital expenditures or investments;

•  sell certain assets and subsidiary stock;

•  enter into sale and leaseback transactions;

•  create or incur liens;

•  consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and

•  enter into certain transactions with our affiliates.

      In addition, under the ABL facility, if our borrowing availability falls below $45.0 million, we are required to satisfy and maintain a fixed charge coverage ratio not less than 1.0 to 1.0. The fixed charge coverage ratio is determined by dividing (i) the sum of EBITDA (as defined by and adjusted in accordance with the loan and security agreement governing the ABL facility) minus income taxes paid in cash and non-financed capital expenditures by (ii) the sum of certain distributions paid in cash, cash interest expense and scheduled principal reductions on debt. Our ability to meet the required fixed charge coverage ratio can be affected by events beyond our control, and we cannot assure you that we will meet this ratio. A breach of any of these covenants could result in a default under the ABL facility.

      Moreover, the ABL facility provides the lenders considerable discretion to impose reserves or availability blocks, which could materially impair the amount of borrowings that would otherwise be available to us. There can be no assurance that the lenders under the ABL facility will not impose such actions during the term of the ABL facility and further, were they to do so, the resulting impact of this action could materially and adversely impair our ability to make interest payments on the notes.

      Upon the occurrence of an event of default under the ABL facility, the lenders could elect to declare all amounts outstanding under the ABL facility to be immediately due and payable and terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders under the ABL facility could proceed against the collateral granted to them to secure the ABL facility on a first-priority lien basis. If the lenders under the ABL facility accelerate the repayment of borrowings, such acceleration could have a material adverse effect on our business, financial condition and results of

19

operations, and, in addition, we cannot assure you that we will have sufficient assets to repay the ABL facility, or to repay the notes.

Despite our substantial indebtedness, we may still be able to incur significantly more debt. This could intensify the risks described above.

      The terms of the indenture governing the notes and the ABL facility contain restrictions on us and our subsidiaries’ ability to incur additional indebtedness. These restrictions are subject to a number of important qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. Accordingly, we or our subsidiaries could incur significant additional indebtedness in the future. As of December 31, 2005, we had approximately $166.8 million available for additional borrowing under the ABL facility, including the subfacility for letters of credit, and the covenants under our debt agreements, including the indenture governing the notes, would allow us to borrow a significant amount of additional indebtedness. In addition, the indenture governing the notes does not limit the amount of indebtedness that may be incurred by Flag Intermediate. The more leveraged we become, the more we, and in turn our security holders, become exposed to the risks described above under “— Our substantial leverage could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations under the notes.”

We may not be able to generate sufficient cash to service all of our indebtedness, including the notes.

      Our ability to make payments on our indebtedness, including the notes, depends on our ability to generate cash in the future. The notes are expected to account for cash interest expense in fiscal 2006 of approximately $30.6 million.

      Accordingly, we will have to generate significant cash flows from operations to meet our new debt service requirements. If we do not generate sufficient cash flow to meet our debt service and working capital requirements, we may need to seek additional financing or sell assets; however, this insufficient cash flow may make it more difficult for us to obtain financing on terms that are acceptable to us, or at all. Without this financing, we could be forced to sell assets to make up for any shortfall in our payment obligations under unfavorable circumstances. However, the ABL facility and the indenture governing the notes limit our ability to sell assets and also restrict the use of proceeds from that sale. Accordingly, we may not be able to sell assets to satisfy our debt service obligations. Furthermore, Apollo and its affiliates have no continuing obligation to provide us with debt or equity financing. We therefore cannot assure you that we will be able to generate sufficient cash to service all of our indebtedness, including the notes.

There may not be sufficient collateral to pay all or any of the notes.

      The notes are secured on a first-priority lien basis (subject to certain exceptions and permitted liens) by substantially all of our and the guarantors’ assets (other than accounts, inventory and cash and proceeds and products of the foregoing and certain assets related thereto) (the “Notes Collateral”), and such collateral may be shared with our future creditors. The indenture governing the notes permits us to incur up to $40 million of additional indebtedness that will share in the Notes Collateral without meeting any leverage or coverage tests. If we meet certain leverage or coverage tests, we can incur additional indebtedness that will share in the Notes Collateral. As of December 31, 2005, the book value of the Notes Collateral was approximately $171.6 million, net of accumulated depreciation. No appraisal of the fair market value of the Notes Collateral has been prepared in connection with this offering, but we have made purchase price allocations based on Management’s estimates of the fair values (on the Merger date) of the assets acquired and liabilities assumed in the Merger. Obviously, the fair market value of the Notes Collateral will change over time. Based on our estimates of the fair market value of the Notes Collateral, the fair market value of the Notes Collateral is substantially less than the principal amount of the notes. The estimated fair value of our property and equipment is approximately $171.6 million. However, the Notes Collateral will not include any of our real property that has both a cost and a book value of less than $750,000 and certain real property and equipment that is subject to pre-existing liens. The estimated

20

fair value of our property and equipment comprising the Notes Collateral is approximately $164.4 million. The remainder of the Notes Collateral consists primarily of intangible assets with an estimated fair value of $37.3 million. The actual value of the Notes Collateral at any time will depend upon market and other economic conditions. By its nature, the Notes Collateral generally will consist of illiquid assets that may have to be sold at a substantial discount in an insolvency situation and may have no readily ascertainable market value. In the event of a foreclosure, liquidation, bankruptcy or similar proceeding, the proceeds from any sale or liquidation of the Notes Collateral will likely be insufficient to pay our obligations under the notes in full. Specifically, if the fair market value of the Notes Collateral were to equal its book value at December 31, 2005; the principal amount of the notes would have exceeded the value of the Notes Collateral by approximately $110.6 million.

      The notes are also secured on a second-priority lien basis (subject to certain exceptions and permitted liens) by our and each guarantor’s accounts receivable, inventory and cash and proceeds and products of the foregoing and certain assets related thereto (the “ABL Collateral”). The ABL Collateral is subject to a first-priority security interest for the benefit of the lenders under the ABL facility, and may be shared with our future creditors. Although the holders of obligations secured by first-priority liens on the ABL Collateral and the holders of obligations secured by second-priority liens on the ABL Collateral, including the notes, share in the proceeds of the ABL Collateral, the holders of obligations secured by first-priority liens in the ABL Collateral are entitled to receive proceeds from any realization of the ABL Collateral to repay the obligations held by them in full before the holders of the notes and the other obligations secured by second-priority liens in the ABL Collateral receive any such proceeds. No appraisal of the fair market value of the ABL Collateral has been prepared in connection with this offering or the offering of the old notes, but we have made purchase price allocations based on preliminary estimates of the fair values of assets acquired and liabilities assumed, which are subject to change. The estimated fair value of our accounts receivable at December 31, 2005 was $172.9 million and the estimated fair value of our inventory at December 31, 2005 was $350.7 million based on our purchase price allocation. The remainder of the ABL Collateral on December 31, 2005 consisted primarily of $11.3 million in cash. Based on those amounts, the fair value of the ABL Collateral was approximately $343.5 million greater than the $191.4 million of senior secured revolving credit borrowings outstanding as of December 31, 2005. However, as up to $450.0 million in total senior secured revolving credit borrowings is available to us subject to the eligible borrowing base calculations and because, pursuant to the terms of the indenture governing the notes, we are able to sell all of the assets comprising ABL Collateral without being required to reinvest the proceeds of such sale of ABL Collateral into our business or to make an offer to the holders of the notes to repurchase the notes, the fair market value of the ABL Collateral in excess of the amount of borrowings that are outstanding under the ABL facility may be substantially less than the principal amount of the notes. The actual value of the ABL Collateral at any time depends upon market and other economic conditions, and any such value may differ substantially from the appraised or book value. In the event of a foreclosure, liquidation, bankruptcy or similar proceeding, we cannot assure you that any proceeds from the sale of the ABL Collateral would be available to satisfy amounts outstanding under the notes and other obligations secured by second-priority liens on the ABL Collateral after payment in full of all obligations secured by first-priority liens on the ABL Collateral. In such an event, the holders of the notes (to the extent not repaid from the proceeds of the sale of the Notes Collateral and ABL Collateral) would only have an unsecured claim against our remaining assets.

      In addition, the asset sale covenant and the definition of asset sale, each in the indenture governing the notes, have a number of significant exceptions pursuant to which we will be able to sell Notes Collateral without being required to reinvest the proceeds of such sale into assets that will comprise Notes Collateral or to make an offer to the holders of the notes to repurchase the notes. For example, certain of the carveouts to the asset sale definition will permit us to sell (i) any Notes Collateral having an aggregate fair market value of less than $750,000 or (ii) up to $32.5 million of Notes Collateral, in each case, without being required to reinvest the proceeds of such sale into assets that will comprise Notes Collateral or to make an offer to the holders of the notes to repurchase the notes. Moreover, the asset sale definition will exclude any sale/leaseback transaction with respect to the Notes Collateral pursuant to which we receive aggregate consideration of less than $10.0 million. The asset sale covenant in the indenture permits

21

each of the foregoing sales and other transactions that each would adversely affect, and, when aggregated, would materially adversely affect, the value of the Notes Collateral. If we were to sell all Notes Collateral having an aggregate fair market value of less than $750,000 and sell $32.5 million of additional Notes Collateral, the estimated fair value of the remaining Notes Collateral would be approximately $89.9 million. In addition, sales of ABL Collateral are not considered asset sales under the indenture governing the notes. See “Description of the Notes — Certain Covenants — Asset Sales” and “Description of the Notes — Certain Definitions.”

      See “— In the event of a bankruptcy of us or any of the guarantors, holders of the notes may be deemed to have an unsecured claim to the extent that our obligations in respect of the notes exceed the fair market value of the collateral securing the notes.”

      As of December 31, 2005, we had approximately $191.4 million of indebtedness outstanding under the ABL facility, with approximately $166.8 million of additional availability under the ABL facility. All indebtedness under the ABL facility will be secured by first-priority liens on the ABL Collateral (subject to certain exceptions and permitted liens). In addition, under the terms of the indenture governing the notes, we may grant an additional lien on any property or asset that constitutes ABL Collateral in order to secure any obligation permitted to be incurred pursuant to the indenture. Any such additional lien may be a lien that is senior to the lien securing the notes or may be a second-priority lien that ranks pari passu with the lien securing the notes. In either case, any grant of additional liens on the ABL Collateral would further dilute the value of the second-priority lien on the ABL Collateral securing the notes. Further, as discussed above, we are permitted under the terms of the indenture governing the notes to sell all assets that constitute ABL Collateral and not apply the proceeds to invest in additional assets that will secure the notes or repay outstanding indebtedness.

The rights of holders of the notes with respect to the ABL Collateral will be substantially limited by the terms of the intercreditor agreement.

      Under the terms of the intercreditor agreement, at any time that obligations that have the benefit of the first-priority liens on the ABL Collateral are outstanding, any actions that may be taken in respect of the ABL Collateral, including the ability to cause the commencement of enforcement proceedings against the ABL Collateral and to control the conduct of such proceedings, and the approval of amendments to, releases of ABL Collateral from the lien of, and waivers of past defaults under, the security documents, has at the direction of the holders of the obligations secured by the first-priority liens and neither the trustee nor the collateral agent, on behalf of the holders of the notes, has the ability to control or direct such actions, even if the rights of the holders of the notes are adversely affected, subject to certain exceptions. See “Description of the Notes — Security for the Notes” and “Description of the Notes — Amendments and Waivers.” Under the terms of the intercreditor agreement, at any time that obligations that have the benefit of the first-priority liens on the ABL Collateral are outstanding, if the holders of such indebtedness release the ABL Collateral for any reason whatsoever, including, without limitation, in connection with any sale of assets, the second-priority security interest in such ABL Collateral securing the notes will be automatically and simultaneously released without any consent or action by the holders of the notes, subject to certain exceptions. The ABL Collateral so released will no longer secure our and the guarantors’ obligations under the notes. In addition, because the holders of the indebtedness secured by first-priority liens in the ABL Collateral control the disposition of the ABL Collateral, such holders could decide not to proceed against the ABL Collateral, regardless of whether there is a default under the documents governing such indebtedness or under the indenture governing the notes. In such event, the only remedy available to the holders of the notes would be to sue for payment on the notes and the related subsidiary guarantees.

The value of the collateral securing the notes may not be sufficient to secure post-petition interest.

      In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding against us, holders of the notes will only be entitled to post-petition interest under the bankruptcy code to the extent that the value of their security interest in the collateral is greater than their pre-bankruptcy claim. Holders

22

of the notes that have a security interest in collateral with a value equal or less than their pre-bankruptcy claim will not be entitled to post-petition interest under the bankruptcy code. No appraisal of the fair market value of the collateral has been prepared in connection with this offering or the offering of the old notes and we therefore cannot assure you that the value of the noteholders’ interest in the collateral equals or exceeds the principal amount of the notes. See “— There may not be sufficient collateral to pay all or any of the notes.”

The waiver in the intercreditor agreement of rights of marshaling may adversely affect the recovery rates of holders of the notes in a bankruptcy or foreclosure scenario.

      The notes and the guarantees are secured on a second-priority lien basis by the ABL Collateral. The intercreditor agreement provides that, at any time that obligations that have the benefit of the first-priority liens on the ABL Collateral are outstanding, the holders of the notes, the trustee under the indenture governing the notes and the collateral agent may not assert or enforce any right of marshaling accorded to a junior lienholder, as against the holders of such indebtedness secured by first-priority liens in the ABL Collateral. Without this waiver of the right of marshaling, holders of such indebtedness secured by first-priority liens in the ABL Collateral would likely be required to liquidate collateral on which the notes did not have a lien, if any, prior to liquidating the ABL Collateral, thereby maximizing the proceeds of the ABL Collateral that would be available to repay our obligations under the notes. As a result of this waiver, the proceeds of sales of the ABL Collateral could be applied to repay any indebtedness secured by first-priority liens in the ABL Collateral before applying proceeds of other collateral securing indebtedness, and the holders of notes may recover less than they would have if such proceeds were applied in the order most favorable to the holders of the notes.

Any future pledge of collateral might be avoidable by a trustee in bankruptcy.

      Any future pledge of collateral in favor of the collateral agent, including pursuant to security documents delivered after the date of the indenture governing the notes, might be avoidable by the pledgor (as debtor in possession) or by its trustee in bankruptcy if certain events or circumstances exist or occur, including, among others, if the pledgor is insolvent at the time of the pledge, the pledge permits the holders of the notes to receive a greater recovery than if the pledge had not been given and a bankruptcy proceeding in respect of the pledgor is commenced within 90 days following the pledge, or, in certain circumstances, a longer period.

Rights of holders of notes in the collateral may be adversely affected by the failure to perfect security interests in certain collateral acquired in the future.

      The security interest in the collateral securing the notes includes domestic assets, both tangible and intangible, whether now owned or acquired or arising in the future. Applicable law requires that certain property and rights acquired after the grant of a general security interest can only be perfected at the time such property and rights are acquired and identified. There can be no assurance that the trustee or the collateral agent will monitor, or that we will inform the trustee or the collateral agent of, the future acquisition of property and rights that constitute collateral, and that the necessary action will be taken to properly perfect the security interest in such after-acquired collateral. Such failure may result in the loss of the security interest therein or the priority of the security interest in favor of the notes against third parties.

We may not be able to repurchase the notes upon a change of control.

      Upon a change of control as defined in the indenture governing the notes, we will be required to make an offer to repurchase all outstanding notes at 101% of their principal amount, plus accrued and unpaid interest, unless we give notice of our intention to exercise our right to redeem the notes. We may not have sufficient financial resources to purchase all of the notes that are tendered upon a change of control offer or to redeem the notes. A failure to make the applicable change of control offer or to pay the applicable change of control purchase price when due would result in a default under the indenture. The occurrence of a change of control would also constitute an event of default under the ABL facility and may constitute

23

an event of default under the terms of our other indebtedness. The terms of the loan and security agreement governing the ABL facility limit our right to purchase or redeem certain indebtedness. In the event any purchase or redemption is prohibited, we may seek to obtain waivers from the required lenders under the ABL facility to permit the required repurchase or redemption, but we may not be able to do so. See “Description of the Notes — Change of Control.”

Federal and state statutes allow courts, under specific circumstances, to void notes, guarantees and security interests and require noteholders to return payments received.

      The proceeds from the sale of the notes were applied to pay a portion of the purchase price in the Transactions. Flag Intermediate and our existing domestic operating subsidiaries guarantee the notes and certain of our future domestic subsidiaries may guarantee the notes. In addition, the notes and the guarantees are secured by certain collateral owned by the related guarantor. If we or any guarantor becomes a debtor in a case under the United States Bankruptcy Code or encounters other financial difficulty, under federal or state fraudulent transfer law, a court may void or otherwise decline to enforce the notes, the guaranty or the related security agreements, as the case may be. A court might do so if it found that when we issue the notes or a guarantor entered into its guaranty or, in some states, when payments became due under the notes, the guaranty or security agreements, we or such guarantor received less than reasonably equivalent value or fair consideration and either:

•  were or were rendered insolvent;

•  were left with inadequate capital to conduct our or its business; or

•  believed or reasonably should have believed that we or it would incur debts beyond our or its ability to pay.

      The court might also void an issuance of notes, a guaranty or security agreements, without regard to the above factors, if the court found that we issued the notes or the guarantors entered into their respective guaranty or security agreements with actual intent to hinder, delay or defraud our or their respective creditors.

      A court would likely find that we or a guarantor did not receive reasonably equivalent value or fair consideration for the notes or its guaranty and security agreements, respectively, if we or a guarantor did not substantially benefit directly or indirectly from the issuance of the notes. If a court were to void an issuance of notes, a guaranty or the related security agreements, you would no longer have a claim against us or the guarantors or, in the case of the security agreements, a claim with respect to the related collateral. Sufficient funds to repay the notes may not be available from other sources, including the remaining guarantors, if any. In addition, the court might direct you to repay any amounts that you already received from us or the guarantors or, with respect to the notes, any guarantee or the collateral.

      The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. In general, however, a court would consider us or a guarantor insolvent if:

•  the sum of our or its debts, as applicable, including contingent and unliquidated liabilities, was greater than the fair saleable value of all of our or its assets, as applicable;

•  the present fair saleable value of our or its assets, as applicable, was less than the amount that would be required to pay our or its probable liability on our or its existing debts, as applicable, including contingent liabilities, as they become absolute and mature; or

•  we or it could not pay our or its debts as they became due.

      Each guaranty will contain a provision intended to limit the guarantor’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its guaranty to be a fraudulent transfer. This provision may not be effective to protect the guaranties from being voided under

24

fraudulent transfer law, or may reduce or eliminate the guarantor’s obligation to an amount that effectively makes the guaranty worthless.

Rights of holders of notes in the collateral may be adversely affected by bankruptcy proceedings.

      The right of the collateral agent to repossess and dispose of the collateral securing the notes upon acceleration is likely to be significantly impaired by federal bankruptcy law if bankruptcy proceedings are commenced by or against us prior to or possibly even after the collateral agent has repossessed and disposed of the collateral. Under the U.S. Bankruptcy Code, a secured creditor, such as the collateral agent, is prohibited from repossessing its security from a debtor in a bankruptcy case, or from disposing of security repossessed from a debtor, without bankruptcy court approval. Moreover, bankruptcy law permits the debtor to continue to retain and to use collateral, and the proceeds, products, rents or profits of the collateral, even though the debtor is in default under the applicable debt instruments, provided that the secured creditor is given “adequate protection.” The meaning of the term “adequate protection” may vary according to circumstances, but it is intended in general to protect the value of the secured creditor’s interest in the collateral and may include cash payments or the granting of additional security, if and at such time as the court in its discretion determines, for any diminution in the value of the collateral as a result of the stay of repossession or disposition or any use of the collateral by the debtor during the pendency of the bankruptcy case. In view of the broad discretionary powers of a bankruptcy court, it is impossible to predict how long payments under the notes could be delayed following commencement of a bankruptcy case, whether or when the collateral agent would repossess or dispose of the collateral, or whether or to what extent holders of the notes would be compensated for any delay in payment of loss of value of the collateral through the requirements of “adequate protection.” Furthermore, in the event the bankruptcy court determines that the value of the collateral is insufficient to repay all amounts due on the notes, the holders of the notes would have “undersecured claims” as to the difference. See “— In the event of a bankruptcy of us or any of the guarantors, holders of the notes may be deemed to have an unsecured claim to the extent that our obligations in respect of the notes exceed the fair market value of the collateral securing the notes.” Federal bankruptcy laws do not permit the payment or accrual of interest, costs and attorneys’ fees for “undersecured claims” during the debtor’s bankruptcy case.

In the event of a bankruptcy of us or any of the guarantors, holders of the notes may be deemed to have an unsecured claim to the extent that our obligations in respect of the notes exceed the fair market value of the collateral securing the notes.

      In any bankruptcy proceeding with respect to us or any of the guarantors, it is possible that the bankruptcy trustee, the debtor-in-possession or competing creditors will assert that the fair market value of the collateral with respect to the notes on the date of the bankruptcy filing was less than the then-current principal amount of the notes. Upon a finding by the bankruptcy court that the notes are under-collateralized, the claims in the bankruptcy proceeding with respect to the notes would be bifurcated between a secured claim and an unsecured claim, and the unsecured claim would not be entitled to the benefits of security in the collateral. Other consequences of a finding of under-collateralization would be, among other things, a lack of entitlement on the part of the notes to receive post-petition interest and a lack of entitlement on the part of the unsecured portion of the notes to receive other “adequate protection” under federal bankruptcy laws. In addition, if any payments of post-petition interest had been made at the time of such a finding of under-collateralization, those payments could be recharacterized by the bankruptcy court as a reduction of the principal amount of the secured claim with respect to the notes.

Because each guarantor’s liability under its guarantees may be reduced to zero, avoided or released under certain circumstances, you may not receive any payments from some or all of the guarantors.

      You have the benefit of the guarantees of the guarantors. However, the guarantees by the guarantors are limited to the maximum amount that the guarantors are permitted to guarantee under applicable law. As a result, a guarantor’s liability under its guarantee could be reduced to zero, depending upon the amount of other obligations of such guarantor. Further, under the circumstances discussed more fully

25

above, a court under federal and state fraudulent conveyance and transfer statutes could void the obligations under a guarantee or further subordinate it to all other obligations of the guarantor. See “— Federal and state statutes allow courts, under specific circumstances, to void notes, guarantees and security interests and require noteholders to return payments received.” In addition, you will lose the benefit of a particular guarantee if it is released under certain circumstances described under “Description of the Notes — Guarantees.”

The notes are effectively subordinated to all liabilities of our non-guarantor subsidiaries and structurally subordinated to claims of creditors of all of our future foreign subsidiaries.

      The notes are structurally subordinated to indebtedness and other liabilities of our subsidiaries that are not guarantors of the notes. In the event of a bankruptcy, liquidation or reorganization of any of our non-guarantor subsidiaries, these non-guarantor subsidiaries will pay the holders of their debts, holders of preferred equity interests and their trade creditors before they will be able to distribute any of their assets to us.

If you do not properly tender your old notes, you will continue to hold unregistered old notes and be subject to the same limitations on your ability to transfer old notes.

      We will only issue exchange notes in exchange for old notes that are timely received by the exchange agent together with all required documents, including a properly completed and signed letter of transmittal. Therefore, you should allow sufficient time to ensure timely delivery of the old notes and you should carefully follow the instructions on how to tender your old notes. Neither we nor the exchange agent is required to tell you of any defects or irregularities with respect to your tender of the old notes. If you are eligible to participate in the exchange offer and do not tender your old notes or if we do not accept your old notes because you did not tender your old notes properly, then, after we consummate the exchange offer, you will continue to hold old notes that are subject to the existing transfer restrictions and will no longer have any registration rights or be entitled to any additional interest with respect to the old notes. In addition:

•  if you tender your old notes for the purpose of participating in a distribution of the exchange notes, you will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes; and

•  if you are a broker-dealer that receives exchange notes for your own account in exchange for old notes that you acquired as a result of market-making activities or any other trading activities, you will be required to acknowledge that you will deliver a prospectus in connection with any resale of those exchange notes.

      We have agreed that, for a period of 180 days after the exchange offer is consummated, we will make this prospectus available to any broker-dealer for use in connection with any resales of the exchange notes.

      After the exchange offer is consummated, if you continue to hold any old notes, you may have difficulty selling them because there will be fewer old notes outstanding.

An active trading market may not develop for the exchange notes, in which case the trading market liquidity and the market price quoted for the exchange notes could be adversely affected.

      The exchange notes are a new issue of securities with no established trading market and will not be listed on any securities exchange or automated dealer quotation system. The liquidity of the trading market in the exchange notes, and the market price quoted for the exchange notes, may be adversely affected by changes in the overall market for high yield securities and by changes in our financial performance or prospects or in the prospects for companies in our industry generally. As a result, you cannot be sure that an active trading market will develop for the exchange notes. In addition, if a large amount of old notes are not tendered or are tendered improperly, the limited amount of exchange notes that would be issued

26

and outstanding after we consummate the exchange offer would reduce liquidity and could lower the market price of those exchange notes.

Risks Related to Our Business

Our business, financial condition and results of operations are heavily impacted by varying metals prices.

      We principally use steel, aluminum and various specialty metals as feedstock. The metals industry as a whole is cyclical and at times pricing and availability of our feedstock can be volatile due to numerous factors beyond our control, including domestic and international economic conditions, labor costs, production levels, competition, import duties and tariffs and currency exchange rates. This volatility can significantly affect the availability and cost of raw materials for us, and may, therefore, adversely affect our net sales, operating margin and net income. Metal costs typically represent approximately 75% of our net sales. Our service centers maintain substantial inventories of metal to accommodate the short lead times and just-in-time delivery requirements of our customers. Accordingly, we purchase metal in an effort to maintain our inventory at levels that we believe to be appropriate to satisfy the anticipated needs of our customers, which we base on information derived from customers, market conditions, historic usage and industry research. Our commitments for metal purchases are generally at prevailing market prices in effect at the time we place our orders. We have no substantial long-term, fixed-price purchase contracts. When raw material prices rise, we may not be able to pass any portion of the price increase on to customers. When raw material prices decline, customer demands for lower prices could result in lower sale prices and, to the extent we reduce existing inventory quantities, lower margins. See “— We may be adversely affected by increases in the price of metals if we are unable to pass through any price increases to our customers.”

      Changes in metal prices also affect our liquidity because of the time difference between our payment for our raw materials and our collection of cash from our customers. We sell our products and typically collect our accounts receivable within 45 days after the sale; however, we tend to pay for replacement materials (which are more expensive when metal prices are rising) over a much shorter period, in part to benefit from early-payment discounts. As a result, when metal prices are rising, we tend to draw more on our revolving credit facility to cover the cash flow cycle from our raw material purchases to cash collection. This cash requirement for working capital is higher in periods when we are increasing inventory quantities as we did at the end of 2004. Our liquidity is thus adversely affected by rising metal prices. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Operating and Investing Activities.”

We may be adversely affected by increases in the price of metals if we are unable to pass through any price increases to our customers.

      There have been historical periods of rapid and significant movements in the prices of metal, particularly steel, both upward and downward. Any limitation on our ability to pass through any price increases to our customers could have a material adverse effect on our business, financial condition or results of operations.

Our operating results could be negatively affected during economic downturns.

      The businesses of many of our customers are, to varying degrees, cyclical and have historically experienced periodic downturns due to economic conditions, energy prices, consumer demand and other factors beyond our control. These economic and industry downturns have been characterized by diminished product demand, excess capacity and, in some cases, lower average selling prices. Therefore, any significant downturn in one or more of the markets that we serve, one or more of the end-markets that our customers serve or in economic conditions in general could result in a reduction in demand for our products and could have a material adverse effect on our business, financial condition or results of operations. Additionally, as an increasing amount of our customers relocate their manufacturing facilities outside of the United States, we may not be able to maintain our level of sales to those customers. As a

27

result of the depressed economic conditions and reduction in construction in the northeastern United States in the years 2000 through the middle of 2002, our customers in such geographic areas had lower demand for our products. While we supply a broad range of products to a large diversified customer base which serves a diverse set of end-markets, concurrent reduced demand in a number of these markets combined with the foreign relocation of some of our customers could have an adverse effect on our business, financial condition or results of operations.

      Although we do not generally sell any of our products directly to customers abroad, a large part of our financial performance is dependent upon a healthy economy beyond the United States. Our customers sell their products abroad and some of our suppliers buy feedstock abroad. As a result, our business is affected by general economic conditions and other factors outside the United States, primarily in Europe and Asia. Our suppliers’ access to metal, and therefore our access to metal, is additionally affected by such conditions and factors. Similarly, the demand for our customers’ products, and therefore our products, is affected by such conditions and factors. We cannot assure you that events having an adverse effect on the industries in which we operate will not occur or continue, such as further increased prices of steel, enhanced imbalances in the world’s iron ore, coal and steel industries, a downturn in world economies, increases in interest rates, unfavorable currency fluctuations, including the weak U.S. dollar, or a slowdown in the key industries served by our customers.

      In addition, demand for the products of our Building Products Group could be adversely affected if consumer confidence falls since the results for that group depend on a strong residential remodeling market, which in turn has been partially driven by relatively high consumer confidence.

We rely on metal suppliers in our business and purchase a significant amount of metal from a limited number of suppliers. Termination of one or more of our relationships with any of those suppliers could have a material adverse effect on our business because we may be unable to obtain metal from other sources in a timely manner or at all.

      We use a variety of metals in our business. Our operations depend upon obtaining adequate supplies of metal on a timely basis. We purchase most of our metal from a limited number of metal suppliers. As of December 31, 2005, the top three metals producers represent a significant portion of our total metal purchasing cost. Termination of one or more of our relationships with any of these major suppliers could have a material adverse effect on our business, financial condition or results of operations if we were unable to obtain metal from other sources in a timely manner or at all.

      In addition, the domestic metals production industry has experienced consolidation in recent years. As of December 31, 2005, the top three metals producers together control over 60% of the domestic flat rolled steel market. Further consolidation could result in a decrease in the number of our major suppliers or a decrease in the number of alternative supply sources available to us, which could make it more likely that termination of one or more of our relationships with major suppliers would result in a material adverse effect on our business, financial condition or results of operations. Consolidation could also result in price increases for the metal that we purchase. Such price increases could have a material adverse effect on our business, financial condition or results of operations if we were not able to pass these price increases on to our customers.

We operate in a highly fragmented and competitive industry.

      We are engaged in a highly fragmented and competitive industry. We compete with a large number of other value-added metals processors/service centers on a regional and local basis, some of which may have greater financial resources than us. We also compete, to a much lesser extent, with primary metals producers, who typically sell to very large customers requiring regular shipments of large volumes of metals. Increased competition could have a material adverse effect on our business, financial condition or results of operation.

28

Our future success depends on our ability to retain our key employees.

      We are dependent on the services of our CEO, Mr. C. Lourenço Gonçalves, and other members of our senior management team to remain competitive in our industry. There is a risk that we will not be able to retain or replace these key employees. While our current key employees are subject to employment conditions or arrangements that contain post-employment non-competition provisions, these arrangements permit the employees to terminate their employment without notice. The loss of any member of our senior management team could have a material adverse effect on our business, financial condition or results of operations.

We are subject to litigation.

      We are a defendant in numerous lawsuits. These suits concern issues including product liability, contract disputes, employee-related matters and personal injury matters. While it is not feasible to predict the outcome of all pending suits and claims, the ultimate resolution of these matters as well as future lawsuits could have a material adverse effect on our business, financial condition, results of operations or reputation.

We are subject to extensive environmental regulation.

      Our operations are subject to extensive regulations governing waste disposal, air and water emissions, the handling of hazardous substances, remediation, workplace exposure and other environmental matters. We believe that we are in substantial compliance with all such laws and do not currently anticipate that we will be required to expend any substantial amounts in the foreseeable future in order to meet current environmental or workplace health and safety requirements. However, some of the properties we own or lease are located in areas with a history of heavy industrial use, and are on or near sites listed on the Comprehensive Environmental Response, Compensation, and Liability Act, or CERCLA, National Priority List. CERCLA establishes joint and several responsibility for cleanup without regard to fault for persons who have arranged for disposal of hazardous substances at sites that have become contaminated and for persons who own or operate contaminated facilities. We have a number of properties located in or near industrial or light industrial use areas; accordingly, these properties may have been contaminated by pollutants which would have migrated from neighboring facilities or have been deposited by prior occupants. Some of our properties are affected by contamination from leaks and drips of cutting oils and similar materials used in our business and we have removed and restored such known impacted soils pursuant to applicable environmental laws. The costs of such clean-ups have not been material. We are not currently subject to any claims and have not received any notices with respect to cleanup or remediation under CERCLA or similar laws for contamination at our leased or owned properties or at any off-site location. However, we cannot rule out the possibility that we could be notified of such claims in the future. It is possible that we could be identified by the Environmental Protection Agency, a state agency or one or more third parties as a potentially responsible party under CERCLA or under analogous state laws. If so, we could incur substantial litigation costs in defense of such claims.

Adverse developments in our relationship with our employees and future shortages of employees could adversely affect our business.

      As of December 31, 2005, approximately 300 of our employees (12%) at various sites are members of unions. Our relationship with these unions generally has been satisfactory, but occasional work stoppages have occurred. Within the last five years, one work stoppage occurred at one facility, which involved approximately 30 employees and lasted approximately 30 days. Any work stoppages in the future could have a material adverse effect on our business, financial condition or results of operations.

      We are currently a party to nine collective bargaining agreements with such unions, which expire at various times. Collective bargaining agreements for all of our union employees expire in each of the next three years. Historically, we have succeeded in negotiating new collective bargaining agreements without a strike. However, no assurances can be given that we will succeed in negotiating new collective bargaining

29

agreements to replace the expiring ones without a strike. Any strikes in the future could have a material adverse effect on our business, financial condition or results of operations.

      From time to time, there are shortages of qualified operators of metals processing equipment. In addition, during periods of low unemployment, turnover among less-skilled workers can be relatively high. Any failure to retain a sufficient number of such employees in the future could have a material adverse effect on our business, financial condition or results of operations.

We emerged from Chapter 11 Reorganization in 2002.

      Our Predecessor Company sought protection under Chapter 11 of the Bankruptcy Code in November 2001. Our Predecessor Company incurred operating losses of $2.6 million and $390.5 million during the ten-month period ended October 31, 2002 and the fiscal year ended December 31, 2001, respectively. Approximately $386.0 million of the 2001 net loss was attributable to write-downs associated with the carrying value of our Predecessor Company’s goodwill and property and equipment to their then estimated recoverable values. We incurred an operating loss of $0.9 million for the two-month period ended December 31, 2002. Our Predecessor Company’s equity ownership, board of directors and a portion of its senior management was replaced in connection with our reorganization. While our current senior management has concentrated on improving our profitability, we may not be able to sustain profitability or achieve growth in our operating performance. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Predecessor Company Chapter 11 Proceedings and Reorganization.”

Our historical financial information is not comparable to our current financial condition and results of operations.

      As a result of our emergence from bankruptcy on October 31, 2002, we were subject to “Fresh-Start Reporting.” Accordingly, our financial information as of any date or for periods after November 1, 2002 is not comparable to our historical financial information before November 1, 2002. This is primarily because the “Fresh-Start Reporting” purchase price allocations required us to reduce the carrying value of the property and equipment we owned at November 1, 2002 to zero. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Predecessor Company Chapter 11 Proceedings and Reorganization.”

We are controlled by an affiliate of Apollo and its interests as an equity holder may conflict with yours as a creditor.

      Flag Intermediate, which is a wholly owned subsidiary of Flag Holdings, owns all of our common stock. Flag Holdings is an affiliate of, and is controlled by, Apollo V and its affiliates. Accordingly, Apollo V and its affiliates have the power to control us. The interests of Apollo V and its affiliates may not always be aligned with yours. For example, our equity holders may have an interest in pursuing acquisitions, divestitures, financings or other transactions, that, in their judgment, could enhance their equity investment, even though these transactions might involve risks to the holders of the notes if the transactions resulted in our being more highly leveraged or significantly changed the nature of our business operations or strategy. In addition, if we encounter financial difficulties, or if we are unable to pay our debts as they mature, the interests of our equity holders might conflict with those of the holders of the notes. In that situation, for example, the holders of the notes might want us to raise additional equity from Flag Holdings or other investors to reduce our leverage and pay our debts, while Flag Holdings might not want to increase their investment in us or have their ownership diluted and instead choose to take other actions, such as selling our assets. Furthermore, Apollo V and its affiliates have no continuing obligation to provide us with debt or equity financing. Additionally, Apollo V and certain of its affiliates are in the business of making investments in companies and currently hold, and may from time to time in the future acquire, controlling interests in businesses engaged in the metals service industry that complement or directly or indirectly compete with certain portions of our business. Further, if they pursue such acquisitions in the metals service industry, those acquisition opportunities may not be available to us. So

30

long as Apollo V and its affiliates continue to indirectly own a significant amount of our equity, even if such amount is less than 50%, they will continue to be able to strongly influence or effectively control our business decisions.

THE EXCHANGE OFFER

Purpose and Effect of the Exchange Offer

      We entered into a registration rights agreement with the initial purchasers of the old notes, in which we agreed to file a registration statement relating to an offer to exchange the old notes for the exchange notes. The registration statement of which this prospectus forms a part was filed in compliance with this obligation. We also agreed to use our commercially reasonable efforts to file the registration statement with the SEC and to cause it to become effective under the Securities Act. The exchange notes will have terms substantially identical to the old notes except that the exchange notes will not contain terms with respect to transfer restrictions and registration rights and additional interest payable for the failure to consummate the exchange offer by September 26, 2006. Old notes in an aggregate principal amount of $275,000,000 were issued on November 30, 2005.

      Under the circumstances set forth below, we will use our commercially reasonable efforts to cause the SEC to declare effective a shelf registration statement with respect to the resale of the old notes and to keep the shelf registration statement effective up to two years after the effective date of the shelf registration statement. These circumstances include:

•  if the exchange offer is not permitted by applicable law or SEC policy;

•  if the exchange offer has not been consummated on or before September 26, 2006;

•  if any initial purchaser so requests on or prior to the 60th day after the consummation of the registered exchange offer with respect to the old notes not eligible to be exchanged for the exchange notes and held by it following the consummation of the exchange offer; or

•  if any holder that participates in the exchange offer does not receive freely transferable exchange notes in exchange for tendered old notes and so requests on or prior to the 60th day after the consummation of the registered exchange offer.

      Each holder of old notes that wishes to exchange such old notes for transferable exchange notes in the exchange offer will be required to make the following representations:

•  any exchange notes to be received by it will be acquired in the ordinary course of its business;

•  it has no arrangement or understanding with any person or entity, including any of our affiliates, to participate in the distribution (within the meaning of Securities Act) of the exchange notes in violation of the Securities Act;

•  it is not our “affiliate,” as defined in Rule 405 under the Securities Act, or, if it is an affiliate, that it will comply with applicable registration and prospectus delivery requirements of the Securities Act; and

•  if such holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the exchange notes.

      In addition, each broker-dealer that receives exchange notes for its own account in exchange for old notes, where such old notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See “Plan of Distribution.”

31

Resale of Exchange Notes

      Based on interpretations of the SEC staff set forth in no-action letters issued to unrelated third parties, we believe that exchange notes issued in the exchange offer in exchange for old notes may be offered for resale, resold and otherwise transferred by any exchange note holder without compliance with the registration and prospectus delivery provisions of the Securities Act, if:

•  such holder is not an “affiliate” of ours within the meaning of Rule 405 under the Securities Act;

•  such exchange notes are required in the ordinary course of the holder’s business; and

•  the holder does not intend to participate in the distribution of such exchange notes.

      Any holder who tenders in the exchange offer with the intention of participating in any manner in a distribution of the exchange notes:

•  cannot rely on the position of the staff of the SEC set forth in “Exxon Capital Holdings Corporation” or similar interpretive letters: and

•  must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction.

      If, as stated above, a holder cannot rely on the position of the staff of the SEC set forth in “Exxon Capital Holdings Corporation” or similar interpretive letters, any effective registration statement used in connection with a secondary resale transaction must contain the selling security holder information required by Item 507 of Regulation S-K under the Securities Act.

      This prospectus may be used for an offer to resell, for the resale or for other retransfer of exchange notes only as specifically set forth in this prospectus. With regard to broker-dealers, only broker-dealers that acquired the old notes as a result of market-making activities or other trading activities may participate in the exchange offer. Each broker-dealer that receives exchange notes for its own account in exchange for old notes, where such old notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. Please read the section captioned “Plan of Distribution” for more details regarding these procedures for the transfer of exchange notes. We have agreed that, for a period of 180 days after the exchange offer is consummated, we will make this prospectus available to any broker-dealer for use in connection with any resale of the exchange notes.

Terms of the Exchange Offer

      Upon the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal, we will accept for exchange any old notes properly tendered and not withdrawn prior to the expiration date. We will issue up to 275,000,000 in principal amount of exchange notes, in the aggregate, in exchange for an equal principal amount of the old notes surrendered under the exchange offer. Old notes may be tendered for the exchange notes only in integral multiples of $1,000.

      The form and terms of the exchange notes will be substantially identical to the form and terms of the old notes except that the exchange notes will be registered under the Securities Act, will not bear legends restricting their transfer and will not provide for any additional interest upon our failure to fulfill our obligations under the registration rights agreement to file, and cause to become effective, a registration statement. The exchange notes will evidence the same debt as the old notes. The exchange notes will be issued under and entitled to the benefits of the same indenture that authorized the issuance of the old notes. Consequently, each series of notes will be treated as a single class of debt securities under the applicable indenture.

      The exchange offer is not conditioned upon any minimum aggregate principal amount of old notes being tendered for exchange.

32

      As of the date of this prospectus, $275,000,000 aggregate principal amount of the old notes are outstanding. This prospectus and the letter of transmittal are being sent to all registered holders of old notes. There will be no fixed record date for determining registered holders of old notes entitled to participate in the exchange offer.

      We intend to conduct the exchange offer in accordance with the provisions of the registration rights agreement, the applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (or the Exchange Act), and the rules and regulations of the SEC. Old notes that are not tendered for exchange in the exchange offer will remain outstanding and continue to accrue interest and will be entitled to the rights and benefits such holders have under the indenture relating to the old notes.

      We will be deemed to have accepted for exchange properly tendered old notes when we have given oral or written notice of the acceptance to the exchange agent. The exchange agent will act as agent for the tendering holders for the purposes of receiving the exchange notes from us and delivering exchange notes to such holders. Subject to the terms of the registration rights agreements, we expressly reserve the right to amend or terminate the exchange offer, and not to accept for exchange any old notes not previously accepted for exchange, upon the occurrence of any of the conditions specified below under the caption “— Certain Conditions to the Exchange Offer.”

      Holders who tender old notes in the exchange offer will not be required to pay brokerage commissions or fees, or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of old notes. We will pay all charges and expenses, other than those transfer taxes described below, in connection with the exchange offer. It is important that you read the section labeled “— Fees and Expenses” below for more details regarding fees and expenses incurred in the exchange offer.

Expiration Date; Extensions; Amendments

      The exchange offer will expire 5:00 p.m. (New York City time) on                     , 2006, unless we extend it in our sole discretion.

      In order to extend the exchange offer, we will notify the exchange agent orally or in writing. In addition, we will notify the registered holders of old notes, in writing, by public announcement or both, of the extension no later than 9:00 a.m. (New York City time) on the business day after the previously scheduled expiration date.

      We reserve the right, in our sole discretion:

•  to delay accepting for exchange any old notes;

•  to extend the exchange offer or to terminate the exchange offer and to refuse to accept old notes not previously accepted if any of the conditions set forth below under “— Certain Conditions to the Exchange Offer” have not been satisfied, by giving oral or written notice of such delay, extension or termination to the exchange agent; or

•  subject to the terms of the registration rights agreement, to amend the terms of the exchange offer in any manner.

      Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice or public announcement thereof to the registered holders of old notes. If we amend the exchange offer in a manner that we determine to constitute a material change, we will promptly disclose such amendment in a manner reasonably calculated to inform the holders of old notes of such amendment. If we terminate this exchange offer as provided in this prospectus before accepting any old notes for exchange or if we amend the terms of this exchange offer in a manner that constitutes a fundamental change in the information set forth in the registration statement of which this prospectus forms a part, we will promptly file a post-effective amendment to the registration statement of which this prospectus forms a part. In addition, we will in all events comply with our obligation to make prompt payment for all old notes properly tendered and accepted for exchange in the exchange offer.

33

      Without limiting the manner in which we may choose to make public announcements of any delay in acceptance, extension, termination or amendment of the exchange offer, we shall not have any obligation to publish, advertise, or otherwise communicate any such public announcement, other than by issuing a timely press release to a financial news service.

Certain Conditions to the Exchange Offer

      Despite any other terms of the exchange offer, we will not be required to accept for exchange, or exchange any exchange notes for, any old notes, and we may terminate the exchange offer as provided in this prospectus before accepting any old notes for exchange if in our reasonable judgment:

•  the exchange notes to be received will not be tradable by the holder without restriction under the Securities Act or the Exchange Act, and without material restrictions under the blue sky or securities laws of substantially all of the states of the United States:

•  the exchange offer, or the making of any exchange by a holder of old notes, would violate applicable law or any applicable interpretation of the staff of the SEC; or

•  any action or proceeding has been instituted or threatened in any court or by or before any governmental agency with respect to the exchange offer that, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer.

      In addition, we will not be obligated to accept for exchange the old notes of any holder that has not made:

•  the representations described under “— Purpose and Effect of the Exchange Offer,” “— Procedures for Tendering” and “Plan of Distribution,” and

•  such other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to make available to us an appropriate form for registration of the exchange notes under the Securities Act.

      We expressly reserve the right, at any time or at various times on or prior to the scheduled expiration date of the exchange offer, to extend the period of time during which the exchange offer is open. Consequently, we may delay acceptance of any old notes by giving oral or written notice of such extension to the registered holders of the old notes. During any such extensions, all old notes previously tendered will remain subject to the exchange offer, and we may accept them for exchange unless they have been previously withdrawn. We will return any old notes that we do not accept for exchange for any reason without expense to their tendering holder promptly after the expiration or termination of the exchange offer.

      We expressly reserve the right to amend or terminate the exchange offer on or prior to the scheduled expiration date of the exchange offer, and to reject for exchange any old notes not previously accepted for exchange, upon the occurrence of any of the conditions of the exchange offer specified above. We will give oral or written notice or public announcement of any extension, amendment, non-acceptance or termination to the registered holders of the old notes as promptly as practicable. In the case of any extension, such notice will be issued no later than 9:00 a.m. (New York City time) on the business day after the previously scheduled expiration date.

      These conditions are for our sole benefit and we may, in our sole discretion, assert them regardless of the circumstances that may give rise to them or waive them in whole or in part at any or at various times except that all conditions to the exchange offer must be satisfied or waived by us prior to the expiration of the exchange offer. If we fail at any time to exercise any of the foregoing rights, that failure will not constitute a waiver of such right. Each such right will be deemed an ongoing right that we may assert at any time or at various times prior to the expiration of the exchange offer.

      In addition, we will not accept for exchange any old notes tendered, and will not issue exchange notes in exchange for any such old notes, if at such time any stop order is threatened or in effect with respect to

34

the registration statement of which this prospectus constitutes a part or the qualification of the indenture under the Trust Indenture Act of 1939, as amended.

Procedures for Tendering

      Only a holder of old notes may tender such old notes in the exchange offer. To tender in the exchange offer, a holder must:

•  complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal; have the signature on the letter of transmittal guaranteed if the letter of transmittal so requires; and mail or deliver such letter of transmittal or facsimile to the exchange agent prior to the expiration date; or

•  comply with DTC’s Automated Tender Offer Program procedures described below.

      In addition, either:

•  the exchange agent must receive old notes along with the letter of transmittal;

•  the exchange agent must receive, prior to the expiration date, a timely confirmation of book-entry transfer of such old notes into the exchange agent’s account at DTC according to the procedures for book-entry transfer described below or a properly transmitted agent’s message; or

•  the holder must comply with the guaranteed delivery procedures described below.

      To be tendered effectively, the exchange agent must receive any physical delivery of the letter of transmittal and other required documents at the address set forth below under “— Exchange Agent” prior to the expiration date.

      The tender by a holder that is not withdrawn prior to the expiration date will constitute an agreement between such holder and us in accordance with the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal.

      The method of delivery of old notes, the letter of transmittal and all other required documents to the exchange agent is at the holder’s election and risk. Rather than mail these items, we recommend that holders use an overnight or hand delivery service. In all cases, holders should allow sufficient time to assure delivery to the exchange agent before the expiration date. Holders should not send us the letter of transmittal or old notes. Holders may request their respective brokers, dealers, commercial banks, trust companies or other nominees to effect the above transactions for them.

      Any beneficial owner whose old notes are registered in the name of a broker, dealer, commercial bank. trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct it to tender on the owners’ behalf. If such beneficial owner wishes to tender on its own behalf, it must, prior to completing and executing the letter of transmittal and delivering its old notes, either:

•  make appropriate arrangements to register ownership of the old notes in such owner’s name; or

•  obtain a properly completed bond power from the registered holder of old notes.

      The transfer of registered ownership may take considerable time and may not be completed prior to the expiration date.

      Signatures on a letter of transmittal or a notice of withdrawal described below must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or another “eligible institution” within the meaning of Rule 17Ad-15 under the Exchange Act, unless the old notes tendered pursuant thereto are tendered:

•  by a registered holder who has not completed the box entitled “Special Issuance Instructions” or “Special Delivery Instructions” on the letter of transmittal; or

•  for the account of an eligible institution.

35

      If the letter of transmittal is signed by a person other than the registered holder of any old notes listed on the old notes, such old notes must be endorsed or accompanied by a properly completed bond power. The bond power must be signed by the registered holder as the registered holder’s name appears on the old notes and an eligible institution must guarantee the signature on the bond power.

      If the letter of transmittal or any old notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing. Unless waived by us, they should also submit evidence satisfactory to us of their authority to deliver the letter of transmittal.

      The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC’s system may use DTC’s Automated Tender Offer Program to tender. Participants in the program may, instead of physically completing and signing the letter of transmittal and delivering it to the exchange agent, transmit their acceptance of the exchange offer electronically. They may do so by causing DTC to transfer the old notes to the exchange agent in accordance with its procedures for transfer. DTC will then send an agent’s message to the exchange agent. The term “agent’s message” means a message transmitted by DTC, received by the exchange agent and forming part of the book-entry confirmation, to the effect that:

•  DTC has received an express acknowledgment from a participant in its Automated Tender Offer Program that is tendering old notes that are the subject of such book-entry confirmation;

•  such participant has received and agrees to be bound by the terms of the letter of transmittal (or, in the case of an agent’s message relating to guaranteed delivery, that such participant has received and agrees to be bound by the applicable notice of guaranteed delivery); and

•  the agreement may be enforced against such participant.

      We will determine in our sole discretion all questions as to the validity, form, eligibility (including time of receipt), acceptance of tendered old notes and withdrawal of tendered old notes. Our determination will be final and binding. We reserve the absolute right to reject any old notes not properly tendered or any old notes the acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defects, irregularities or conditions of tenders as to particular old notes. Our interpretation of the terms and conditions of the exchange offer (including the instructions in the letter of transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of old notes must be cured within such time as we shall determine. Although we intend to notify holders of defects or irregularities with respect to tenders of old notes, neither we, the exchange agent nor any other person will incur any liability for failure to give such notification. Tenders of old notes will not be deemed made until such defects or irregularities have been cured or waived. Any old notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned without cost to the tendering holder, unless otherwise provided in the letter of transmittal, promptly following the expiration date.

      In all cases, we will issue exchange notes for old notes that we have accepted for exchange under the exchange offer only after the exchange agent timely receives:

•  old notes or a timely book-entry confirmation of such old notes into the exchange agent’s account at DTC; and

•  a properly completed and duly executed letter of transmittal and all other required documents or a properly transmitted agent’s message.

36

      By signing the letter of transmittal, each tendering holder of old notes will represent that, among other things:

•  any exchange notes that the holder receives will be acquired in the ordinary course of its business;

•  the holder has no arrangement or understanding with any person or entity, including any of our affiliates, to participate in the distribution of the exchange notes;

•  if the holder is not a broker-dealer, that it is not engaged in and does not intend to engage in the distribution of the exchange notes; and

•  the holder is not our “affiliate,” as defined in Rule 405 of the Securities Act, or, if it is an affiliate, that it will comply with applicable registration and prospectus delivery requirements of the Securities Act.

      In addition, each broker-dealer that receives exchange notes for its own account in exchange for old notes, where such old notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. See “Plan of Distribution.”

Book-Entry Transfer

      The exchange agent will make a request to establish an account with respect to the old notes at DTC for purposes of the exchange offer promptly after the date of this prospectus and any financial institution participating in DTC’s system may make book-entry delivery of old notes by causing DTC to transfer such old notes into the exchange agent’s account at DTC in accordance with DTC’s procedures for transfer. Holders of old notes who are unable to deliver confirmation of the book-entry tender of their old notes into the exchange agent’s account at DTC or all other documents of transmittal to the exchange agent on or prior to the expiration date must tender their old notes according to the guaranteed delivery procedures described below.

Guaranteed Delivery Procedures

      Holders wishing to tender their old notes but whose old notes are not immediately available or who cannot deliver their old notes, the letter of transmittal or any other required documents to the exchange agent or comply with the applicable procedures under DTC’s Automated Tender Offer Program prior to the expiration date may tender if:

•  the tender is made through an eligible institution;

•  prior to the expiration date, the exchange agent receives from such eligible institution either a properly completed and duly executed notice of guaranteed delivery by facsimile transmission, mail or hand delivery or a properly transmitted agent’s message and notice of guaranteed delivery:

•  setting forth the name and address of the holder, the registered number(s) of such old notes and the principal amount of old notes tendered;

•  stating that the tender is being made thereby;

•  guaranteeing that, within three (3) New York Stock Exchange trading days after the expiration date, the letter of transmittal or facsimile thereof together with the old notes or a book-entry confirmation, and any other documents required by the letter of transmittal will be deposited by the eligible institution with the exchange agent; and

•  the exchange agent receives such properly completed and executed letter of transmittal or facsimile thereof, as well as all tendered old notes in proper form for transfer or a book-entry confirmation, and all other documents required by the letter of transmittal, within three (3) New York Stock Exchange trading days after the expiration date.

37

      Upon request to the exchange agent, a notice of guaranteed delivery will be sent to holders who wish to tender their old notes according to the guaranteed delivery procedures set forth above.

Withdrawal of Tenders

      Except as otherwise provided in this prospectus, holders of old notes may withdraw their tenders at any time prior to the expiration date.

      For a withdrawal to be effective:

•  the exchange agent must receive a written notice of withdrawal, which notice may be by telegram, telex, facsimile transmission or letter, at one of the addresses set forth below under “— Exchange Agent”; or

•  holders must comply with the appropriate procedures of DTC’s Automated Tender Offer Program system.

      Any such notice of withdrawal must:

•  specify the name of the person who tendered the old notes to be withdrawn;

•  identify the old notes to be withdrawn, including the principal amount of such old notes; and

•  where certificates for old notes have been transmitted, specify the name in which such old notes were registered, if different from that of the withdrawing holder.

      If certificates for old notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of such certificates, the withdrawing holder must also submit:

•  the serial numbers of the particular certificates to be withdrawn; and

•  a signed notice of withdrawal with signatures guaranteed by an eligible institution unless such holder is an eligible institution

      If old notes have been tendered pursuant to the procedure for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawn old notes and otherwise comply with the procedures of such facility. We will determine all questions as to the validity, form and eligibility, including time of receipt of such notices, and our determination shall be final and binding on all parties. We will deem any old notes so withdrawn not to have been validly tendered for exchange for purposes of the exchange offer. Any old notes that have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to such holder (or, in the case of old notes tendered by book-entry transfer into the exchange agent’s account at DTC according to the procedures described above, such old notes will be credited to an account maintained with DTC for old notes) promptly after withdrawal, rejection of tender or termination of the exchange offer. Properly withdrawn old notes may be retendered by following one of the procedures described under “—Procedures for Tendering” above at any time prior to the expiration date.

Exchange Agent

      Wells Fargo Bank, N.A. has been appointed as exchange agent for the exchange offer. You should direct questions and requests for assistance, requests for additional copies of this prospectus or of the letter

38

of transmittal and requests for the notice of guaranteed delivery to the exchange agent addressed as follows:

By Overnight Courier or Mail: Wells Fargo Bank, N.A. Corporate Trust Operations MAC N9303-121 6th & Marquette Avenue Minneapolis, MN 55479 Attn: Reorg	By Registered or Certified Mail: Wells Fargo Bank, N.A Corporate Trust Operations MAC N9303-121 P.O. Box 1517 Minneapolis, MN 55480 Attn: Reorg	By Hand: Wells Fargo Bank, N.A. Corporate Trust Services Northstar East Bldg.—12th Floor 608 2nd Avenue South Minneapolis, MN 55402 Attn: Reorg
(if by mail, registered or certified recommended)
By Facsimile:		To Confirm by Telephone:
		(800) 344-5128; or
(612) 667-6282		(612) 667-9764
Attn: Bondholder Communications		Attn: Bondholder Communications

      DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.

Fees and Expenses

      We will bear the expenses of soliciting tenders. The principal solicitation is being made by mail; however, we may make additional solicitations by telegraph, telephone or in person by our officers and regular employees and those of our affiliates.

      We have not retained any dealer-manager in connection with the exchange offer and will not make any payments to broker-dealers or others soliciting acceptances of the exchange offer. We will, however, pay the exchange agent reasonable and customary fees for its services and reimburse it for its related reasonable out-of-pocket expenses.

      Our expenses in connection with the exchange offer include:

•  SEC registration fees;

•  fees and expenses of the exchange agent and trustee;

•  accounting and legal fees and printing costs; and

•  related fees and expenses.

Transfer Taxes

      In general, we will pay all transfer taxes, if any, applicable to the exchange of old notes under the exchange offer. The tendering holder, however, will be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if:

•  certificates representing old notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of old notes tendered;

•  tendered old notes are registered in the name of any person other than the person signing the letter of transmittal; or

•  a transfer tax is imposed for any reason other than the exchange of old notes under the exchange offer.

      If satisfactory evidence of payment of such taxes is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed to that tendering holder.

39

      In addition, holders who instruct us to register exchange notes in the name of, or request that old notes not tendered or not accented in the exchange offer be returned to, a person other than the registered tendering holder will be required to pay any applicable transfer taxes.

Consequences of Failure to Exchange

      Holders of old notes who do not exchange their old notes for exchange notes under the exchange offer, including as a result of failing to timely deliver old notes to the exchange agent, together with all required documentation, including a properly completed and signed letter of transmittal, will remain subject to the restrictions on transfer of such old notes:

•  as set forth in the legend printed on the old notes as a consequence of the issuance of the old notes pursuant to the exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws; and

•  otherwise as set forth in the offering a memorandum distributed in connection with the private offering of the old notes.

      In addition, you will no longer have any registration rights or be entitled to additional interest with respect to the old notes.

      In general, you may not offer or sell the old notes unless they are registered under the Securities Act, or if the offer or sale is exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the old notes under the Securities Act. Based on interpretations of the SEC staff, exchange notes issued pursuant to the exchange offer may be offered for resale, resold or otherwise transferred by their holders, other than any such holder that is our “affiliate” within the meaning of Rule 405 under the Securities Act, without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the holders acquired the exchange notes in the ordinary course of the holders’ business and the holders have no arrangement or understanding with respect to the distribution of the exchange notes to be acquired in the exchange offer. Any holder who tenders in the exchange offer for the purpose of participating in a distribution of the exchange notes:

•  could not rely on the applicable interpretations of the SEC; and

•  must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction.

      After the exchange offer is consummated, if you continue to hold any old notes, you may have difficulty selling them.

Accounting Treatment

      We will record the exchange notes in our accounting records at the same carrying value as the old notes, as reflected in our accounting records on the date of exchange. Accordingly, we will not recognize any gain or loss for accounting purposes in connection with the exchange offer. We will expense the costs of the exchange offer.

Other

      Participation in the exchange offer is voluntary, and you should carefully consider whether to accept. You are urged to consult your financial and tax advisors in making your own decision on what action to take.

      We may in the future seek to acquire untendered old notes in the open market or privately negotiated transactions, through subsequent exchange offers or otherwise. We have no present plans to acquire any old notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any untendered old notes.

40

USE OF PROCEEDS

      We will not receive any cash proceeds from the issuance of the exchange notes. In consideration for issuing the exchange notes, we will receive in exchange the old notes in like principal amount, which will be cancelled and as such will not result in any increase in our indebtedness.

      The net proceeds from the offering of the old notes, after deducting the initial purchasers’ fees and expenses of the offering, was $268.0 million. We used these proceeds to fund the Transactions and pay related fees and expenses.

      The following table sets forth the sources and uses of funds in connection with the Transaction.

Sources and Uses of Funds (in millions)
ABL facility(1)		$	225.4
Old notes			275.0
Debt Assumed			7.2
Contributed equity(2)			134.0
Warrants Payable			6.4
	Total Sources	$	648.0
Merger consideration(3)		$	458.7
Refinance existing debt			152.5
Transaction expenses(4)			36.8
	Total Uses	$	648.0

(1)	The ABL facility provides for up to $450.0 million of senior secured revolving credit borrowings and letters of credit, subject to a borrowing base determined primarily by the value of our eligible receivables and eligible inventory, subject to certain reserves.
(2)	Consists of approximately $136.1 million of cash equity contributed by investment funds associated with Apollo V, plus approximately $3.9 million of equity from management participants, less $6.0 million of transaction fees paid to Apollo V and accounted for as a reduction in capital.
(3)	Represents payments made to or for the account of equity and warrant holders.
(4)	Includes underwriting discounts, professional fees, transaction fees and other payments made in connection with the Transactions.

41

CAPITALIZATION

      The following table sets forth our capitalization as of December 31, 2005. The information in this table should be read in conjunction with “Use of Proceeds,” “Unaudited Pro Forma Condensed Combined Financial Information,” “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of the Transactions,” and the consolidated financial statements included elsewhere in this prospectus.

		As of December 31, 2005
		Historical
		(In millions)
Total debt:
	ABL facility(1)	$	191.4
	Old notes	$	275.0
	Other(2)	$	7.1
Total debt		$	473.5
Stockholders’ equity		$	132.0
Total capitalization		$	605.5

(1)

The ABL facility provides for up to $450.0 million of senior secured revolving credit borrowings and letters of credit, subject to a borrowing base determined primarily by the value of our eligible receivables and eligible inventory, subject to certain reserves. Our borrowing base under the ABL facility was approximately $416.8 million on February 28, 2006, of which $206.4 million was drawn and $18.5 million reserved for letters of credit.

(2)

Consists of an Industrial Revenue Bond (IRB) with $5.7 million principal amount outstanding as of December 31, 2005, which is payable on May 1, 2016 in one lump sum payment and $1.4 million in vendor financing and purchase money notes.

42

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

      The following unaudited pro forma condensed combined financial statements have been developed by applying pro forma adjustments to our historical audited consolidated financial statements included elsewhere in this prospectus. The unaudited pro forma condensed combined statements of operations give effect to the Transactions as if they had occurred on January 1, 2005. Each of the unaudited pro forma adjustments and their underlying assumptions are described more fully in the notes to our unaudited pro forma condensed combined financial statements.

      The summary unaudited pro forma condensed combined financial data are for informational purposes only and do not purport to represent what our results of operations or financial position actually would have been if the Transactions had occurred at any date, and such data do not purport to project the results of operations for any future period. A pro forma condensed balance sheet has not been included herein as the Transaction is already reflected in the consolidated financial statements and related notes included elsewhere in this prospectus. Additionally, Flag Holdings and Flag Intermediate each currently have no assets, except their investment in subsidiaries and conduct no operations.

      The merger was accounted for as a purchase, with the Successor Company applying Statement of Financial Accounting Standards No. 141, “Business Combinations” on the merger date. As a result, the merger consideration was allocated to the respective values of the assets acquired and liabilities assumed from the Predecessor Company. As a result of the application of purchase accounting, the Successor Company balances and amounts presented in the consolidated financial statements are not comparable with those of the Predecessor Company.

      The unaudited pro forma combined financial data should be read in conjunction with “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors” and our consolidated financial statements and related notes included elsewhere in this prospectus.

Metals USA, Inc.

Unaudited Pro Forma Condensed

Combined Statement of Operations

For the year ended December 31, 2005

		Predecessor Company			Successor Company
		Period from			Period from May 9, 2005
		January 1, 2005 to			(Date of Inception) to			Combined			Pro Forma			Pro Forma
		November 30, 2005			December 31, 2005			2005			Adjustments			2005
		(In millions)			(In millions)
Net sales		$	1,522.1		$	116.9		$	1,639.0		$	—		$	1,639.0
Costs and expenses:
	Cost of sales (exclusive of operating and delivery, and depreciation and amortization shown below)		1,189.3			92.5			1,281.8			(4.1	)(a)		1,277.7
	Operating and delivery		139.1			12.8			151.9			—			151.9
	Selling, general & administrative		108.5	(g)		9.3			117.8			1.1	(b)		118.9
	Depreciation and amortization		3.1			1.4			4.5			11.7	(c)(d)		16.2
Operating income (loss)			82.1			0.9			83.0			8.7			74.3
	Interest expense		12.0			4.1			16.1			31.8	(b)(e)		47.9
	Other (income) expense		(0.1	)		0			(0.1	)		—			(0.1	)
Income (loss) before taxes			70.2			(3.2	)		67.0			(40.5	)		26.5
	Provision (benefit) for income taxes		26.7			(1.2	)		25.5			(14.9	)(f)		10.6
Net income (loss)			43.5			(2.0	)	$	41.5		$	(25.6	)	$	15.9

43

NOTES TO UNAUDITED PRO FORMA CONDENSED

COMBINED FINANCIAL INFORMATION

(dollars in millions)

(a)	As a result of management’s analysis and evaluation of the replacement cost of inventory at the date of the Merger, a purchase price adjustment of $14.9 was recorded with $4.1 of that amount charged to cost of sales in December 2005. This credit reflects the elimination of this amount from the pro forma results.
(b)	Upon completion of the Merger, Flag Holdings and we entered into a management agreement with Apollo V pursuant to which Apollo V or its affiliates will provide us with management services. Pursuant to such agreement, Apollo V will receive an annual management fee equal to $2.0, payable on March 15 of every year, starting on March 15, 2006. Apollo V elected to waive $0.5 of the annual management fee indefinitely, and reserved the right to revoke this waiver. The management agreement will terminate on December 31, 2012, unless earlier terminated by Apollo V. The payment obligation has been recorded as a current liability, at the present value of minimum future annual payments of $1.5. A discount rate of 6.1% was used in the determination of present value, which approximated our incremental borrowing rate at the inception of the agreement. Deferred management fees of $8.6 million were recorded as a current asset, and are being amortized using the straight-line method over the term of the management agreement. The pro forma adjustments reflect $1.1 of selling, general and administrative expense and $0.3 of interest expense.
(c)	Reflects $4.4 of additional depreciation as a result of the purchase price adjustments of $107.8 recorded for buildings and machinery and equipment. The increase in depreciation expense is calculated using an estimated useful life of 30 years for buildings and 10 years for machinery and equipment.
(d)	We recorded an intangible asset of $22.2 for customer lists using valuation and other studies. Amortization expense was increased by $7.3 over the historical amortization expense.
(e)	Represents an increase in the interest expense as a result of the notes offered hereby, the ABL facility, related issuance costs, and the elimination of interest costs attributable to the existing revolving credit facility as follows:

	Year Ended
	December 31, 2005
Interest on the 111/8 % Senior Secured Notes Due 2015	$	28.0
Amortization of deferred financing costs for the interest on the 111/8 % Senior Secured Notes Due 2015		0.6
Interest on the ABL facility		3.9
Amortization of deferred financing costs for the ABL facility		(1.0	)
Interest on management fee obligation to Apollo V (see note(c))		0.3
	$	31.8

The interest expense on the ABL facility is primarily based on a spread over LIBOR. For purposes of calculating pro forma interest expense, average historical LIBOR rates during the respective periods were used, and the spread above LIBOR was from 1.75% to 3.50%. Each one-quarter percent change in the interest rate would increase pro forma interest expense by $0.5 on an annual basis.

(f)  Reflects an estimated 40% effective tax rate on a pro forma basis. The effective tax rate on a pro forma basis is higher than the effective historical rate because permanent differences represent a higher percentage of income before taxes.

(g)  We incurred certain non-recurring costs related to the Merger that were charged to the Predecessor Company’s selling, general and administrative expense during the period from January 1, 2005 to November 30, 2005. These expenses of $15.8 included $14.6 paid by us at the closing of the Merger to holders of $1,081,270 vested in-the-money options and holders of 45,437 restricted stock grant awards. Additionally, we recorded $0.8 of expense related to severance costs and $0.4 to other costs.

44

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

      On May 18, 2005, Flag Intermediate and its indirect wholly owned subsidiary, Flag Acquisition, entered into an agreement and plan of merger with Metals USA. On November 30, 2005, Flag Acquisition merged with and into Metals USA, with Metals USA being the surviving corporation. Flag Intermediate and Flag Acquisition conducted no operations during the period May 9, 2005 (date of inception) to November 30, 2005. As a result of the merger, Metals USA was delisted from the NASDAQ and withdrew its registration under the Exchange Act.

      After the consummation of the Merger, Flag Intermediate and its wholly owned subsidiary Metals USA (along with its consolidated subsidiaries) are referred to collectively herein as the “Successor Company.” Prior to the consummation of the Merger, Metals USA (along with its consolidated subsidiaries) is referred to as the “Predecessor Company.” We applied Statement of Financial Accounting Standards No. 141, “Business Combinations” on the merger date and, as a result, the merger consideration was allocated to the respective values of the assets acquired and liabilities assumed from the Predecessor Company. As a result of the application of purchase accounting, the Successor Company balances and amounts presented in the consolidated financial statements and footnotes are not comparable with those of the Predecessor Company.

      During 2001, the Predecessor Company filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code, from which it emerged on October 31, 2002. Upon our emergence from bankruptcy, the Predecessor Company adopted “Fresh-Start Reporting” accounting as contained in SOP 90-7. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Predecessor Company Chapter 11 Proceedings and Reorganization.”

      The consolidated financial statements of the Predecessor Company after October 31, 2002 are not comparable to the consolidated financial statements of the Predecessor Company prior to November 1, 2002. The principal differences relate to the exchange of shares of new common stock for pre-petition liabilities subject to compromise, issuance of warrants in exchange for the extinguished old common stock, adjustments to reflect the fresh-start impact on the carrying value of certain non-current assets and elimination of the retained deficit. For a complete discussion of our application of Fresh-Start Reporting, including the impact on historical results of operations, cash flows and financial position, please refer to our consolidated financial statements and related notes included elsewhere in this prospectus.

      The following table sets forth our selected historical consolidated financial data as of the dates and for the periods indicated. The selected historical consolidated financial data as of December 31, 2004 and 2005 and for each of the three years in the period ended December 31, 2005 have been derived from our audited consolidated financial statements and related notes included elsewhere in this prospectus. The selected historical consolidated financial data as of December 31, 2001, 2002 and 2003 and for the two years in the period ended December 31, 2002 presented in this table have been derived from our Predecessor Company’s audited consolidated financial statements not included in this prospectus. The historical financial statements for the periods not presented herein have been reclassified to give effect to discontinued operations identified during 2002. The consolidated results of operations for any period are not necessarily indicative of the results to be expected for any future period. The selected historical consolidated financial data set forth below should be read in conjunction with, and are qualified by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes thereto included elsewhere in this prospectus.

45

																				Successor
		Predecessor Company(1)																		Company
																				Period from
					Period from			Period from									Period from			May 9, 2005
					January 1,			November 1,			Year Ended						January 1,			(Date of
		Year Ended			2002 to			2002 to			December 31,						2005 to			Inception) to
		December 31,			October 31,			December 31,									November 30,			December 31,
		2001			2002(1)			2002			2003			2004			2005			2005
																				(In millions)
		(In millions)
Operation Data:
Net sales		$	1,243.0		$	833.3		$	128.7		$	963.2		$	1,509.8		$	1,522.1		$	116.9
Costs and expenses:
	Cost of sales (exclusive of operating and delivery, and depreciation and amortization shown below)		953.3			639.0			98.7			731.6			1,080.1			1,189.3			92.5
	Operating and delivery		156.8			110.1			18.3			127.7			144.4			139.1			12.8
	Selling, general and administrative		118.1			79.5			12.6			87.0			109.6			108.5			9.3
	Depreciation and amortization(2)		21.3			7.5			—			0.5			2.0			3.1			1.4
	Integration credits(3)		(2.1	)		(3.2	)		—			—			—			—			—
	Asset impairment(4)		386.1			3.0			—			—			—			—			—
Operating income (loss)			(390.5	)		(2.6	)		(0.9	)		16.4			173.7			82.1			0.9
	Interest expense		49.6			15.8			1.3			5.7			8.4			12.0			4.1
	Other (income) expense		1.8			(1.1	)		0.1			(2.0	)		(2.5	)		(0.1	)		—
	Fresh-start adjustments		—			109.7			—			—			—			—			—
	Gain on reorganization		—			(190.6	)		—			—			—			—			—
	Reorganization expenses		19.4			28.3			—			—			—			—			—
Income (loss) before taxes and discontinued operations			(461.3	)		35.3			(2.3	)		12.7			167.8			70.2			(3.2	)
	Provision (benefit) for income taxes		(52.9	)		(15.4	)		—			5.1			63.3			26.7			(1.2	)
Net income (loss) before discontinued operations			(408.4	)		50.7			(2.3	)		7.6			104.5			43.5			(2.0	)
	Income (loss) from discontinued operations, net of taxes		(0.7	)		0.6			(1.0	)		(0.1	)		—			—			—
Net income (loss)		$	(409.1	)	$	51.3		$	(3.3	)	$	7.5		$	104.5		$	43.5		$	(2.0	)

	Predecessor									Successor
	Company(1)									Company
	As of
	December 31,									As of
										December 31,
	2001			2002		2003		2004		2005
										(In millions)
	(In millions)
Balance Sheet Data:
Cash	$	72.4		$	6.3	$	11.4	$	12.6	$	11.3
Working capital		183.2			318.2		303.4		565.0		453.3
Total assets		690.1			378.6		407.2		710.0		795.3
Total debt		501.9			128.7		118.7		270.6		473.5
Total liabilities		725.2			189.6		206.6		381.8		663.3
Stockholders’ equity		(35.1	)		189.0		200.6		328.2		132.0
Dividends declared		1.1			—		—		—		—

46

																			Successor
	Predecessor Company(1)																		Company
				Period															Period from
				from			Period from									Period from			May 9, 2005
				January 1,			November 1,			Year Ended						January 1,			(Date of
	Year Ended			2002 to			2002 to			December 31,						2005 through			Inception) to
	December 31,			October 31,			December 31,									November 30,			December 31,
	2001			2002(1)			2002			2003			2004			2005			2005
																			(Dollars in
	(Dollars in millions)																		millions)
Cash Flow Data:
Cash flows provided by (used in) operating activities	$	180.5		$	8.4		$	14.5		$	26.9		$	(128.6	)	$	170.1		$	7.3
Cash flows provided by (used in) investing activities		(109.3	)		80.2			6.4			(11.8	)		(16.0	)		(15.8	)		(434.5	)
Cash flows provided by (used in) financing activities		(2.6	)		(141.9	)		(33.7	)		(10.0	)		145.8			(120.7	)		438.5
Capital expenditures		16.3			3.0			0.5			17.5			17.4			15.9			4.4
Other Financial Data:
Deficiency of earnings to fixed charges	$	461.3			—		$	2.3			—			—			—			3.2
Ratio of earnings to fixed charges(5)		—			2.2	x		—			2.2	x		13.3	x		5.1	x		0.3x

(1)	We applied “Fresh-Start Reporting” to our consolidated balance sheet as of October 31, 2002 in accordance with SOP 90-7. Under “Fresh-Start Reporting,” a new reporting entity is considered to be created and the recorded amounts of assets and liabilities are adjusted to reflect their estimated fair values at the date “Fresh-Start Reporting” is applied. On October 31, 2002, we emerged from bankruptcy. As a result of the application of “Fresh-Start Reporting,” our financial information of any date or for periods after October 31, 2002 is not comparable to our historical financial information before November 1, 2002. As a result of the emergence from bankruptcy and for the purpose of presentation, activities subsequent to October 31, 2002 to November 30, 2005 relate to our Predecessor Company (after application of Fresh Start Reporting) and activities prior to November 1, 2002 relate to our Predecessor Company (prior to Fresh Start Reporting).
(2)	Excludes depreciation expense reflected in cost of sales for the Building Products Group.
(3)	Reflects unexpended amounts associated with integration accruals made in 1999 and 2001.
(4)	Of the total impairment charges, $288.7 million related to goodwill, $90.3 million related to property and equipment and a $10.1 million integration charge related to future reserves for personnel and facility costs associated with the disposition of certain properties.
(5)	For the purposes of calculating the ratio of earnings to fixed charges, earnings represent income (loss) before income taxes and discontinued operations plus fixed charges. Fixed charges consist of financing costs and the portion of operational rental expense which management believes is representative of interest within rent expense.

47

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

      The following discussion and analysis of our results of operations and financial condition covers periods prior to the consummation of the Transactions. Accordingly, except where indicated, the discussion and analysis of historical periods does not reflect the significant impact that the Transactions will have on us, including significantly increased leverage and liquidity requirements. You should read the following discussion of our results of operations and financial condition with the “Unaudited Pro Forma Condensed Combined Financial Information,” “Selected Historical Consolidated Financial Data” and the audited historical consolidated financial statements and related notes included elsewhere in this prospectus. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this prospectus. Actual results may differ materially from those contained in any forward-looking statements. In addition, certain of the descriptions of our operating and financial measures may not be directly comparable to similar classifications used by other companies.

Overview

      We are a leading provider of value-added processed steel, aluminum and specialty metals and manufactured metal components. Approximately 88% of our net sales is derived from our metal service center and distribution activities that are segmented into two groups, Plates and Shapes and Flat Rolled. The remaining 12% of our net sales is derived from our Building Products Group that manufactures and distributes products primarily related to the residential remodeling industry. We purchase metal from primary producers that generally focus on large volume sales of unprocessed metals in standard configurations and sizes. In most cases, we perform the customized, value-added processing services required to meet the specifications provided by end-use customers. Our Plates and Shapes Group and Flat Rolled Group customers are in the machining, furniture, transportation equipment, power and process equipment, industrial/commercial construction/fabrication, consumer durables and electrical equipment businesses, as well as machinery and equipment manufacturers. Our Building Products Group customers are distributors and contractors engaged in residential building projects.

      Net sales. We derive the net sales of our Plates and Shapes and Flat Rolled Groups from the processing and sale of metal products to end-users including metal fabrication companies, general contractors and OEMs. Pricing is generally based upon the underlying metal cost as well as a margin associated with customized value-added services as specified by the customer. The net sales of our Building Products Group are derived from the sales of finished goods to local distributors and general contractors who are generally engaged in the residential remodeling industry.

      Cost of sales. Our Plates and Shapes and Flat Rolled Groups follow the normal industry practice which classifies, within cost of sales, the underlying commodity cost of metal purchased in mill form, the cost of inbound freight charges together with third-party processing cost, if any. Generally, the cost of metal approximates 75% of net sales for the Plates and Shapes and Flat Rolled Groups. Cost of sales with respect to our Building Products Group, includes the cost of raw materials, manufacturing labor and overhead costs, together with depreciation and amortization expense associated with property, buildings and equipment used in the manufacturing process.

      Operating and delivery expense. Our operating and delivery expense reflects the cost incurred by our Plates and Shapes and Flat Rolled Groups for labor and facility costs associated with the value-added metal processing services that we provide. With respect to our Building Products Group, operating costs are associated with the labor and facility costs attributable to the distribution and warehousing of our finished goods at our service center facilities. Delivery expense reflects labor, material handling and other third party costs incurred with the delivery of product to customers.

      Selling, general and administrative expenses. Selling, general and administrative expenses include sales and marketing expenses, executive officers’ compensation, office and administrative salaries,

48

insurance, accounting, legal, computer systems, and professional services and costs not directly associated with the processing, manufacturing, operating or delivery costs of our products.

      Depreciation and amortization. Depreciation and amortization expense represents the costs associated with property, buildings and equipment used throughout the company except for depreciation and amortization expense associated with the manufacturing assets employed by our Building Products Group, which is included within cost of sales.

      Inventories. Rising steel prices result in inventory holding gains, as demonstrated in 2004, and declining prices result in inventory holding losses. Our inventories are stated at the lower of cost or market and accounted for using a variety of methods including specific identification, average cost and the first-in first-out method of accounting. However, we are unable to quantify with precision these inventory holding gains or losses due to the complexity of the purchases and sales at our 75 operating locations, which purchase and sell thousands of different products. Investors are cautioned that our historical inventory gain and loss experience is not necessarily a reliable indicator of our future inventory gains and losses.

      The Merger with Flag Acquisition. On November 30, 2005, Flag Acquisition, a wholly owned subsidiary of Flag Intermediate, merged with and into Metals USA, with Metals USA being the surviving corporation. The Merger was consummated pursuant to a merger agreement by and among Metals USA, Flag Acquisition and Flag Intermediate. As a result of and immediately following the merger, we became and are a wholly owned subsidiary of Flag Intermediate. Flag Intermediate has no assets other than its investment in us, conducts no operations and is a guarantor of both our ABL facility and our notes. Immediately prior to the effective time of the merger, all outstanding shares of common stock were cancelled in exchange for a cash payment of $22.00 per share of common stock. As a result of the merger, all of issued and outstanding capital stock of Metals USA is held indirectly by Flag Holdings through Flag Intermediate, its wholly-owned subsidiary. Investment funds associated with Apollo V own approximately 97% of the capital stock of Flag Holdings (or approximately 92% on a fully-diluted basis). The remainder of the capital stock of Flag Holdings is held by members of our management.

      Predecessor Company Chapter 11 Proceedings and Reorganization. In November 2001, we and all of our subsidiaries sought protection under the U.S. bankruptcy laws. We emerged from bankruptcy on October 31, 2002 as more fully described under “— Predecessor Company Chapter 11 Proceedings and Reorganization.” Our implementation of “Fresh Start Reporting” pursuant to SOP 90-7 resulted in material changes to our consolidated financial statements. As a result, our results of operations after October 31, 2002, the date that we emerged from bankruptcy, are those of a new reporting entity and are not comparable to the results of operations of our Predecessor Company for periods prior to October 31, 2002, described in this management’s discussion and analysis and reported in our consolidated financial statements included elsewhere in this prospectus.

      Under the reorganization plan approved by the bankruptcy court, our Predecessor Company divested certain assets resulting in proceeds of approximately $90.1 million during 2002, revalued its remaining assets, canceled old common stock, issued new common stock and warrants, and entered into a new revolving credit facility. Our Predecessor Company’s equity ownership, board of directors and a portion of its senior management was replaced in connection with our reorganization.

Recent Events/ Industry Trends

      Since 2000, there has been significant consolidation among the major domestic metals producers. The top three steel producers now control over 60% of the domestic flat rolled steel market, up significantly since 2000, which has created a metals pricing environment characterized by a more disciplined approach to production and pricing. The domestic suppliers have largely exited their non-core metals service and distribution functions to focus on reducing production costs and driving efficiencies from their core metals production activities. Increasingly, metals service centers like us have continued to capture a greater proportion of these key functions once served by the major metals producers.

49

      In 2004, increased demand for steel in China, shortages of raw materials such as coking coal, iron ore and oil, increased demand for scrap, the weak U.S. dollar and increased freight rates all contributed to significant increases in prices for domestic metal of all types, particularly steel. Further, improved economic conditions in Europe, Asia and North America contributed to a higher level of demand for steel. During most of 2004, supplies of many products were constrained, which also led to price increases.

      In early 2005, the three iron ore suppliers controlling about 80% of the world market announced a 71.5% price increase to the integrated steel mills in Europe and Asia. This iron ore price increase was unprecedented, and resulted in cost increases for the European and other large integrated steel mills throughout the world. We anticipate that both foreign and domestic mills will have to continue the disciplined practice they implemented in 2004 of passing along such added costs, in the form of both price increases and surcharges. Although the domestic steel producers have demonstrated restraint in curbing manufacturing capacity, earlier in 2005, the decline in automotive build rate in the United States increased the amount of steel available to the domestic manufacturing industries. We believe this excess of supply adversely affected the market price of flat rolled steel; however, this supply imbalance appears to have been resolved. As a result, the mills began to raise their prices in the domestic market starting in September and continuing into the fourth quarter. The timing of the effect that further price increases will have on the domestic market is difficult to predict, and any number of political or general economic factors could cause metal prices to decline.

Critical Accounting Policies

      We have identified the following critical accounting policies based upon the significance of the policy to and the potential impact of estimates and subjective assessments on our overall financial statement presentation. During the past three years we have not changed our critical accounting policies. We have concluded our critical accounting policies are as follows:

      Accounts Receivable. We recognize revenue as product is shipped (risk of loss for our products passes at time of shipment), net of provisions for estimated returns. Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of trade accounts and notes receivable. Collections on our accounts receivable are made through several lockboxes maintained by our lenders. The ABL facility requires a lockbox arrangement, which in the absence of default, is controlled by the Company. Credit risk associated with concentration of cash deposits is low as we have the right of offset with our lenders for the substantial portion of our cash balances. Concentrations of credit risk with respect to trade accounts receivable are within several industries. Generally, credit is extended once appropriate credit history and references have been obtained. We perform ongoing credit evaluations of customers and set credit limits based upon reviews of customers’ current credit information and payment history. We monitor customer payments and maintain a provision for estimated credit losses based on historical experience and specific customer collection issues that we have identified. Provisions to the allowance for doubtful accounts are made monthly and adjustments are made periodically based upon our expected ability to collect all such accounts. Generally we do not require collateral for the extension of credit.

      Each quarter we consider all available information when assessing the adequacy of the provision for allowances, claims and doubtful accounts. Adjustments made with respect to the allowance for doubtful accounts often relate to improved information not previously available. Uncertainties with respect to the allowance for doubtful accounts are inherent in the preparation of financial statements. The rate of future credit losses may not be similar to past experience.

      Inventories. Inventories are stated at the lower of cost or market. Our inventories are accounted for using a variety of methods including specific identification, average cost and the first-in first-out, or FIFO, method of accounting. We regularly review inventory on hand and record provisions for damaged and slow-moving inventory based on historical and current sales trends. Changes in product demand and our customer base may affect the value of inventory on hand which may require higher provisions for damaged and slow-moving inventory.

50

      Adjustments made with respect to the inventory valuation allowance often relate to improved information not previously available. Uncertainties with respect to the inventory valuation allowance are inherent in the preparation of financial statements. The rate of future losses associated with damaged or slow moving inventory may not be similar to past experience.

Year-End Consolidated Results

      The results of operations data for 2005 includes the Predecessor Company results for the period January 1, 2005 through November 30, 2005 and the Successor Company results for the period May 9, 2005 (date of inception) through December 31, 2005. See the supplementary table presented after the Results of Operations discussion below for the 2005 Successor Company and Predecessor Company results.

		Fiscal Years Ended December 31,
		2005			%			2004			%			2003			%
		(In millions, except percentages)
Net sales		$	1,639.0			100.0	%	$	1,509.8			100.0	%	$	963.2			100.0	%
Cost of sales			1,281.8			78.2	%		1,080.1			71.5	%		731.6			76.0	%
Operating and delivery			151.9			9.3	%		144.4			9.6	%		127.7			13.3	%
Selling, general and administrative			117.8			7.2	%		109.6			7.3	%		87.0			9.0	%
Depreciation and amortization			4.5			0.3	%		2.0			0.1	%		0.5			0.1	%
	Operating income (loss)		83.0			5.1	%		173.7			11.5	%		16.4			1.7	%
Interest expense			16.1			1.0	%		8.4			0.6	%		5.7			0.6	%
Other (income) expense, net			(0.1	)		—			(2.5	)		(0.2	)%		(2.0	)		(0.2	)%
	Income before income taxes and discontinued operations	$	67.0			4.1	%	$	167.8			11.1	%	$	12.7			1.3	%

Results of Operations — Year Ended December 31, 2005 Compared to 2004

      Net sales. Net sales increased $129.2 million, or 8.6%, from $1,509.8 million for the twelve months ended December 31, 2004 to $1,639.0 million for the twelve months ended December 31, 2005. The increase in sales was primarily attributable to a 13.6% increase in average realized price per ton partially offset by a 4.2% decrease in volumes for our Flat Rolled and Plates and Shapes Product Groups. Net sales increased for our Building Products Group by $12.1 million.

      Cost of sales. Cost of sales increased $201.7 million, or 18.7%, from $1,080.1 million for the twelve months ended December 31, 2004, to $1,281.8 million for the twelve months December 31, 2005. The increase in cost of sales was primarily attributable to a 25.6% increase in the average cost per ton partially offset by a 4.2% decrease in volumes for our Flat Rolled and Plates and Shapes Product Groups. Cost of sales as a percentage of net sales increased from 71.5% in 2004 to 78.2% in the same period in 2005. This percentage increase was primarily due to the combination of higher average costs per ton and to a lesser extent a decrease in volumes for our Flat Rolled and Plates and Shapes Product Groups.

      Operating and delivery. Operating and delivery expenses increased $7.5 million, or 5.2%, from $144.4 million for the twelve months ended December 31, 2004 to $151.9 million for the twelve months ended December 31, 2005. This increase was primarily due to increased labor and delivery costs. As a percentage of net sales, operating and delivery expenses decreased from 9.6% for the twelve months ended December 31, 2004 to 9.3% for the twelve months ended December 31, 2005. This percentage decrease was primarily due to higher average realized sales prices being spread over higher net sales in our Flat Rolled and Plates and Shapes Product Groups.

      Selling, general and administrative. Selling, general and administrative expenses increased $8.2 million, or 7.5%, from $109.6 million for the twelve months ended December 31, 2004 to $117.8 million for the twelve months ended December 31, 2005. This was principally due to the acceleration of payment of

51

stock based compensation as a result of the Merger. As a percentage of net sales, selling, general and administrative expenses decreased from 7.3% for the twelve months ended December 31, 2004 to 7.2% for the twelve months ended December 31, 2005. This percentage decrease was primarily due to higher average realized sales prices being spread over higher net sales in our Flat Rolled and Plates and Shapes Product Groups.

      Depreciation and amortization. Depreciation and amortization increased $2.5, million, or 125%, from $2.0 million for the twelve months ended December 31, 2004 to $4.5 million for the twelve months ended December 31, 2005. This increase was primarily due to capital investments in facilities and equipment made during the prior twelve months as well as a revaluation of our assets to a fair value basis as a result of the Merger.

      Operating income. Operating income decreased $90.7 million, or 52.2%, from $173.7 million for the twelve months ended December 31, 2004 to $83.0 million for the twelve months ended December 31, 2005. This decrease was due to the increased cost of raw materials and to a lesser extent the costs of the Merger.

      Interest expense. Interest expense increased $7.7 million, or 91.7%, from $8.4 million for the twelve months ended December 31, 2004 to $16.1 million for the twelve months ended December 31, 2005. This increase was primarily due to the increased debt we incurred as a result of the Merger, and to a lesser extent higher interest rates in 2005.

Results of Operations — Year Ended December 31, 2004 Compared to 2003

      Net sales. Net sales increased $546.6 million, or 56.7%, from $963.2 million in 2003 to $1,509.8 million in 2004. The increase in sales was primarily attributable to a 42.6% increase in average realized price per ton and a 16.6% increase in volumes for our Flat Rolled and Plates and Shapes Groups. Net sales increased for our Building Products Group by $17.8 million.

      Cost of sales. Cost of sales increased $348.5 million, or 47.6%, from $731.6 million in 2003 to $1,080.1 million in 2004. The increase in cost of sales was primarily attributable to a 31.6% increase in the average cost per ton and a 16.6% increase in volumes for our Flat Rolled and Plates and Shapes Groups. Cost of sales as a percentage of net sales decreased from 76.0% in 2003 to 71.5% in 2004. This percentage decrease was due to higher average realized sales prices.

      Operating and delivery. Operating and delivery expenses increased $16.7 million, or 13.1%, from $127.7 million in 2003 to $144.4 million in 2004. This increase is primarily due to the increase in shipments. As a percentage of net sales, operating and delivery expenses decreased from 13.3% in 2003 to 9.6% in 2004. This percentage decrease was primarily due to higher average realized sales prices together with fixed costs being spread over a higher volume of net sales.

      Selling, general and administrative. Selling, general and administrative expenses increased $22.6 million, or 26.0%, from $87.0 million in 2003 to $109.6 million in 2004. This increase was principally due to higher incentive compensation resulting from increased sales and gross margins, along with $5.0 million of costs associated with the elimination of one layer of management and the closing of eleven redundant or unprofitable locations in our Building Products Group. As a percentage of net sales, selling, general and administrative expenses decreased from 9.0% in 2003 to 7.3% in 2004. This percentage decrease was primarily due to higher average realized sales prices together with fixed costs being spread over a higher volume of net sales.

      Depreciation and amortization. Depreciation and amortization increased $1.5 million, or 300.0%, from $0.5 million in 2003 to $2.0 million in 2004, due to capital investment in facilities and equipment made during the prior twelve months.

      Operating income. Operating income increased by $157.3 million, or 959.1%, from $16.4 million in 2003 to $173.7 million in 2004. This increase is due to the improved margins and increased shipments in our Flat Rolled and Plates and Shapes Groups.

52

      Interest expense. Interest expense increased $2.7 million, or 47.4%, from $5.7 million in 2003 to $8.4 million in 2004, primarily as a result of increased borrowings, and to a lesser extent higher interest rates, on our revolving credit facility to support the increased working capital requirements in 2004.

      Other (income) expense, net. Other income increased $0.5 million, or 25.0%, from $2.0 million in 2003 to $2.5 million in 2004. These credits relate to settlements or adjustments attributable to our Predecessor Company claims and accruals.

Results of Operations — 2005 Successor Company and Predecessor Company Results-Combined

      The following table presents the combined results for the full-year 2005, the results for the Successor Company from May 9, 2005 (date of inception) to December 31, 2005, and the results for the Predecessor Company from January 1, 2005 to November 30, 2005.

		Predecessor Company			Successor Company			Combined
					Period from May 9,
		Period from			2005 (Date of
		January 1, 2005 to			Inception) to			Year Ended
		November 30, 2005			December 31, 2005			December 31, 2005
		(in millions)
Net sales		$	1,522.1		$	116.9		$	1,639.0
Cost of sales			1,189.3			92.5			1,281.8
Operating and delivery			139.1			12.8			151.9
Selling, general and administrative			108.5			9.3			117.8
Depreciation and amortization			3.1			1.4			4.5
	Operating income (loss)		82.1			0.9			83.0
Interest expense			12.0			4.1			16.1
Other (income) expense, net			(0.1	)		—			(0.1	)
	Income (loss) before income taxes and discontinued operations	$	70.2		$	(3.2	)	$	67.0

Results of Operations by Segment

      The results of operations by segment data for 2005 includes the Predecessor Company results for the period January 1, 2005 through November 30, 2005 combined with the Successor Company results for the period May 9, 2005 (date of inception) through December 31, 2005. See the supplementary table presented after the Results of Operations by Segment discussion below for the 2005 Successor Company and Predecessor Company results.

			Fiscal Years Ended December 31,
									Operating					Operating
									Costs and					Income						Capital
			Net Sales			%			Expenses		%			(Loss)			%			Expenditures		Shipments(1)
			(In millions, except percentages)
2005:
	Plates and Shapes		$	694.7			42.4	%	$	626.3		40.3	%	$	68.4			82.4	%	$	13.7		740
	Flat Rolled			770.9			47.0	%		735.4		47.3	%		35.5			42.8	%		2.5		723
	Building Products			195.1			11.9	%		178.3		11.4	%		16.8			20.2	%		3.2		—
	Corporate and other			(21.7	)		(1.3)	%		16.0		1.0	%		(37.7	)		(45.4)	%		0.9		(24	)
		Total	$	1,639.0			100.0	%	$	1,556.0		100.0	%	$	83.0			100.0	%	$	20.3		1,439

53

			Fiscal Years Ended December 31,
									Operating						Operating
									Costs and						Income						Capital
			Net Sales			%			Expenses			%			(Loss)			%			Expenditures		Shipments(1)
			(In millions, except percentages)
2004:
	Plates and Shapes		$	621.0			41.1	%	$	517.8			38.8	%	$	103.2			59.4	%	$	10.3		751
	Flat Rolled			723.2			47.9	%		641.4			48.0	%		81.8			47.0	%		2.3		773
	Building Products			183.0			12.1	%		175.1			13.1	%		7.9			4.5	%		2.2		—
	Corporate and other			(17.4	)		(1.1)	%		1.8			0.1	%		(19.2	)		(10.9)	%		2.6		(22	)
		Total	$	1,509.8			100.0	%	$	1,336.1			100.0	%	$	173.7			100.0	%	$	17.4		1,502
2003:
	Plates and Shapes		$	354.1			36.8	%	$	342.5			36.2	%	$	11.6			70.7	%	$	11.0		663
	Flat Rolled			463.6			48.1	%		455.9			48.2	%		7.7			47.0	%		3.1		658
	Building Products			165.2			17.1	%		152.8			16.1	%		12.4			75.6	%		2.4		—
	Corporate and other			(19.7	)		(2.0)	%		(4.4	)		(0.5)	%		(15.3	)		(93.3)	%		1.0		(33	)
		Total	$	963.2			100.0	%	$	946.8			100.0	%	$	16.4			100.0	%	$	17.5		1,288

(1)  Shipments are expressed in thousands of tons and are not an appropriate measure of volume for the Building Products Group.

Segment Results — Year Ended December 31, 2005 Compared to December 31, 2004

      Plates and Shapes. Net sales increased $73.7 million, or 11.9%, from $621.0 million in 2004 to $694.7 million in 2005. This increase is primarily due to a 13.5% increase in the average realized price per ton partially offset by a 1.5% decrease in volumes. The increase in average realized sales price was primarily due to an industry-wide improvement in supply and demand characteristics for our products.

      Operating costs and expenses increased $108.5 million, or 21.0%, from $517.8 million in 2004 to $626.3 million in 2005. This increase was attributable to the higher costs of raw materials. Operating costs and expenses as a percentage of net sales increased from 83.4% in 2004 to 90.2% in 2005. This percentage increase was primarily due to higher average costs per ton together with fixed costs being spread over a lower volume of net sales.

      Operating income decreased by $34.8 million, or 33.7%, from $103.2 million in 2004 to $68.4 million in 2005. This decrease is primarily attributable to the increase in the cost of raw materials. Operating income as a percentage of net sales decreased from 16.6% in 2004 to 9.8% in 2005.

      Flat Rolled. Net sales increased $47.7 million, or 6.6%, from $723.2 million in 2004 to $770.9 million in 2005. This increase is primarily due to a 14.0% increase in the average realized price per ton partially offset by a 6.5% decrease in volumes. The increase in average realized sales prices was primarily due to an industry-wide improvement in supply and demand characteristics for our products.

      Operating costs and expenses increased $94.0 million, or 14.7%, from $641.4 million in 2004 to $735.4 million in 2005. This increase was attributable to the higher cost of raw materials partially offset by decreased volumes. Operating costs and expenses as a percentage of net sales increased from 88.7% in 2004 to 95.4% in 2005. This percentage increase was primarily due to higher average costs per ton together with fixed costs being spread over a lower volume of net sales.

      Operating income decreased by $46.3 million, or 56.6%, from $81.8 million in 2004 to $35.5 million in 2005. This decrease is primarily attributable to the increase in the cost of raw materials. Operating income as a percentage of net sales increased from 11.3% in 2004 to 4.6% in 2005.

54

      Building Products. Net sales increased $12.1 million, or 6.6%, from $183.0 million in 2004 to $195.1 million in 2005. The increase in net sales was principally due to price increases and to a lesser extent increased demand for these products.

      Operating costs and expenses increased $3.2 million, or 1.8%, from $175.1 million in 2004 to $178.3 million in 2005, primarily due to higher sales. Operating costs and expenses as a percentage of net sales decreased from 95.7% in 2004 to 91.4% in 2005.

      Operating income increased by $8.9 million, or 112.7%, from $7.9 million in 2004 to $16.8 million in 2005. This increase was primarily due to price increases. Operating income as a percentage of net sales increased from 4.3% in 2004 to 8.6% in 2005.

      Corporate and other. This category reflects certain administrative costs and expenses that we have not allocated to our industry segments. These costs include compensation for executive officers, insurance, professional fees for audit, tax and legal services and data processing expenses. The negative net sales amount represents the elimination of inter-company sales. The operating loss increased $18.5 million, or 96.4%, from $19.2 million in 2004 to $37.7 million in 2005. This increase is primarily attributable to costs related with the completion of the Merger.

Segment Results — Year Ended December 31, 2004 Compared to December 31, 2003

      Plates and Shapes. Net sales increased $266.9 million, or 75.4%, from $354.1 million in 2003 to $621.0 million in 2004. This increase is primarily due to a 54.7% increase in the average realized sale price per ton and a 13.3% increase in volumes. The increase in average realized sales prices was primarily due to the industry-wide raw material cost increases from producing mills and a higher level of demand from the improved U.S. economy.

      Operating costs and expenses increased $175.3 million, or 51.2%, from $342.5 million in 2003 to $517.8 million in 2004. This increase was attributable to the higher costs of raw materials and to a lesser extent the increased volumes. Operating costs and expenses as a percentage of net sales decreased from 96.7% in 2003 to 83.4% in 2004. This percentage decrease was primarily due to higher average realized sales prices together with fixed costs being spread over a higher volume of net sales.

      Operating income increased by $91.6 million, from $11.6 million in 2003 to $103.2 million in 2004. This increase is primarily attributable to increased volumes and sales prices that increased faster than our material costs in 2004. Operating income as a percentage of net sales increased from 3.3% in 2003 to 16.6% in 2004.

      Flat Rolled. Net sales increased $259.6 million, or 56.0%, from $463.6 million in 2003 to $723.2 million in 2004. This increase is primarily due to a 32.7% increase in the average sales price per ton and a 17.5% increase in volumes. The increase in average realized sales prices was primarily due to the industry-wide raw material cost increases from producing mills and a higher level of demand from the improved U.S. economy.

      Operating costs and expenses increased $185.5 million, or 40.7%, from $455.9 million in 2003 to $641.4 million in 2004. This increase was attributable to the higher cost of raw materials and to a lesser extent from increased volumes. Operating costs and expenses as a percentage of net sales decreased from 98.3% in 2003 to 88.7% in 2004. This percentage decrease was primarily due to higher average realized sales prices together with fixed costs being spread over a higher volume of net sales.

      Operating income increased by $74.1 million, from $7.7 million in 2003 to $81.8 million in 2004. This increase is primarily attributable to increased volumes and sales prices that increased faster than our material costs in 2004. Operating income as a percentage of net sales increased from 1.7% in 2003 to 11.3% in 2004.

      Building Products. Net sales increased $17.8 million, or 10.8%, from $165.2 million in 2003 to $183.0 million in 2004. The increase in net sales was principally due to increased demand for these products, and to a lesser extent price increases.

55

      Operating costs and expenses increased $22.3 million, or 14.6%, from $152.8 million in 2003 to $175.1 million in 2004, primarily due to higher sales volume and $5.0 million of costs associated with the elimination of one layer of management and the closing of eleven redundant or unprofitable locations. To a lesser extent, increased cost of raw materials and product realignment initiatives taken by new division management also contributed to the increase. Operating costs and expenses as a percentage of net sales increased from 92.5% in 2003 to 95.7% in 2004.

      Operating income decreased by $4.5 million, or 36.3%, from $12.4 million in 2003 to $7.9 million in 2004. This decrease is due to primarily to $5.0 million of costs associated with the elimination of one layer of management and the closing of eleven redundant or unprofitable locations. Operating income as a percentage of net sales decreased from 7.5% in 2003 to 4.3% in 2004.

      Corporate and other. This category reflects certain administrative costs and expenses that we have not allocated to our industry segments. These costs include compensation for executive officers, insurance, professional fees for audit, tax and legal services and data processing expenses. The negative net sales amount represents the elimination of inter-company sales. The operating loss increased $3.9 million, or 25.5%, from $15.3 million in 2003 to $19.2 million in 2004. This increase is primarily attributable to increased incentive compensation costs and professional fees associated with our Sarbanes-Oxley compliance initiatives, offset by lower costs for workers compensation insurance.

Results of Operations by Segment — 2005 Successor Company and Predecessor Company Results — Combined

      The following table presents the full-year 2005 combined results (Predecessor Company and Successor Company) by segment, the results for the Successor Company from May 9, 2005 (date of inception) to December 31, 2005, and the results for the Predecessor Company from January 1, 2005 to November 30, 2005.

									Operating					Operating
									Costs and					Income						Capital
			Net Sales			%			Expenses		%			(Loss)			%			Expenditures		Shipments(1)
			(In millions, except percentages)
Combined 2005:
	Plates and Shapes		$	694.7			42.4	%	$	626.3		40.3	%	$	68.4			82.4	%	$	13.7		740
	Flat Rolled			770.9			47.0	%		735.4		47.3	%		35.5			42.8	%		2.5		723
	Building Products			195.1			11.9	%		178.3		11.4	%		16.8			20.2	%		3.2		—
	Corporate and other			(21.7	)		(1.3)	%		16.0		1.0	%		(37.7	)		(45.4)	%		0.9		(24	)
		Total	$	1,639.0			100.0	%	$	1,556.0		100.0	%	$	83.0			100.0	%	$	20.3		1,439
Successor Company:
	Plates and Shapes		$	54.5			46.6	%	$	50.5		43.5	%	$	4.0			444.4	%	$	4.1		57
	Flat Rolled			51.0			43.6	%		50.4		43.4	%		0.6			66.7	%		0.2		52
	Building Products			13.2			11.3	%		13.9		12.0	%		(0.7	)		(77.8)	%		0.1		—
	Corporate and other			(1.8	)		(1.5)	%		1.2		1.1	%		(3.0	)		(333.3)	%		—		(2	)
		Total	$	116.9			100.0	%	$	116.0		100.0	%	$	0.9			100.0	%	$	4.4		107
Predecessor Company:
	Plates and Shapes		$	640.2			42.1	%	$	575.8		40.0	%	$	64.4			78.4	%	$	9.6		683
	Flat Rolled			719.9			47.3	%		685.0		47.6	%		34.9			42.5	%		2.3		671
	Building Products			181.9			12.0	%		164.4		11.4	%		17.5			21.3	%		3.1
	Corporate and other			(19.9	)		(1.4)	%		14.8		1.0	%		(34.7	)		(42.2)	%		0.9		(22	)
		Total	$	1,522.1			100.0	%	$	1,440.0		100.0	%	$	82.1			100.0	%	$	15.9		1,332

56

(1)  Shipments are expressed in thousands of tons and are not an appropriate measure of volume for the Building Products Group.

Liquidity and Capital Resources

      Our primary sources of liquidity are borrowings under our asset based revolving Credit facility (“ABL”) and our cash flows from operations.

Operating and Investing Activities

      Although we do not produce any metal, our financial performance is affected by changes in metal prices. When metal prices rise, the prices at which we are able to sell our products generally increase over their historical costs; accordingly, our operating income and our working capital (which consists primarily of accounts receivable and inventory) tend to increase in a rising price environment. Conversely, when metal prices fall, our operating income and working capital tend to decrease. From January through August of 2005 prices were in a general state of decline. As a consequence, our working capital (current assets less current liabilities) decreased from $565.0 million at December 31, 2004 to $453.3 million at December 31, 2005 primarily resulting from a $112.2 million decrease in inventory and a $0.6 million decrease in accounts receivable.

      Changes in metal prices also affect our liquidity because of the time difference between our payment for our raw materials and our collection of cash from our customers. In a rising price environment, we sell our products and typically collect our accounts receivable within 45 days after the sale; however, we tend to pay for replacement materials (which are more expensive when metal prices are rising) over a much shorter period, in part to benefit from early-payment discounts. As a result, when metal prices are rising, we tend to draw more on our ABL facility to cover the cash flow cycle from material purchase to cash collection. This cash requirement for inventories is higher in periods when we are increasing inventory quantities as we did at the end of 2004. When metal prices fall, we can replace our inventory at lower cost and, thus, generally do not need to access our ABL facility as much to cover the cash flow cycle. We believe our cash flow from operations, supplemented with the cash available under our ABL facility will provide sufficient liquidity to meet the challenges and obligations we face during the current metal price environment.

      The year ended December 31, 2005 includes the combined results for the Successor Company from May 9, 2005 (date of inception) to December 31, 2005, and the Predecessor Company from January 1, 2005 to November 30, 2005.

      During the year ended December 31, 2005, net cash by operating activities was $177.4 million. We had operating income of $83.0 million in 2005, and $124.8 million of cash was provided by the reduction of inventory and collection of accounts receivable. During the year ended December 31, 2004, net cash used in operating activities was $128.6 million which consisted of operating income of $173.7 million in 2004 offset by $275.4 million of cash used to fund inventory and accounts receivable requirements in concert with rising steel prices during the year.

      Net cash used by investing activities for the year ended December 31, 2005 was $450.3 million and consisted of Flag Intermediate’s acquisition Metals pursuant to the Merger for $430.1 million and the purchase of assets of $20.3 million, which was partially offset by the sales of assets of $0.1 million. The most significant capital investments during the year included an acquisition of new laser cutting equipment at our Plates and Shapes facility in the New Orleans area, the expansion of our Plates and Shapes facility in Greensboro, North Carolina, and the purchase of the building housing our Plates and Shapes business in Newark, New Jersey. Net cash used by investing activities for the year ended December 31, 2004 was $16.0 million and consisted of the purchase of assets of $17.4 million, partially offset by the sales of assets of $1.4 million. The most significant capital investments made during 2004 were the expansion and purchase of new paint line equipment for our Plates and Shapes facility near New Orleans and the expansion of our Plates and Shapes facility near Dallas, Texas.

57

      The foregoing discussion of the principal sources and uses of cash should be read in conjunction with our Consolidated Statements of Cash Flows included elsewhere in this prospectus. See also “Selected Historical Consolidated Financial Data.”

      Net cash provided by financing activities was $317.8 million for year ended December 31, 2005 and consisted primarily of the proceeds from the issuance of our notes, $191.4 million of borrowings under our ABL facility, and the capital contribution from Flag Intermediate of $134.0 million. These were partially offset by payments of $107.7 million under our previous credit facility and the final payment of $145.3 million to payoff and terminate that facility as a result of the Merger. Net cash provided by financing activities was $145.8 million for the year ended December 31, 2004 and consisted primarily of net borrowings on the revolving credit facility.

Financing Activities

The ABL Facility

      Overview. The ABL facility provides for borrowings, subject to a borrowing base calculation, of up to $450.0 million and will enable us to borrow and repay funds as needed. The ABL facility is initially comprised of $415.0 million of Tranche A Commitments and $35.0 million of Tranche A-1 Commitments. While the Tranche A-1 Commitments are outstanding, the borrowing base is subject to greater advance rates than would otherwise be in effect. Subject to certain conditions, the Tranche A-1 Commitments may be reduced or terminated at any time and, upon the reduction or termination of the Tranche A-1 Commitments, the Tranche A Commitments will be increased on a dollar-for-dollar basis in an amount equal to such reduction or termination. On May 31, 2006, the Tranche A-1 Commitments will automatically be reduced to $25.0 million (with a corresponding increase in the Tranche A Commitments), unless previously reduced below $25.0 million.

      Borrowing Base. The maximum availability under the ABL facility is based on eligible receivables and eligible inventory, subject to certain reserves. Our borrowing availability fluctuates daily with changes in eligible receivables and inventory, less outstanding borrowings and letters of credit. The borrowing base is equal to the lesser of (a) the aggregate amount of the Tranche A Commitments and the Tranche A-1 Commitments and (b) the sum of:

•  85% of the net amount of eligible accounts receivable;

•  the lesser of (i) 70% of the lesser of the original cost or market value of eligible inventory and (ii) 90% of the net orderly liquidation value of eligible inventory; and

•  at all times prior to the termination of the Tranche A-1 Commitments,

•  prior to May 31, 2006, the sum of 5% of the net amount of eligible accounts receivable and 10% of the net orderly liquidation value of eligible inventory; or

•  thereafter, the sum of 5% of the net amount of eligible accounts receivable and 5% of the net orderly liquidation value of eligible inventory.

      Initial borrowings under the ABL facility were used to repay the outstanding amounts drawn under our existing revolving credit facility and to fund other costs and expenses related to the Transactions. The loan and security agreement governing the ABL facility provides for up to $15.0 million of swing-line loans and up to $100.0 million for the issuance of letters of credit. Both the face amount of any outstanding letters of credit and any swing-line loans will reduce borrowing availability under the ABL facility on a dollar-for-dollar basis.

      As of December 31, 2005, we had eligible collateral of $384.7 million, $191.4 million in outstanding advances, $18.5 million in open letters of credit and $166.8 million in additional borrowing capacity.

      Guarantees and Security. Substantially all of our subsidiaries are defined as “borrowers” under such agreement (such subsidiaries are all of our domestic operating subsidiaries as of the date of this prospectus and we do not have any foreign subsidiaries as of the date of this prospectus). The obligations under the

58

ABL facility are guaranteed by Flag Intermediate and certain of our future domestic subsidiaries and are secured (i) on a first-priority lien basis by our, the other borrowers’ and the guarantors’ accounts, inventory, cash and proceeds and products of the foregoing and certain assets related thereto and (ii) on a second-priority lien basis by substantially all of our, the other borrowers’ and the guarantors’ other assets, subject to certain exceptions and permitted liens.

      Interest Rate and Fees. Interest is calculated based upon a margin (established within a specific pricing grid for loans utilizing Tranche A Commitments) over reference rates. The marginal rates vary with our financial performance as measured by the fixed charge coverage ratio. The fixed charge coverage ratio is determined by dividing (i) the sum of EBITDA (as defined by and adjusted in accordance with the loan and security agreement governing the ABL facility) minus income taxes paid in cash minus non-financed capital expenditures by (ii) the sum of certain distributions paid in cash, cash interest expense and scheduled principal reductions on debt.

      The interest rates with respect to loans utilizing the Tranche A Commitments are, at our option, (i) the higher of (a) the prime rate of Credit Suisse in effect at its principal office in New York City and (b) the federal funds effective rate plus 0.5%; in each case plus an applicable margin ranging between 0.25% and 0.0% as determined in accordance with the loan agreement or (ii) the rate (as adjusted) at which Eurodollar deposits for one, two, three, six or, if available, nine or twelve months, as selected by us, by reference to the British Bankers’ Association Interest Settlement Rates for deposits in dollars, plus an applicable margin ranging between 1.25% and 2.00% as determined in accordance with the loan and security agreement governing the ABL facility. The interest rates with respect to loans utilizing the Tranche A-1 Commitments are, at our option, (i) the higher of (a) the prime rate of Credit Suisse in effect at its principal office in New York City and (b) the federal funds effective rate plus 0.5%; in each case plus an applicable margin of (1) initially, 1.75% and (2) after the first adjustment date under the ABL facility, 1.50% or (ii) the rate (as adjusted) at which Eurodollar deposits for one, two, three, six or, if available, nine or twelve months, as selected by us, by reference to the British Bankers’ Association Interest Settlement Rates for deposits in dollars, plus an applicable margin of (a) initially, 3.75% and (b) after the first adjustment date under the ABL facility, 3.50%.

      A commitment fee is payable on any unused commitments under the ABL facility of 0.250% per annum. The applicable base rate and the effective LIBOR rate were 7.25% and 4.53% as of December 31, 2005.

      Certain Covenants. The loan and security agreement governing the ABL facility requires us to comply with limited affirmative, negative and subjective covenants, the most significant of which are: (i) the maintenance of a borrowing base availability of at least $45.0 million, or, if such required borrowing base availability is not maintained, the maintenance of the fixed charge coverage ratio, (ii) restrictions on additional indebtedness and (iii) restrictions on liens, guarantees and quarterly dividends. There are no limitations with respect to capital expenditures. As long as our borrowing availability is $45.0 million or greater, we do not have to maintain a minimum fixed charge coverage ratio. Should borrowing availability fall below $45.0 million, we must maintain a fixed charge coverage ratio of 1.0 to 1.0.

      Additionally, payments to affiliates are limited to the greater of $3.0 million or 3% of Adjusted EBITDA (as defined in the loan and security agreement governing the ABL facility) provided borrowing availability equals at least $25.0 million. Further, distributions in respect of capital stock is limited to the payment of up to $25.0 million, plus $5.0 million for each full fiscal quarter (with any amount not used in any fiscal quarter being permitted to be used in succeeding fiscal quarters), plus 50% of cumulative consolidated net income, or if a loss, minus 100% of the amount thereof, plus 100% of the aggregate net proceeds received by us from certain sales and issuances of capital stock or from certain capital contributions, of dividends in any fiscal quarter provided that borrowing availability is greater than $50.0 million.

59

The Notes

      At the effective time of the Merger, we received approximately $268.0 million of net cash proceeds from the sale of the old notes, after deducting discounts and estimated expenses of the offering. We will pay interest on overdue principal at 1% per annum in excess of the above rate and will pay interest on overdue installments of interest at such higher rate to the extent lawful. The indenture governing the notes contains the covenants described under “Description of the Notes — Certain Covenants.”

      We used the net proceeds from the issuance of the old notes, borrowings under the ABL facility, the equity contributions by Apollo V and the management participants and cash on hand to repay the outstanding amounts drawn under our previous revolving credit facility and to fund other costs and expenses related to the Transactions.

      Our pro forma cash interest expense for the year ended December 31, 2005, after giving pro forma effect to the Transactions, was $47.9 million.

      As of December 31, 2005, we were in compliance with all of the debt covenants including those of the loan and security agreement governing the ABL facility and the indenture governing the old notes. Further, as of December 31, 2005, our debt as a percentage of total capitalization (debt plus stockholders equity) was 78.2%. Both the loan and security agreement governing the ABL facility and the indenture governing the notes contain restrictions as to the payment of dividends. As of December 31, 2005, under the most restrictive of these covenants the maximum amount of dividends that could be paid was $25.8 million.

      We believe the cash flow from operations, supplemented by the cash available under the ABL facility, will be sufficient to enable us to meet our debt service and operational obligations as they come due for at least the next twelve months.

Commitments, Contingencies and Contractual Obligations

      We enter into operating leases for many of our facility, vehicle and equipment needs. These leases allow us to conserve cash by paying a monthly lease rental fee for the use of rather than purchasing facilities, vehicles and equipment. At the end of the lease, we have no further obligation to the lessor. Our future contractual obligations include the following:

				For the Fiscal Years Ended December 31,
		Total		2006		2007		2008		2009		2010		Beyond
		(In millions)
ABL facility(1)		$	191.4	$	—	$	—	$	—	$	—	$	—	$	191.4
Purchase Orders			212.1		212.1		—		—		—		—		—
111/8 % Senior Secured Notes Due 2015			580.9		30.6		30.6		30.6		30.6		30.6		427.9
Letters of credit supporting IRB(2)			5.7		—		—		—		—		—		5.7
Other obligations			1.4		0.6		0.5		0.1		0.1		0.1		—
Operating lease obligations			88.1		15.9		14.7		12.9		10.0		9.4		25.2
	Total	$	1,079.6	$	259.2	$	45.8	$	43.6	$	40.7	$	40.1	$	650.2

(1)	The amounts stated do not include interest costs. The ABL facility bears interest based upon a margin over reference rates established within a specific pricing grid. The marginal rates will vary with our financial performance as measured by the fixed charge coverage ratio. The applicable base rate and the effective LIBOR rate were 7.25% and 4.53%, respectively, on the December 31, 2005.
(2)	The amounts stated do not include interest costs. The interest rate assessed on the IRB varies from month to month based on an index of mutual bonds, which was 3.68% on December 31, 2005.

60

      We have varying amounts of open purchase orders that are subject to renegotiation/cancellation by either party as to quantity or price. Generally, the amounts outstanding relate to delivery periods of up to twelve weeks from date of purchase order.

Off-Balance Sheet Arrangements

      We were not engaged in off-balance sheet arrangements through any unconsolidated, limited purpose entities and no material guarantees of debt or other commitments to third parties existed at December 31, 2005.

New Accounting Pronouncements

      In November 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 151 (“SFAS 151”), “Inventory Costs — An amendment of ARB No. 43, Chapter 4”, which requires that abnormal amounts of idle facility expense, freight, handling costs and spoilage should be expensed as incurred and not included in overhead, and that allocation of fixed production overheads to conversion costs should be based on normal capacity of the production facilities. The provisions in Statement 151 are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of SFAS 151 did not have a significant impact on our consolidated financial statements.

      In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123-Revised 2004 (“SFAS 123(R)”), “Share-Based Payment.” This is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation” and supersedes APB No. 25, “Accounting for Stock Issued to Employees.” As noted in Note 10 to our consolidated financial statements, we do not record compensation expense for stock-based compensation. Under SFAS 123(R), we will be required to measure the cost of employee services received in exchange for stock based on the grant-date fair value (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award (usually the vesting period). The fair value will be estimated using an option-pricing model. Excess tax benefits, as defined in SFAS 123, will be recognized as an addition to paid-in-capital. In April 2005, the SEC delayed the implementation date of this pronouncement to the first annual reporting period that begins after December 15, 2005. The adoption of SFAS 123(R) did not have a significant impact on our consolidated financial statements as Flag Intermediate does not have any options outstanding.

      In March 2005, the Financial Accounting Standard Board issued FIN Interpretation No. 47, (“FIN 47”), “Accounting for Conditional Asset Retirement Obligations — An interpretation of FASB Statement No. 143”, which requires that “an entity should recognize the fair value of a liability for an asset retirement obligation in the period in which it is incurred if reasonable estimate of fair value can be made”. The provisions of FIN 47 are effective no later than the year end of fiscal years ending after December 15, 2005. The adoption of FIN 47 has had no significant impact on our consolidated financial statements.

Quantitative and Qualitative Disclosures About Market Risk

      In the normal course of business, we are exposed to market risk, primarily from changes in interest rates and the cost of metal we hold in inventory. We continually monitor exposure to market risk and develop appropriate strategies to manage this risk. With respect to our metal purchases, there is no recognized market to purchase derivative financial instruments to reduce the inventory exposure risks. See “Liquidity and Capital Resources” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of market risk relative to steel prices.

      Our exposure to market risk for changes in interest rates relates primarily to the ABL facility. The ABL facility was subject to variable interest rates as of December 31, 2005. Accordingly, we are subject to interest rate risks on the revolving credit facility. Outstanding borrowings under the ABL facility were $191.4 million as of December 31, 2005. Assuming a 1% change in the interest rate on the revolving credit facility, our annual interest expense would increase by $1.9 million.

61

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The consolidated financial statements of our Company are set forth at pages F-1 through F-30 inclusive, found at the end of this prospectus.

      Selected unaudited quarterly financial information for the years ended December 31, 2005 and 2004 is presented below. The unaudited quarterly results for the fourth quarter of 2005 are presented below based on combining the Predecessor Company’s results for the period from October 1, 2005 to November 30, 2005 and the Successor Company’s for the period from October 1, 2005 to December 31, 2005. Flag Intermediate and Flag Acquisition had no assets and conducted no operations from May 9, 2005 to November 30, 2005.

		Three Months Ended
		March 31		June 30		Sept 30		Dec 31
		(In millions)
2005:
	Net sales	$	427.6	$	426.8	$	396.1	$	388.5
	Operating income (loss)		31.0		26.7		20.0		5.3
	Net income (loss)		17.3		14.3		11.2		(1.3	)
2004:
	Net sales	$	319.2	$	383.6	$	412.6	$	394.4
	Operating income (loss)		31.7		56.5		52.6		32.9
	Net income (loss)		18.5		33.7		31.8		20.5

62

BUSINESS

Company Overview

      As one of the largest metal service center businesses in the United States, we are a leading provider and distributor of value-added processed carbon steel, stainless steel, aluminum, red metals and manufactured metal components. We are an important intermediary between primary metal producers that produce and sell large volumes of metals in a limited number of sizes and configurations and end-users, such as contractors and original equipment manufacturers, or OEMs, that require smaller quantities of more customized products delivered on a just-in-time basis. We earn a margin over the cost of metal based upon value-added processing enhancements, which adds stability to our financial results and significantly reduces our earnings volatility relative to metal producers. In addition to our metal service center and distribution activities, we have a building products business, which supplies a range of products to the residential remodeling market. We serve more than 30,000 customers annually from 75 operating locations throughout the United States. Our business is primarily divided into three operating groups: Plates and Shapes Group; Flat Rolled Group; and Building Products Group.

      Our Plates and Shapes and Flat Rolled Groups perform customized, value-added processing services to unimproved steel and other metals required to meet specifications provided by our customers, as well as offering inventory management and just-in-time delivery services. These services enable our customers to reduce material costs, decrease capital required for raw materials inventory and processing equipment and save time, labor, warehouse space and other expenses. The customers of our Plates and Shapes and Flat Rolled Groups are in businesses such as the machining, furniture, transportation equipment, power and process equipment, industrial/ commercial construction/fabrication, consumer durables and electrical equipment industries, as well as machinery and equipment manufacturers. Our Building Products Group manufactures higher-value finished building products for distributors and contractors engaged in residential and commercial building projects.

Competitive Strengths

      Margin Over Metal Creates Financial Stability. Our metal service centers are an integral intermediary between large metal producers and smaller end-users, which allows us to utilize a “cost plus” business model. Through our cost plus business model, we earn a margin over the cost of metal which varies according to the extent of value-added processing enhancements we add to our products. As a result, over time, we are able to pass along changes in metal prices to our customers. Given that metal costs typically represent approximately 75% of our net sales, our ability to pass through changes in pricing and our “cost plus” business model significantly reduce the volatility of our earnings and free cash flow relative to metal producers.

      Skilled Inventory Management. We manage our inventory to minimize our investment in working capital while maintaining sufficient stock to respond quickly to customer orders. We tailor our inventory and processing services at each service center location to the needs of that particular market with branch management teams responsible for determining the inventory mix at each of our locations. All of our groups utilize management information systems and computer-aided manufacturing technology, which enable us to track and allocate inventory among all of our locations on a real-time basis, providing our salespeople and operating employees with visibility into in-process orders and allowing us to provide just-in-time delivery. We believe that the combination of our decentralized inventory management and the monitoring by our senior management with their global market insights has allowed us to react more quickly than many of our competitors to changing metals prices and customer needs, and to optimize our use of working capital. Also, due to the countercyclical nature of cash flows in our business, by proactively managing inventory we are able to generate significant earnings during rising metal price environments and generate significant free cash flow for debt paydown in declining metal price environments.

      Strong Relationships with Key Suppliers. In the metal service center industry, where “buying right” is critical to a company’s success, we have established strong relationships with large domestic and international metal suppliers. We are a significant customer of our major suppliers in each of our core

63

products, enabling us to obtain volume discounts and source materials in periods of tight supply. For instance, our strong relationships and large purchasing volumes enabled us to maintain ample access to metal when supply became constrained during 2004. Our negotiation of purchase agreements with suppliers is centralized to leverage our buying power and global market insights.

      Geographically Diversified Network of Strategically Located Facilities. Our 75 operating facilities are strategically located throughout the United States, providing a number of advantages over smaller, locally-focused service centers. The majority of our service centers are located within 150-250 miles of our customers, which enables us to deliver products within one day of receiving an order. The proximity of our facilities to our customers allows us to provide critical, value-added services such as just-in-time delivery to both larger customers with multiple locations and smaller single-site customers. Our service centers also have the ability to share inventory between facilities, which improves inventory management and customer service. The geographically diverse network of facilities provides protection against regional fluctuations in demand and prices as we are not dependent on one geographical region or customer.

      Broad Product Offering with Superior Customer Service. We provide a broad range of high quality products which, together with customized valued-added services, enable us to offer one-stop shopping to our customers. We believe that our broad product offering and value-added services provide a significant competitive advantage over smaller service centers that generally stock fewer products than we do. As a result of the regular interaction between our sales force and our customers, we have developed strong relationships with our customers, which allows us to identify and assess their supply chain requirements in a more accurate and timely manner. This ability in turn enables us to offer just-in-time delivery and to respond to short lead time orders. Further, because our local managers have significant operational control, our service centers can react quickly to changes in local markets and customer demands. We believe the quality of our products and timeliness of service have increased the loyalty of our customers and have assisted our marketing efforts to new customers.

      Diversified Customer Base and End-Markets. Our three groups supply a broad range of products to a large diversified customer base which serves a diverse set of end-markets. We serve more than 30,000 customers annually across a broad range of industries including machining, furniture, transportation equipment, power and process equipment, industrial/commercial construction/fabrication, consumer durables, electrical equipment industries, machinery and equipment manufacturers, home improvement and building materials. The automotive sector, in which we sell only to primary and secondary suppliers, represented less than 4% of our sales in 2005. No single customer accounted for more than 3% of our net sales in 2005, while our ten largest customers represented less than 12% of our net sales in 2005. Further, the breakdown of our 2005 net sales by industry is:

      State-of-the-Art Processing Facilities. Our state-of-the-art processing facilities provide a significant advantage over smaller metal service centers that do not have the necessary capital resources to invest in such equipment, thereby limiting the range of products and services they offer. Our facilities are capable of

64

quickly and efficiently processing metals to precise length, width, shape and surface quality required to satisfy individual customer specifications. In addition, we provide value-added services such as applications engineering and custom machining, in order to enable our customers to reduce their total cost of manufacturing.

      Experienced and Proven Management Team. We have a seasoned senior management team which, on average, has over 20 years of experience in the metals industry. Our CEO, C. Lourenço Gonçalves, has 25 years experience in the metals industry. Since he became President and CEO, we have implemented a number of operational and safety improvements which have significantly improved the performance of our business and our safety record.

Strategy

      Increase Our Market Share of Higher Margin Products. Our management team intends to continue its focus on selling higher margin products such as non-ferrous metals as well as those products that require significant value-added processing or which are highly customized. This focus will enable us to further leverage our state-of-the-art processing facilities and provide higher margin value-added processing functions such as precision blanking, laser cutting and painting. We believe that our ability to perform these types of processing functions will also enable us to fulfill a greater proportion of our customers’ processing requirements, providing them with a more complete product and allowing them to achieve their objective of outsourcing a greater proportion of their processing requirements. We further believe that our ability to perform these types of processing functions will lead to an increased stability in the demand for our products.

      Expand Value-Added Services Provided to Customers. We are focused on expanding the range of value-added services that we offer to enhance our strong, long-standing relationships with our existing customers and to build new customer relationships. Our customers are continually seeking new ways to operate more efficiently and generate higher returns, including the outsourcing of customized metals processing and inventory management requirements. We believe our ability to provide value-added services, such as new supply chain solutions, is attractive to customers. We also believe that there are significant opportunities to expand the range of value-added services that we offer in areas such as processing equipment, inventory management and logistics systems. We believe that our size and operating expertise enable us to better provide these value-added services and therefore, further differentiate ourselves from smaller metal service centers.

      Maintain Strong Focus on Inventory Management. We will continue managing our inventory to maximize our profitability and cash flow while maintaining sufficient stock to respond quickly to customer orders. We intend to continue to manage our inventory through a combination of local management of inventory requirements at each service center location and the centralized monitoring of inventory by our senior management team to leverage our buying power and global market insights. In addition, we intend to further integrate our salespeople and operating employees into the operations of our customers to enhance our visibility into in-process orders and to allow us to continue to improve our just-in-time delivery and overall level of customer service. We expect our continued focus on inventory management to improve gross profit margins as well as further differentiate us from our smaller competitors. We believe it will also improve performance throughout the metal price cycle by ensuring that we will have ample supply to satisfy customer demand in rising price and constrained supply environments as well as enabling us to generate significant free cash flow in declining metal price environments.

      Capitalize on Changing Market Dynamics and Increasing Demands. While steel producers have undergone significant consolidation, end-customer segments of the market remain highly fragmented. Therefore, while steel producers continue to seek long-term, select relationships with metal service centers that have access to numerous end-user customers, end-user customers are also seeking relationships with metal service centers that can provide a reliable source of high quality products combined with value-added services. As one of the largest metal service centers, we intend to use our significant resources to exploit the opportunities presented by this market dynamic. In addition, we believe that, in light of current

65

economic conditions, demand for the products manufactured by our customers will continue to be robust. This increase in end-market demand will help drive increased sales of our products and, combined with the initiatives we have proactively taken to reduce our cost structure, further enhance our profitability and cash flow.

      Continue to Focus on Improving the Performance of Our Building Products Group. In August 2004, we appointed a new President of the Building Products Group and subsequently undertook a major restructuring of the business to focus the group on the steadily growing residential remodeling market. In addition, we closed 11 underperforming sales locations, expanded our production capabilities and reduced the operating cost structure of the group. Since this time, the financial performance of the group has improved significantly and we expect it to become an increasingly larger part of our business in the future as we continue to capitalize on the benefits resulting from the restructuring and take advantage of the attractive fundamentals of the residential remodeling industry.

Segment Information

      Each of our product groups is led by an experienced executive and is supported by a professional staff in finance, purchasing and sales and marketing. This product-oriented organizational structure facilitates the efficient advancement of our goals and objectives to achieve operational synergies and focused capital investment. For additional industry segment information, see the Segment Results discussions in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 11 to our audited consolidated financial statements included elsewhere in this prospectus.

Metal Processing/ Service Center Businesses: Plates and Shapes and Flat Rolled Groups

      Business Overview. Companies operating in the metals industry can generally be characterized as primary metals producers, metals processors/service centers or end-users. Our Plates and Shapes and Flat Rolled Groups are metals processor/service centers. As such, we purchase steel, aluminum, brass, copper and other metals from producing mills and then sell our metal processing services and the metal to our customers, who are generally end-users. We believe that both primary metals producers and end-users are increasingly seeking to have their metals processing and inventory management requirements met by value-added metals processors/service centers like us.

      Primary metals producers, which manufacture and sell large volumes of metals in standard sizes and configurations, generally sell only to those large end-users and metals processors/service centers who do not require processing of the products and who can tolerate relatively long lead times. Metal processors/service centers offer services ranging from precision value-added pre-production processing, in accordance with specific customer specifications, to storage and distribution of unprocessed metal products. Generally service centers function as intermediaries between end-users and primary metals producers. End-users, such as contractors and OEMs incorporate the processed metal into a finished product, in some cases with little further modification.

      In our Plates and Shapes and Flat Rolled Groups, we engage in pre-production processing of steel, stainless steel, red metals and aluminum and act as an intermediary between primary metals producers and end-users. We purchase metals from primary producers, maintain an inventory of various metals to allow rapid fulfillment of customer orders and perform customized processing services to the specifications provided by end-users and other customers. By providing these services, as well as offering inventory management and just-in-time delivery services, we enable our customers to reduce overall production costs and decrease capital required for raw materials inventory and metals processing equipment. The Plates and Shapes and Flat Rolled Groups contributed approximately 88% of our 2005 net sales and the substantial majority of our 2005 net income.

      Industry Overview. Metal service centers function as key intermediaries between the primary metals producers that produce and sell large volumes of metals in a limited number of sizes and configurations and end-users, such as contractors and OEMs, that require smaller quantities of more customized products

66

delivered on a just-in-time basis. End-users incorporate processed metals into finished products, in some cases with little further modification.

      The service center industry is highly fragmented, with as many as 5,000 participants throughout North America, generating in excess of $80 billion in net sales in 2004. The industry includes both general line distributors that handle a wide range of metal products and specialty distributors that specialize in particular categories of metal products. We are a general line distributor. Metal service centers accounted for approximately one quarter or more of U.S. steel shipments in 2004 based on volume, a market share which has been relatively constant for the last 15 years.

      We believe that both primary metals producers and end-users are increasingly seeking to have their metals processing and inventory management requirements met by value-added service centers. During the past two decades, primary metals producers have been focusing on their core competency of high-volume production of a limited number of standardized metal products. As primary metal producers have consolidated, they increasingly require service centers and processors to perform value-added services for end customers. As a result, most end-users can no longer obtain processed products directly from primary metals producers and therefore over 300,000 OEMs, contractors and fabricators nationwide rely on service centers. End-users have also recognized the economic advantages associated with outsourcing their customized metals processing and inventory management requirements. Outsourcing permits end-users to reduce total production costs by shifting the responsibility for pre-production processing to service centers, whose higher efficiencies in performing these processing services make the ownership and operation of the necessary equipment more financially feasible.

      Value-added service centers, including ourselves, have also benefited from growing customer demand for inventory management and just-in-time delivery services. These supply-chain services, which are normally not provided by primary metals producers, enable end-users to reduce input costs, decrease capital required for inventory and equipment and save time, labor and other expenses. Some value-added service centers, including us, have installed EDI between their computer systems and those of their customers to facilitate order entry, inventory management, just-in-time delivery and billing.

      In addition, manufacturers in general appear to be reducing their operating costs by limiting the number of suppliers with which they do business, often eliminating suppliers offering limited ranges of products and services. Customers are increasingly seeking suppliers capable of providing sophisticated processing services, such as marine coatings and precision laser cutting. These trends have placed small, owner-operated businesses at a competitive disadvantage because they have limited access to the capital resources necessary to increase their capabilities, or they may be unwilling to justify the investment in equipment. As a result, smaller metal service centers are finding it increasingly difficult to compete with larger service centers.

      The industry has been consolidating due to the economies of scale and other advantages that the larger metal service centers enjoy. According to industry sources, the number of metal processor and service center locations in the U.S. has been reduced significantly. We believe the larger and more sophisticated companies, like us, enjoy significant advantages over smaller companies in areas such as obtaining higher discounts associated with volume purchases, the ability to service customers with operations in multiple locations and the use of more sophisticated information systems.

      Plates and Shapes Group. We believe we are one of the largest distributors of metal plates and shapes in the United States. We sell products such as wide-flange beams, plate, tubing, angles, bars and other structural shapes in a number of alloy grades and sizes. A substantial number of our products undergo additional processing prior to being delivered to our customers, such as blasting and painting, tee-splitting, cambering, leveling, cutting, sawing, punching, drilling, beveling, surface grinding, bending, shearing and cutting-to-length. We sell the majority of our products to a fragmented customer base that consists of a large number of small customers who purchase products in small order sizes and require just-in-time delivery. The customers of our Plates and Shapes Group are primarily in the fabrication, construction, machinery and equipment, transportation and energy industries. We serve our customers, who generally operate in a limited geographic region, from 21 metal service centers located primarily in the

67

eastern half of the United States. Each metal service center is located in close proximity to our metal suppliers and our customers.

      Flat Rolled Group. The Flat Rolled Group sells a number of products, including carbon and stainless steel, aluminum, brass and copper in a number of alloy grades and sizes. As relatively few end-user customers can handle carbon steel in the form generally shipped by steel mills (sizes less than a quarter of an inch in thickness in continuous coils that typically weigh 40,000 to 60,000 pounds each), substantially all of the carbon steel material, as well as the nonferrous materials sold by our Flat Rolled Group, undergo additional processing prior to delivery to the customer. We provide a broad range of value-added processing services including precision blanking, slitting, shearing, cutting-to-length, punching, bending and leveling. Our customers are in the electrical manufacturing, fabrication, furniture, appliance manufacturing, machinery and equipment and transportation industries and include many larger customers who value the high quality products that we provide together with our customer service and reliability. A number of our large customers purchase through pricing arrangements or contractual agreements. We serve our customers from 12 metal service centers in the midwestern and southern regions of the United States. Each metal service center is located in close proximity to our metal suppliers and our customers.

      Products and Services. We purchase our raw materials in anticipation of projected customer requirements based on interaction with and feedback from customers, market conditions, historical usage and industry research. Primary producers typically find it more cost effective to focus on large volume production and sale of metals in standard sizes and configurations to large volume purchasers. We process the metals to the precise length, width, shape and surface quality specified by our customers. Our value-added processes include:

•  Precision blanking — the process in which metal is cut into precise two-dimensional shapes.

•  Flame cutting — the cutting of metals to produce various shapes according to customer-supplied drawings.

•  Laser and plasma cutting — the cutting of metals to produce shapes under strict tolerance requirements.

•  Slitting — the cutting of coiled metals to specified widths along the length of the coil.

•  Blasting and painting — the process of cleaning steel plate by shot-blasting, then immediately applying a paint or primer.

•  Plate forming and rolling — the forming and bending of plates to cylindrical or required specifications.

•  Shearing and cutting to length — the cutting of metals into pieces and along the width of a coil to create sheets or plates.

•  Tee-splitting — the cutting of metal beams along the length to form separate pieces.

•  Cambering — the bending of structural shapes to improve load-bearing capabilities.

•  Sawing — the cutting to length of bars, tubular goods and beams.

•  Leveling — the flattening of metals to uniform tolerances for proper machining.

•  Edge trimming — a process that removes a specified portion of the outside edges of coiled metal to produce uniform width and round or smooth edges.

•  Metallurgy — the analysis and testing of the physical and chemical composition of metals.

      Our additional capabilities include applications engineering and other value-added processes such as custom machining. Using these capabilities, we use processed metals to manufacture higher-value components.

68

      Once we receive an order, we select the appropriate inventory and schedule it for processing in accordance with the customer’s requirements and specified delivery date. Orders are monitored by our computer systems, including, in certain locations, the use of bar coding to aid in and reduce the cost of tracking material. We record the source of all metal shipped to customers. This enables us to identify the source of any metal which may later be shown to not meet industry standards or that fails during or after manufacture. This capability is important to our customers as it allows them to assign responsibility for non-conforming or defective metal to the mill that produced the metal. Many of the products and services we provide can be ordered and tracked through a web-based electronic network that directly connects our computer system to those of our customers.

      We cooperate with our customers and tailor our deliveries to support their needs, which in many instances consist of short lead-time and just-in-time delivery requirements. This is accomplished through our inventory management programs, which permit us to deliver processed metals from a sufficient inventory of raw materials to meet the requirements of our customers, which in many instances results in orders filled within 24-48 hours.

      While we ship products throughout the U.S., most of our customers are located within a 250-mile radius of our facilities, thus enabling an efficient delivery system capable of handling a large number of short lead-time orders. We transport most of our products directly to our customers either with our own trucks for short-distance and/or multi-stop deliveries or through common or contract trucking companies.

      We have quality control systems to ensure product quality and traceability throughout processing. Quality controls include periodic supplier audits, customer approved quality standards, inspection criteria and metals source traceability. A total of 20 of our metal processing/service center facilities have International Standards Organization, or ISO, 9002 certification. In addition to our metal processing/service center facilities that are ISO certified, one location in our Building Products Group is ISO certified.

Building Products Group

      Business Overview. The Building Products Group provides diversification to our overall business as both its operations and the end-markets that it serves are significantly different from those of our metal service center business. The Building Products Group manufactures and sells sunrooms, roofing products, awnings and solariums for use in residential applications and large area covered canopies, awnings and covered walkways for use in commercial applications. Approximately 95% of our Building Products Group sales are attributable to the residential remodeling market with the remaining sales attributable to commercial applications. Because our building products business is primarily focused on the residential remodeling market, its sales are not correlated to housing starts or interest rates, nor are they subject to fluctuations in the demand or price of metal. The customers of our Building Products Group are predominantly in the construction, wholesale trade and building material industries. We primarily distribute our products through a network of independent distributors and home improvement contractors. We believe we are one of only a few suppliers with national scale across our market segments.

      Building Products had net sales of $195.1 million in 2005 and currently has 17 operating locations and 25 sales and distribution centers throughout the southeast, southwest and western regions of the U.S. The Building Products Group contributed approximately 11.9% of our 2005 net sales.

      Industry Overview. The residential remodeling industry has experienced significant growth over the last 10 years and is poised for continued growth in the future. The Home Improvement Research Institute estimates that homeowners and rental property owners spend approximately $256.0 billion annually on remodeling their homes which accounts for over 40% of all residential construction and improvement spending. Over the last decade, the industry has experienced accelerated growth due to a number of different macroeconomic and demographic factors including strong existing-home sales, rising disposable incomes, increased rates of home ownership and aging American houses. Existing-home sales impact the remodeling market as owners improve their homes in preparation for sale and new-home buyers often undertake significant renovations and remodeling projects within the first few months of ownership. The

69

increase in disposable incomes has been a factor in the rise in homeownership to over 68% in 2004 from under 64% in 1993. The aging of the domestic home supply is also expected to bolster remodeling sales as the average home in the U.S. is now over 30 years old. As Americans look to improve and upgrade their homes, we believe that an increasing number will turn to remodeling as a cost effective alternative to new housing construction. Among the most popular remodeling projects are backyard living items, such as pool enclosures, lattices and patio covers, as well as sunrooms and roofing, all of which we manufacture and distribute.

Sources of Supply

      In recent years, steel, aluminum, copper and other metals production in the U.S. has fluctuated from period to period as mills attempt to match production to projected demand. Periodically, this has resulted in shortages of, or increased ordering lead times for, some products, as well as fluctuations in price. Typically, metals producers announce price changes with sufficient advance notice to allow us to order additional products prior to the effective date of a price increase, or to defer purchases until a price decrease becomes effective. Our purchasing decisions are based on our forecast of the availability of metal products, ordering lead times and pricing, as well as our prediction of customer demand for specific products.

      We obtain the overwhelming majority of our raw materials from domestic suppliers, which include Nucor Corp., U.S. Steel, AK Steel, Gerdau Ameristeel, International Steel Group, Alcoa Inc., Bayou Steel, Chaparral Steel and IPSCO Steel. Although we have historically purchased approximately 10% to 15% of our raw material supplies from foreign producers, domestic suppliers have always been and we believe will continue to be our principal source of raw material.

      Although most forms of steel and aluminum produced by mills can be obtained from a number of integrated mills or mini-mills, both domestically and internationally, there are a few products that are available from only a limited number of producers. Since most metals are shipped freight-on-board and the transportation of metals is a significant cost factor, we seek to purchase metals, to the extent possible, from the nearest mill, but will use a more distant mill when it offers a lower delivered price.

      Ferrous metal producers have been undergoing rapid consolidation over the past three years. U.S. Steel, Nucor Corp. and International Steel Group have acquired several of their domestic competitors, and international integrated producers have merged and consolidated operations. Furthermore, Mittal Steel purchased International Steel Group, creating the largest steel producer in the world. The result of this trend will be fewer integrated producers from which we can purchase our raw materials. While we believe that global consolidation of the steel industry is beneficial to the steel industry as a whole, we are unable to predict what impact this consolidation may have on our operations.

Sales and Marketing; Customers

      We employ a sales force consisting of inside and outside salespeople. Inside salespeople are primarily responsible for maintaining customer relationships, receiving and soliciting individual orders and responding to service and other inquiries by customers. Our outside sales force is primarily responsible for identifying potential customers and calling on them to explain our services. The sales force is trained and knowledgeable about the characteristics and applications of various metals, as well as the manufacturing methods employed by our customers.

      Our sales and marketing focus is on the identification of OEMs and other metals end-users that could achieve significant cost savings through the use of our inventory management, value-added processing, just-in-time delivery and other services. We use a variety of methods to identify potential customers, including the use of databases, direct mail and participation in manufacturers’ trade shows. Customer referrals and the knowledge of our sales force about regional end-users also result in the identification of potential customers. Once a potential customer is identified, our outside salespeople assume responsibility for visiting the appropriate contact, typically the purchasing manager or manager of operations.

70

      Nearly all sales are on a negotiated price basis. In some cases, sales are the result of a competitive bid process where a customer provides a list of products, along with requirements, to us and several competitors and we submit a bid on each product. We have a diverse customer base, with no single customer accounting for more than 3% of our net sales in each of the last three years. Less than 4% of our sales are to the automotive industry and we do not sell directly to the “Big Three” automobile manufacturers.

Competition

      We are engaged in a highly fragmented and competitive industry. Competition is based on price, product quality, service, and timeliness of delivery and geographic proximity. We compete with a large number of other metals processors/service centers on a national, regional and local basis, some of which may have greater financial resources. We also compete to a lesser extent with primary metals producers, who typically sell directly to very large customers requiring regular shipments of large volumes of metals. Numerous smaller metals processors/service centers compete with us locally.

      Historically, we believe that we have been able to compete effectively because of our significant number of locations, geographic dispersion, knowledgeable and trained sales force, integrated computer systems, modern equipment, broad-based inventory, combined purchasing volume and operational economies of scale. Furthermore, we believe our liquidity and overall financial position affords us a good platform with which to compete with our peers in the industry.

Government Regulation and Environmental Matters

      Our operations are subject to a number of federal, state and local regulations relating to the protection of the environment and to workplace health and safety. In particular, our operations are subject to extensive federal, state and local laws and regulations governing waste disposal, air and water emissions, the handling of hazardous substances, environmental protection, remediation, workplace exposure and other matters. Hazardous materials we use in our operations include general commercial lubricants and cleaning solvents. Among the more significant regulated activities that occur at some of our facilities are: the accumulation of scrap metal, which is sold for recycling; the generation of plant trash and other solid wastes and wastewaters, such as water from burning tables operated at some of our facilities, which wastes are disposed of in accordance with the Federal Water Pollution Control Act and the Resource Conservation and Recovery Act using third party commercial waste handlers; the storage, handling, and use of lubricating and cutting oils and small quantities of maintenance related products and chemicals, the health hazards of which are communicated to employees pursuant to Occupational Safety and Health Act-prescribed hazard communication efforts and the disposal or recycling of which are performed pursuant to the Resource Conservation and Recovery Act.

      Generally speaking, our facilities’ operations do not involve the types of emissions of air pollutants, discharges of pollutants to land or surface water, or treatment, storage, or disposal of hazardous waste which would ordinarily require federal or state environmental permits. Some of our facilities possess authorizations for air emissions from paints and coatings, hazardous materials permits under local fire codes or ordinances for the storage and use of small quantities of combustible materials such as oils or paints, and state or local permits for on-site septic systems. Our cost of obtaining and complying with such permits has not been and is not anticipated to be material. Our operations are such that environmental regulations typically have not required us to make significant capital expenditures for environmental compliance activities, and ongoing operational costs relating to environmental compliance are limited.

      We believe that we are in substantial compliance with all applicable environmental and workplace health and safety laws and do not currently anticipate that we will be required to expend any substantial amounts in the foreseeable future in order to meet such current requirements. However, some of the properties we own or lease are located in areas with a history of heavy industrial use, and are on or near sites listed on the CERCLA National Priority List. CERCLA establishes joint and several responsibility for clean-up without regard to fault for persons who have arranged for disposal of hazardous substances at

71

sites that have become contaminated and for persons who own or operate contaminated facilities. We have a number of properties located in or near industrial or light industrial use areas; accordingly, these properties may have been contaminated by pollutants which would have migrated from neighboring facilities or have been deposited by prior occupants. Some of our properties are affected by contamination from leaks and drips of cutting oils and similar materials used in our business and we have removed such and restored such known impacted soils pursuant to applicable environmental laws. The costs of such clean-ups have not been material. We are not currently subject to any claims or notices with respect to clean-up or remediation under CERCLA or similar laws for contamination at our leased or owned properties or at any off-site location. However, we cannot rule out the possibility that we could be notified of such claims in the future. It is also possible that we could be identified by the Environmental Protection Agency, a state agency or one or more third parties as a potentially responsible party under CERCLA or under analogous state laws.

Management Information Systems

      Both the Plates and Shapes Group and Flat Rolled Group service centers use a system marketed and distributed specifically for the service center industry. During 2003, we completed a similar common-platform initiative in the Building Products Group. Some of our subsidiaries currently use EDI, through which they offer customers a paperless process with respect to order entry, shipment tracking, billing, remittance processing and other routine activities. Additionally, several of our subsidiaries also use computer-aided drafting systems to directly interface with computer-controlled metal processing equipment, resulting in more efficient use of material and time.

      We believe investment in uniform management information systems and computer-aided manufacturing technology permits us to respond quickly and proactively to our customers’ needs and service expectations. These systems are able to share data regarding inventory status, order backlog, and other critical operational information on a real-time basis.

Employees

      We employ approximately 2,500 persons. As of December 31, 2005, approximately 300 employees (12%) at various sites were members of unions: the United Steelworkers of America; the Sheet Metals Workers Union; the International Association of Bridge, Structural, and Ornamental Ironworkers of America; the International Brotherhood of Teamsters; and the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers. Our relationship with these unions generally has been satisfactory, but occasional work stoppages have occurred. Within the last five years, one work stoppage occurred at one facility, which involved approximately 30 employees and lasted approximately 30 days. We are currently a party to 9 collective bargaining agreements, which expire at various times. Collective bargaining agreements for all of our union employees expire in each of the next three years. Historically, we have succeeded in negotiating new collective bargaining agreements without a strike. The largest collective bargaining agreement, which is at the Northbrook site and covers approximately one-third of our unionized employees, was recently renewed for another three years.

      From time to time, there are shortages of qualified operators of metals processing equipment. See “Risk Factors — Risks Related to Our Business — Adverse developments in our relationship with our employees and future shortages of employees could adversely affect our business.” In addition, during periods of low unemployment, turnover among less-skilled workers can be relatively high. We believe that our relations with our employees are satisfactory.

Vehicles

      We operate a fleet of owned or leased trucks and trailers, as well as forklifts and support vehicles. We believe these vehicles are generally well maintained and adequate for our current operations.

72

Risk Management and Insurance

      The primary risks in our operations are bodily injury, property damage and vehicle liability. We maintain general and vehicle liability insurance and liability insurance for bodily injury and property damage and workers’ compensation coverage, which we consider sufficient to protect us against a catastrophic loss due to claims associated with these risks.

Safety

      Our goal is to provide an accident-free workplace. We are committed to continuing and improving upon each facility’s focus and emphasis on safety in the workplace. We currently have a number of safety programs in place, which include regular weekly or monthly field safety meetings and training sessions to teach proper safe work procedures. We have developed a comprehensive “best practices” safety program which has been implemented throughout our operations to ensure that all employees comply with our safety standards, as well as those established by our insurance carriers, and federal, state and local laws and regulations. This program is led by the corporate office, with the assistance of each of our product group presidents, executive officers and industry consultants with expertise in workplace safety. We have experienced improvements in our safety record in each of the past three years. Furthermore, our annual bonus plan for our CEO, officers and managers are tied directly to our safety record.

Financial Information about Segments

      For information regarding revenues from external customers, measures of profit or loss and total assets for the last three years for each segment, see the Segment Results discussions in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” Note 11 to our consolidated audited financial statements included elsewhere in this prospectus.

Patents and Trademarks

      We own several U.S. patents, trademarks, service marks and copyrights. Certain of the trademarks and patents are registered with the U.S. Patent and Trademark Office, and, in some cases, with trademark offices of foreign countries. We consider other information owned by us to be trade secrets. We protect our trade secrets by, among other things, entering into confidentiality agreements with our employees and implementing security measures to restrict access to such information. We believe that our safeguards provide adequate protection to our proprietary rights. While we consider all of our intellectual property to be important, we do not consider any single intellectual property right to be essential to our operations as a whole.

Seasonal Aspects, Renegotiation and Backlog

      There is a slight decrease in our business during the winter months because of inclement weather conditions and the impact on the construction industry. No material portion of our business is subject to renegotiation of profits or termination of contracts at the election of the government. Because of the just-in-time delivery policy and the short lead-time nature of our business, we do not believe the information on backlog of orders is material to an understanding of our business.

Foreign Operations

      We do not derive any material revenue from foreign countries and do not have long-term assets or customer relationships outside of the U.S. We have no foreign operations or subsidiaries.

Research and Development

      We do not incur material expenses in research and development activities but do participate in various research and development programs. We address research and development requirements and product enhancement by maintaining a staff of technical support, quality assurance and engineering personnel.

73

Legal Proceedings

      We are involved in a variety of claims, lawsuits and other disputes arising in the ordinary course of business. We believe the resolution of these matters and the incurrence of their related costs and expenses should not have a material adverse effect on our consolidated financial position, results of operations or liquidity. “See “Risk Factors — Risks Related to Our Business — We are subject to litigation.”

Manufacturing and Facilities

Properties

      As of December 31, 2005, we operated 21 metals processing facilities in the Plates and Shapes Group and 12 facilities in the Flat Rolled Group. These facilities are used to receive, warehouse, process and ship metals. These facilities use various metals processing and materials handling machinery and equipment. Our Building Products Group operates 17 facilities where we process metals into various building products and 25 sales and distribution centers. During 2004, nine Building Products locations were closed and two locations were merged. During 2005, the operation of two Building Products locations were merged into other operating locations. One Building Products location converted from processing metal to a sales and distribution center. We continue to serve the marketing areas of the closed facilities with our existing sales force by expanding the responsible territories of our other facilities, and through the use of common carrier for product delivery.

      Many of our facilities are capable of being used at higher capacities, if necessary. We believe that our facilities will be adequate for the expected needs of our existing businesses over the next several years. Our facilities, sales and distribution centers and administrative offices are located and described as follows, as of December 31, 2005:

			Square
	Location		Footage		Owned/Leased
Plates and Shapes Group:
Northeast Plates and Shapes		Baltimore, Maryland		65,000		Leased
		Seekonk, Massachusetts		115,000		Owned
		Newark, New Jersey		81,000		Owned
		Langhorne, Pennsylvania		235,000		Leased
		Philadelphia, Pennsylvania		85,000		Owned
		York, Pennsylvania		109,000		Owned
South Central Plates and Shapes		Enid, Oklahoma		112,000		Leased
		Muskogee, Oklahoma(1)		229,000		Owned
		Cedar Hill, Texas		104,000		Owned
Mid-Atlantic Plates and Shapes		Ambridge, Pennsylvania		200,000		Leased
		Canton, Ohio		110,000		Owned
		Greenville, Kentucky		56,000		Owned
		Greensboro, North Carolina		115,000		Owned
		Leetsdale, Pennsylvania		114,000		Leased
		Wilmington, North Carolina		178,000		Leased
Southeast Plates and Shapes		Mobile, Alabama		246,000		Owned
		Jacksonville, Florida		60,000		Owned
		Oakwood, Georgia		206,000		Owned
		Waggaman, Louisiana		295,000		Owned
		Columbus, Mississippi		45,000		Owned
Southwest Plates and Shapes		Hayward, California		64,000		Leased

74

			Square
	Location		Footage		Owned/Leased
Flat Rolled Group:
		Madison, Illinois		150,000		Owned
		Jeffersonville, Indiana		90,000		Owned
		Randleman, North Carolina		150,000		Owned
		Springfield, Ohio		110,000		Owned
		Wooster, Ohio		140,000		Owned
		Chattanooga, Tennessee		60,000		Owned
		Germantown, Wisconsin		90,000		Owned
		Horicon, Wisconsin		120,000		Leased
		Wichita, Kansas		40,000		Leased
		Liberty, Missouri		84,000		Leased
		Northbrook, Illinois		187,000		Owned
		Walker, Michigan		50,000		Owned
Building Products Group:
Service Centers		Phoenix, Arizona		111,000		Leased
		Brea, California		44,000		Leased
		Buena Park, California		168,000		Leased
		Corona, California		38,000		Leased
		Ontario, California		29,000		Leased
		Rancho Cordova, California		41,000		Leased
		Groveland, Florida		247,000		Leased
		Leesburg, Florida		61,000		Leased
		Pensacola, Florida		48,000		Leased
		Kansas City, Missouri		58,000		Leased
		Las Vegas, Nevada		133,000		Leased
		Irmo, South Carolina		38,000		Leased
		Houston, Texas		285,000		Owned
		Houston, Texas		220,000		Leased
		Mesquite, Texas		200,000		Leased
		Mesquite, Texas		55,000		Leased
		Kent, Washington		57,000		Leased

75

			Square
	Location		Footage		Owned/Leased
Sales and Distribution Centers		Birmingham, Alabama		12,000		Leased
		Tucson, Arizona		9,000		Leased
		Hayward, California		25,000		Leased
		San Diego, California		8,000		Leased
		Clearwater, Florida		20,000		Leased
		Fort Myers, Florida		18,000		Leased
		Holly Hill, Florida		10,000		Leased
		Jacksonville, Florida		17,000		Leased
		Lakeland, Florida		24,000		Leased
		West Melbourne, Florida		18,000		Leased
		Stone Mountain, Georgia		14,000		Leased
		Louisville, Kentucky		11,000		Leased
		Jackson, Mississippi		25,000		Leased
		Overland, Missouri		14,000		Leased
		Greensboro, North Carolina		15,000		Leased
		Oklahoma City, Oklahoma		40,000		Leased
		Harrisburg, Pennsylvania		12,000		Leased
		Memphis, Tennessee		20,000		Leased
		Nashville, Tennessee		15,000		Leased
		Dallas, Texas		36,000		Leased
		Longview, Texas		15,000		Leased
		San Antonio, Texas		20,000		Leased
		Weslaco, Texas		21,000		Leased
		Salt Lake City, Utah		23,000		Leased
		Virginia Beach, Virginia		10,000		Leased
Administrative Locations:
Corporate Headquarters		Houston, Texas.		13,200		Leased
Southeast Plates and Shapes		Mobile, Alabama		16,000		Owned
i-Solutions		Ft. Washington, Pennsylvania		4,300		Leased

(1)  This facility is subject to liens with respect to specific debt obligations, including Industrial Revenue Bonds.

DESCRIPTION OF THE TRANSACTIONS

      On November 30, 2005, Flag Acquisition merged with and into Metals USA, with Metals USA as the surviving company. We are wholly-owned by Flag Intermediate, which is in turn wholly-owned by Flag Holdings. As of December 31, 2005, investment funds affiliated with Apollo V and the management participants owned approximately 97% and 3% of Flag Holdings, respectively. The issuance of the old notes, borrowings under the ABL facility, the equity investment and participation described above, the Merger and other related transactions are collectively referred to in this prospectus as the “Transactions.” For a more complete description of the Transactions, see “— Ownership and Corporate Structure,” “Description of the Transactions,” “Description of Certain Indebtedness” and “Description of the Notes.”

      The Merger was financed by the issuance of the old notes, borrowings under the ABL facility and the equity investment of the investment funds affiliated with Apollo V and the management participants.

76

Ownership and Corporate Structure

      The following diagram sets forth our ownership structure.

(1)	The ABL facility provides for up to $450.0 million of senior secured revolving credit borrowings and letters of credit, subject to a borrowing base determined primarily by the value of our eligible receivables and eligible inventory, subject to certain reserves. Our borrowing base under the ABL facility was approximately $384.7 million on December 31, 2005, of which $191.4 million was drawn.
(2)	The notes are guaranteed on a senior secured basis by the guarantors. The notes and the related guarantees will be secured on a first-priority lien basis by substantially all of the assets (other than accounts, inventory, cash and proceeds and products of the foregoing and certain assets related thereto) of Metals USA and the guarantors and on a second-priority lien basis by the accounts, inventory, cash and proceeds and products of the foregoing and certain assets related thereto of Metals USA and the guarantors.
(3)	Consists of an Industrial Revenue Bond (IRB) with $5.7 million principal amount outstanding as of December 31, 2005, which is payable on May 1, 2016 in one lump sum payment and $1.4 million in vendor financing and purchase money notes.

77

MANAGEMENT

Executive Officers and Directors

      Our executive officers and directors are as follows. Each is a citizen of the U.S. unless otherwise indicated.

Name		Age		Position
Executive Officers:
	C. Lourenço Gonçalves		48	President and CEO
	Robert C. McPherson, III		42	Senior Vice President and CFO
	John A. Hageman		51	Senior Vice President and CLO
	Keith A. Koci		41	Senior Vice President — Business Development
	Roger Krohn		52	President of the Flat Rolled Group
	David Martens		53	President of the Plates and Shapes Group — West
	Joe Longo		58	President of the Plates and Shapes Group — East
	Gerard Papazian		61	President of the Building Products Group
Directors:
	C. Lourenço Gonçalves		48	Director
	Joshua J. Harris		40	Director
	Marc E. Becker		33	Director
	M. Ali Rashid		29	Director
	Eric L. Press		39	Director
	John T. Baldwin		49	Director

      C. Lourenço Gonçalves, 48, has been President and Chief Executive Officer and one of our directors since February 2003. Mr. Gonçalves served as President and Chief Executive Officer of California Steel Industries, Inc., or CSI, from March 1998 to February 2003. From 1981 to 1998, he was employed by Companhia Siderurgica Nacional, where he held positions as a managing director, general superintendent of Volta Redonda Works, hot rolling general manager, cold rolling and coated products general manager, hot strip mill superintendent, continuous casting superintendent and quality control manager. Mr. Gonçalves is a metallurgical engineer with a masters degree from the Federal University of Minas Gerais State and a bachelor’s degree from the Military Institute of Engineering in Rio de Janeiro, Brazil. Mr. Gonçalves is a citizen of Brazil.

      Robert C. McPherson, III, 42, became Senior Vice President on March 31, 2003 and Chief Financial Officer on December 1, 2005. From August, 2004 through November, 2005, Mr. McPherson was President of our Building Products Group. Prior to joining us, Mr. McPherson was employed at CSI from 1989 until March 2003. Mr. McPherson served in a number of capacities at CSI, most recently having served as Treasurer and Controller from 1996 until 2003, Assistant Treasurer from 1992 until 1996, and as Cash Management Administrator from 1989 until 1992.

      John A. Hageman, 51, became Senior Vice President, Chief Legal Officer and Secretary in April 1997. From 1987 through 1997, Mr. Hageman was Senior Vice President of Legal Affairs, General Counsel and Secretary of Physician Corporation of America. From 1981 to 1987, Mr. Hageman was a partner with a law firm in Wichita, Kansas.

      Keith Koci, 41, became Senior Vice President, Business Development on December 1, 2005. Mr. Koci joined us in August, 1998 as a regional controller in the Flat Rolled Group, subsequently served as Corporate Director of Budgeting from August, 2003 through May 2004, and then served as Vice President, Corporate Controller from May, 2004 through November, 2005. Mr. Koci is a certified public accountant licensed in the state of Texas. Prior to joining us, Mr. Koci was CFO and Controller for Optimum Nutrition Inc. from 1996 until 1998.

78

      Roger Krohn, 52, became President Flat Rolled Group in November of 2003 and is responsible for the operations of our Flat Rolled Group. Mr. Krohn served as President of Krohn Steel Service Center, from 1982 until 1998. After we acquired Krohn Steel Service Center in 1998, Mr. Krohn remained as President and General Manager until becoming President of the Flat Rolled Group in November, 2003. After attending college, Mr. Krohn served seven years as a pilot in the U.S. Air Force commissioned as an officer in 1975.

      David A. Martens, 53, became President of the Plates and Shapes Group — West in July, 2005 and is responsible for the operations of our Plates and Shapes Western Region. From 1997 through 2005, Mr. Martens was Vice President of our Plates and Shapes South Central Region. Mr. Martens was employed at Singer Steel, Inc. from 1978 until it was acquired by Uni-Steel, Inc. in 1987. Mr. Martens served in a number of capacities at Uni-Steel, most recently Executive Vice President from 1992 to 1997.

      Joe Longo, 58, became President of the Plates and Shapes Group — East in July of 2005 and is responsible for 16 Plates and Shapes operations. Mr. Longo served as Vice President, Plates and Shapes Northeast since January 2001. Mr. Longo began his career with Bethlehem Steel in 1972 and entered the Steel Service Center industry in 1983 and held various management positions including Vice President East for Levinson Steel, a company later Purchased by Metals USA. Mr. Longo is graduate of the University of Maryland.

      Gerard Papazian, 61, became President of the Building Products Group in December, 2005 and is responsible for the Building Products Group consisting of patio and roofing units. Mr. Papazian served as Vice President of Operations for the Building Products Group from 2000 to 2005. Prior to joining us, he held senior management positions with Alcan Aluminum Inc as President of their Fabral roofing division based in Pennsylvania and later as President of Vicwest USA, metal roofing based in Tennessee. Mr. Papazian is a graduate engineer from the University of Toronto and has over 30 years of building products experience.

      Joshua J. Harris, 40, co-founded Apollo in 1990. Prior to 1990, Mr. Harris was a member of the Mergers and Acquisitions department of Drexel Burnham Lambert, Inc.

      Marc E. Becker, 33, is a partner of Apollo and has been associated with Apollo since 1996. Prior to 1996, Mr. Becker was employed by Smith Barney, Inc. within its Investment Banking division.

      M. Ali Rashid, 29, is a partner of Apollo and has been associated with Apollo since 2000. From 1998 to 2000, Mr. Rashid was employed by The Goldman Sachs Group, Inc. in the Financial Institutions Group of its Investment Banking Division.

      Eric L. Press, 39, is a partner of Apollo and has been associated with Apollo since 1998. From 1992 to 1998, Mr. Press was associated with the law firm of Wachtell, Lipton, Rosen & Katz specializing in mergers, acquisitions, restructurings and related financing transactions. From 1987 to 1989, Mr. Press was a consultant with The Boston Consulting Group.

      John T. Baldwin, 49, became a Director on January 18, 2006. Mr. Baldwin served as Senior Vice President and Chief Financial Officer of Graphic Packaging Corporation from September 2003 to August 2005, and as Vice President and Chief Financial Officer of Worthington Industries, Inc. from December 1998 to September 2003. He joined Worthington, a steel processor, in 1997 as treasurer. Prior to Worthington, Mr. Baldwin served in various financial capacities at Tenneco Inc. in Greenwich, Connecticut, London, England and Houston, Texas. Mr. Baldwin is a graduate of the University of Houston and the University of Texas School of Law. Mr. Baldwin has served on the Board of The Genlyte Group Incorporated, a lighting manufacturer, since March 2003.

Management Agreements with Metals USA

      Each of Messrs. Gonçalves, Hageman and McPherson has an employment agreement and each of Messrs. Krohn, Martens and Longo has a severance agreement with Metals USA.

79

      Mr. Gonçalves’ Employment Agreement. Under his employment agreement, Mr. Gonçalves will serve as our president and chief executive officer for an initial term of five years following the effective time of the Merger. The initial term will automatically be renewed for successive one-year periods unless 90 days’ prior notice is given by either party. In addition, Mr. Gonçalves is a member of our board of directors. He receives an annual base salary of $525,000. Mr. Gonçalves is eligible to receive an annual bonus of not less than 100% of his base salary if we achieve specified performance objectives. In addition, pursuant to his employment agreement, he received two stock option grants at the effective time of the Merger to purchase Flag Holdings’ common stock at an exercise price of $10.00 per share. The first grant was for options to purchase 407,960 shares of Flag Holdings’ common stock and will expire ten years after the grant date. Pursuant to his non-qualified stock option agreements, 203,980 of these options will be classified as Tranche A Options, and 20% of these options will vest and become exercisable on each of the first five anniversaries of the grant date, except that vesting will accelerate upon our sale. The remaining 203,980 options subject to this first grant are classified as Tranche B Options and will vest and become exercisable on the earlier of the eighth anniversary of the grant date and the date that the internal rate of return of funds managed by Apollo Management with respect to its investment in us equals or exceeds 25%. The second grant was for options to purchase 18,800 shares of Flag Holdings’ common stock which will be fully vested as of the grant date and exercisable on or before March 30, 2006. Mr. Gonçalves has exercised his options subject to the second grant, and received an additional 40,790 options to purchase shares of Flag Holdings’ common stock for each option exercised. These additional contingent options are allocated equally among Tranches A and B and are subject to similar vesting specifications as the 407,690 option grant discussed above. Further, Mr. Gonçalves received a grant of 39,600 restricted shares. Under the employment agreement, Mr. Gonçalves will be provided employee benefits equal to or greater than those provided to him by us prior to the Merger. Upon Mr. Gonçalves’ termination of employment by us without “cause” or by Mr. Gonçalves for “good reason” (each as defined in the employment agreement) or upon our election not to renew his employment, Mr. Gonçalves will be entitled to receive the following severance payments and benefits: all accrued salary and bonus earned but not yet paid, a pro-rata bonus for the year in which the termination occurs, a lump sum payment equal to twelve months of his base salary, monthly payments equal to one-twelfth of his annual base salary beginning with the thirteenth month following the date of his termination, monthly payments equal to one-twelfth of his annual base salary until the twenty-fourth month following his date of termination (or on the earlier date of his material violation of the terms of his employment agreement), and we will reimburse Mr. Gonçalves for the cost of COBRA Continuation coverage for a period of up to eighteen months. Additionally, Mr. Gonçalves will be subject to certain restrictions on his ability to compete with or solicit our customers or employees for two years after his termination. Mr. Gonçalves’ employment agreement may also be terminated for “cause” (as defined in the employment agreement).

      Mr. Hageman’s Employment Agreement. Under his employment agreement, Mr. Hageman will serve as our senior vice president and chief legal officer and administrative officer for an initial term of two years following the effective time of the Merger. The initial term will automatically be renewed for successive one-year periods unless 90 days’ prior notice is given by either party. Mr. Hageman receives an annual base salary of $270,000 and is eligible for an annual bonus of 70% of his base salary if we achieve specified performance objectives. In addition, he received a stock option grant to purchase 73,000 shares of Flag Holdings’ common stock at an exercise price of $10.00 per share that will expire ten years after the grant date. Pursuant to his non-qualified stock option agreement, 36,500 of these options are classified as Tranche A Options, 20% of which will vest and become exercisable on each of the first five anniversaries of the grant date, except that vesting will accelerate upon our sale. The remaining 36,500 options are classified as Tranche B Options and will vest and become exercisable on the earlier of the eighth anniversary of the effective time of the Merger and the date that the internal rate of return of funds managed by Apollo V with respect to its investment in us equals or exceeds 25%. Further, Mr. Hageman received a grant of 8,000 restricted shares. Mr. Hageman will be provided employee benefits equal to or greater than those provided to him by us prior to the Merger. Upon his termination of employment by us without “cause” or by Mr. Hageman for “good reason,” or upon our election not to renew his employment, Mr. Hageman will be entitled to the following severance payments and benefits: all accrued

80

salary and bonus earned but not paid, a pro rata bonus for the year in which the termination occurs, his annual base salary for a period of eighteen months following his termination or, at our election, a lump sum payment equal to eighteen months of annual base salary (such payments to cease (or be repaid by Mr. Hageman on a pro-rata basis in the case of a lump sum payment) if he violates the terms of his employment agreement prior to such time), and we will reimburse Mr. Hageman for the cost of COBRA Continuation coverage for a period of up to eighteen months. Additionally, Mr. Hageman will be subject to certain restrictions on his ability to compete with or solicit our customers or employees for two years after his termination. Mr. Hageman’s employment agreement may also be terminated for “cause” (as defined in the employment agreement).

      Mr. McPherson’s Employment Agreement. Under his employment agreement, Mr. McPherson will serve as our senior vice president and chief financial officer for an initial term of two years following the effective time of the Merger. The initial term will automatically be renewed for successive one-year periods unless 90 days’ prior notice is given by either party. Mr. McPherson receives an annual base salary of $300,000 and is eligible for an annual bonus of 70% of his base salary if we achieve specified performance objectives. In addition, he received a stock option grant to purchase 49,500 shares of Flag Holdings’ common stock at an exercise price of $10.00 per share that will expire ten years after the grant date. Pursuant to his non-qualified stock option agreement, 24,750 of these options are classified as Tranche A Options, and 20% of these options will vest and become exercisable on each of the first five anniversaries of the grant date, except that vesting will accelerate upon our sale. The remaining 24,750 options are classified as Tranche B Options and will vest and become exercisable on the earlier of the eighth anniversary of the grant date and the date that the internal rate of return of funds managed by Apollo V with respect to its investment in us equals or exceeds 25%. Further, Mr. McPherson will receive a grant of 5,500 restricted shares, which shares will vest on the second anniversary of the Merger. Mr. McPherson will be provided employee benefits equal to or greater than those provided to him by us prior to the Merger. Upon Mr. McPherson’s termination of employment by us without “cause” or by Mr. McPherson for “good reason” (each as defined in the employment agreement) or upon our election not to renew his employment, Mr. McPherson will be entitled to receive the same severance payments as set forth in Mr. Hageman’s employment agreement and described above. Additionally, Mr. McPherson will be subject to certain restrictions on his ability to compete with or solicit our customers or employees for two years after his termination. Mr. McPherson’s employment agreement may also be terminated for “cause” (as defined in the employment agreement).

      Mr. Krohn’s Severance Agreement. Under his severance agreement, upon his termination of employment by us without “cause” or by Mr. Krohn for “good reason” as those terms are defined in the severance agreement, Mr. Krohn will be entitled to the following severance payments and benefits: all accrued salary and bonus earned but not paid, his annual base salary for a period of twelve months following his termination of employment (such payments to cease if he violates any material terms of his severance agreement prior to such time), and we will reimburse Mr. Krohn for the cost of COBRA Continuation coverage for a period of up to twelve months. Additionally, Mr. Krohn will be subject to certain restrictions on his ability to compete with us for one year (two years if his employment is terminated for cause or he resigns without good reason) and to solicit our customers or employees for two years after his termination. In addition, pursuant to a stock option agreement with Flag Holdings, Mr. Krohn received a stock option grant at the effective time of the Merger to purchase 47,250 shares of Flag Holdings’ common stock at an exercise price of $10.00 per share that will expire ten years after the grant date. Pursuant to his non-qualified stock option agreement, 23,625 of these options are classified as Tranche A Options, 20% of which will vest and become exercisable on each of the first five anniversaries of the grant date, except that vesting will accelerate upon our sale. The remaining 23,625 options are classified as Tranche B Options and will vest and become exercisable on the earlier of the eighth anniversary of the effective time of the Merger and the date that the internal rate of return of funds managed by Apollo Management with respect to its investment in us equals or exceeds 25%. Further, pursuant to a restricted stock agreement with Flag Holdings, Mr. Krohn will receive a grant of 4,900 restricted shares, which shares will vest on the second anniversary of the Merger.

81

      Mr. Martens’ Severance Agreement. Under his severance agreement, upon his termination of employment by us without “cause” or by Mr. Martens for “good reason” as those terms are defined in the severance agreement, Mr. Martens will be entitled to the following severance payments and benefits: all accrued salary and bonus earned but not paid, his annual base salary for a period of twelve months following his termination of employment (such payments to cease if he violates any material terms of his severance agreement prior to such time), and we will reimburse Mr. Martens for the cost of COBRA Continuation coverage for a period of up to twelve months. Additionally, Mr. Martens will be subject to certain restrictions on his ability to compete with us for one year (two years if his employment is terminated for cause or he resigns without good reason) and to solicit our customers or employees for two years after his termination. In addition, pursuant to a stock option agreement with Flag Holdings, Mr. Martens received a stock option grant at the effective time of the Merger to purchase 13,126 shares of Flag Holdings’ common stock at an exercise price of $10.00 per share that will expire ten years after the grant date. Pursuant to his non-qualified stock option agreement, 6,563 of these options are classified as Tranche A Options, 20% of which will vest and become exercisable on each of the first five anniversaries of the grant date, except that vesting will accelerate upon our sale. The remaining 6,563 options are classified as Tranche B Options and will vest and become exercisable on the earlier of the eighth anniversary of the effective time of the Merger and the date that the internal rate of return of funds managed by Apollo Management with respect to its investment in us equals or exceeds 25%. Further, pursuant to a restricted stock agreement with Flag Holdings, Mr. Martens will receive a grant of 1,600 restricted shares, which shares will vest on the second anniversary of the Merger.

      Mr. Longo’s Severance Agreement. Under his severance agreement, upon his termination of employment by us without “cause” or by Mr. Longo for “good reason” as those terms are defined in the severance agreement, Mr. Longo will be entitled to the following severance payments and benefits: all accrued salary and bonus earned but not paid, his annual base salary for a period of twelve months following his termination of employment (such payments to cease if he violates any material terms of his severance agreement prior to such time), and we will reimburse Mr. Longo for the cost of COBRA Continuation coverage for a period of up to twelve months. Additionally, Mr. Longo will be subject to certain restrictions on his ability to compete with us for one year (two years if his employment is terminated for cause or he resigns without good reason) and to solicit our customers or employees for two years after his termination. In addition, pursuant to a stock option agreement with Flag Holdings, Mr. Longo received a stock option grant at the effective time of the Merger to purchase 15,750 shares of Flag Holdings’ common stock at an exercise price of $10.00 per share that will expire ten years after the grant date. Pursuant to his non-qualified stock option agreement, 7,875 of these options are classified as Tranche A Options, 20% of which will vest and become exercisable on each of the first five anniversaries of the grant date, except that vesting will accelerate upon our sale. The remaining 7,875 options are classified as Tranche B Options and will vest and become exercisable on the earlier of the eighth anniversary of the effective time of the Merger and the date that the internal rate of return of funds managed by Apollo Management with respect to its investment in us equals or exceeds 25%. Further, pursuant to a restricted stock agreement with Flag Holdings, Mr. Longo will receive a grant of 1,600 restricted shares, which shares will vest on the second anniversary of the Merger.

Compensation of Directors

      We compensate our directors with an annual retainer of $50,000, paid quarterly in advance of each fiscal quarter of service. Each director also receives a fee of $2,000 per board meeting attended and $2,000 for each regularly scheduled committee meeting unless it is on the same day of a board meeting. The Chairman of the Audit Committee receives an annual fee of $10,000. All reasonable out of pocket expenses are reimbursed upon submission of support documentation.

Audit Committee of the Board of Directors

      The Board of Directors has an Audit Committee. Our Audit Committee recommends the firm to be appointed as independent accountants to audit financial statements and to perform services related to the

82

audit, reviews the scope and results of the audit and with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of the internal accounting procedures, considers the effect of such procedures on the accountants’ independence and establishes policies for business values, ethics and employee relations. The Audit Committee consists of Messrs. Baldwin, Rashid and Becker. Mr. Baldwin is an “audit committee financial expert” as such term is defined in Item 401(h) of Regulation S-K.] We currently do not have any other committees of our Board of Directors.

Executive Compensation

      The following table summarizes certain information concerning compensation earned by Metals USA’s chief executive officer and each of its four other most highly compensated executive officers during 2003, 2004 and 2005. Flag Intermediate does not compensate (in any manner) its executive officers.

				Annual Compensation							Long-Term Compensation
									Other					Securities
									Annual		Restricted			Underlying
									Compen-		Stock Awards			Options			All Other
Name and Principal Position		Year		Salary		Bonus			sation(1)		(Shares) (2)			Granted(3)			Compensation(14)
C. Lourenço Gonçalves(4)			2005	$	533,218	$	660,000		$	4,545,975		39,600	(11)		448,750	(12)	$	16,016
	President and CEO		2004	$	445,213	$	1,046,560	(9)		—		7,622			22,747		$	9,054
			2003	$	342,528	$	339,600	(10)		—		12,000			300,000	(5)	$	42,949
Robert C. McPherson, III(6)			2005	$	293,022	$	310,000		$	485,951		5,500	(13)		50,415	(12)	$	10,341
	Senior Vice President		2004	$	279,407	$	260,000	(9)		—		4,065			12,132		$	5,384
	and CFO		2003	$	196,009	$	131,250	(10)		—		6,000			15,000		$	17,570
John A. Hageman			2005	$	279,792	$	255,000		$	1,164,436		8,000	(11)		73,000	(12)	$	15,840
	Senior Vice President		2004	$	271,715	$	360,780	(9)		—		3,920			11,698		$	16,904
	and CLO		2003	$	259,769	$	194,800	(10)		—		6,000			50,000		$	4,291
Roger Krohn(7)			2005	$	293,890	$	160,000		$	277,671		4,900	(13)		47,250	(12)	$	1,526
	President Flat Rolled Group		2004	$	261,572	$	441,780	(9)		—		4,065			12,132		$	4,100
			2003	$	156,632	$	60,000	(10)		—		6,000			5,000			—
David A. Martens(8)			2005	$	236,379	$	129,375		$	172,424		1,600	(13)		13,126	(12)	$	4,662
	President Plates and Shapes		2004	$	213,259	$	155,250			—		—			6,000		$	4,706
	Group-West		2003	$	182,000	$	166,500			—		—			12,500		$	364

(1)	Includes acceleration of stock options and stock grants at $22 per share pursuant to the terms of the Merger.
(2)	The 2003 and 2004 stock grants accelerated on November 30, 2005 pursuant to the terms of the Merger. At December 31, 2005, the aggregate value of these restricted stock grants was $1,092,720.
(3)	The 2003 and 2004 stock options accelerated on November 30, 2005 pursuant to the terms of the Merger.
(4)	Became President and CEO in February 2003.
(5)	Each increment of 100,000 options has a strike price of $4.75, $9.50 and $14.25, respectively.
(6)	Became Senior Vice President in March 2003 and CFO in December 2005.
(7)	Became President Flat Rolled Group in November 2003.
(8)	Became President Plates and Shapes Group-West in June 2005.
(9)	Includes fair market value of stock grants made February 1, 2005: (a) Mr. Gonçalves — $71,560; and Messrs. Hageman, Krohn and McPherson — $35,780.

(10)	Includes fair market value of the stock grants made February 1, 2004: (a) Mr. Gonçalves — $39,600 and (b) Messrs. Hageman, Krohn and McPherson — $19,800.
(11)	Stock Grants vested immediately.

83

(12)	Tranche A options vest 20% over five years and Tranche B options vest in full on the earlier of the 8th anniversary of the Grant Date or the date that the internal rate of return of funds managed by Apollo equals or exceeds 25%.
(13)	Stock Grants vest in full December 2007.
(14)	Includes the value of (a) contributions to 401(k) plans, (b) premiums paid for term life insurance for the benefit of the insured, and (c) country club dues. The amounts described in clauses (a), (b) and (c) above for each of the above officers paid in 2005 are set forth below:

	2005						2004
	(a)		(b)		(c)		(a)		(b)		(c)
C. Lourenço Gonçalves		4,200		5,665		6,151		4,100		4,954		—
Robert C. McPherson, III		4,200		1,344		4,797		4,100		—		1,284
John A. Hageman		4,200		5,975		5,665		4,100		5,975		6,829
Roger Krohn		1,112		414		—		4,100		—		—
David A. Martens		4,200		462		—		4,254		452		—

STOCK OPTIONS

Individual Option Grants in 2005

      The following table presents information regarding stock options granted to certain executive officers during 2005. Unless otherwise indicated, options disclosed in the tables below are exercisable for shares of Flag Holdings’ common stock.

			Percent of
	Number of		Total
	Securities		Options
	Underlying		Granted to						Present Value
	Options		Employees		Exercise		Expiration		at Grant
Name	Granted		in 2005		Price		Date		Date
C. Lourenco Gonçalves		448,750		55.9%	$	10.00		11/30/2015	$	3,109,838
Robert C. McPherson, III		50,415		6.3%	$	10.00		11/30/2015		349,376
John A. Hageman		73,000		9.1%	$	10.00		11/30/2015		505,890
Roger Krohn		47,250		5.9%	$	10.00		11/30/2015		327,443
David A. Martens		13,126		1.6%	$	10.00		11/30/2015		90,963

Year End 2005 Option Values

      The following table presents information regarding unexercised options held by certain executive officers as of December 31, 2005. None of those officers exercised options during 2005.

	Number of Unexercisable				Value of Unexercised
	Options at				“In-the-Money” Options at
	December 31, 2005				December 31, 2005
Name	Exercisable		Unexercised		Exercisable		Unexercised
C. Lourenco Gonçalves		—		448,750		—	$	4,487,500
Robert C. McPherson, III		—		55,915		—		559,150
John A. Hageman		—		73,000		—		730,000
Roger Krohn		—		52,150		—		521,500
David A. Martens		—		14,726		—		147,260

2005 Stock Incentive Plan

      In connection with the Merger, Flag Holdings adopted the 2005 Stock Incentive Plan under which Messrs. Gonçalves, Hageman, McPherson, Krohn and other management participants are eligible to

84

receive awards of stock options for common stock of Flag Holdings. Pursuant to option agreements entered into that are subject to the terms of the 2005 Stock Incentive Plan, Messrs. Gonçalves, Hageman, McPherson and Krohn have been granted options under the Plan, effective at the effective time of the Merger. The number of options to be granted to each of Messrs. Gonçalves, Hageman, McPherson and Krohn and the date of vesting and pricing of such options are more fully described below under “— Management Agreements.” Under the 2005 Stock Incentive Plan, awards may be granted to employees or directors of, or consultants to, us, or any of our subsidiaries, except that consultants may only receive awards with the consent of our president. The 2005 Stock Incentive Plan has a term of ten years. The date of grant, vesting and pricing of options granted under the option plan are subject to the discretion of the compensation committee of Flag Holdings. In addition, Messrs. Gonçalves, Hageman, McPherson, Krohn and a limited number of other management participants have also received awards of restricted shares of common stock of Flag Holdings granted under the 2005 Stock Incentive Plan. Messrs. Gonçalves, Hageman, McPherson and Krohn have been granted 39,600, 8,000, 5,500 and 4,900 restricted shares, respectively, pursuant to restricted stock agreements entered into that are subject to the terms of the 2005 Stock Incentive Plan.

85

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      Flag Holdings owns 100% of the common stock of Flag Intermediate, which owns 100% of the common stock of Metals USA.

      The following table sets forth information with respect to the ownership of Flag Holdings as of March 1, 2006 for:

•  each person who owns beneficially more than a 5% equity interest in Flag Holdings,

•  each member of our board of directors,

•  each of our named executive officers, and

•  all of our executive officers and directors as a group.

					Flag Holdings(1)
			Number of Shares
			That May be
			Acquired within
	Number of Shares		60 Days by
Name and Address of Owner(2)	Beneficially Owned		Exercise of Options		Equity Interest
Apollo Management V, L.P.(3)		13,612,900		0		96.9	%
C. Lourenço Gonçalves		246,400		0		1.8	%
Robert C. McPherson, III		27,500		0		*
John A. Hageman		45,500		0		*
Roger Krohn		27,000		0		*
Keith A. Koci		8,000		0		*
Marc E. Becker		0		0		*
Joshua J. Harris		0		0		*
Eric L. Press		0		0		*
M. Ali Rashid		0		0		*
John T. Baldwin		0		0		*
All executive officers and directors as a group (9 persons)		354,400		0		2.5	%

* Less than 1%

(1)	The amounts and percentages of interests beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power, which includes the power to vote or direct the voting of such security, or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Securities that can be so acquired are deemed to be outstanding for purposes of computing such person’s ownership percentage, but not for purposes of computing any other person’s percentage. Under these rules, more than one person may be deemed beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest. Except as otherwise indicated in these footnotes, each of the beneficial owners has, to our knowledge, sole voting and investment power with respect to the indicated ownership interests.
(2)	Unless otherwise indicated, the address of each person listed is c/o Metals USA, Inc., One Riverway, Suite 1100, Houston, TX 77056
(3)	Represents all equity interest of Flag Holdings held of record by affiliates of Apollo Management V, L.P. Each of Messrs. Becker, Harris, Press and Rashid disclaim beneficial ownership of any shares of Flag Holdings that may be deemed beneficially owned by Apollo V. Each of Apollo Management V, L.P. and its affiliated investment funds disclaims beneficial ownership of any such shares in which it does not have a pecuniary interest. The address of Messrs. Becker, Harris, Press and Rashid and Apollo V is c/o Apollo Management, L.P., 9 West 57th Street, New York, New York 10019.

86

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Management Agreements

      In contemplation of the Merger, Messrs. Gonçalves, Hageman, McPherson and Krohn entered into certain agreements with Flag Holdings and Flag Acquisition. The terms of the employment and other related agreements with Messrs. Gonçalves, Hageman and McPherson are substantially identical, other than with respect to certain economic terms. Mr. Krohn entered into a severance agreement that differs from the others’ employment agreements, but entered into other related agreements that are similar. The terms of those agreements are described under “Management — Management Agreements.”

Investors Rights Agreement

      Flag Holdings and each of the management participants have entered into an investor rights agreement which provides for, among other things, a restriction on the transferability of each such person’s equity ownership in Flag Holdings, tag-along rights, come-along rights, piggyback registration rights, repurchase rights by Flag Holdings and Apollo V in certain circumstances, and the grant of an irrevocable proxy to Apollo with respect to the voting rights associated with his respective ownership, and certain restrictions on each such person’s ability to compete with or solicit our employees or customers.

Apollo Management Agreements

      We and Flag Holdings have entered into a management agreement with Apollo V pursuant to which Apollo V or its affiliates will provide us with management services. Pursuant to such agreement, Apollo V will receive an annual management fee equal to $2 million, payable on March 15 of every year, starting on March 15, 2006. A portion of this fee equal to $500,000 has been waived by Apollo V for 2006 and will be waived in future years unless we are notified by Apollo V prior to the due date of the payment. The management agreement will terminate on December 31, 2012, unless earlier terminated by Apollo V. Upon a termination of the management agreement prior to December 31, 2012, Apollo V will be entitled to receive the present value of (a) $14 million (excluding management fees waived), less (b) the aggregate amount of management fees that were paid to it under the agreement prior to such termination. Finally, the parties have entered into a transaction fee agreement that provides that affiliates of Apollo V will be entitled to receive a fee in connection with certain subsequent financing, acquisition, disposition and change of control transactions with a value of $20 million or more, such fee to be equal to 1% of the gross transaction value of any such transaction. Both the management agreement and transaction fee agreement contain customary indemnification provisions in favor of Apollo V and its affiliates, as well as expense reimbursement provisions with respect to expenses incurred by Apollo V and its affiliates in connection with its performance of services thereunder.

DESCRIPTION OF CERTAIN INDEBTEDNESS

Senior Secured Asset-Based Revolving Credit Facility

      On December 1, 2005 we entered into the ABL facility arranged by Credit Suisse, as sole bookrunner and joint lead arranger, and Banc of America Securities LLC, as joint lead arranger.

      The ABL facility is available to us on a revolving basis during the period beginning on December 1, 2005 and ending on November 30, 2011. Substantially all of our subsidiaries are also borrowers under the ABL facility. The maximum availability under the ABL facility is based on eligible receivables and eligible inventory, subject to certain reserves, to be determined in accordance with the loan agreement. The commitments under the ABL facility are initially comprised of $415.0 million of Tranche A Commitments and $35.0 million of Tranche A-1 Commitments. While the Tranche A-1 Commitments are outstanding, the borrowing base is subject to greater advance rates than would otherwise be in effect. Subject to certain conditions, the Tranche A-1 Commitments may be reduced or terminated at any time. Subject to certain conditions, upon the reduction or termination of the Tranche A-1 Commitments, the Tranche A

87

Commitments will be increased on a dollar-for-dollar basis in an amount equal to such reduction or termination. On June 1, 2006, the Tranche A-1 Commitments will automatically be reduced to $25.0 million (with a corresponding increase in the Tranche A Commitments), unless previously reduced below $25.0 million. A portion of the ABL facility is available for swingline loans and the issuance of letters of credit. Both the face amount of any outstanding letters of credit and any swingline loans will reduce availability under the ABL facility on a dollar-for-dollar basis.

      The interest rates with respect to loans made utilizing the Tranche A Commitments are, at our option, (i) the higher of (a) the prime rate of Credit Suisse in effect at its principal office in New York City and (b) the federal funds effective rate plus 0.5%; in each case plus an applicable margin ranging between -0.25% and 0.0% as determined in accordance with the loan agreement or (ii) the rate (as adjusted) at which eurodollar deposits for one, two, three, six or, if available, nine or twelve months, as selected by us, by reference to the British Bankers’ Association Interest Settlement Rates for deposits in dollars, plus an applicable margin ranging between 1.25% and 2.00% as determined in accordance with the loan and security agreement governing the ABL facility.

      The interest rates with respect to loans utilizing the Tranche A-1 Commitments are, at our option, (i) the higher of (a) the prime rate of Credit Suisse in effect at its principal office in New York City and (b) the federal funds effective rate plus 0.5%; in each case plus an applicable margin of (1) initially, 1.75% and (2) after the first adjustment date under the ABL facility, 1.50% or (ii) the rate (as adjusted) at which eurodollar deposits for one, two, three, six or, if available, nine or twelve months, as selected by us, by reference to the British Bankers’ Association Interest Settlement Rates for deposits in dollars, plus an applicable margin of (a) initially, 3.75% and (b) after the first adjustment date under the ABL facility, 3.50%.

      Substantially all of our subsidiaries are defined as “borrowers” under such agreement (such subsidiaries are all of our domestic operating subsidiaries as of the date of this prospectus and we do not have any foreign subsidiaries as of the date of this prospectus). The obligations under the ABL facility are guaranteed by Flag Intermediate and certain of our future domestic subsidiaries and are secured (i) on a first-priority lien basis by our, the other borrowers’ and the guarantors’ accounts, inventory, cash and proceeds and products of the foregoing and certain assets related thereto and (ii) on a second-priority lien basis by substantially all of our, the other borrowers’ and the guarantors’ other assets, subject to certain exceptions and permitted liens.

Covenants

      The ABL facility contains customary representations, warranties and covenants for the type and nature of an asset-based senior secured revolving credit facility, including limitations on our, the other borrowers’, or the guarantors’ ability to:

•  incur or guarantee additional debt, subject to certain exceptions;

•  pay dividends, or make redemptions and repurchases, with respect to capital stock;

•  create or incur certain liens;

•  make certain loans or investments;

•  make acquisitions or investments, engage in mergers, acquisitions, asset sales and sale lease-back transactions; and

•  engage in certain transactions with affiliates.

88

Events of Default

      The ABL facility contains events of default with respect to:

•  default in payment of principal when due;

•  default in the payment of interest, fees or other amounts after a specified grace period;

•  material breach of the representations or warranties;

•  default in the performance of specified covenants;

•  failure to make any payment when due under any indebtedness with a principal amount in excess of a specified amount;

•  certain bankruptcy events;

•  certain ERISA violations;

•  invalidity of certain security agreements or guarantees;

•  material judgments; or

•  a change of control (as defined in the ABL facility).

Industrial Revenue Bonds

      As of December 31, 2005, the aggregate principal amount outstanding under the IRB was $5.7 million. The IRB is payable on May 1, 2016 in one lump sum payment. The interest rate assessed on the IRB varies from month to month and was 3.68% at December 31, 2005. The IRB is secured by a letter of credit under the ABL facility. The IRB places various restrictions on certain of our subsidiaries, including maintenance of required insurance coverage, maintenance of certain financial ratios, limits on capital expenditures and maintenance of tangible net worth and is supported by a letter of credit. We were in compliance with all of the covenants as of December 31, 2005.

DESCRIPTION OF THE NOTES

      The old notes were, and the exchange notes will be, issued under an Indenture (the “Indenture”) among Metals USA, Flag Intermediate, the Subsidiary Guarantors and Wells Fargo Bank, N.A., as trustee (in such capacity, the “Trustee”).

      The following summary of certain provisions of the Indenture, the Registration Rights Agreement and the Security Documents does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Indenture, the Registration Rights Agreement and the Security Documents, including the definitions of certain terms therein and those terms made a part of the Indenture by the TIA. We urge you to read the Indenture, the Registration Rights Agreement and the Security Documents because they, not this description, define your rights as holders of the notes. Capitalized terms used in this “Description of the Notes” section and not otherwise defined have the meanings set forth under “— Certain Definitions.” As used in this “Description of the Notes” section, “the Company” or “Metals USA” refers to Metals USA, Inc., a Delaware corporation, and “we,” “us” and “our” refers to the Company and to its subsidiaries.

Brief Description of the Notes and the Guarantees

      The old notes are and the exchange notes will be:

•  senior obligations of the Company;

•  pari passu in right of payment with all existing and future senior Indebtedness of the Company;

89

•  secured on a first-priority lien basis by the Notes Collateral and on a second-priority lien basis by the ABL Collateral, in each case subject to certain liens permitted under the Indenture;

•  effectively subordinated to the ABL Facility to the extent of the value of the ABL Collateral;

•  guaranteed on a senior secured basis by Flag Intermediate and the Subsidiary Guarantors; and

•  subject to registration with the SEC pursuant to the Registration Rights Agreement.

      The Guarantee of each Guarantor:

•  is a senior obligation of such Guarantor;

•  ranks pari passu in right of payment with all existing and future senior Indebtedness of such Guarantor;

•  is secured on a first-priority basis by the Notes Collateral owned by such Guarantor and on a second-priority basis by the ABL Collateral owned by such Guarantor (in each case subject to certain liens permitted under the Indenture);

•  is effectively subordinated to the Guarantee of such Guarantor under the ABL Facility to the extent of the value of the ABL Collateral owned by such Guarantor; and

•  is subject to registration with the SEC pursuant to the Registration Rights Agreement.

Principal, Maturity and Interest

      The Company will issue the exchange notes in an aggregate principal amount up to $275.0 million. The exchange notes will be issued only in fully registered form, without coupons, in denominations of $1,000 and any integral multiple of $1,000. No service charge will be made for any registration of transfer or exchange of the exchange notes, but in certain circumstances the Company may require payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection therewith. The notes will mature on December 1, 2015. Subject to our compliance with the covenants described under the subheading “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” and “— Limitation on Liens,” we are permitted to issue more notes from time to time under the Indenture (the “Additional Notes”). The notes, the exchange notes and the Additional Notes, if any, will be treated as a single class for all purposes of the Indenture, including waivers, amendments, redemptions and offers to purchase. Holders of Additional Notes actually issued will share equally and ratably in the Collateral. Unless the context otherwise requires, for all purposes of the Indenture and this “Description of the Notes,” references to the notes include any Additional Notes actually issued.

      Interest on the notes and exchange notes will accrue at the rate of 11?% per annum and will be payable semiannually in arrears on June 1 and December 1, commencing on June 1, 2006. The Company will make each interest payment to the Holders of record of the notes on the immediately preceding May 15 and November 15. The Company will pay interest on overdue principal at 1% per annum in excess of the above rate and will pay interest on overdue installments of interest at such higher rate to the extent lawful.

      Interest on the notes and the exchange notes will accrue from the Issue Date. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

      Additional interest may accrue on the notes in certain circumstances pursuant to the Registration Rights Agreement. See “— Registered Exchange Offer; Registration Rights.”

Optional Redemption

      On and after December 1, 2010, the Company may redeem the notes at its option, in whole at any time or in part from time to time, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each holder’s registered address, at the following redemption prices (expressed as a

90

percentage of principal amount), plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on December 1 of the years set forth below:

	Redemption
Period	Price
2010		105.563%
2011		103.708%
2012		101.854%
2013 and thereafter		100.000%

      In addition, prior to December 1, 2010, the Company may redeem the notes at its option, in whole at any time or in part from time to time, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each holder’s registered address, at a redemption price equal to 100% of the principal amount of the notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and additional interest, if any, to the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

      Notwithstanding the foregoing, at any time and from time to time on or prior to December 1, 2008, the Company may redeem, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each holder’s registered address, in the aggregate up to 35% of the aggregate principal amount of the notes (which includes Additional Notes, if any) with the net cash proceeds of one or more Equity Offerings (1) by the Company or (2) by any direct or indirect parent of the Company, to the extent the net cash proceeds thereof are contributed to the common equity capital of the Company or used to purchase Capital Stock (other than Disqualified Stock) of the Company from it, at a redemption price (expressed as a percentage of principal amount thereof) of 111.13% plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that at least 65% of the aggregate principal amount of the notes (which includes Additional Notes, if any), remains outstanding after each such redemption; provided further, however, that such redemption shall occur within 90 days after the date on which any such Equity Offering is consummated and otherwise in accordance with the procedures set forth in the Indenture.

Selection

      In the case of any partial redemption of the notes, selection of the notes for redemption will be made by the Trustee on a pro rata basis to the extent practicable; provided, however, that no notes of $1,000 or less shall be redeemed in part. If any note is to be redeemed in part only, the notice of redemption relating to such note shall state the portion of the principal amount thereof to be redeemed. A new note in principal amount equal to the unredeemed portion thereof will be issued in the name of the holder thereof upon cancellation of the original note. On and after the redemption date, interest will cease to accrue on notes or portions thereof called for redemption so long as the Company has deposited with the Paying Agent funds sufficient to pay the principal of, plus accrued and unpaid interest and additional interest (if any) on, the notes to be redeemed. Notices of redemption may not be conditional.

Mandatory Redemption; Offers to Purchase; Open Market Purchases

      The Company is not required to make any mandatory redemption or sinking fund payments with respect to the notes. However, under certain circumstances, the Company may be required to offer to purchase notes as described under the captions “— Change of Control” and “— Certain Covenants — Asset Sales.” We may at any time and from time to time purchase notes in the open market or otherwise.

91

Ranking

      The Indebtedness evidenced by the old notes and existing Guarantees is and the Indebtedness evidenced by the exchange notes and the related Guarantees will be senior Indebtedness of the Company or the applicable Guarantor, as the case may be, ranks and will rank pari passu in right of payment with all existing and future senior Indebtedness of the Company and the Guarantors, as the case may be, and is and will be secured by the Collateral, which Collateral is and will be shared on an equal and ratable basis with any Other Pari Passu Lien Obligations Incurred thereafter. Indebtedness under the ABL Facility is also secured by the Collateral. The Indebtedness under the ABL Facility and any other Lenders Debt Incurred in the future has and will have first-priority with respect to the ABL Collateral but is and will be junior in ranking with respect to the Notes Collateral. Such security interests are described under “— Security for the Notes.” The Indebtedness evidenced by the old notes and existing Guarantees is and the Indebtedness evidences by the exchange notes and the related Guarantees will be senior in right of payment to all existing and future Subordinated Indebtedness of the Company and the Guarantors, as the case may be.

      As of December 31, 2005,

      (1) Flag Intermediate, the Company and its Subsidiaries had $466.4 million aggregate principal amount of senior Indebtedness (including the notes and the Guarantees) outstanding (excluding unused commitments); and

      (2) the Company’s Subsidiaries that are not Guarantors did not have any liabilities (excluding intercompany liabilities of Subsidiaries that are not Guarantors).

      A significant portion of the operations of the Company are conducted through its Subsidiaries. Unless the Subsidiary is a Guarantor, claims of creditors of such Subsidiaries, including trade creditors, and claims of preferred stockholders (if any) of such Subsidiaries generally will have priority with respect to the assets and earnings of such Subsidiaries over the claims of creditors of the Company, including holders of the old notes and the exchange notes. The old notes are and the exchange notes will be effectively subordinated to holders of Indebtedness and other creditors (including trade creditors) and preferred stockholders (if any) of Subsidiaries of the Company that are not Guarantors. Although the Indenture limits the Incurrence of Indebtedness by and the issuance of Disqualified Stock and Preferred Stock of certain of the Company’s Subsidiaries, such limitation is subject to a number of significant qualifications. See “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock.”

      Although the Indenture contains limitations on the amount of additional Pari Passu Indebtedness and additional Secured Indebtedness that the Company and its Restricted Subsidiaries may Incur, under certain circumstances the amount of such Pari Passu Indebtedness and Secured Indebtedness could be substantial. The Indenture does not limit the amount of additional Indebtedness that Flag Holdings may Incur. See “Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” and “Certain Covenants — Liens.”

Security for the Notes

      The old notes and existing Guarantees have and the exchange notes and the related Guarantees will have the benefit of the Collateral, which will consist of (i) the Notes Collateral as to which the holders of the old notes and holders of certain Other Pari Passu Lien Obligations have and the exchange notes will have a first-priority security interest (subject to Permitted Collateral Liens) and the Bank Lenders and certain other holders of Lenders Debt have a second-priority security interest and (ii) the ABL Collateral as to which the Bank Lenders and certain other holders of Lenders Debt have a first-priority security interest and the holders of the old notes and holders of certain Other Pari Passu Lien Obligations have and the exchange notes will have a second-priority security interest (subject to Permitted Liens).

      The Company and the Guarantors are and will be able to Incur additional Indebtedness in the future which could share in the Collateral. The amount of all such additional Indebtedness is and will be limited

92

by the covenants disclosed under “— Certain Covenants — Liens” and “— Limitation on Incurrence of Indebtedness and Issuances of Disqualified Stock and Preferred Stock.” Under certain circumstances the amount of such additional Secured Indebtedness could be significant.

Notes Collateral

      The Notes Collateral has been and will be pledged as collateral to the Notes Collateral Agent for the benefit of the Trustee, the Notes Collateral Agent and the holders of the old notes and the exchange notes. The old notes and existing Guarantees are and the exchange notes and the related Guarantees will be secured by first-priority security interests in the Notes Collateral, subject to Permitted Collateral Liens. The Notes Collateral consists of substantially all the assets of Flag Intermediate, the Company and the Subsidiary Guarantors, other than the ABL Collateral. Those assets include but are not limited to (subject to the limitations described in the next paragraph and “— Limitations on Stock Collateral”): (i) all of the Capital Stock of the Company, (ii) all of the Capital Stock held by the Company, Flag Intermediate or any Subsidiary Guarantor (which, in the case of any first-tier Foreign Subsidiary, will be limited to 100% of the non-voting stock (if any) and 65% of the voting stock of such first-tier Foreign Subsidiary) and (iii) substantially all of the tangible and intangible assets, other than the ABL Collateral, of the Company, Flag Intermediate and each Subsidiary Guarantor.

      In addition to the limitations described below under “— Limitations on Stock Collateral,” the Notes Collateral does not and will not include (i) the ABL Collateral, (ii) the Excluded Assets, (iii) those assets as to which the Notes Collateral Agent has reasonably determined or will reasonably determine that the costs of obtaining such a security interest are excessive in relation to the value of the security to be afforded thereby, (iv) the property securing the Industrial Revenue Bonds and the letter of credit reimbursement obligations relating thereto and (v) the property securing certain capital leases existing on the Issue Date or Incurred thereafter and certain purchase money obligations existing on the Issue Date or Incurred thereafter.

      Initially, subject to Permitted Collateral Liens, only the old notes have and the exchange notes will have the benefit of the first-priority security interest in the Notes Collateral. No other Indebtedness Incurred by the Company may share in the first-priority security interest in the Notes Collateral other than any Additional Notes and certain Indebtedness constituting Other Pari Passu Lien Obligations.

      The Company has granted a second-priority lien on and security interest in the Notes Collateral for the benefit of the Lenders Debt, which currently consists of the loans outstanding under the ABL Facility made by the Bank Lenders, obligations with respect to letters of credit issued under the ABL Facility, certain hedging and cash management obligations incurred with the Bank Lenders or their affiliates and any other Obligations under the ABL Facility. Any additional Indebtedness that is Incurred by the Company pursuant to the terms of the Indenture may also be given a lien on and security interest in the Notes Collateral that ranks junior to the lien of the old notes and the exchange notes in the Notes Collateral. Except as provided in the Intercreditor Agreement, holders of such junior liens will not be able to take any enforcement action with respect to the Notes Collateral so long as any old notes or exchange notes are outstanding.

ABL Collateral

      The old notes are and the exchange notes will also be secured by a second-priority lien on and security interest in the ABL Collateral (subject to certain Permitted Liens). The ABL Collateral consists of all accounts receivable, inventory, cash (other than certain cash proceeds of the Notes Collateral) and proceeds and products of the foregoing and certain assets related thereto, in each case held by the Company, Flag Intermediate and the Subsidiary Guarantors. Generally, the old notes and the exchange notes second-priority lien on and security interest in the ABL Collateral will be terminated and automatically released if the lien on such ABL Collateral in favor of the Lenders Debt is released.

      From and after the Issue Date, the Company or any Guarantor may grant an additional lien on any property or asset that constitutes ABL Collateral in order to secure any Obligation permitted to be

93

Incurred pursuant to the Indenture. Any such additional lien may be a first-priority lien that is senior to the lien securing the notes or may be a second-priority lien that will rank pari passu with the second priority lien securing the notes or a lien that will rank junior to the second-priority lien securing the notes.

Limitations on Stock Collateral

      The Capital Stock and other securities of a Subsidiary of the Company that are owned by the Company or any Subsidiary Guarantor constitute Notes Collateral only to the extent that such Capital Stock and other securities can secure the notes without Rule 3-10 or Rule 3-16 of Regulation S-X under the Securities Act (or any other law, rule or regulation) requiring separate financial statements of such Subsidiary to be filed with the SEC (or any other governmental agency). In the event that Rule 3-10 or Rule 3-16 of Regulation S-X under the Securities Act requires or is amended, modified or interpreted by the SEC to require (or is replaced with another rule or regulation, or any other law, rule or regulation is adopted, which would require) the filing with the SEC (or any other governmental agency) of separate financial statements of any Subsidiary (other than the Company) due to the fact that such Subsidiary’s Capital Stock and other securities secure the notes, then the Capital Stock and other securities of such Subsidiary shall automatically be deemed not to be part of the Notes Collateral (but only to the extent necessary to not be subject to such requirement). In such event, the Security Documents may be amended or modified, without the consent of any Holder of notes, to the extent necessary to release the first-priority security interests in the shares of Capital Stock and other securities that are so deemed to no longer constitute part of the Notes Collateral.

      In the event that Rule 3-10 or Rule 3-16 of Regulation S-X under the Securities Act is amended, modified or interpreted by the SEC to permit (or is replaced with another rule or regulation, or any other law, rule or regulation is adopted, which would permit) such Subsidiary’s Capital Stock and other securities to secure the notes in excess of the amount then pledged without the filing with the SEC (or any other governmental agency) of separate financial statements of such Subsidiary, then the Capital Stock and other securities of such Subsidiary shall automatically be deemed to be a part of the Notes Collateral (but only to the extent necessary to not be subject to any such financial statement requirement). In such event, the Security Documents may be amended or modified, without the consent of any holder of notes, to the extent necessary to subject to the Liens under the Security Documents such additional Capital Stock and other securities.

      In accordance with the limitations set forth in the two immediately preceding paragraphs, the Notes Collateral includes shares of Capital Stock of Subsidiaries of the Company only to the extent that the applicable value of such Capital Stock (on a Subsidiary-by-Subsidiary basis) is less than 20% of the aggregate principal amount of the notes outstanding. Following the Issue Date, however, the portion of the Capital Stock of Subsidiaries constituting Notes Collateral may decrease or increase as described above.

Security Documents and Certain Related Intercreditor Provisions

      The Company, the Guarantors, the Notes Collateral Agent and the Trustee entered into one or more Security Documents creating and establishing the terms of the security interests that secure the notes and the Guarantees of the notes. These security interests secure the payment and performance when due of all of the Obligations of the Company and the Guarantors under the notes, the Indenture, the Guarantees and the Security Documents, as provided in the Security Documents. The Company and the Guarantors agreed to use their commercially reasonable efforts to complete on or prior to the Issue Date all filings and other similar actions required in connection with the perfection of such security interests. If they were not able to complete such actions on or prior to the Issue Date, they agreed to use their commercially reasonable efforts to complete such actions as soon as reasonably practicable after such date. Wells Fargo Bank, N.A. was appointed, pursuant to the Indenture, as the Notes Collateral Agent. The Trustee, Notes Collateral Agent and each noteholder and each other holder of, or obligee in respect of, any Obligations in respect of the notes outstanding at such time are referred to collectively as the “Noteholder Secured Parties.”

94

Intercreditor Agreement

      On the Issue Date, the Company, the Guarantors, the Trustee, the Notes Collateral Agent and the Bank Collateral Agent entered into the Intercreditor Agreement. Although the holders of the old notes are not and the holders of the exchange notes will not be party to the Intercreditor Agreement, by their acceptance of the old notes or exchange notes, as applicable, they agreed or will agree to be bound thereby. Pursuant to the terms of the Intercreditor Agreement, the Notes Collateral Agent will determine the time and method by which the security interests in the Notes Collateral will be enforced and the Bank Collateral Agent will determine the time and method by which the security interests in the ABL Collateral will be enforced.

      The aggregate amount of the obligations secured by the ABL Collateral may, subject to the limitations set forth in the Indenture, be increased. A portion of the obligations secured by the ABL Collateral consists or may consist of Indebtedness that is revolving in nature, and the amount thereof that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed and such obligations may, subject to the limitations set forth in the Indenture, be increased, extended, renewed, replaced, restated, supplemented, restructured, repaid, refunded, refinanced or otherwise amended or modified from time to time, all without affecting the subordination of the liens held by the noteholders or the provisions of the Intercreditor Agreement defining the relative rights of the parties thereto. The lien priorities provided for in the Intercreditor Agreement shall not be altered or otherwise affected by any amendment, modification, supplement, extension, increase, replacement, renewal, restatement or refinancing of either the obligations secured by the ABL Collateral or the obligations secured by the Notes Collateral, by the release of any Collateral or of any guarantees securing any secured obligations or by any action that any representative or secured party may take or fail to take in respect of any Collateral.

No Action With Respect to the ABL Collateral

      The Intercreditor Agreement provides that none of the Noteholder Secured Parties may commence any judicial or nonjudicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of, exercise any right, remedy or power with respect to, or otherwise take any action to enforce its interest in or realize upon, or take any other action available to it in respect of, the ABL Collateral under any Security Document, applicable law or otherwise, at any time when the ABL Collateral is subject to any first-priority security interest and any Lenders Debt secured by such ABL Collateral remains outstanding or any commitment to extend credit that would constitute such Lenders Debt remains in effect. Only the Bank Collateral Agent is entitled to take any such actions or exercise any such remedies. Notwithstanding the foregoing, the Notes Collateral Agent may, but has no obligation to, take all such actions it deems necessary to perfect or continue the perfection of the noteholders’ second-priority security interest in the ABL Collateral. The Bank Collateral Agent is subject to similar restrictions with respect to its ability to enforce the second-priority security interest in the Notes Collateral held by holders of Lenders Debt.

No Duties of Bank Collateral Agent

      The Intercreditor Agreement provides that neither the Bank Collateral Agent nor any holder of any Lenders Debt secured by any ABL Collateral has any duties or other obligations to any Noteholder Secured Party with respect to the ABL Collateral, other than to transfer to the Trustee any proceeds of any such ABL Collateral in which the Notes Collateral Agent continues to hold a security interest remaining following any sale, transfer or other disposition of such ABL Collateral (in each case, unless the noteholders’ lien on all such ABL Collateral is terminated and released prior to or concurrently with such sale, transfer, disposition, payment or satisfaction), the payment and satisfaction in full of such Lenders Debt and the termination of any commitment to extend credit that would constitute such Lenders Debt, or, if the Bank Collateral Agent is in possession of all or any part of such ABL Collateral after such payment and satisfaction in full and termination, such ABL Collateral or any part thereof remaining, in each case without representation or warranty on the part of the Bank Collateral Agent or any such lender.

95

In addition, the Intercreditor Agreement further provides that, until the Lenders Debt secured by any ABL Collateral has been paid and satisfied in full and any commitment to extend credit that would constitute Lenders Debt secured thereby has been terminated, the Bank Collateral Agent is entitled, for the benefit of the holders of such Lenders Debt, to sell, transfer or otherwise dispose of or deal with such ABL Collateral without regard to any second-priority security interest therein or any rights to which any Noteholder Secured Party is otherwise entitled as a result of such second-priority security interest. Without limiting the foregoing, the Trustee and the Notes Collateral Agent agreed in the Intercreditor Agreement and each Holder of the old notes agreed and each Holder of the exchange notes will agree by its acceptance of the notes that neither the Bank Collateral Agent nor any holder of any Lenders Debt secured by any ABL Collateral has or will have any duty or obligation first to marshal or realize upon the ABL Collateral, or to sell, dispose of or otherwise liquidate all or any portion of the ABL Collateral, in any manner that would maximize the return to the Noteholder Secured Parties, notwithstanding that the order and timing of any such realization, sale, disposition or liquidation may affect the amount of proceeds actually received by the Noteholder Secured Parties from such realization, sale, disposition or liquidation. The Intercreditor Agreement contains similar provisions regarding the duties owed to the Bank Collateral Agent and the holders of any Lenders Debt by the Noteholder Secured Parties with respect to the Notes Collateral.

      The Intercreditor Agreement additionally provides that the Notes Collateral Agent and the Trustee have waived, and each Holder of the old notes has waived and each Holder of the exchange notes will waive by its acceptance of the notes, any claim that may be had against the Bank Collateral Agent or any holder of any Lenders Debt arising out of (i) any actions which the Bank Collateral Agent or such holder of Lenders Debt take or omit to take (including, actions with respect to the creation, perfection or continuation of Liens on any Collateral, actions with respect to the foreclosure upon, sale, release or depreciation of, or failure to realize upon, any of the Collateral and actions with respect to the collection of any claim for all or any part of the Lenders Debt from any account debtor, guarantor or any other party) in accordance with the documents governing any such Lenders Debt or any other agreement related thereto or to the collection of such Lenders Debt or the valuation, use, protection or release of any security for such Lenders Debt, (ii) any election by the Bank Collateral Agent or such holder of Lenders Debt, in any proceeding instituted under Title 11 of the United States Code of the application of Section 1111(b) of Title 11 of the United States Code or (iii) any borrowing of, or grant of a security interest or administrative expense priority under Section 364 of Title 11 of the United States Code to, Flag Intermediate or any of its subsidiaries as debtor-in-possession. The Bank Collateral Agent and holders of Lenders Debt waived similar claims with respect to the actions of any of the Noteholder Secured Parties.

No Interference; Payment Over; Reinstatement

      The Trustee and the Notes Collateral Agent agreed in the Intercreditor Agreement and each Holder of the old notes agreed and each Holder of the exchange notes will agree by its acceptance of the exchange notes that:

•  it will not take or cause to be taken any action the purpose or effect of which is, or could be, to make any Lien that the Holders of the notes have on the ABL Collateral pari passu with, or to give the Trustee or the Holders of the notes any preference or priority relative to, any lien that the holders of any Lenders Debt secured by any ABL Collateral have with respect to such ABL Collateral,

•  it will not challenge or question in any proceeding the validity or enforceability of any first-priority security interest in the ABL Collateral, the validity, attachment, perfection or priority of any lien held by the holders of any Lenders Debt secured by any ABL Collateral, or the validity or enforceability of the priorities, rights or duties established by or other provisions of the Intercreditor Agreement,

•  it will not take or cause to be taken any action the purpose or intent of which is, or could be, to interfere, hinder or delay, in any manner, whether by judicial proceedings or otherwise, any sale,

96

	transfer or other disposition of the ABL Collateral by the Bank Collateral Agent or the holders of any Lenders Debt secured by such ABL Collateral,
•	it will have no right to (A) direct the Bank Collateral Agent or any holder of any Lenders Debt secured by any ABL Collateral to exercise any right, remedy or power with respect to such ABL Collateral or (B) consent to the exercise by the Bank Collateral Agent or any holder of any Lenders Debt secured by the ABL Collateral of any right, remedy or power with respect to such ABL Collateral,
•	it will not institute any suit or assert in any suit, bankruptcy, insolvency or other proceeding any claim against the Bank Collateral Agent or any holder of any Lenders Debt secured by any ABL Collateral seeking damages from or other relief by way of specific performance, instructions or otherwise with respect to, and neither the Bank Collateral Agent nor any holders of under any Lenders Debt secured by any ABL Collateral will be liable for, any action taken or omitted to be taken by the Bank Collateral Agent or such lenders with respect to such ABL Collateral,
•	it will not seek, and will waive any right, to have any ABL Collateral or any part thereof marshaled upon any foreclosure or other disposition of such ABL Collateral, and
•	it will not attempt, directly or indirectly, whether by judicial proceedings or otherwise, to challenge the enforceability of any provision of the Intercreditor Agreement.

      The Bank Collateral Agent and the holders of Lenders Debt agreed to similar limitations with respect to their rights in the Notes Collateral and their ability to bring a suit against the Notes Collateral Agent or the Holders of the notes.

      The Trustee and the Notes Collateral Agent agreed in the Intercreditor Agreement and each Holder of the old notes agreed and each Holder of the exchange notes will agree by its acceptance of the exchange notes that if it obtains possession of the ABL Collateral or realizes any proceeds or payment in respect of the ABL Collateral, pursuant to any Security Document or by the exercise of any rights available to it under applicable law or in any bankruptcy, insolvency or similar proceeding or through any other exercise of remedies, at any time when any Lenders Debt secured or intended to be secured by such ABL Collateral remains outstanding or any commitment to extend credit that would constitute Lenders Debt secured or intended to be secured by such ABL Collateral remains in effect, then it will hold such ABL Collateral, proceeds or payment in trust for the Bank Collateral Agent and the holders of any Lenders Debt secured by such ABL Collateral and transfer such ABL Collateral, proceeds or payment, as the case may be, to the Bank Collateral Agent. The Trustee, the Notes Collateral Agent and each Holder of the old notes has and each Holder of the exchange notes will further agree that if, at any time, all or part of any payment with respect to any Lenders Debt secured by any ABL Collateral previously made shall be rescinded for any reason whatsoever, it will promptly pay over to the Bank Collateral Agent any payment received by it in respect of any such ABL Collateral and shall promptly turn any such ABL Collateral then held by it over to the Bank Collateral Agent, and the provisions set forth in the Intercreditor Agreement will be reinstated as if such payment had not been made, until the payment and satisfaction in full of such Lenders Debt. The Bank Collateral Agent and the holders of Lenders Debt are subject to similar limitations with respect to the Notes Collateral and any proceeds or payments in respect of any Notes Collateral.

Entry Upon Premises by Bank Collateral Agent and Holders of Lenders Debt

      The Intercreditor Agreement provides that if the Bank Collateral Agent takes any enforcement action with respect to the ABL Collateral, the Noteholder Secured Parties (i) will cooperate with the Bank Collateral Agent in its efforts to enforce its security interest in the ABL Collateral and to finish any work-in-process and assemble the ABL Collateral, (ii) will not hinder or restrict in any respect the Bank Collateral Agent from enforcing its security interest in the ABL Collateral or from finishing any work-in-process or assembling the ABL Collateral, and (iii) will permit the Bank Collateral Agent, its employees, agents, advisers and representatives, at the sole cost and expense of the Bank Collateral Agent and the

97

holders of Lenders Debt, to enter upon and use the Notes Collateral (including (x) equipment, processors, computers and other machinery related to the storage or processing of records, documents or files and (y) intellectual property), for a period not to exceed 180 days after the taking of such enforcement action, for purposes of (A) assembling and storing the ABL Collateral and completing the processing of and turning into finished goods of any ABL Collateral consisting of work-in-process, (B) selling any or all of the ABL Collateral located on such Notes Collateral, whether in bulk, in lots or to customers in the ordinary course of business or otherwise, (C) removing any or all of the ABL Collateral located on such Notes Collateral, or (D) taking reasonable actions to protect, secure, and otherwise enforce the rights of the Bank Collateral Agent and the holders of Lenders Debt in and to the ABL Collateral; provided, however, that nothing contained in the Intercreditor Agreement restricts the rights of the Trustee or the Notes Collateral Agent from selling, assigning or otherwise transferring any Notes Collateral prior to the expiration of such 180-day period if the purchaser, assignee or transferee thereof agrees to be bound by the provisions of the Intercreditor Agreement. If any stay or other order prohibiting the exercise of remedies with respect to the ABL Collateral has been entered by a court of competent jurisdiction, such 180-day period shall be tolled during the pendency of any such stay or other order. If the Bank Collateral Agent conducts a public auction or private sale of the ABL Collateral at any of the real property included within the Notes Collateral, the Bank Collateral Agent shall provide the Notes Collateral Agent with reasonable notice and use reasonable efforts to hold such auction or sale in a manner which would not unduly disrupt the Notes Collateral Agent’s use of such real property.

      During the period of actual occupation, use or control by the Bank Collateral Agent or the holders of Lenders Debt or their agents or representatives of any Notes Collateral, the Bank Collateral Agent and the holders of Lenders Debt will (i) be responsible for the ordinary course third-party expenses related thereto, including costs with respect to heat, light, electricity, water and real property taxes with respect to that portion of any premises so used or occupied, and (ii) be obligated to repair at their expense any physical damage to such Notes Collateral or other assets or property resulting from such occupancy, use or control, and to leave such Notes Collateral or other assets or property in substantially the same condition as it was at the commencement of such occupancy, use or control, ordinary wear and tear excepted. The Bank Collateral Agent and the holders of Lenders Debt agree to pay, indemnify and hold the Trustee and the Notes Collateral Agent harmless from and against any third-party liability resulting from the gross negligence or willful misconduct of the Bank Collateral Agent or any of its agents, representatives or invitees in its or their operation of such facilities. In the event, and only in the event, that in connection with its use of some or all of the premises constituting Notes Collateral, the Bank Collateral Agent requires the services of any employees of Flag Intermediate or any of its subsidiaries, the Bank Collateral Agent shall pay directly to any such employees the appropriate, allocated wages of such employees, if any, during the time periods that the Bank Collateral Agent requires their services. Notwithstanding the foregoing, in no event shall the Bank Collateral Agent or the holders of Lenders Debt have any liability to the Noteholder Secured Parties pursuant to the Intercreditor Agreement as a result of any condition (including any environmental condition, claim or liability) on or with respect to the Notes Collateral existing prior to the date of the exercise by the Bank Collateral Agent or the holders of Lenders Debt of their rights under the Intercreditor Agreement and the Bank Collateral Agent and the holders of Lenders Debt will not have any duty or liability to maintain the Notes Collateral in a condition or manner better than that in which it was maintained prior to the use thereof by them, or for any diminution in the value of the Notes Collateral that results solely from ordinary wear and tear resulting from the use of the Notes Collateral by such persons in the manner and for the time periods specified under the Intercreditor Agreement. Without limiting the rights granted in under the Intercreditor Agreement, the Bank Collateral Agent and the holders of Lenders Debt will cooperate with the Noteholder Secured Parties in connection with any efforts made by the Noteholder Secured Parties to sell the Notes Collateral.

Agreements With Respect to Bankruptcy or Insolvency Proceedings

      If Flag Intermediate or any of its subsidiaries becomes subject to a case under the U.S. Bankruptcy Code and, as debtor(s)-in-possession, moves for approval of financing (“DIP Financing”) to be provided by one or more lenders (the “DIP Lenders”) under Section 364 of the U.S. Bankruptcy Code or the use

98

of cash collateral with the consent of the DIP Lenders under Section 363 of the U.S. Bankruptcy Code, the Trustee and the Notes Collateral Agent agreed in the Intercreditor Agreement, each Holder of the old notes agreed by its acceptance of the old notes and each Holder of exchange notes will agree by its acceptance of the exchange notes that it will raise no objection to any such financing or to the Liens on the ABL Collateral securing the same (“DIP Financing Liens”) or to any use of cash collateral that constitutes ABL Collateral, unless the Bank Collateral Agent or the holders of any Lenders Debt secured by such ABL Collateral oppose or object to such DIP Financing or such DIP Financing Liens or use of such cash collateral (and, to the extent that such DIP Financing Liens are senior to, or rank pari passu with, the Liens of such Lenders Debt in such ABL Collateral, the Trustee and the Notes Collateral Agent will, for themselves and on behalf of the Holders of the notes, subordinate the liens of the Noteholder Secured Parties in such ABL Collateral to the liens of the Lenders Debt in such ABL Collateral and the DIP Financing Liens), so long as the Noteholder Secured Parties retain liens on all the Notes Collateral, including proceeds thereof arising after the commencement of such proceeding, with the same priority as existed prior to the commencement of the case under the U.S. Bankruptcy Code. The Bank Collateral Agent and the holders of Lenders Debt agreed to similar provisions with respect to any DIP Financing.

      The Trustee and the Noteholder Collateral Agent agreed in the Intercreditor Agreement, each Holder of old notes agreed by its acceptance of the old notes and each Holder of the exchange notes will agree by its acceptance of the exchange notes that it will not object to or oppose a sale or other disposition of any ABL Collateral (or any portion thereof) under Section 363 of the Bankruptcy Code or any other provision of the Bankruptcy Code if the Bank Collateral Agent and the holders of Lenders Debt shall have consented to such sale or disposition of such ABL Collateral. The Bank Collateral Agent and the holders of Lenders Debt agreed to similar limitations with respect to their right to object to a sale of Notes Collateral.

Insurance

      Unless and until written notice by the Bank Collateral Agent to the Trustee that the obligations under the ABL Facility have been paid in full and all commitments to extend credit under the ABL Facility shall have been terminated, as between the Bank Collateral Agent, on the one hand, and the Trustee and Notes Collateral Agent, as the case may be, on the other hand, only the Bank Collateral Agent has the right (subject to the rights of the Grantors under the security documents related to the ABL Facility and the Indenture and the Security Documents) to adjust or settle any insurance policy or claim covering or constituting ABL Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding affecting the ABL Collateral. Unless and until written notice by the Trustee to the Bank Collateral Agent that the Obligations under the Indenture and the notes have been paid in full, as between the Bank Collateral Agent, on the one hand, and the Trustee and the Notes Collateral Agent, as the case may be, on the other hand, only the Notes Collateral Agent has the right (subject to the rights of the Grantors under the security documents related to the ABL Facility and the Indenture and the Security Documents) to adjust or settle any insurance policy covering or constituting Notes Collateral in the event of any loss thereunder and to approve any award granted in any condemnation or similar proceeding solely affecting the Notes Collateral. To the extent that an insured loss covers or constitutes both ABL Collateral and Notes Collateral, then the Bank Collateral Agent and the Notes Collateral Agent will work jointly and in good faith to collect, adjust or settle (subject to the rights of the Grantors under the security documents related to the ABL Facility and the Indenture and the Security Documents) under the relevant insurance policy.

Refinancings of the ABL Facility and the Notes

      The Obligations under the ABL Facility and the Obligations under the Indenture, the old notes and the exchange notes may be refinanced or replaced, in whole or in part, in each case, without notice to, or the consent (except to the extent a consent is otherwise required to permit the refinancing transaction under the ABL Facility or any security document related thereto and the Indenture and the Security Documents) of the Bank Collateral Agent or any holder of Lenders Debt or any Noteholder Secured

99

Party, all without affecting the Lien priorities provided for in the Intercreditor Agreement; provided, however, that the holders of any such refinancing or replacement indebtedness (or an authorized agent or trustee on their behalf) bind themselves in writing to the terms of the Intercreditor Agreement pursuant to such documents or agreements (including amendments or supplements to the Intercreditor Agreement) as the Bank Collateral Agent or the Notes Collateral Agent, as the case may be, shall reasonably request and in form and substance reasonably acceptable to the Bank Collateral Agent or the Notes Collateral Agent, as the case may be.

      In connection with any refinancing or replacement contemplated by the foregoing paragraph, the Intercreditor Agreement may be amended at the request and sole expense of the Company, and without the consent of either the Bank Collateral Agent or the Notes Collateral Agent, (a) to add parties (or any authorized agent or trustee therefor) providing any such refinancing or replacement indebtedness, (b) to establish that Liens on any Notes Collateral securing such refinancing or replacement indebtedness shall have the same priority as the Liens on any Notes Collateral securing the indebtedness being refinanced or replaced and (c) to establish that the Liens on any ABL Collateral securing such refinancing or replacement indebtedness shall have the same priority as the Liens on any ABL Collateral securing the indebtedness being refinanced or replaced, all on the terms provided for herein immediately prior to such refinancing or replacement.

Use of Proceeds of ABL Collateral

      After the satisfaction of all obligations under any Lenders Debt secured by ABL Collateral and the termination of all commitments to extend credit that would constitute Lenders Debt secured or intended to be secured by any ABL Collateral, the Trustee, in accordance with the terms of the Intercreditor Agreement, the Indenture and the Security Documents, will distribute all cash proceeds (after payment of the costs of enforcement and collateral administration, including any amounts owed to the Trustee in its capacity as Trustee or Notes Collateral Agent) of the ABL Collateral received by it under the Security Documents for the ratable benefit of the Holders of the notes and any remaining Other Pari Passu Lien Obligations.

      Subject to the terms of the Security Documents, the Company and the Guarantors will have the right to remain in possession and retain exclusive control of the Collateral securing the notes (other than any cash, securities, obligations and Cash Equivalents constituting part of the Collateral and deposited with the Notes Collateral Agent or the Bank Collateral Agent in accordance with the provisions of the Security Documents and other than as set forth in the Security Documents), to freely operate the Collateral and to collect, invest and dispose of any income therefrom.

      See “Risk Factors — Risk Factors Related to an Investment in the Notes — Rights of holders of notes in the collateral may be adversely affected by bankruptcy proceedings.”

Conflicts Among the Intercreditor Agreement, the Senior Credit Documents, the Indenture and the Security Documents

      Notwithstanding anything to the contrary, the Grantors shall not be required to act or refrain from acting (a) pursuant to the Intercreditor Agreement, the Indenture or the Security Documents with respect to any ABL Collateral in any manner that would cause a default under the Senior Credit Documents, or (b) pursuant to the Intercreditor Agreement or the Senior Credit Documents with respect to any Notes Collateral in any manner that would cause a default under the Indenture or any Security Document.

Release of Collateral

      The Company and the Guarantors are entitled to the releases of property and other assets included in the Collateral from the Liens securing the notes under any one or more of the following circumstances:

      (1) to enable us to consummate the disposition of such property or assets to the extent not prohibited under the covenant described under “— Certain Covenants — Asset Sales”;

100

      (2) in the case of a Guarantor that is released from its Guarantee with respect to the notes, the release of the property and assets of such Guarantor; or

      (3) as described under “— Amendments and Waivers” below.

      The second-priority lien on the ABL Collateral securing the notes will terminate and be released automatically if the first-priority liens on the ABL Collateral are released by the Bank Collateral Agent (unless, at the time of such release of such first-priority liens, an Event of Default shall have occurred and be continuing under the Indenture). Notwithstanding the existence of an Event of Default, the second-priority lien on the ABL Collateral securing the notes shall also terminate and be released automatically to the extent the first-priority liens on the ABL Collateral are released by the Bank Collateral Agent in connection with a sale, transfer or disposition of ABL Collateral that is either not prohibited under the Indenture or occurs in connection with the foreclosure of, or other exercise of remedies with respect to, such ABL Collateral by the Bank Collateral Agent (except with respect to any proceeds of such sale, transfer or disposition that remain after satisfaction in full of the Lenders Debt). The liens on the Collateral securing the notes that otherwise would have been released pursuant to the first sentence of this paragraph will be released when such Event of Default and all other Events of Default under the Indenture cease to exist.

      The security interests in all Collateral securing the notes also will be released upon (i) payment in full of the principal of, together with accrued and unpaid interest (including additional interest, if any) on, the notes and all other Obligations under the Indenture, the Guarantees under the Indenture and the Security Documents that are due and payable at or prior to the time such principal, together with accrued and unpaid interest (including additional interest, if any), are paid or (ii) a legal defeasance or covenant defeasance under the Indenture as described below under “ — Defeasance” or a discharge of the Indenture as described under “ — Satisfaction and Discharge.”

Compliance with Trust Indenture Act

      The Indenture provides that the Company will comply with the provisions of TIA §314 to the extent applicable.

      To the extent applicable, the Company will cause TIA §313(b), relating to reports, and TIA §314(d), relating to the release of property or securities subject to the Lien of the Security Documents, to be complied with. Any certificate or opinion required by TIA §314(d) may be made by an Officer or legal counsel, as applicable, of the Company except in cases where TIA §314(d) requires that such certificate or opinion be made by an independent Person, which Person will be an independent engineer, appraiser or other expert selected by or reasonably satisfactory to the Trustee. Notwithstanding anything to the contrary in this paragraph, the Company will not be required to comply with all or any portion of TIA §314(d) if it determines, in good faith based on the written advice of counsel, a copy of which written advice shall be provided to the Trustee, that under the terms of TIA §314(d) or any interpretation or guidance as to the meaning thereof of the SEC and its staff, including “no action” letters or exemptive orders, all or any portion of TIA §314(d) is inapplicable to any release or series of releases of Collateral.

Guarantees

      Flag Intermediate and each direct and indirect Restricted Subsidiary of the Company that is a Domestic Subsidiary and that guarantees the obligations of the Company under the Credit Agreement jointly and severally irrevocably and unconditionally guarantee on a senior secured basis the performance and punctual payment when due, whether at Stated Maturity, by acceleration or otherwise, of all obligations of the Company under the Indenture, the old notes and the exchange notes, whether for payment of principal of, premium, if any, or interest or additional interest on the old notes and the exchange notes, expenses, indemnification or otherwise (all such obligations guaranteed by such Guarantors being herein called the “Guaranteed Obligations”). The Guaranteed Obligations of all Guarantors are secured by (i) first-priority security interests (subject to Permitted Collateral Liens) in the Notes Collateral owned by such Guarantor and (ii) second-priority security interests (subject to Permitted

101

Liens) in the ABL Collateral owned by such Guarantor. Such Guarantors agreed to pay, in addition to the amount stated above, any and all expenses (including reasonable counsel fees and expenses) incurred by the Trustee, the Notes Collateral Agent or the holders in enforcing any rights under the Guarantees.

      Each Guarantee of a Restricted Subsidiary is limited to an amount not to exceed the maximum amount that can be guaranteed by the applicable Guarantor without rendering such Guarantee, as it relates to such Guarantor, voidable under applicable laws relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. See “Risk Factors — Risk Factors Related to an Investment in the Notes — Federal and state statutes allow courts, under specific circumstances, to void guarantees and require note holders to return payments received from guarantors.” After the Issue Date, the Company will cause certain domestic Subsidiaries that Incur or guarantee certain Indebtedness or that issue certain shares of Disqualified Stock or Preferred Stock to execute and deliver to the Trustee supplemental indentures pursuant to which such Restricted Subsidiary will guarantee payment of the notes on the same basis. See “ — Certain Covenants — Future Guarantors.”

      Each Guarantee is a continuing guarantee and, subject to the next succeeding paragraph, shall:

        (1) remain in full force and effect until payment in full of all the Guaranteed Obligations;

        (2) be binding upon each such Guarantor and its successors; and

        (3) inure to the benefit of and be enforceable by the Trustee, the holders of the notes and their successors, transferees and assigns.

      A Guarantee of a Restricted Subsidiary will be automatically released upon:

           (a) the sale, disposition or other transfer (including through merger or consolidation) of the Capital Stock (including any sale, disposition or other transfer following which the applicable Guarantor is no longer a Restricted Subsidiary), or all or substantially all the assets, of the applicable Guarantor if such sale, disposition or other transfer is made in compliance with the Indenture, in each case other than to the Company, Flag Intermediate or a Subsidiary of the Company or Flag Intermediate; provided, however, that such Guarantor is released from its guarantees, if any, of, and all pledges and security, if any, granted in connection with, the Credit Agreement and any other Indebtedness of the Company or any Restricted Subsidiary of the Company;

           (b) the Company designating such Guarantor to be an Unrestricted Subsidiary in accordance with the provisions set forth under “ — Certain Covenants — Limitation on Restricted Payments” and the definition of “Unrestricted Subsidiary”;

           (c) the release or discharge of all guarantees by such Restricted Subsidiary and the repayment of all Indebtedness and retirement of all Disqualified Stock of such Restricted Subsidiary which, if Incurred by such Restricted Subsidiary, would require such Restricted Subsidiary to guarantee the notes under the covenant described under “ — Certain Covenants — Future Guarantors”; or

           (d) our exercise of our legal defeasance option or covenant defeasance option as described under “ — Defeasance” or if our obligations under the Indenture are discharged in accordance with the terms of the Indenture.

Book-Entry, Delivery and Form

      Except as set forth below, the exchange notes will initially be issued in the form of one or more fully registered notes in global form without coupons (a “Global Note”). Each Global Note shall be deposited with the Trustee, as custodian for, and registered in the name of DTC or a nominee thereof. The old notes to the extent validly tendered and accepted and directed by their holders in their letters of transmittal, will be exchanged through book-entry electronic transfer for the global note.

      Except as set forth below, the Global Note may be transferred, in whole but not in part, solely to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Note may not be exchanged for notes in certificated form except in the limited circumstances described below.

102

Depository Procedures

      The following description of the operations and procedures of DTC is provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. We take no responsibility for these operations and procedures and urge investors to contact the system or their participants directly to discuss these matters.

      DTC has advised us that DTC is a limited-purpose trust company organized under the laws of the State of New York, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participating organizations (collectively, the “participants”) and to facilitate the clearance and settlement of transactions in those securities between participants through electronic book-entry changes in accounts of its participants. The participants include securities brokers and dealers (including the initial purchasers), banks, trust companies, clearing corporations and certain other organizations. Access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly (collectively, the “indirect participants”). Persons who are not participants may beneficially own securities held by or on behalf of DTC only through the participants or the indirect participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the participants and indirect participants.

      DTC has also advised us that, pursuant to procedures established by it:

        (1) upon issuance of the Global Note, DTC will credit the principal amount of notes of the individual beneficial interest represented by the Global Note to the respective accounts of persons who have accounts with such depository; and

        (2) ownership of these interests in the Global Note will be shown on, and the transfer of ownership of these interests will be effected only through, records maintained by DTC (with respect to the participants) or by the participants and the indirect participants (with respect to other owners of beneficial interests in the Global Note).

      Investors in the Global Note who are participants in DTC’s system may hold their interests therein directly through DTC. Investors in the Global Note who are not participants may hold their interests therein indirectly through organizations which are participants in such system. All interests in the Global Note may be subject to the procedures and requirements of DTC. The laws of some states require that certain Persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in the Global Note to such Persons will be limited to that extent. Because DTC can act only on behalf of participants, which in turn act on behalf of indirect participants, the ability of a Person having beneficial interests in the Global Note to pledge such interests to Persons that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests.

      Except as described below, owners of an interest in the Global Note will not have notes registered in their names, will not receive physical delivery of notes in certificated form and will not be considered the registered owners or “holders” thereof under the Indenture for any purpose.

      Payments in respect of the principal of, and interest and premium and additional interest, if any, on the Global Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered holder under the Indenture. Under the terms of the Indenture, the Company and the Trustee will treat the Persons in whose names the notes, including the Global Note, are registered as the owners of the notes for the purpose of receiving payments and for all other purposes. Consequently, neither

103

the Company, the Trustee nor any agent of the Company or the Trustee has or will have any responsibility or liability for:

        (1) any aspect of DTC’s records or any participant’s or indirect participant’s records relating to or payments made on account of beneficial ownership interests in the Global Note or for maintaining, supervising or reviewing any of DTC’ s records or any participant’s or indirect participant’s records relating to the beneficial ownership interests in the Global Note; or

        (2) any other matter relating to the actions and practices of DTC or any of its participants or indirect participants.

      DTC has advised us that its current practice, upon receipt of any payment in respect of securities such as the notes (including principal and interest), is to credit the accounts of the relevant participants with the payment on the payment date unless DTC has reason to believe it will not receive payment on such payment date. Each relevant participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the participants and the indirect participants to the beneficial owners of notes will be governed by standing instructions and customary practices and will be the responsibility of the participants or the indirect participants and will not be the responsibility of DTC, the Trustee or the Company. Neither the Company nor the Trustee will be liable for any delay by DTC or any of its participants in identifying the beneficial owners of the notes, and the Company and the Trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.

      Transfers between participants in DTC will be effected in accordance with DTC’s procedures, and will be settled in same-day funds.

      DTC has advised the Company that it will take any action permitted to be taken by a holder of notes only at the direction of one or more participants to whose account DTC has credited the interests in the Global Note and only in respect of such portion of the aggregate principal amount of the notes as to which such participant or participants has or have given such direction. However, if there is an Event of Default under the notes, DTC reserves the right to exchange the Global Note for legended notes in certificated form, and to distribute such notes to its participants.

      Although DTC has agreed to the foregoing procedures in order to facilitate transfers of interests in the Global Note among participants, it is under no obligation to perform such procedures, and such procedures may be discontinued or changed at any time. Neither the Company nor the Trustee nor any of their respective agents will have any responsibility for the performance by DTC or its participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

Exchange of the Global Note for Certificated Notes

      The Global Note is exchangeable for Certificated Notes if:

      (1) DTC (A) notifies the Company that it is unwilling or unable to continue as depositary for the Global Note or (B) has ceased to be a clearing agency registered under the Exchange Act and, in each case, a successor depositary is not appointed;

      (2) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of the Certificated Notes; or

      (3) there has occurred and is continuing a Default with respect to the notes.

      In addition, beneficial interests in the Global Note may be exchanged for Certificated Notes upon prior written notice given to the Trustee by or on behalf of DTC in accordance with the Indenture. In all cases, Certificated Notes delivered in exchange for the Global Note or beneficial interests in the Global Note will be registered in the names, and issued in any approved denominations, requested by or on behalf

104

of the depositary (in accordance with its customary procedures) and will bear the applicable restrictive legend unless that legend is not required by applicable law.

Exchange of Certificated Notes for the Global Note

      Certificated Notes may not be exchanged for beneficial interests in the Global Note unless the transferor first delivers to the Trustee a written certificate (in the form provided in the Indenture) to the effect that such transfer will comply with the appropriate transfer restrictions applicable to such notes.

Same Day Settlement and Payment

      The Company will make payments in respect of the notes represented by the Global Note (including principal, premium, if any, interest and additional interest, if any) by wire transfer of immediately available funds to the accounts specified by the Global Note holder. The Company will make all payments of principal, interest and premium and additional interest, if any, with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the holders of the Certificated Notes or, if no such account is specified, by mailing a check to each such holder’s registered address. The notes represented by the Global Note are expected to be eligible to trade in the PORTAL market and to trade in DTC’s Same-Day Funds Settlement System, and any permitted secondary market trading activity in such notes will, therefore, be required by DTC to be settled in immediately available funds. The Company expects that secondary trading in any Certificated Notes will also be settled in immediately available funds.

Registered Exchange Offer; Registration Rights

      The following description is a summary of the material provisions of the Registration Rights Agreement. It does not restate that agreement in its entirety. We urge you to read the Registration Rights Agreement in its entirety because it, and not this description, defines your registration rights as holders of the notes.

      The Company, the Guarantors and the Initial Purchasers entered into the Registration Rights Agreement on November 30, 2005. Pursuant to the Registration Rights Agreement, the Company and the Guarantors agreed to file with the SEC the Exchange Offer Registration Statement (as defined in the Registration Rights Agreement) on the appropriate form under the Securities Act with respect to the exchange notes (as defined below). Upon the effectiveness of the Exchange Offer Registration Statement of which this prospectus forms a part, the Company will offer to the holders of Transfer Restricted Securities pursuant to the exchange offer (as defined in the Registration Rights Agreement) who are able to make certain representations the opportunity to exchange their Transfer Restricted Securities for the exchange notes.

      We and Flag Intermediate agreed pursuant to the Registration Rights Agreement that we and Flag Intermediate will, subject to certain exceptions,

      (1) prepare and use commercially reasonable efforts to file a registration statement (the “Exchange Offer Registration Statement”) with the SEC with respect to a registered offer (the “Registered Exchange Offer”) to exchange the old notes for new notes of the Company (the “exchange notes”) having terms substantially identical in all material respects to the notes being exchanged (except that the exchange notes will not contain terms with respect to transfer restrictions);

      (2) use commercially reasonable efforts to cause the Exchange Offer Registration Statement to be declared effective under the Securities Act;

      (3) as soon as practicable after the effectiveness of the Exchange Offer Registration Statement (the “Effectiveness Date”), offer the exchange notes in exchange for surrender of the old notes; and

105

      (4) use commercially reasonable efforts to keep the Registered Exchange Offer open for not less than 20 business days (or longer if required by applicable law) after the date notice of the Registered Exchange Offer is mailed to the holders of the old notes.

      For each old Note validly tendered to us and not withdrawn pursuant to the Registered Exchange Offer, we will issue to the holder of such old Note an Exchange Note having a principal amount equal to that of the surrendered Note. Interest on each Exchange Note will accrue from the last interest payment date on which interest was paid on the old Note surrendered in exchange therefor, or, if no interest has been paid on such Note, from the Issue Date.

      Under existing SEC interpretations, the exchange notes will be freely transferable by holders other than our affiliates after the Registered Exchange Offer without further registration under the Securities Act if the holder of the exchange notes represents to us in the Registered Exchange Offer that it is acquiring the exchange notes in the ordinary course of its business, that it has no arrangement or understanding with any person to participate in the distribution of the exchange notes and that it is not an affiliate of the Company, as such terms are interpreted by the SEC; provided, however, that broker dealers (“Participating Broker Dealers”) receiving exchange notes in the Registered Exchange Offer will have a prospectus delivery requirement with respect to resales of such exchange notes. The SEC has taken the position that Participating Broker Dealers may fulfill their prospectus delivery requirements with respect to exchange notes (other than a resale of an unsold allotment from the original sale of the notes) with the prospectus contained in the Exchange Offer Registration Statement.

      Under the Registration Rights Agreement, the Company is required to allow Participating Broker Dealers and other persons, if any, with similar prospectus delivery requirements to use the prospectus contained in the Exchange Offer Registration Statement in connection with the resale of such exchange notes for a period of not less than 180 days after the consummation of the Registered Exchange Offer (or such shorter period during which Participating Broker-Dealers are required by law to deliver such prospectus).

      A Holder of old notes (other than certain specified holders) who wishes to exchange such notes for exchange notes in the Registered Exchange Offer will be required to represent that any exchange notes to be received by it will be acquired in the ordinary course of its business, that at the time of the commencement of the Registered Exchange Offer it has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the exchange notes, that it is not an “affiliate” of the Company, as defined in Rule 405 of the Securities Act, or if it is an affiliate, that it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, if such Holder is not a broker-dealer, that it is not engaged in, and does not intent to engage in the distribution of exchange notes and, if such Holder is a broker-dealer, that it will receive exchange notes for its own account for old notes that were acquired as a result of market-making activities or other trading activities and that it will be required to deliver a prospectus in connection with any resale of exchange notes.

      In the event that with respect to the notes:

      (1) applicable interpretations of the staff of the SEC do not permit us to effect such a Registered Exchange Offer;

      (2) for any other reason we do not consummate the Registered Exchange Offer by September 25, 2006;

      (3) an Initial Purchaser shall notify us on or before the 60th day following consummation of the Registered Exchange Offer that old notes held by it are not eligible to be exchanged for exchange notes in the Registered Exchange Offer; or

      (4) certain holders are prohibited by law or SEC policy from participating in the Registered Exchange Offer or may not resell the exchange notes acquired by them in the Registered Exchange

106

Offer to the public without delivering a prospectus and such holders notify us in writing on or before the 60th day following consummation of the Registered Exchange Offer,

then, we, together with Flag Intermediate, will with respect to the notes, subject to certain exceptions and pursuant to the Registration Rights Agreement,

      (i) (A) in the case of clause (1) above, use commercially reasonable efforts to cause a shelf registration statement (the “Shelf Registration Statement”) filed with the SEC covering resales of the old notes or the exchange notes, as the case may be, to be declared effective under the Securities Act on or prior to September 25, 2006 and (B) in the case of clause (2), (3) or (4) above, use commercially reasonable efforts to cause the Shelf Registration Statement to be declared effective under the Securities Act no later than the later of September 25, 2006 and the 60th day after the date on which the Shelf Registration Statement was filed; and

      (ii) keep the Shelf Registration Statement effective until the earliest of (A) the time when the old notes covered by the Shelf Registration Statement can be sold pursuant to Rule 144 without any limitations under clauses (c), (e), (f) and (h) of Rule 144, (B) two years from the Issue Date and (C) the date on which all notes registered thereunder are disposed of in accordance therewith.

      If pursuant to the Registration Rights Agreement, a Shelf Registration Statement is filed, we will among other things, provide to each holder for whom such Shelf Registration Statement was filed copies of the prospectus which is a part of the Shelf Registration Statement, notify each such holder when the Shelf Registration Statement has become effective and take certain other actions as are required to permit unrestricted resales of the old notes or the exchange notes, as the case may be. A holder selling such old notes or exchange notes pursuant to the Shelf Registration Statement generally would be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the Registration Rights Agreement that are applicable to such holder (including certain indemnification obligations).

      We, together with Flag Intermediate, may require each holder requesting to be named as a selling security holder to furnish to us such information regarding the holder and the distribution of the old notes or exchange notes by the holder as we may from time to time reasonably require for the inclusion of the holder in the Shelf Registration Statement, including requiring the holder to properly complete and execute such selling security holder notice and questionnaires, and any amendments or supplements thereto, as we may reasonably deem necessary or appropriate. We may refuse to name any holder as a selling security holder that fails to provide us with such information.

      We, together with Flag Intermediate, will pay additional cash interest on the old notes and exchange notes, subject to certain exceptions and pursuant to the Registration Rights Agreement:

      (1) if the Company fails to file the Exchange Offer Registration Statement or a Shelf Registration Statement with the SEC on or prior to May 28, 2006;

      (2) if the exchange offer is not consummated on or before September 25, 2006,

      (3) if obligated to file a Shelf Registration Statement pursuant to clause (i)(A) above, a Shelf Registration Statement is not declared effective by the SEC on or prior September 25, 2006,

      (4) if obligated to file a Shelf Registration Statement pursuant to clause (i)(B) above, the Company fails to file the Shelf Registration Statement with the SEC on or prior to the later of May 28, 2006 and the 30th day after the date on which the obligation to file a Shelf Registration Statement arises (such later date, the “Shelf Filing Date”);

      (5) if obligated to file a Shelf Registration Statement pursuant to clause (i)(B) above, the Shelf Registration Statement is not declared effective on or prior to the later of September 25, 2006 and the 60th day after the Shelf Filing Date, or

107

      (6) after the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, is declared effective, such Registration Statement thereafter ceases to be effective or usable (subject to certain exceptions) (each such event referred to in the preceding clauses (1) through (5) a “Registration Default”);

from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured.

      The rate of the additional interest will be 0.25% per annum for the first 90-day period immediately following the occurrence of a Registration Default, and such rate will increase by an additional 0.25% per annum with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum additional interest rate of 1.00% per annum. We will pay such additional interest on regular interest payment dates. Such additional interest will be in addition to any other interest payable from time to time with respect to the old notes and the exchange notes.

      All references in the Indenture, in any context, to any interest or other amount payable on or with respect to the old notes shall be deemed to include any additional interest payable pursuant to the Registration Rights Agreement.

      If we, together with Flag Intermediate, effect the Registered Exchange Offer, we will be entitled to close the Registered Exchange Offer 20 business days after the commencement thereof provided that we have accepted all old notes theretofore validly tendered in accordance with the terms of the Registered Exchange Offer.

Change of Control

      The occurrence of any of the following events will constitute a “Change of Control”:

      (1) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all the assets of the Company and its Subsidiaries, taken as a whole, to a Person other than any of the Permitted Holders; or

      (2) the Company becomes aware (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) of the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than any of the Permitted Holders, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision), of more than 50% of the total voting power of the Voting Stock of the Company; or

      (3) individuals who on November 30, 2005 constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors of the Company or whose nomination for election by the shareholders of the Company was approved by (a) a vote of a majority of the directors of the Company then still in office who were either directors on November 30, 2005 or whose election or nomination for election was previously approved as described in this paragraph or (b) the Permitted Holders) cease for any reason to constitute a majority of the Board of Directors of the Company then in office.

      Not later than 30 days following any Change of Control, unless the Company has given notice of redemption as described under the caption “— Optional Redemption” with respect to all the notes, the Company will mail a notice to each Holder with a copy to the Trustee (the “Change of Control Offer”) stating:

      (1) that a Change of Control has occurred and that such holder has the right to require the Company to purchase such holder’s notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest and additional interest, if any, to the date of

108

purchase (subject to the right of holders of record on a record date to receive interest on the relevant interest payment date);

      (2) the circumstances and relevant facts and financial information regarding such Change of Control;

      (3) the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and

      (4) the instructions determined by the Company, consistent with this covenant, that a holder must follow in order to have its notes purchased.

      A Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.

      The Company will be deemed to have made a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all notes validly tendered and not withdrawn under such Change of Control Offer.

      The Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with provisions of the Indenture applicable to a Change of Control Offer, the Company will comply with the applicable securities laws and regulations and will not be deemed to have failed to make a Change of Control Offer or purchase notes pursuant thereto as described above by virtue thereof.

      This Change of Control repurchase provision is a result of negotiations among the Company and the Initial Purchasers. The Company has no present intention to engage in a transaction involving a Change of Control, although it is possible that the Company could decide to do so in the future. Subject to the limitations discussed below, the Company could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control under the Indenture, but that could increase the amount of Indebtedness outstanding at such time or otherwise affect the Company’s capital structure or credit ratings.

      The ABL Facility does (subject to limited exceptions), and future credit agreements or other agreements to which the Company becomes a party may, prohibit the Company from purchasing any notes as result of a Change of Control. In the event a Change of Control occurs at a time when the Company is prohibited from purchasing the notes, the Company could seek the consent of their lenders and noteholders to permit the purchase of the notes or could attempt to refinance the borrowings and notes that contain such prohibition. If the Company does not obtain such consent or repay such borrowings or notes, the Company will remain prohibited from purchasing the notes. In such case, the Company’s failure to purchase tendered notes would constitute an Event of Default under the Indenture.

      The ABL Facility does, and other Indebtedness of the Company may, provide that certain change of control events with respect to the Company (including a Change of Control under the Indenture) constitute a default thereunder. If the Company experiences a change of control that triggers a default under the ABL Facility or under any other Indebtedness, the Company could seek a waiver of such defaults or seek to refinance the Indebtedness outstanding under the ABL Facility and such other Indebtedness. In the event the Company does not obtain such a waiver or refinance the Indebtedness outstanding under the ABL Facility and such other Indebtedness, such defaults could result in amounts outstanding under the ABL Facility and such other Indebtedness being declared due and payable. The Company’s ability to pay cash to the Holders following the occurrence of a Change of Control may be limited by its then existing financial resources. Therefore, sufficient funds may not be available when necessary to make any required repurchases.

109

      The definition of Change of Control includes a phrase relating to the sale, lease or transfer of “all or substantially all” the assets of the Company and its Subsidiaries taken as a whole. Although there is a developing body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a holder of notes to require the Company to repurchase such notes as a result of a sale, lease or transfer of less than all of the assets of the Company and its Subsidiaries taken as a whole to another Person or group may be uncertain.

      The provisions under the Indenture relating to the Company’s obligation to make an offer to repurchase the notes as a result of a Change of Control may be waived or modified with the written consent of the Holders of a majority in principal amount of the notes.

Certain Covenants

      The Indenture contains covenants including, among others, the following:

Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock

      The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness (including Acquired Indebtedness) or issue any shares of Disqualified Stock and the Company will not permit any of its Restricted Subsidiaries to issue any shares of Preferred Stock; provided, however, that the Company and any Restricted Subsidiary may Incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock and any Restricted Subsidiary may issue shares of Preferred Stock, in each case if the Fixed Charge Coverage Ratio of the Company for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is Incurred or such Disqualified Stock or Preferred Stock is issued would have been at least 2.00 to 1.00 determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been Incurred, or the Disqualified Stock or Preferred Stock had been issued, as the case may be, and the application of proceeds therefrom had occurred at the beginning of such four-quarter period.

      In addition, if any Indebtedness is Incurred, or any Disqualified Stock or Preferred Stock is issued, in each case pursuant to the preceding paragraph and in contemplation of a merger or an acquisition of an operating unit (including a service center) or business, whether directly or through the acquisition of Capital Stock of another Person, or to provide all or a portion of the funds or credit support required to consummate such merger or acquisition, the Consolidated Total Debt Ratio would be no greater than 4.75 to 1.0 at the time of such Incurrence or issuance, as the case may be, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom and giving pro forma effect to such merger or acquisition), as if the additional Indebtedness had been Incurred, or the Disqualified Stock or Preferred Stock had been issued, as the case may be, and the application of proceeds therefrom and the consummation of such merger or acquisition had occurred at the beginning of such four-quarter period.

      The foregoing limitations will not apply to:

      (a) the Incurrence by the Company or its Restricted Subsidiaries of Indebtedness under any Credit Agreement and the issuance and creation of letters of credit and bankers’ acceptances thereunder (with letters of credit and bankers’ acceptances being deemed to have a principal amount equal to the face amount thereof) up to an aggregate principal amount then outstanding equal to the greater of (i) $450.0 million less the sum of (A) the amount of any such Indebtedness Incurred pursuant to this clause (a) that is permanently retired with the Net Proceeds from any Asset Sale applied from and after the Issue Date to reduce the outstanding amounts pursuant to the covenant described under “— Asset Sales” and (B) the aggregate Off-Balance Sheet Financing Amount attributable to all Qualified Receivables Financings then outstanding and (ii) the sum of (x) 70% of the net book value of the inventory of the Company and its Restricted Subsidiaries and (y) 90% of the net book value of the accounts receivable of the Company and its Restricted Subsidiaries (in each case, determined by the net book value set forth on the consolidated balance sheet of the Company

110

for the fiscal quarter immediately preceding the date on which such Indebtedness is Incurred for which internal financial statements are available);

      (b) the Incurrence by the Company and the Guarantors of Indebtedness represented by the notes (not including any Additional Notes) and the related Guarantees, as applicable;

      (c) Indebtedness existing on the Issue Date (after giving effect to the Transactions) (other than Indebtedness described in clauses (a) and (b)), including the Industrial Revenue Bonds, certain capital leases and purchase money Indebtedness;

      (d) Indebtedness (including Capitalized Lease Obligations) Incurred by the Company or any of its Restricted Subsidiaries to finance the purchase, lease, construction or improvement of property (real or personal) or equipment (whether through the direct purchase of assets or the Capital Stock of any Person owning such assets (but no other material assets)) in an aggregate principal amount which, when aggregated with the principal amount of all other Indebtedness then outstanding that was Incurred (or deemed Incurred as provided under clause (n) below) pursuant to this clause (d), does not exceed the greater of (x) 3.5% of Total Assets and (y) $45.0 million;

      (e) Indebtedness Incurred by the Company or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims; provided, however, that upon the drawing of such letters of credit, such obligations are reimbursed within 30 days following such drawing;

      (f) Indebtedness arising from agreements of the Company or any of its Restricted Subsidiaries providing for adjustment of purchase price or similar obligations, in each case, Incurred in connection with the acquisition or disposition of any business, assets or a Subsidiary of the Company in accordance with the terms of the Indenture, other than guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition; provided, however, that, at the time of closing, the amount of such Indebtedness is not determinable and, to the extent such Indebtedness thereafter becomes fixed and determined, the Indebtedness is paid within 60 days thereafter;

      (g) Indebtedness of the Company to a Restricted Subsidiary; provided, however, that any such Indebtedness is subordinated in right of payment to the obligations of the Company under the notes and the Indenture; provided further, however, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to another Restricted Subsidiary) shall be deemed, in each case to be an Incurrence of such Indebtedness;

      (h) shares of Preferred Stock of a Restricted Subsidiary issued to the Company or another Restricted Subsidiary; provided, however, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any Restricted Subsidiary that holds such shares of Preferred Stock of another Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the Company or another Restricted Subsidiary) shall be deemed, in each case, to be an issuance of shares of Preferred Stock;

      (i) Indebtedness of a Restricted Subsidiary to the Company or another Restricted Subsidiary; provided, however, that (i) any such Indebtedness is made pursuant to an intercompany note and (ii) if a Subsidiary Guarantor Incurs such Indebtedness to a Restricted Subsidiary that is not a Guarantor such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor; provided further, however,that any subsequent issuance or transfer of any Capital Stock or any other event which results in any Restricted Subsidiary holding such Indebtedness ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to another Restricted Subsidiary) shall be deemed, in each case, to be an Incurrence of such Indebtedness;

111

      (j) Hedging Obligations that are not Incurred for speculative purposes and are (1) for the purpose of fixing or hedging interest rate risk with respect to any Indebtedness that is permitted by the terms of the Indenture to be outstanding; (2) for the purpose of fixing or hedging currency exchange rate risk with respect to any currency exchanges; or (3) for the purpose of fixing or hedging commodity price risk with respect to any metal or other commodity purchases or sales;

      (k) obligations in respect of performance, bid, appeal and surety bonds, including surety bonds issued in respect of workers’ compensation claims, and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business;

      (l) Indebtedness or Disqualified Stock of the Company or any Restricted Subsidiary not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, as applicable, which when aggregated with the principal amount or liquidation preference of all other Indebtedness and Disqualified Stock then outstanding and Incurred pursuant to this clause (l), does not exceed $50.0 million at any one time outstanding (it being understood that any Indebtedness Incurred under this clause (l) shall cease to be deemed Incurred or outstanding for purposes of this clause (l) but shall be deemed Incurred for purposes of the first and second (to the extent applicable) paragraphs of this covenant from and after the first date on which the Company, or the Restricted Subsidiary, as the case may be, could have Incurred such Indebtedness under the first and second (to the extent applicable) paragraphs of this covenant without reliance upon this clause (l));

      (m) any guarantee by the Company or any of its Restricted Subsidiaries of Indebtedness or other obligations of the Company or any of its Restricted Subsidiaries so long as the Incurrence of such Indebtedness or other obligations Incurred by the Company or such Restricted Subsidiary is permitted under the terms of the Indenture; provided, however, that if such Indebtedness is by its express terms subordinated in right of payment to the notes or the Guarantee of such Restricted Subsidiary, as applicable, any such guarantee of any Guarantor with respect to such Indebtedness shall be subordinated in right of payment to such Guarantor’s Guarantee with respect to the notes substantially to the same extent as such Indebtedness is subordinated to the notes or the Guarantee of such Guarantor, as applicable;

      (n) the Incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness which serves to refund, refinance or defease any Indebtedness Incurred under the first paragraph or the first and second (to the extent applicable) paragraphs of this covenant or clause (b), (c), (d), (n), (o) or (s) of this paragraph (subject to the following proviso, “Refinancing Indebtedness”); provided, however, that such Refinancing Indebtedness:

      (1) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is Incurred which is not less than the shorter of (x) the remaining Weighted Average Life to Maturity of the Indebtedness being refunded or refinanced and (y) the Weighted Average Life to Maturity that would result if all payments of principal on the Indebtedness being refunded or refinanced that were due on or after the date one year following the last maturity date of any notes then outstanding were instead due on such date one year following;

      (2) has a Stated Maturity which is no earlier than the earlier of (x) the Stated Maturity of the Indebtedness being refunded or refinanced or (y) one year following the last maturity date of any notes then outstanding;

      (3) to the extent such Refinancing Indebtedness refinances Indebtedness junior to the notes or the Guarantee of such Restricted Subsidiary, as applicable, such Refinancing Indebtedness is junior to the notes or the Guarantee of such Restricted Subsidiary, as applicable;

      (4) is Incurred in an aggregate principal amount (or if issued with significant original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if issued with significant original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced plus premium and fees and expenses Incurred in connection with such refinancing;

112

      (5) shall not include (x) Indebtedness of a Restricted Subsidiary of the Company that is not a Guarantor that refinances Indebtedness of the Company or another Guarantor (unless such Restricted Subsidiary is an obligor with respect to such Indebtedness being refinanced), or (y) Indebtedness of the Company or a Restricted Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary; and

      (6) in the case of any Refinancing Indebtedness Incurred to refinance Indebtedness outstanding under clause (d) or (s), shall be deemed to have been Incurred and to be outstanding under such clause (d) or (s), as applicable, and not this clause (n) for purposes of determining amounts outstanding under such clauses (d) or (s), as applicable;

provided further, however, that subclauses (1), (2) and (3) of this clause (n) will not apply to any Refinancing Indebtedness Incurred to refund, refinance or defease the notes;

      (o) Indebtedness or Disqualified Stock of Persons that are acquired by the Company or any of its Restricted Subsidiaries or merged into the Company or a Restricted Subsidiary in accordance with the terms of the Indenture; provided, however, that such Indebtedness or Disqualified Stock is not Incurred in contemplation of such acquisition or merger or to provide all or a portion of the funds or credit support required to consummate such acquisition or merger; provided further, however, that after giving effect to such acquisition and the Incurrence of such Indebtedness either:

      (1) the Company would be permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first sentence of this covenant; or

      (2) the Fixed Charge Coverage Ratio would be greater than immediately prior to such acquisition;

      (p) Indebtedness Incurred by a Receivables Subsidiary in a Qualified Receivables Financing that is not recourse (except for Standard Securitization Undertakings) to the Company or any Restricted Subsidiary other than a Receivables Subsidiary;

      (q) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five business days of its Incurrence;

      (r) Indebtedness of the Company or any Restricted Subsidiary supported by a letter of credit issued pursuant to the Credit Agreement, in a principal amount not in excess of the stated amount of such letter of credit;

      (s) Contribution Indebtedness;

      (t) Indebtedness of Foreign Subsidiaries of the Company Incurred for working capital purposes; and

      (u) Indebtedness of the Company or any Restricted Subsidiary consisting of (x) the financing of insurance premiums or (y) take or pay obligations contained in supply arrangements, in each case, entered into in the ordinary course of business.

      Notwithstanding the foregoing, the Company and the Guarantors may not Incur any Indebtedness pursuant to the immediately preceding paragraph if the proceeds thereof are used, directly or indirectly, to repay, prepay, redeem, defease, retire, refund or refinance any Subordinated Indebtedness unless such Indebtedness will be subordinated to the notes or such Guarantor’s Guarantee, as applicable, to at least the same extent as such Subordinated Indebtedness. For purposes of determining compliance with this covenant, (A) Indebtedness need not be Incurred solely by reference to one category of permitted Indebtedness described in clauses (a) through (u) or pursuant to the first and second (to the extent applicable) paragraphs of this covenant but is permitted to be Incurred in part under any combination thereof and (B) in the event that an item of Indebtedness (or any portion thereof) meets the criteria of one or more of the categories of permitted Indebtedness described in clauses (a) through (u) above or is

113

entitled to be Incurred pursuant to the first and second (to the extent applicable) paragraphs of this covenant, the Company shall, in its sole discretion, classify or reclassify such item of Indebtedness (or any portion thereof) in any manner that complies with this covenant and will only be required to include the amount and type of such item of Indebtedness in one of the above clauses and such item of Indebtedness will be treated as having been Incurred pursuant to only one of such clauses or pursuant to the first and second (to the extent applicable) paragraphs hereof; provided, however, that all Indebtedness under the Credit Agreement outstanding on the Issue Date shall be deemed to have been Incurred pursuant to clause (a) and the Company shall not be permitted to reclassify all or any portion of Indebtedness Incurred pursuant to such clause. Accrual of interest, the accretion of accreted value, amortization of original issue discount, the payment of interest in the form of additional Indebtedness with the same terms or in the form of common stock of the Company, the payment of dividends on Preferred Stock in the form of additional shares of Preferred Stock of the same class, the accretion of liquidation preference and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies or increases in the value of property securing Indebtedness described in clause (3) of the definition of “Indebtedness” will not be deemed to be an Incurrence of Indebtedness for purposes of this covenant. Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness which is otherwise included in the determination of a particular amount of Indebtedness shall not be included in the determination of such amount of Indebtedness; provided, however, that the Incurrence of the Indebtedness represented by such guarantee or letter of credit, as the case may be, was in compliance with this covenant.

Limitation on Restricted Payments

      (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

      (1) declare or pay any dividend or make any distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests, including any payment with respect to such Equity Interests made in connection with any merger or consolidation (other than (A) dividends or distributions payable solely in Equity Interests (other than Disqualified Stock) of the Company; or (B) dividends or distributions by a Restricted Subsidiary; provided, however, that, in the case of any dividend or distribution payable on or in respect of any Equity Interests issued by a Restricted Subsidiary other than a Wholly Owned Restricted Subsidiary, the Company or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its ownership percentage of such Equity Interests);

      (2) purchase or otherwise acquire or retire for value any Equity Interests of the Company or any direct or indirect parent company of the Company;

      (3) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value, in each case prior to any scheduled repayment or scheduled maturity, any Subordinated Indebtedness of the Company or any Subsidiary Guarantor (other than the payment, redemption, repurchase, defeasance, acquisition or retirement of (A) Subordinated Indebtedness in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such payment, redemption, repurchase, defeasance, acquisition or retirement and (B) Indebtedness permitted under clauses (g) and (i) of the second paragraph of the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”); or

      (4) make any Restricted Investment

(all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”), unless, at the time of such Restricted Payment:

      (i) no Default shall have occurred and be continuing or would occur as a consequence thereof;

114

      (ii) immediately after giving effect to such transaction on a pro forma basis, the Company could Incur $1.00 of additional Indebtedness under the provisions of the first paragraph of the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; and

      (iii) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Issue Date (including Restricted Payments permitted by clauses (1), (4) (only to the extent of one-half of the amounts paid pursuant to such clause), (6) and (8) of paragraph (b) below, but excluding all other Restricted Payments permitted by paragraph (b) below), is less than the sum of, without duplication,

      (1) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from September 30, 2005 to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, in the case such Consolidated Net Income for such period is a deficit, minus 100% of such deficit), plus

      (2) 100% of the aggregate net cash proceeds received by the Company after the Issue Date from the issue or sale of Equity Interests of the Company (excluding Refunding Capital Stock, Designated Preferred Stock, Cash Contribution Amounts, Excluded Contributions and Disqualified Stock), including Equity Interests issued upon conversion of Indebtedness (in which case the Company will be deemed to have received an amount equal to the aggregate principal amount of such Indebtedness (or, if such Indebtedness was issued at a significant original issue discount, an amount equal to the accreted value of such Indebtedness at such time)) or upon exercise of warrants or options (other than an issuance or sale to a Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any of its Subsidiaries), plus

      (3) 100% of the aggregate amount of cash contributions to the capital of the Company received after the Issue Date (other than Refunding Capital Stock, Designated Preferred Stock, contributions from the issuance of Designated Preferred Stock, Cash Contribution Amounts, Excluded Contributions and Disqualified Stock), plus

      (4) 100% of the aggregate amount received by the Company or any Restricted Subsidiary in cash subsequent to the Issue Date, from:

      (A) the sale or other disposition (other than to the Company or a Restricted Subsidiary of the Company) of Restricted Investments made by the Company and its Restricted Subsidiaries and from repurchases and redemptions of such Restricted Investments from the Company and its Restricted Subsidiaries by any Person (other than the Company or any of its Subsidiaries) and from repayments of loans or advances which constituted Restricted Investments (other than in each case to the extent that the Restricted Investment was made pursuant to clause (7) or (10) of paragraph (b) below),

      (B) the sale (other than to the Company or a Restricted Subsidiary of the Company) of the Capital Stock of an Unrestricted Subsidiary or

      (C) a distribution or dividend from an Unrestricted Subsidiary, plus

      (5) in the event any Unrestricted Subsidiary of the Company has been redesignated as a Restricted Subsidiary or has been merged, consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company, in each case subsequent to the Issue Date, the Fair Market Value (as determined in accordance with the next succeeding sentence) of the Investment of the Company in such Unrestricted Subsidiary at the time of such redesignation,

115

combination or transfer (or of the assets transferred or conveyed, as applicable), after deducting any Indebtedness associated with the Unrestricted Subsidiary so designated or combined or any Indebtedness associated with the assets so transferred or conveyed (other than in each case to the extent that the designation of such Subsidiary as an Unrestricted Subsidiary was made pursuant to clause (7) or (10) of paragraph (b) below or constituted a Permitted Investment).

      (b) The foregoing provisions will not prohibit:

      (1) the payment of any dividend or distribution within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of the Indenture;

      (2) (A) the repurchase, retirement or other acquisition of any Equity Interests (“Retired Capital Stock”) of the Company or any direct or indirect parent company of the Company or Subordinated Indebtedness of the Company or any Subsidiary Guarantor in exchange for, or out of the proceeds of the substantially concurrent sale of, Equity Interests of the Company or any direct or indirect parent company of the Company or contributions to the equity capital of the Company (other than Designated Preferred Stock, Cash Contribution Amounts, Excluded Contributions and Disqualified Stock or any Equity Interests sold to a Subsidiary of the Company or to an employee stock ownership plan or any trust established by the Company or any of its Subsidiaries) (collectively, including any such contributions, “Refunding Capital Stock”) and

      (B) the declaration and payment of accrued dividends on the Retired Capital Stock out of the proceeds of the substantially concurrent sale (other than to a Subsidiary of the Company or to an employee stock ownership plan or any trust established by the Company or any of its Subsidiaries) of Refunding Capital Stock;

      (3) the payment, redemption, repurchase, defeasance or other acquisition or retirement of Subordinated Indebtedness of the Company or any Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of new Indebtedness of the Company or such Subsidiary Guarantor, respectively, which is Incurred in accordance with the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” so long as

      (A) the principal amount of such new Indebtedness (or, if such Indebtedness is issued at a significant original issue discount, the aggregate issue price) does not exceed the principal amount (or, if such Indebtedness was issued at a significant original issue discount, the aggregate accreted value at such time) of the Subordinated Indebtedness being so paid, redeemed, repurchased, defeased, acquired or retired for value (plus the amount of any premium required to be paid under the terms of the instrument governing the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired plus any fees and expenses incurred in connection therewith),

      (B) such Indebtedness is subordinated to the notes or the related Guarantee, as the case may be, at least to the same extent as such Subordinated Indebtedness so paid, purchased, exchanged, redeemed, repurchased, defeased, acquired or retired for value,

      (C) such Indebtedness has a Stated Maturity which is no earlier than the earlier of (x) the Stated Maturity of the Subordinated Indebtedness being paid, redeemed, repurchased, defeased, acquired or retired or (y) one year following the last maturity date of any notes then outstanding; and

      (D) such Indebtedness has a Weighted Average Life to Maturity at the time Incurred which is not less than the shorter of (x) the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness being paid, redeemed, repurchased, defeased, acquired or retired and (y) the Weighted Average Life to Maturity that would result if all payments of principal on the

116

Subordinated Indebtedness being paid, redeemed, repurchased, defeased, acquired or retired were due on or after the date one year following the last maturity date of any notes then outstanding were instead due on such date one year following;

      (4) the repurchase, retirement or other acquisition (or dividends to any direct or indirect parent company of the Company to finance any such repurchase, retirement or other acquisition) for value of Equity Interests of the Company or any direct or indirect parent company of the Company held by any future, present or former employee, director or consultant of the Company or any direct or indirect parent company of the Company or any other Subsidiary of the Company pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or other agreement or arrangement; provided, however, that the aggregate amounts paid under this clause (4) do not exceed $10.0 million in any calendar year (with unused amounts in any calendar year being permitted to be carried over for the next succeeding calendar year); provided further, however, that such amount in any calendar year may be increased by an amount not to exceed:

      (A) the cash proceeds received by the Company or any of its Restricted Subsidiaries from the sale of Equity Interests (excluding Refunding Capital Stock, Designated Preferred Stock, Cash Contribution Amounts, Excluded Contributions and Disqualified Stock) of the Company or any direct or indirect parent company of the Company (to the extent contributed to the Company) to members of management, directors or consultants of the Company and its Restricted Subsidiaries or any direct or indirect parent company of the Company that occurs after the Issue Date; provided, however, that the amount of such cash proceeds utilized for any such repurchase, retirement, other acquisition or dividend will not increase the amount available for Restricted Payments under clause (iii) of paragraph (a) of this covenant; plus

      (B) the cash proceeds of key man life insurance policies received by the Company or any direct or indirect parent company of the Company (to the extent contributed to the Company) and its Restricted Subsidiaries after the Issue Date;

(provided, however, that the Company may elect to apply all or any portion of the aggregate increase contemplated by clauses (A) and (B) above in any calendar year and, to the extent any payment described under this clause (4) is made by delivery of Indebtedness and not in cash, such payment shall be deemed to occur only when, and to the extent, the obligor on such Indebtedness makes payments with respect to such Indebtedness);

      (5) the declaration and payment of dividends or distributions to holders of any class or series of Disqualified Stock of the Company or any of its Restricted Subsidiaries issued or incurred in accordance with the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

      (6) the declaration and payment of dividends or distributions to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) issued after the Issue Date and the declaration and payment of dividends to any direct or indirect parent entity of the Company, the proceeds of which will be used to fund the payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) of any direct or indirect parent company of the Company issued after the Issue Date, the proceeds of which were contributed to the Company; provided, however, that (A) for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of issuance of such Designated Preferred Stock, after giving effect to such issuance (and the payment of dividends or distributions) on a pro forma basis, the Company would have had a Fixed Charge Coverage Ratio of at least 2.25 to 1.00 and (B) the aggregate amount of dividends declared and paid pursuant to this clause (6) does not exceed the net cash proceeds actually received by the Company from the sale of such Designated Preferred Stock (other than Disqualified Stock) issued after the Issue Date;

      (7) Investments in Unrestricted Subsidiaries having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (7) that are at that time

117

outstanding, not to exceed $20.0 million at the time of such Investment (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value);

      (8) the payment of dividends on the Company’s common stock or Preferred Stock (or the payment of dividends to any direct or indirect parent of the Company to fund the payment by any direct or indirect parent of the Company of dividends on such entity’s common stock or Preferred Stock) of up to 6.0% per annum of the net proceeds received by the Company from any public offering of common stock or contributed to the Company by any direct or indirect parent of the Company from any public offering of common stock or Preferred Stock; provided, however, that such Preferred Stock was issued in a registered public offering;

      (9) Investments that are made with Excluded Contributions;

      (10) other Restricted Payments in an aggregate amount not to exceed $20.0 million;

      (11) the distribution, as a dividend or otherwise, of shares of Capital Stock of, or Indebtedness owed to the Company or a Restricted Subsidiary of the Company by, Unrestricted Subsidiaries;

      (12) (A) with respect to each tax year or portion thereof that the Company qualifies as a Flow Through Entity, the distribution by the Company to the holders of Capital Stock of the Company of an amount equal to the product of (i) the amount of aggregate net taxable income of the Company allocated to the holders of Capital Stock of the Company for such period and (ii) the Presumed Tax Rate for such period; and

      (B) with respect to any tax year or portion thereof that the Company does not qualify as a Flow Through Entity and files a consolidated U.S. federal tax return with its direct or indirect parent company, the payment of dividends or other distributions to any direct or indirect parent company of the Company that files a consolidated U.S. federal tax return that includes the Company and its subsidiaries in an amount not to exceed the amount that the Company and its Restricted Subsidiaries would have been required to pay in respect of federal, state or local taxes (as the case may be) in respect of such year if the Company and its Restricted Subsidiaries paid such taxes directly as a stand-alone taxpayer (or stand-alone group);

      (13) the payment of dividends, other distributions or other amounts by the Company:

      (A) in amounts equal to the amounts required for any direct or indirect parent of the Company to pay fees and expenses (including franchise or similar taxes) required to maintain its corporate existence, customary salary, bonus and other benefits payable to, and indemnity provided on behalf of, officers and employees of any direct or indirect parent of the Company, and general corporate overhead expenses of any direct or indirect parent of the Company, in each case to the extent such fees, expenses, salaries, bonuses, benefits and indemnities are attributable to the ownership or operation of the Company and its respective Subsidiaries; provided, however, that any such dividends, distributions or other amounts shall not exceed $1.0 million per year and shall be treated as an operating expense of the Company for purposes of determining the Consolidated Net Income of the Company; and

      (B) in amounts equal to amounts required for any direct or indirect parent of the Company to pay interest or principal on Indebtedness the proceeds of which have been contributed to the Company or any of its Restricted Subsidiaries and that has been guaranteed by, or is otherwise considered Indebtedness of, the Company Incurred in accordance with the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; provided, however, that any such contribution will not increase the amount available for Restricted Payments under clause (iii) of the immediately preceding paragraph or be used to Incur Contribution Indebtedness or to make a Restricted Payment pursuant to paragraph (b) of this covenant (other than payments permitted by this clause (13)); provided

118

further, however, any such dividends, other distributions or other amounts used to pay interest shall be treated as interest payments of the Company for purposes of the Indenture;

      (14) cash dividends or other distributions on the Company’s Capital Stock used to, or the making of loans to any direct or indirect parent of the Company to, fund the Transactions or the payment of fees and expenses incurred in connection with the Transactions or owed by the Company or any Restricted Subsidiary of the Company to Affiliates, in each case to the extent permitted by the covenant described under “— Transactions with Affiliates”;

      (15) repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants;

      (16) purchases of receivables pursuant to a Receivables Repurchase Obligation in connection with a Qualified Receivables Financing;

      (17) in the event of a Change of Control, the payment, purchase, redemption, defeasance or other acquisition or retirement of Subordinated Indebtedness, Disqualified Stock or Preferred Stock of the Company or Subordinated Indebtedness of any Guarantor or Disqualified Stock or Preferred Stock of any Restricted Subsidiary, in each case, at a purchase price not greater than 101% of the principal amount or liquidation preference, as applicable (or, if such Subordinated Indebtedness was issued with significant original issue discount, 101% of the accreted value), of such Subordinated Indebtedness, Disqualified Stock or Preferred Stock, plus any accrued and unpaid interest or dividends thereon; provided, however, that prior to such payment, purchase, redemption, defeasance or other acquisition or retirement, the Company (or a third party to the extent permitted by the Indenture) has made a Change of Control Offer with respect to the notes as a result of such Change of Control and have repurchased all notes validly tendered and not withdrawn in connection with such Change of Control Offer; and

      (18) in the event of an Asset Sale that requires the Company to offer to purchase notes pursuant to the covenant described under “— Asset Sales,” the payment, purchase, redemption, defeasance or other acquisition or retirement of Subordinated Indebtedness, Disqualified Stock or Preferred Stock of the Company or Subordinated Indebtedness of any Guarantor or Disqualified Stock or Preferred Stock of any Restricted Subsidiary, in each case, at a purchase price not greater than 100% of the principal amount or liquidation preference, as applicable (or, if such Subordinated Indebtedness was issued with significant original issue discount, 100% of the accreted value), of such Subordinated Indebtedness, Disqualified Stock or Preferred Stock, plus any accrued and unpaid interest or dividends thereon; provided, however, that (i) prior to such payment, purchase, redemption, defeasance or other acquisition or retirement, the Company (or a third party to the extent permitted by the Indenture) has made an Asset Sale Offer or Notes Collateral Asset Sale Offer as applicable with respect to the notes as a result of such Asset Sale and have repurchased all notes validly tendered and not withdrawn in connection with such Asset Sale Offer or Notes Collateral Asset Sale Offer as applicable and (ii) the aggregate amount of all such payments, purchases, redemptions, defeasances or other acquisitions or retirements of all such Subordinated Indebtedness, Disqualified Stock and Preferred Stock may not exceed the amount of the Excess Proceeds or Notes Collateral Excess Amount used to determine the aggregate purchase price of the notes tendered for in such Asset Sale Offer or Notes Collateral Asset Sale Offer as applicable less the aggregate amount applied in connection with such Asset Sale Offer or Notes Collateral Asset Sale Offer as applicable;

      (19) any Restricted Payments made in connection with the consummation of the Transactions or as contemplated by the Merger Agreement, including any payments or loans made to any direct or indirect parent to enable it to make any such payments; and

      (20) payments of cash, or dividends, distributions or advances by the Company or any Restricted Subsidiary to allow any such entity to make payments of cash, in lieu of the issuance of fractional shares upon the exercise of warrants or upon the conversion or exchange of Capital Stock of any such

119

Person; provided, however, the aggregate amount of such payments, dividends, distributions or advances does not exceed $2.5 million;

provided, however, that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (6), (7), (10), (11), (17) and (18), no Default shall have occurred and be continuing or would occur as a consequence thereof.

      As of December 31, 2005, all of the Company’s Subsidiaries were Restricted Subsidiaries except for Wilkoff-Morris Steel Corporation and Metals USA Contract Manufacturing, Inc. The Company will not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the definition of “Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Restricted Payments in an amount determined as set forth in the last sentence of the definition of “Investments.” Such designation will only be permitted if a Restricted Payment in such amount would be permitted at such time and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.

Dividend and Other Payment Restrictions Affecting Subsidiaries

      The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to:

      (a) (i) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or by, its profits or (ii) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries;

      (b) make loans or advances to the Company or any of its Restricted Subsidiaries; or

      (c) sell, lease or transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries;

except in each case for such encumbrances or restrictions existing under or by reason of:

      (1) contractual encumbrances or restrictions in effect on the Issue Date, including pursuant to the Credit Agreement and the other Senior Credit Documents;

      (2) the Indenture, the notes, the Security Documents and the Intercreditor Agreement;

      (3) applicable law or any applicable rule, regulation or order;

      (4) any agreement or other instrument relating to Indebtedness of a Person acquired by the Company or any Restricted Subsidiary which was in existence at the time of such acquisition (but not created in contemplation thereof or to provide all or any portion of the funds or credit support utilized to consummate such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired;

      (5) any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition;

      (6) Secured Indebtedness otherwise permitted to be Incurred pursuant to the covenants described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” and “— Liens” that limit the right of the debtor to dispose of the assets securing such Indebtedness;

      (7) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

120

      (8) customary provisions in joint venture agreements and other similar agreements that the Board of Directors of the Company determines in good faith at the time the joint venture or other similar agreement is entered into that such encumbrances or restrictions will not materially adversely affect the Company’s ability to make timely payment of interest, premium (if any) or principal on the notes when due;

      (9) purchase money obligations for property acquired in the ordinary course of business or Capitalized Lease Obligations that impose restrictions of the nature discussed in clause (c) above on the property so acquired;

      (10) customary provisions contained in leases, licenses and other similar agreements entered into in the ordinary course of business that impose restrictions of the type described in clause (c) above on the property subject to such lease, license or other similar agreement;

      (11) any encumbrance or restriction of a Receivables Subsidiary effected in connection with a Qualified Receivables Financing; provided, however, that such restrictions apply only to such Receivables Subsidiary;

      (12) other Indebtedness

      (i) of (A) the Company or (B) any Restricted Subsidiary of the Company, in each case that (x) is Incurred subsequent to the Issue Date pursuant to the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” and (y) an Officer reasonably and in good faith determines at the time such Indebtedness is Incurred (and at the time of any modification of the terms of any such encumbrance or restriction) that any such encumbrance or restriction will not materially adversely affect the Company’s ability to satisfy its obligations under the notes and the Indenture and any other Indebtedness that is an obligation of the Company and such determination is set forth in an Officer’s Certificate delivered to the Trustee, or

      (ii) that is Incurred by a Foreign Subsidiary of the Company subsequent to the Issue Date pursuant to clauses (d), (l), (m) (but limited to guarantees of Indebtedness of other Foreign Subsidiaries described in this clause (12)(ii)), (n) (but only to the extent such Indebtedness refunds, refinances or decreases Indebtedness of such Foreign Subsidiary Incurred pursuant to clause (d) or (1)) or (t) of the second paragraph of the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; provided, however, that such encumbrance or restriction applies only to Foreign Subsidiaries of the Company;

      (13) any encumbrances or restrictions of the type referred to in clauses (a), (b) and (c) above imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (12) above; provided, however, that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company, no more restrictive with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing; or

      (14) any encumbrances or restrictions of the type referred to in clause (c) above imposed by any Permitted Liens referred to in clauses (1) and (4) of the definition thereof.

      For purposes of determining compliance with this covenant, (i) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock shall not be deemed a restriction on the ability to make distributions on Capital Stock and (ii) the subordination of loans or advances made to the Company to other Indebtedness Incurred by the Company shall not be deemed a restriction on the ability to make loans or advances.

121

Asset Sales

      (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, cause or make an Asset Sale of any Notes Collateral unless:

      (1) the Company or any of its Restricted Subsidiaries, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value (as determined in good faith by the Company) of the assets sold or otherwise disposed of;

      (2) at least 75% of the consideration thereof received by the Company or such Restricted Subsidiary is in the form of Cash Equivalents or Asset Sale Cash Equivalents;

      (3) (i) to the extent that any assets received by the Company and its Restricted Subsidiaries in such Asset Sale constitute securities or may be used or useful in a Similar Business, such assets are concurrently with their acquisition added to the Notes Collateral securing the notes and (ii) to the extent that any assets received by the Company and its Restricted Subsidiaries in such Asset Sale constitute the Capital Stock of any Person, the assets of such Person that may be used or useful in a Similar Business with a Fair Market Value that is equal to or greater than the Fair Market Value of the Notes Collateral that is the subject of such Asset Sale (measured together with the consideration described in clause (a)(2) above) are concurrently with the acquisition added to the Notes Collateral securing the notes and

      (4) an amount equal to 100% of the Net Proceeds from such Asset Sale is paid directly by the purchaser thereof to the Notes Collateral Agent to be held in trust for application in accordance with this covenant.

      The Company or such Restricted Subsidiary may use the Net Proceeds from such Asset Sale at its option to do any one or more of the following:

      (A) within 365 days after the Notes Collateral Agent’s receipt of such Net Proceeds, to make an Asset Sale Investment (or to reimburse the Company for customary out-of-pocket costs incurred by the Company or such Restricted Subsidiary and directly related to such an investment), the assets which are acquired pursuant to such Asset Sale Investment are concurrently with their acquisition added to the Notes Collateral securing the notes; provided, however, that (i) to the extent that the assets acquired by the Company and its Restricted Subsidiaries in such Asset Sale Investment may be used or useful in a Similar Business, such assets are concurrently with their acquisition added to the Notes Collateral securing the notes and (ii) to the extent that the assets acquired by the Company and its Restricted Subsidiaries pursuant to such Asset Sale Investment constitute the Capital Stock of any Person, the assets of such Person that may be used or useful in a Similar Business, other than such assets that constitute ABL Collateral, are concurrently with the acquisition added to the Notes Collateral securing the notes, or

      (B) within 365 days after the Notes Collateral Agent’s receipt of such Net Proceeds, to make one or more offers to the holders of the notes (and, at the option of the Company, the holders of Other Pari Passu Lien Obligations) to purchase the maximum principal amount of notes (and principal amount or accreted value, as applicable, of such Other Pari Passu Lien Obligations) that is an integral multiple of $1,000 that may be purchased out of the Notes Collateral Excess Amount at an offer price in cash in an amount equal to 100% of the principal amount thereof (or, in the event such Other Pari Passu Lien Obligations were issued with significant original issue discount, “principal amount” shall refer to 100% of the accreted value thereof), plus accrued and unpaid interest and additional interest, if any (or, in respect of such Other Pari Passu Lien Obligations, such lesser price, if any, as may be provided for by the terms of such Other Pari Passu Lien Obligations), to the date fixed for the closing of such offer, pursuant to and subject to the conditions contained in the Indenture (each, a “Notes Collateral Asset Sale Offer”); provided, however, that in connection with any prepayment, repayment or purchase of Indebtedness pursuant to this clause (B), the Company or such Restricted Subsidiary shall permanently retire such Indebtedness and shall cause the related loan

122

commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased.

      Notwithstanding the foregoing provisions of this paragraph (a), (i) if during the 365-day period described in this paragraph (a), the Company or a Restricted Subsidiary enters into a binding agreement committing it to apply such Net Proceeds of any Asset Sale of any Notes Collateral in an Asset Sale Investment in the manner set forth in clause (A) of this paragraph (a), such 365-day period will be extended with respect to the amount of Net Proceeds so committed until such Net Proceeds are required to be applied in accordance with such agreement (or, if earlier, until termination of such agreement) (but such extension will in no event be for a period longer than 180 days); and (ii) the Company and the Restricted Subsidiaries will not be required to apply any Net Proceeds in accordance with this paragraph (a) except to the extent that the aggregate Net Proceeds from all Asset Sales of Notes Collateral which are not applied in accordance with this covenant exceeds $3.0 million (the aggregate amount of such Net Proceeds, the “Notes Collateral Excess Amount”).

      The Company will commence a Notes Collateral Asset Sale Offer with respect to the Net Proceeds from any Asset Sale of Notes Collateral not later than 10 Business Days after the later of (x) the 365th day (or such later date provided in the preceding paragraph) after the receipt of such Net Proceeds to the extent such Net Proceeds have not been used in accordance with paragraph (A) or (B) above and (y) the date that the Net Proceeds from Asset Sales of Notes Collateral not applied in accordance with this covenant exceeds $3.0 million by mailing the notice required pursuant to the terms of the Indenture, with a copy to the Trustee. After the Company or any Restricted Subsidiary has applied the Net Proceeds from any Asset Sale of any Notes Collateral as provided in, and within the time periods required by, this paragraph (a), the balance of such Net Proceeds, if any, from such Asset Sale of any Notes Collateral shall be released by the Notes Collateral Agent to the Company or such Restricted Subsidiary for use by the Company or such Restricted Subsidiary for any purpose not prohibited by the terms of the Indenture and shall cease to constitute Net Proceeds of Asset Sales of Notes Collateral subject to the provisions of this covenant. If the aggregate principal amount of notes (and such Other Pari Passu Lien Obligations) surrendered by holders thereof exceeds the amount of Notes Collateral Excess Amount, the Trustee shall select the notes (and such Other Pari Passu Lien Obligations) to be purchased in the manner set forth in Section 4.06(g). Upon completion of any such Notes Collateral Asset Sale Offer, the amount of Notes Collateral Excess Amount which served as the basis for such Notes Collateral Asset Sale Offer shall be reduced to zero.

      (b) The Company will not, and will not permit any of its Restricted Subsidiaries to, cause or make an Asset Sale (other than an Asset Sale of Notes Collateral), unless (1) the Company or any of its Restricted Subsidiaries, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value (as determined in good faith by the Company) of the assets sold or otherwise disposed of, and (2) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary, as the case may be, is in the form of Cash Equivalents or Asset Sale Cash Equivalents.

      Within 365 days after the Company’s or any Restricted Subsidiary of the Company’s receipt of the Net Proceeds of any Asset Sale (other than an Asset Sale of Notes Collateral), the Company or such Restricted Subsidiary may apply the Net Proceeds from such Asset Sale at its option to anyone or more of the following:

      (A) to permanently reduce any Indebtedness constituting Indebtedness of a Restricted Subsidiary that is not a Guarantor (and, in the case of revolving Obligations, to correspondingly reduce commitments with respect thereto) or any Pari Passu Indebtedness, in each case other than Indebtedness owed to the Company or an Affiliate of the Company; provided, however, that if the Company or any Guarantor shall so reduce any Pari Passu Indebtedness, the Company will equally and ratably reduce Indebtedness under the notes by making an offer to all holders of notes to purchase at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest and additional interest, if any, the pro rata principal amount of the notes, such offer to be

123

conducted in accordance with the procedures set forth below for an Asset Sale Offer but without any further limitation in amount; or

      (B) to make an Asset Sale Investment.

      Pending the final application of any such Net Proceeds, the Company or such Restricted Subsidiary of the Company may temporarily reduce Indebtedness under a revolving credit facility, if any, or otherwise invest such Net Proceeds in Cash Equivalents or Investment Grade Securities. The Indenture provides that any Net Proceeds from any Asset Sale (other than an Asset Sale of Notes Collateral) that are not applied as provided and within the 365-day time period set forth in the preceding paragraph will be deemed to constitute “Excess Proceeds”; provided, however, that if during such 365-day time period the Company or a Restricted Subsidiary enters into a binding agreement committing it to apply such Net Proceeds in accordance with the requirements of clause (B) of the immediately preceding paragraph after the 365th day, such 365-day time period will be extended with respect to the amount of Net Proceeds so committed until such Net Proceeds are required to be applied in accordance with such agreement (or, if earlier, until termination of such agreement) (but such extension will in no event be longer than 180 days). When the aggregate amount of Excess Proceeds exceeds $12.5 million, the Company shall make an offer to all holders of notes (and, at the option of the Company, to holders of any Pari Passu Indebtedness) (an “Asset Sale Offer”) to purchase the maximum principal amount of notes (and principal amount or accreted value, as applicable, of such Pari Passu Indebtedness), that is an integral multiple of $1,000 that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof (or, in the event such Pari Passu Indebtedness was issued with significant original issue discount, “principal amount” shall refer to 100% of the accreted value thereof), plus accrued and unpaid interest and additional interest, if any (or, in respect of such Pari Passu Indebtedness, such lesser price, if any, as may be provided for by the terms of such Pari Passu Indebtedness), to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture. The Company will commence an Asset Sale Offer with respect to Excess Proceeds not later than ten business days after the date that Excess Proceeds exceed $12.5 million by mailing the notice required pursuant to the terms of the Indenture, with a copy to the Trustee. To the extent that the aggregate amount of notes (and such Pari Passu Indebtedness) tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of notes (and such Pari Passu Indebtedness) surrendered by holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the notes (and such Pari Passu Indebtedness) to be purchased in the manner described below. Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds which served as the basis for such Asset Sale Offer shall be reduced to zero.

      The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations to the extent such laws or regulations are applicable in connection with the repurchase of the notes pursuant to a Notes Collateral Asset Sale Offer or an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in the Indenture by virtue thereof.

      If more notes (and any Other Pari Passu Lien Obligations) are tendered pursuant to a Notes Collateral Asset Sale Offer than the Company is required to purchase, the principal amount of the notes (and such Other Pari Passu Lien Obligations) to be purchased will be determined pro rata based on the principal amounts so tendered and the selection of the actual notes for purchase will be made by the Trustee on a pro rata basis to the extent practicable; provided, however, that no notes (or any Other Pari Passu Lien Obligations) of $1,000 or less shall be purchased in part. If more notes (and Pari Passu Indebtedness) are tendered pursuant to an Asset Sale Offer than the Company is required to purchase, the principal amount of the notes (and Pari Passu Indebtedness) to be purchased will be determined pro rata based on the principal amounts so tendered and the selection of the actual notes for purchase will be made by the Trustee on a pro rata basis to the extent practicable; provided, however, that no notes (or Pari Passu Indebtedness) of $1,000 or less shall be purchased in part.

124

      Notices of a Notes Collateral Asset Sale Offer or an Asset Sale Offer shall be mailed by first class mail, postage prepaid, at least 30 but not more than 60 days before the purchase date to each holder of notes at such holder’s registered address. If any Note is to be purchased in part only, any notice of purchase that relates to such Note shall state the portion of the principal amount thereof that has been or is to be purchased.

      A new Note in principal amount equal to the unpurchased portion of any Note purchased in part will be issued in the name of the holder thereof upon cancellation of the original Note. On and after the purchase date, unless the Company defaults in payment of the purchase price, interest shall cease to accrue on notes or portions thereof purchased.

      This covenant contains a number of substantial qualifications and exceptions. See the definition of “Asset Sale” under “— Certain Definitions” and “Risk Factors — Risks Related to an Investment in the Notes — There may not be sufficient collateral to pay all or any of the notes.”

     Transactions with Affiliates

      The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction or series of transactions, contract, agreement, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Company (each of the foregoing, an “Affiliate Transaction”) involving aggregate consideration in excess of $2.0 million, unless:

      (a) such Affiliate Transaction is on terms that are not materially less favorable to the Company or the relevant Restricted Subsidiary than those that could reasonably have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unaffiliated party; and

      (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, the Company delivers to the Trustee a resolution adopted in good faith by the majority of the Board of Directors of the Company approving such Affiliate Transaction and set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (a) above.

      The foregoing provisions will not apply to the following:

      (1)(x) transactions between or among the Company or any of its Restricted Subsidiaries and (y) any merger of the Company and any direct parent company of the Company; provided, however, that such parent shall have no material liabilities and no material assets other than cash, Cash Equivalents and the Capital Stock of the Company and such merger is otherwise in compliance with the terms of the Indenture and effected for a bona fide business purpose;

      (2) Restricted Payments permitted under the covenant “— Limitation on Restricted Payments” and Permitted Investments (other than pursuant to clauses (3), (6), (9), (10) and (13) of the definition thereof) permitted under the Indenture;

      (3)(x) the entering into of any agreement to pay, and the payment of, annual management, consulting, monitoring and advisory fees and expenses to the Sponsor in an aggregate amount in any fiscal year not to exceed the greater of (A) $3.0 million and (B) 3% of Adjusted EBITDA of the Company and its Restricted Subsidiaries for the immediately preceding fiscal year; provided, however, that any payment not made in any fiscal year may be carried forward and paid in the following two fiscal years and (y) the payment of the present value of all amounts payable pursuant to any agreement described in clause (3)(x) in connection with the termination of such agreement;

      (4) the payment of reasonable and customary fees paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any Restricted Subsidiary or any direct or indirect parent company of the Company;

125

      (5) payments by the Company or any of its Restricted Subsidiaries to the Sponsor made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including in connection with acquisitions or divestitures, which payments are (x) approved by a majority of the Board of Directors of the Company in good faith or (y) made pursuant to any agreement described under the caption “Certain Relationships and Related Party Transactions” in this prospectus, including the transaction fee agreement described thereunder;

      (6) transactions in which the Company or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to the Company or such Restricted Subsidiary from a financial point of view or meets the requirements of clause (a) of the preceding paragraph;

      (7) payments or loans (or cancellation of loans) to employees or consultants in the ordinary course of business which are approved by a majority of the Board of Directors of the Company in good faith;

      (8) the existence of, or the performance by the Company or any of its Restricted Subsidiaries under the terms of, any agreement or instrument (other than with the Sponsor, except to the extent the Sponsor includes the Company, any of its direct or indirect parents, Flag Intermediate or any Subsidiary of the Company) as in effect as of the Issue Date or any amendment thereto (so long as any such agreement or instrument together with all amendments thereto, taken as a whole, is not more disadvantageous to the holders of the notes in any material respect than the original agreement or instrument as in effect on the Issue Date) or any transaction contemplated thereby;

      (9) the existence of, or the performance by the Company or any of its Restricted Subsidiaries of its obligations under the terms of, the Merger Agreement, any stockholders agreement or investor rights agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Issue Date and any amendment thereto or similar agreements which it may enter into thereafter; provided, however, that the existence of, or the performance by the Company or any of its Restricted Subsidiaries of its obligations under, any future amendment to any such existing agreement or under any similar agreement entered into after the Issue Date shall only be permitted by this clause (9) to the extent that the terms of any such existing agreement together with all amendments thereto, taken as a whole, or new agreement are not otherwise more disadvantageous to the holders of the notes in any material respect than the original agreement as in effect on the Issue Date or any transaction contemplated thereby;

      (10) transactions to effect the Transactions and the payment of all fees and expenses related to the Transactions, including fees to the Sponsor, in each case that are described in this prospectus;

      (11)(x) transactions with customers, clients, suppliers, toll manufacturers or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of the Indenture, on terms that are not materially less favorable to the Company or the relevant Restricted Subsidiary than those that could reasonably have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unaffiliated party or (y) transactions with joint ventures or Unrestricted Subsidiaries for the purchase or sale of goods or services entered into in the ordinary course of business;

      (12) any transaction effected as part of a Qualified Receivables Financing;

      (13) the issuance of Equity Interests (other than Disqualified Stock) of the Company;

      (14) the issuances of securities or other payments, awards or grants in cash, securities or otherwise pursuant to or the funding of, employment arrangements, stock option and stock ownership plans or similar employee benefit plans approved by the Board of Directors of the Company or of a Restricted Subsidiary, as appropriate, in good faith;

      (15) the entering into of any tax sharing agreement or arrangement and any payments permitted by clause (b)(12) of the covenant described under “— Limitations on Restricted Payments”;

126

      (16) any contribution to the capital of the Company; and

      (17) any employment agreements entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business.

     Liens

      Flag Intermediate and the Company will not, and the Company will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, Incur or suffer to exist any Lien (the “Initial Lien”) on any asset or property of Flag Intermediate, the Company or such Restricted Subsidiary of the Company, or any income or profits therefrom, or assign or convey any right to receive income therefrom, whether owned at the Issue Date or thereafter acquired, except

      (1) in the case of the Notes Collateral, any Initial Lien if (i) such Initial Lien expressly ranks junior to the first-priority security interest intended to be created in favor of the Notes Collateral Agent for the benefit of the Trustee and the holders of the notes pursuant to the Security Documents; provided, however, that the terms of such junior interest will be no more favorable to the beneficiaries thereof than the terms contained in the Intercreditor Agreement; or (ii) such Initial Lien is a Permitted Collateral Lien;

      (2) in the case of the ABL Collateral, any Initial Lien if (i) the notes are equally and ratably secured on a second priority basis by such ABL Collateral until such time as such Initial Lien is released or (ii) such Initial Lien is a Permitted Lien; and

      (3) in the case of any other asset or property, any Initial Lien if (i) the notes are equally and ratably secured with (or on a senior basis to, in the case such Initial Lien secures any Subordinated Obligations) the obligations secured by such Initial Lien or (ii) such Initial Lien is a Permitted Lien.

      Any Lien created for the benefit of the Holders of the notes pursuant to clause (2) or (3) of the preceding paragraph shall provide by its terms that such Lien shall be automatically and unconditionally released and discharged upon the release and discharge of the Initial Lien which release and discharge in the case of any sale of any such asset or property shall not affect any Lien that the Notes Collateral Agent may have on the proceeds from such sale.

     Reports and Other Information

      Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, the Company will file with the SEC (and provide the Trustee and holders of the notes with copies thereof, without cost to each holder, within 15 days after it files them with the SEC),

      (1) within the time periods specified by the Exchange Act, annual reports on Form 10-K (or any successor or comparable form) containing the information required to be contained therein (or required in such successor or comparable form),

      (2) within the time periods specified by the Exchange Act, reports on Form 10-Q (or any successor or comparable form),

      (3) promptly from time to time after the occurrence of an event required to be therein reported (and in any event within the time period specified for filing current reports on Form 8-K by the SEC), such other reports on Form 8-K (or any successor or comparable form), and

      (4) any other information, documents and other reports which the Company would be required to file with the SEC if it were subject to Section 13 or 15(d) of the Exchange Act;

provided, however, that the Company shall not be so obligated to file such reports with the SEC if the SEC does not permit such filing, in which event the Company will post the reports specified in the first sentence of this paragraph on its website within the time periods that would apply if the Company were

127

required to file those reports with the SEC. In addition, the Company will make available such information to prospective purchasers of notes, in addition to providing such information to the Trustee and the holders of the notes, in each case within 15 days after the time the Company would be required to file such information with the SEC if it were subject to Section 13 or 15(d) of the Exchange Act.

      Notwithstanding the foregoing, the Company will be deemed to have furnished such reports referred to above to the Trustee and the holders if it has filed such reports with the SEC via the EDGAR filing system and such reports are publicly available.

      In the event that:

      (a) the rules and regulations of the SEC permit the Company and any direct or indirect parent company of the Company to report at such parent entity’s level on a consolidated basis and

      (b) such parent entity of the Company is not engaged in any business in any material respect other than incidental to its ownership, directly or indirectly, of the capital stock of the Company,

such consolidated reporting at such parent entity’s level in a manner consistent with that described in this covenant for the Company will satisfy this covenant.

     Future Guarantors

      On the Issue Date, each of our Restricted Subsidiaries that is a guarantor under the Credit Agreement guaranteed the notes in the manner and on the terms set forth in the Indenture.

      After the Issue Date, the Company will cause each of its Restricted Subsidiaries (other than a Foreign Subsidiary or a Receivables Subsidiary) that

      (a) guarantees any Indebtedness of the Company or any of its Restricted Subsidiaries; or

      (b) Incurs any Indebtedness or issues any shares of Disqualified Stock permitted to be Incurred or issued pursuant to clause (a) or (1) of the second paragraph of the covenant described under “—Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” or not permitted to be Incurred by such covenant to execute and deliver to the Trustee a supplemental indenture pursuant to which such Subsidiary will guarantee payment of the notes on the terms and conditions set forth in the Indenture.

      Each Guarantee by a Restricted Subsidiary is and will be limited to an amount not to exceed the maximum amount that can be guaranteed by that Restricted Subsidiary without rendering the Guarantee, as it relates to such Restricted Subsidiary, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.

      Each Guarantee by a Restricted Subsidiary may be released as described under “— Guarantees.”

     Impairment of Security Interest

      Subject to the rights of the holders of Permitted Liens and Permitted Collateral Liens, the Company will not, and will not permit any of its Restricted Subsidiaries to, take or knowingly or negligently omit to take, any action which action or omission would or could reasonably be expected to have the result of materially impairing the security interest with respect to the Collateral for the benefit of the Trustee and the Holders of the notes, subject to limited exceptions. The Company shall not amend, modify or supplement, or permit or consent to any amendment, modification or supplement of, the Security Documents in any way that would be adverse to the holders of the notes in any material respect, except as described above under “— Security for the Notes” or as permitted under “— Amendments and Waivers.”

     After-Acquired Property

      Upon the acquisition by the Company or any Guarantor of any After-Acquired Property (but subject to the limitations, if applicable, described under “— Security for the Notes — Notes Collateral” and “—

128

Security for the Notes — Limitations on Stock Collateral”), the Company or such Guarantor shall execute and deliver such mortgages, deeds of trust, security instruments, financing statements and certificates and opinions of counsel as shall be reasonably necessary to vest in the Notes Collateral Agent a perfected security interest in such After Acquired Property and to have such After-Acquired Property added to the Notes Collateral or the ABL Collateral, as applicable, and thereupon all provisions of the Indenture relating to the Notes Collateral or the ABL Collateral, as applicable, shall be deemed to relate to such After-Acquired Property to the same extent and with the same force and effect.

Merger, Consolidation or Sale of All or Substantially All Assets

      (a) The Company will not consolidate or merge with or into or wind up into (whether or not the Company is the surviving entity), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets in one or more related transactions, to any Person (other than any such consolidation, merger, sale, assignment, transfer, lease, conveyance or disposition in connection with the Transactions) unless:

      (1) the Company is the surviving entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation, limited partnership or limited liability company organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (the Company or such Person, as the case may be, being herein called the “Successor-by-Merger Company”); provided, however, that if such Successor-by-Merger Company is not a corporation, such Successor-by-Merger Company will form a Wholly Owned Subsidiary that is a corporation and cause such Wholly Owned Subsidiary to become a co-issuer of the notes;

      (2) the Successor-by-Merger Company (if other than the Company) expressly assumes all the obligations of the Company under the Indenture pursuant to supplemental indentures or other documents or instruments in form reasonably satisfactory to the Trustee;

      (3) immediately after giving effect to such transaction no Default shall have occurred and be continuing;

      (4) immediately after giving pro forma effect to such transaction, as if such transaction had occurred at the beginning of the applicable four-quarter period (and treating any Indebtedness which becomes an obligation of the Successor-by-Merger Company or any of its Restricted Subsidiaries as a result of such transaction as having been Incurred by the Successor-by-Merger Company or such Restricted Subsidiary at the time of such transaction), either

      (A) the Successor-by-Merger Company would be permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first sentence of the covenant described under “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” or

      (B) the Fixed Charge Coverage Ratio for the Successor-by-Merger Company and its Restricted Subsidiaries would be greater than the Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries immediately prior to such transaction; and

      (5) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indentures (if any) comply with the Indenture.

      The Successor-by-Merger Company (if other than the Company) will succeed to, and be substituted for, the Company under the Indenture, and the Predecessor Company, except in the case of a lease of all or substantially all assets, will be released from all obligations with respect to the Indenture and the notes. Notwithstanding the foregoing clauses (3) and (4), (A) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company or to another Restricted

129

Subsidiary, and (B) the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in another state of the United States so long as the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby.

      (b) The Company will not permit any Subsidiary Guarantor to, consolidate or merge with or into or wind up into (whether or not such Subsidiary Guarantor is the surviving entity), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets in one or more related transactions to, any Person (other than any such consolidation, merger, sale, assignment, transfer, lease, conveyance or disposition in connection with the Transactions described in this prospectus) unless:

      (1) except in the case of a Subsidiary Guarantor (x) that has been disposed of in its entirety to another Person (other than to the Company, Flag Intermediate or a Subsidiary of the Company or Flag Intermediate), whether through a merger, consolidation or sale of Capital Stock or assets or (y) that, as a result of the disposition of all or a portion of its Capital Stock, ceases to be a Subsidiary, in both cases, if in connection therewith the Company provides an Officers’ Certificate to the Trustee to the effect that the Company will comply with its obligations under the covenant described under “— Asset Sales” in respect of such disposition, such Subsidiary Guarantor is the surviving entity or the Person formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation, partnership or limited liability company organized and existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (such Subsidiary Guarantor or such Person, as the case may be, except in the case of clause (x) or (y), being herein called the “Successor Guarantor”);

      (2) the Successor Guarantor (if other than such Guarantor) (to the extent applicable) expressly assumes all the obligations of such Guarantor under the Indenture and such Guarantors’ Guarantee of the notes pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Trustee;

      (3) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Guarantor (to the extent applicable) or any of its Subsidiaries as a result of such transaction as having been Incurred by the Successor Guarantor (to the extent applicable) or such Subsidiary at the time of such transaction) no Default shall have occurred and be continuing; and

      (4) the Successor Guarantor (if other than such Subsidiary Guarantor) (to the extent applicable) shall have delivered or caused to be delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture.

      Subject to certain limitations described in the Indenture, the Successor Guarantor (to the extent applicable) will succeed to, and be substituted for, such Guarantor under the Indenture and such Guarantor’s Guarantee of the notes, and the predecessor Subsidiary Guarantor, except in the case of a lease of all or substantially all assets, will be released from all obligations with respect to its Guarantee, the Indenture and the notes. Notwithstanding the foregoing clause (3), (A) a Guarantor may merge with an Affiliate incorporated solely for the purpose of reincorporating such Guarantor in another state of the United States, so long as the amount of Indebtedness of the Guarantor is not increased thereby and (B) a Guarantor may merge with another Guarantor or the Company.

      (c) Flag Intermediate will not consolidate or merge with or into or wind up into (whether or not Flag Holdings is the surviving entity), or sell, assign, transfer, lease, conveyor otherwise dispose of all or substantially all of its assets in one or more related transactions to, any Person (other than any

130

such consolidation, merger, sale, assignment, transfer, lease, conveyance or disposition in connection with the Transactions described in this prospectus) unless:

      (1) Flag Intermediate is the surviving corporation or the Person formed by or surviving any such consolidation or merger (if other than Flag Intermediate) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation, partnership or limited liability company organized and existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (Flag Intermediate or such Person, as the case may be, being herein called the “Successor Flag Intermediate Guarantor”);

      (2) the Successor Flag Intermediate Guarantor (if other than Flag Intermediate) expressly assumes all the obligations of Flag Intermediate under the Indenture and Flag Intermediate’s Guarantee of the notes pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Trustee;

      (3) immediately after giving effect to such transaction no Default shall have occurred and be continuing; and

      (4) the Successor Flag Intermediate Guarantor (if other than Flag Intermediate) shall have delivered or caused to be delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the Indenture.

      Subject to certain limitations described in the Indenture, the Successor Flag Intermediate Guarantor will succeed to, and be substituted for, Flag Intermediate under the Indenture and such Flag Intermediate’s Guarantee of the notes and the predecessor Flag Intermediate, except in the case of a lease of all or substantially all assets, will be released from all obligations with respect to its Guarantee, the Indenture and the notes. Notwithstanding the foregoing clause (3), (A) Flag Intermediate may merge with an Affiliate incorporated solely for the purpose of reincorporating Flag Intermediate in another state of the United States and (B) Flag Intermediate may merge with another Guarantor or the Company.

Defaults

      An Event of Default with respect to all the notes is defined in the Indenture as:

      (1) a default in any payment of interest on any Note when due continued for 30 days,

      (2) a default in the payment of principal or premium, if any, of any Note when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise,

      (3) the failure by the Company or Flag Intermediate to comply with its obligations under the covenant described under “— Merger, Consolidation or Sale of All or Substantially All Assets” above,

      (4) the failure by the Company or any of its Restricted Subsidiaries to comply for 30 days after notice with any of its obligations under the covenants described under “— Certain Covenants” (other than a failure to purchase notes),

      (5) the failure by the Company, Flag Intermediate or any of the Company’s Restricted Subsidiaries to comply for 60 days after notice with its agreements contained in the notes or the Indenture other than those referred to in clauses (1) through (4) above,

      (6) the failure by the Company, Flag Intermediate or any Significant Subsidiary to pay any Indebtedness (other than Indebtedness owing to the Company or a Restricted Subsidiary of the Company) within any applicable grace period after final maturity or the acceleration of any such Indebtedness by the holders thereof because of a default, in each case, if the total amount of such Indebtedness unpaid or accelerated exceeds $15.0 million or its foreign currency equivalent (the “cross-acceleration provision”),

131

      (7) certain events of bankruptcy, insolvency or reorganization of the Company, Flag Intermediate or a Significant Subsidiary (the “bankruptcy provisions”),

      (8) failure by the Company, Flag Intermediate or any Significant Subsidiary to pay final judgments aggregating in excess of $15.0 million or its foreign currency equivalent (net of any amounts which are covered by enforceable insurance policies issued by solvent carriers), which judgments are not discharged, waived or stayed for a period of 60 days (the “judgment default provision”),

      (9) the Guarantee of any notes by Flag Intermediate or a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms thereof) or any Guarantor denies or disaffirms in writing its obligations under the Indenture or any Guarantee of any notes and such Default continues for 10 days,

      (10) unless all of the Collateral has been released from the Liens in accordance with the provisions of the Security Documents, the Company, Flag Intermediate or any Subsidiary shall assert, in any pleading in any court of competent jurisdiction, that any such security interest is invalid or unenforceable and, in the case of any such Subsidiary, the Company fails to cause such Subsidiary to rescind such assertions within 30 days after the Company has actual knowledge of such assertions, or

      (11) the failure by the Company, Flag Intermediate or any Restricted Subsidiary to comply for 60 days after notice with its other agreements contained in the Security Documents except for a failure that would not be material to the holders of the notes and would not materially affect the value of the Collateral taken as a whole (together with the defaults described in clauses (9) and (10) the “security default provisions”).

      The foregoing will constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

      However, a default under clause (4), (5) or (11) will not constitute an Event of Default until the Trustee or the holders of 25% in principal amount of outstanding notes notify the Company of the default and the Company does not cure such default within the time specified in clauses (4), (5) and (11) hereof after receipt of such notice.

      If an Event of Default (other than a Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) occurs and is continuing, the Trustee or the holders of at least 25% in principal amount of outstanding notes by notice to the Company may declare the principal of, premium, if any, and accrued but unpaid interest on all the notes to be due and payable. Upon such a declaration, such principal and interest will be due and payable immediately. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of, premium, if any, and interest on all the notes will become immediately due and payable without any declaration or other act on the part of the Trustee or any holders of the notes. Under certain circumstances, the holders of a majority in principal amount of the outstanding notes may rescind any such acceleration with respect to the notes and its consequences.

      Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the holders unless such holders have offered to the Trustee reasonable indemnity or security satisfactory to it against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no holder may pursue any remedy with respect to the Indenture or the notes unless:

      (1) such holder has previously given the Trustee notice that an Event of Default is continuing,

      (2) holders of at least 25% in principal amount of the outstanding notes have requested the Trustee to pursue the remedy,

132

      (3) such holders have offered the Trustee reasonable security or indemnity satisfactory to it against any loss, liability or expense,

      (4) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity, and

      (5) the holders of a majority in principal amount of the outstanding notes have not given the Trustee a direction inconsistent with such request within such 60-day period.

      Subject to certain restrictions, the holders of a majority in principal amount of outstanding notes are given the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. The Trustee, however, may refuse to follow any direction that conflicts with law, the Indenture or any Security Document including the Intercreditor Agreement or that the Trustee determines is unduly prejudicial to the rights of any other holder or that would involve the Trustee in personal liability. Prior to taking any action under the Indenture, the Trustee will be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

      The Indenture provides that if a Default occurs and is continuing and is actually known to the Trustee, the Trustee must mail to each holder of the notes notice of the Default within the earlier of 90 days after it occurs or 30 days after it is actually known to a Trust Officer or written notice of it is received by the Trustee. Except in the case of a Default in the payment of principal of, premium (if any) or interest on any Note, the Trustee may withhold notice if and so long as a committee of its Trust Officers in good faith determines that withholding notice is in the interests of the noteholders. In addition, the Company is required to deliver to the Trustee, within 120 days after the end of each fiscal year, a certificate indicating whether the signers thereof know of any Default that occurred during the previous year. The Company also is required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice of any event which would constitute certain Defaults with respect to the notes, their status and what action the Company is taking or proposes to take in respect thereof.

Amendments and Waivers

      Subject to certain exceptions, the Indenture and the related Security Documents may be amended with the consent of the holders of a majority in principal amount of the notes then outstanding and any past default or compliance with any provisions may be waived with the consent of the holders of a majority in principal amount of the notes then outstanding. Notwithstanding the foregoing, without the consent of each holder of an outstanding Note affected, no amendment may, among other things:

      (1) reduce the amount of such notes whose holders must consent to an amendment,

      (2) reduce the rate of or extend the time for payment of interest on such Note,

      (3) reduce the principal of or change the Stated Maturity of such Note,

      (4) reduce the amount payable upon the redemption of such Note or change the time when any such Note may be redeemed as described under “ — Optional Redemption,”

      (5) make such Note payable in money other than that stated in such Note,

      (6) impair the right of any holder to receive payment of principal of, premium, if any, and interest on such holder’s notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder’s notes,

      (7) make any change in the amendment provisions which require each holder’s consent or in the waiver provisions,

      (8) expressly subordinate such Note or any Guarantee of such Note to any other Indebtedness of the Company or any Guarantor,

      (9) modify the Guarantees in any manner adverse to the holders of such Note, or

133

      (10) make any change in the Intercreditor Agreement or the provisions in the Indenture, in each case dealing with the application of Trust proceeds of the Collateral that would adversely affect the noteholders.

      Without the consent of the holders of at least two-thirds in aggregate principal amount of the notes then outstanding, no amendment or waiver may release from the Lien of the Indenture and the Security Documents all or substantially all of the Collateral.

      Without the consent of any holder, the Company, the Guarantors and the Trustee may amend the Indenture, the notes, any Security Document or the Intercreditor Agreement to cure any ambiguity, omission, defect, mistake or inconsistency, to provide for the assumption by a successor corporation, partnership or limited liability company of the obligations of the Company or any Guarantor under the Indenture, to provide for uncertificated notes in addition to or in place of certificated notes (provided, however, that the uncertificated notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated notes are described in Section 163(f)(2)(B) of the Code), to add Guarantees with respect to the notes, to secure the notes, to add additional assets as Collateral, to release Collateral from the Lien, or any Guarantor from its Guarantee, in each case pursuant to the Indenture, the Security Documents and the Intercreditor Agreement when permitted or required by the Indenture or the Security Documents, to add to the covenants of the Company or any Restricted Subsidiaries for the benefit of the holders or to surrender any right or power conferred upon the Company or any Guarantor, to make any change that does not adversely affect the rights of any holder, to comply with any requirement of the SEC in connection with the qualification of the Indenture under the TIA, to make certain changes to the Indenture to provide for the issuance of Additional Notes or to make any amendment to the provisions of the Indenture relating to the transfer and legending of notes; provided, however, that (a) compliance with the Indenture as so amended would not result in notes being transferred in violation of the Securities Act or any other applicable securities law and (b) such amendment does not materially and adversely affect the rights of holders to transfer notes. In addition, the Intercreditor Agreement will provide that, subject to certain exceptions, any amendment, waiver or consent to any of the collateral documents securing the obligations under any Lenders Debt, to the extent applicable to the ABL Collateral, will also apply automatically to the comparable Security Documents with respect to the noteholders’ interest in the ABL Collateral. The Intercreditor Agreement will have a similar provision regarding the effect of any amendment, waiver or consent to any of the Security Documents, to the extent applicable to the Notes Collateral, on the corresponding collateral documents with respect to any Lenders Debt.

      The Intercreditor Agreement may be amended from time to time with the consent of certain parties thereto. In addition, the Intercreditor Agreement may be amended from time to time at the sole request and expense of the Company, and without the consent of either the Bank Collateral Agent or the Notes Collateral Agent, (i) (A) to add other parties (or any authorized agent thereof or trustee therefor) holding Other Pari Passu Lien Obligations that are incurred in compliance with the ABL Facility and the Indenture and the Security Documents, (B) to establish that the Liens on any Notes Collateral securing such Other Pari Passu Lien Obligations shall be pari passu under the Intercreditor Agreement with the Liens on such Notes Collateral securing the Obligations under the Indenture and the notes and senior to the Liens on such Notes Collateral securing any Obligations under the ABL Facility, all on the terms provided for in the Intercreditor Agreement in effect immediately prior to such amendment and (C) to establish that the Liens on any ABL Collateral securing such Other Pari Passu Lien Obligations shall be pari passu under the Intercreditor Agreement with the Liens on such ABL Collateral securing the Obligations under the Indenture and the notes and junior and subordinated to the Liens on such ABL Collateral securing any Obligations under the ABL Facility, all on the terms provided for in the Intercreditor Agreement as in effect immediately prior to such amendment, and (ii) (A) to add other parties (or any authorized agent thereof or trustee therefor) holding Lenders Debt that is incurred in compliance with the ABL Facility and the Indenture and the Security Documents, (B) to establish that the Liens on any ABL Collateral securing such Lenders Debt shall be pari passu under the Intercreditor Agreement with the Liens on such ABL Collateral securing the Obligations under the ABL Facility and

134

senior to the Liens on such ABL Collateral securing any Obligations under the Indenture and the notes, all on the terms provided for in the Intercreditor Agreement in effect immediately prior to such amendment and (C) to establish that the Liens on any Notes Collateral securing such Lenders Debt shall be pari passu under the Intercreditor Agreement with the Liens on such Notes Collateral securing the Obligations under the ABL Facility and junior and subordinated to the Liens on such Notes Collateral securing any Obligations under the Indenture and the notes, all on the terms provided for in the Intercreditor Agreement in effect immediately prior to such amendment. Any such additional party and the Bank Collateral Agent, Trustee and Notes Collateral Agent shall be entitled to rely upon a certificate delivered by an officer of the Company certifying that such Other Pari Passu Lien Obligations or Lenders Debt, as the case may be, were issued or borrowed in compliance with the ABL Facility and the Indenture and the Security Documents. Any amendment of the Intercreditor Agreement that is proposed to be effected without the consent of the Bank Collateral Agent or the Notes Collateral Agent will be submitted to such Person for its review at least 5 business days prior to the proposed effectiveness of such amendment.

      The consent of the noteholders is not necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment.

      After an amendment under the Indenture becomes effective, the Company is required to mail to the respective noteholders a notice briefly describing such amendment. However, the failure to give such notice to all noteholders entitled to receive such notice, or any defect therein, will not impair or affect the validity of the amendment.

      See also “Security for the Notes — Intercreditor Agreement — Refinancings of the ABL Facility and the Notes.”

No Personal Liability of Directors, Officers, Employees and Stockholders

      No affiliate, director, officer, employee, incorporator or holder of any equity interests in the Company or any direct or indirect parent corporation of the Company, as such, will have any liability for any obligations of the Company under the notes or the Indenture, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. The waiver may not be effective to waive liabilities under the federal securities laws.

Transfer and Exchange

      A noteholder may transfer or exchange notes in accordance with the Indenture. Upon any transfer or exchange, the registrar and the Trustee may require a noteholder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a noteholder to pay any taxes required by law or permitted by the Indenture. The Company is not required to transfer or exchange any Note, selected for redemption or to transfer or exchange any such Note for a period of 15 days prior to a selection of such notes to be redeemed. The old notes and the exchange notes will be issued in registered form and the registered holder of a Note will be treated as the owner of such Note for all purposes.

Satisfaction and Discharge

      The Indenture will be discharged and will cease to be of further effect (except as to surviving rights or registration of transfer or exchange of the notes, as expressly provided for in the Indenture) as to all outstanding notes when:

      (1) either (a) all the notes theretofore authenticated and delivered (except lost, stolen or destroyed notes which have been replaced or paid and notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the

135

Company or discharged from such trust) have been delivered to the Trustee for cancellation or (b) all of the notes (i) have become due and payable, (ii) will become due and payable at their stated maturity within one year or (iii) if redeemable at the option of the Company, are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the notes to the date of deposit together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;

      (2) the Company or the Guarantors have paid all other sums payable under the Indenture; and

      (3) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been complied with.

Defeasance

      The Company at any time may terminate all its obligations under the notes and its obligations under the Indenture with respect to the holders of the notes (“legal defeasance”), except for certain obligations, including those respecting the defeasance trust and obligations to register the transfer or exchange of the notes, to replace notes that have been mutilated, destroyed, lost or stolen and to maintain a registrar and paying agent in respect of the notes. The Company at any time may terminate its obligations under the covenants described under “— Certain Covenants” for the benefit of the notes, the operation of the cross acceleration provision, the bankruptcy provisions with respect to Significant Subsidiaries, the judgment default provision, the security default provisions, and the change of control default provision described under “— Defaults” and certain provisions of the covenant described under “— Merger, Consolidation or Sale of All or Substantially All Assets” (“covenant defeasance”) for the benefit of the notes. If the Company exercises its legal defeasance option or its covenant defeasance option, each Guarantor will be released from all of its obligations with respect to its Guarantee and the Security Documents.

      The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its legal defeasance option, payment of the notes may not be accelerated because of an Event of Default with respect thereto. If the Company exercises its covenant defeasance option, payment of the notes may not be accelerated because of an Event of Default specified in clause (3), (4), (6), (7) with respect only to Significant Subsidiaries, (8) with respect only to Significant Subsidiaries, (9), (10), or (11) under “— Defaults” or because of the failure of the Company to comply with clause (a)(4) under “— Merger, Consolidation or Sale of All or Substantially All Assets.”

      In order to exercise either defeasance option, the Company must irrevocably deposit in trust (the “defeasance trust”) with the Trustee money or Government Obligations for the payment of principal, premium (if any) and interest on the notes to redemption or maturity, as the case may be, and must comply with certain other conditions, including delivery to the Trustee of an Opinion of Counsel to the effect that holders of the notes will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and defeasance and will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred (and, in the case of legal defeasance only, such Opinion of Counsel must be based on a ruling of the Internal Revenue Service or change in applicable Federal income tax law). Notwithstanding the foregoing, the Opinion of Counsel required with respect to a legal defeasance need not be delivered if all the notes, not theretofore delivered to the Trustee for cancellation, have become due and payable.

136

Concerning the Trustee

      Wells Fargo Bank, N.A. is the Trustee under the Indenture and has been appointed by the Company as Registrar and a Paying Agent with regard to the notes.

      The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; provided, however, if it acquires any conflicting interest it must either eliminate such conflict within 90 days, apply to the SEC for permission to continue or resign.

      The Holders of a majority in principal amount of the outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. If an Event of Default with respect to any notes occurs (and is not cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any holder of notes unless such holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense and then only to the extent required by the terms of the Indenture.

Governing Law

      The Indenture, certain of the Security Documents, the Intercreditor Agreement and the notes are governed by, and construed in accordance with, the laws of the State of New York. Certain of the Security Documents are governed by the law of the jurisdiction in which the applicable Collateral is located.

Certain Definitions

      “ABL Collateral” means any and all of the following assets and properties now owned or at any time hereafter acquired by the Company or any Guarantor: (a) all Accounts; (b) all Inventory; (c) to the extent evidencing, governing, securing or otherwise related to the items referred to in the preceding clauses (a) and (b), all (i) General Intangibles, (ii) Chattel Paper, (iii) Instruments and (iv) Documents; (d) all Payment Intangibles (including corporate tax refunds), other than any Payment Intangibles that represent tax refunds in respect of or otherwise relate to real property, Fixtures or Equipment; (e) all Indebtedness of Flag Intermediate or any of its subsidiaries that arises from cash advances made after the date hereof to enable the obligor or obligors thereon to acquire Inventory; (f) all collection accounts, deposit accounts and commodity accounts and any cash or other assets in any such accounts (other than identifiable cash proceeds in respect of real estate, Fixtures or Equipment); (g) all books and records related to the foregoing; and (h) all Products and Proceeds of any and all of the foregoing in whatever form received, including proceeds of insurance policies related to Inventory of the Company or any Guarantor and business interruption insurance. All capitalized terms used in this definition and not defined elsewhere herein have the meanings assigned to them in the Uniform Commercial Code.

      “ABL Facility” means the credit agreement among Flag Intermediate, the Company, certain Subsidiaries of the Company, the financial institutions named therein, Credit Suisse, as Administrative Agent, and Bank of America, N.A., as Collateral Agent, dated as of the Issue Date, as amended, extended, renewed, restated, supplemented, waived, replaced (whether or not upon termination, and whether with the original agents, lenders or otherwise), restructured, repaid, refunded, refinanced or otherwise modified from time to time, including any agreement or indenture or multiple agreements and indentures extending the maturity thereof, refinancing, replacing or otherwise restructuring all or any portion of the Indebtedness under such agreement or agreements or indenture or indentures or any successor or replacement agreement or agreements or indenture or indentures or increasing the amount loaned or issued thereunder or altering the maturity thereof and adding Restricted Subsidiaries as additional borrowers, issuers or guarantors thereunder.

137

      “Acquired Indebtedness” means, with respect to any specified Person:

      (1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, and

      (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person, in each case, other than Indebtedness Incurred as consideration in, in contemplation of, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was otherwise acquired by such Person, or such asset was acquired by such Person, as applicable.

      “Additional Notes” has the meaning given to such term under the heading “— Principal, Maturity and Interest.”

      “Adjusted EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication, to the extent the same was deducted in calculating Consolidated Net Income:

      (1) Consolidated Taxes; plus

      (2) Consolidated Interest Expense; provided, however, such amount will be included in Adjusted EBITDA notwithstanding that such amount was not deducted in calculating Consolidated Net Income; plus

      (3) Consolidated Non-cash Charges; plus

      (4) the amount of management, monitoring, consulting and advisory fees and related expenses paid to the Sponsor or its predecessor (or any accruals relating to such fees and related expenses) during such period; provided, however, that such amount shall not exceed in any four-quarter period commencing after September 30, 2005 the amount determined in accordance with clause (3) of the covenant described under “— Certain Covenants — Transactions with Affiliates”;

      (5) facility closure and severance costs and charges; plus

      (6) impairment charges, including the write-down of Investments; plus

      (7) non-operating expenses; plus

      (8) restructuring expenses and charges;

      less, without duplication,

      (9) non-cash items increasing Consolidated Net Income for such period (excluding any items which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period, including the amortization of employee benefit plan prior service costs); minus

      (10) non-operating income.

      “Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

      “After-Acquired Property” means (i) equipment or fixtures acquired by the Company or any Guarantor after the Issue Date which constitute accretions, additions or technological upgrades to the equipment or fixtures that form part of the Notes Collateral, (ii) any equipment, fixtures and real estate of the Company or any Guarantor acquired after the Issue Date and which is not subject to a Permitted Lien pursuant to clause (6) or (10) of the definition thereof, (iii) any assets acquired by the Company or any Restricted Subsidiary in compliance with clause (a)(3) of the covenant described under “Certain

138

Covenants — Asset Sales” or pursuant to an Asset Sale Investment contemplated by clause (A) of the second paragraph of clause (a) of the covenant described under “Certain Covenants — Asset Sales,” (iv) all Capital Stock of the Company issued after the Issue Date, (v) all of the Capital Stock acquired after the Issue Date (subject to the limits described under “— Security for the Notes — Limitations on Stock Collateral”) and held by the Company, Flag Intermediate or any Subsidiary Guarantor (which, in the case of any first-tier Foreign Subsidiary, will be limited to 100% of the non-voting stock (if any) and 65% of the voting stock of such first-tier Foreign Subsidiary) and (vi) substantially all of the other tangible and intangible assets of the Company, Flag Intermediate and each Subsidiary Guarantor acquired after the Issue Date; provided, however, that in no event shall After-Acquired Property include any Excluded Assets;

      “Applicable Premium” means, with respect to any Note on any applicable redemption date, the greater of:

      (1) 1.0% of the then outstanding principal amount of such Note; and

      (2) the excess of:

      (A) the present value at such redemption date of the sum of (i) the redemption price of such Note at December 1, 2010 (such redemption price being set forth in the applicable table appearing above under “— Optional Redemption”) plus (ii) all required interest payments due on such Note through December 1, 2010 (excluding accrued but unpaid interest), such present value to be computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over

      (B) the then outstanding principal amount of such Note.

      “Asset Sale” means:

      (1) the sale, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) of assets (including by way of a Sale/ Leaseback Transaction) of the Company or any Restricted Subsidiary of the Company other than in the ordinary course of business (each referred to in this definition as a “disposition”) or

      (2) the issuance or sale of Equity Interests of any Restricted Subsidiary (other than to the Company or another Restricted Subsidiary of the Company other than directors’ or other legally required qualifying shares) (whether in a single transaction or a series of related transactions),

      in each case other than:

      (a) a disposition of Cash Equivalents or Investment Grade Securities;

      (b) disposition of obsolete, damaged or worn out equipment or other property or other disposals of equipment or other property in connection with reinvestment in or replacement of equipment or other property, in each case, in the ordinary course of business;

      (c) the disposition of all or substantially all of the assets of the Company in a manner permitted pursuant to paragraph (a) of the provisions described above under “— Merger, Consolidation or Sale of All or Substantially All Assets” or any disposition that constitutes a Change of Control;

      (d) any Restricted Payment or Permitted Investment that is permitted to be made, and is made, under the covenant described above under “— Certain Covenants — Limitation on Restricted Payments”;

      (e) any disposition of assets of the Company or any Restricted Subsidiary or issuance or sale of Equity Interests of any Restricted Subsidiary, which assets or Equity Interests so disposed or issued have an aggregate Fair Market Value of less than $4.5 million; provided, however, that the aggregate Fair Market Value of all dispositions made pursuant to this clause (e) shall not exceed $16.0 million;

139

      (f) any disposition of assets of the Company or any Restricted Subsidiary having an aggregate Fair Market Value of less than $750,000;

      (g) any disposition of assets to the Company or any Restricted Subsidiary of the Company, including by way of merger;

      (h) any exchange of assets for assets related to a Similar Business to the extent of comparable or better market value, as determined in good faith by the Company, which in the event of an exchange of assets with a Fair Market Value in excess of (1) $3.5 million shall be evidenced by an Officers’ Certificate, and (2) $10.0 million shall be set forth in a resolution approved in good faith by at least a majority of the Board of Directors of the Company;

      (i) any disposition of assets received by the Company or any of its Restricted Subsidiaries upon the foreclosure on a Lien;

      (j) any disposition of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;

      (k) any disposition of ABL Collateral;

      (1) the lease, assignment or sub-lease of any real or personal property in the ordinary course of business;

      (m) any disposition of accounts receivable and related assets of the type specified in the definition of “Receivables Financing” to a Receivables Subsidiary in a Qualified Receivables Financing or in factoring or similar transactions;

      (n) a transfer of accounts receivable and related assets of the type specified in the definition of “Receivables Financing” (or a fractional undivided interest therein) by a Receivables Subsidiary in a Qualified Receivables Financing;

      (o) any agreement or arrangement involving, relating to or otherwise facilitating, (i) requirements contracts, (ii) tolling arrangements, (iii) the reservation or presale of production capacity of the Company or any of its Restricted Subsidiaries by one or more third parties;

      (p) sales or grants of licenses or sublicenses to use the Company’s or any of its Restricted Subsidiaries, trademarks, patents, trade secrets, know-how or other intellectual property and technology to the extent that such sale, license or sublicense does not prohibit the licensor from using such trademark, patent, trade secret, know-how, technology or other intellectual property;

      (q) any Sale/ Leaseback Transaction pursuant to which the Company or any Restricted Subsidiaries receives with respect to such transaction aggregate consideration of less than $10.0 million; and

      (r) any other disposition of property or assets owned by the Company or any of its Restricted Subsidiaries; provided, however, that the aggregate Fair Market Value of all property and assets disposed of pursuant to this clause (r) shall be less than $16.5 million.

      For purposes of this definition of “Asset Sale,” a transaction that would otherwise be an Asset Sale need not be excluded pursuant solely to one clause above and may be divided among the clauses above as well as excluded in part pursuant to one or more of such clauses and treated in part as an Asset Sale under “— Certain Covenants — Asset Sales.”

      “Asset Sale Cash Equivalents” means, in connection with an Asset Sale by the Company or any of its Restricted Subsidiaries:

      (a) any liabilities (as shown on the Company’s or such Restricted Subsidiary’s most recent balance sheet or in the footnotes thereto) of the Company or any Restricted Subsidiary of the Company (other than liabilities that are by their terms subordinated to the notes or the Guarantees of

140

the notes, as the case may be) that are assumed by the transferee of any assets pursuant to an Asset Sale;

      (b) any notes or other obligations or other securities or assets received by the Company or such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash within 180 days of the receipt thereof (to the extent of the cash received); and

      (c) except in the case of an Asset Sale of any Notes Collateral, any Designated Non-cash Consideration received by the Company or any of its Restricted Subsidiaries in such Asset Sale having an aggregate Fair Market Value, taken together with all other Designated Non-cash Consideration received pursuant to this clause (c) that is at that time outstanding, not to exceed the greater of 3.0% of Total Assets and $20.0 million at the time of the receipt of such Designated Non-cash Consideration (with the Fair Market Value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value).

      “Asset Sale Investment” means an investment in anyone or more businesses, assets or capital expenditures, in each case used or useful in a Similar Business; provided, however, that if such investment is in the form of the acquisition of Capital Stock of a Person, such acquisition results in such Person becoming a Restricted Subsidiary of the Company or, if such Person is a Restricted Subsidiary of the Company, in an increase in the percentage ownership of such Person by the Company or any Restricted Subsidiary of the Company.

      “Bank Collateral Agent” means Bank of America, N.A. and any successor under the ABL Facility, or if there is no ABL Facility, the “Bank Collateral Agent” designated pursuant to the terms of the Lenders Debt.

      “Bank Lenders” means the lenders or holders of Indebtedness issued under the ABL Facility.

      “Bank Representative” means any trustee, agent or representative with respect to Indebtedness issued under the ABL Facility.

      “Board of Directors” means as to any Person, the board of directors or managers, as applicable, of such Person (or, if such Person is a partnership, the board of directors or other governing body of the general partner of such Person) or any duly authorized committee thereof.

      “Business Day” means each day which is not a Legal Holiday.

      “Capital Stock” means:

      (1) in the case of a corporation, corporate stock;

      (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

      (3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

      (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

      “Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP.

      “Cash Contribution Amount” means the aggregate amount of cash contributions made to the capital of the Company described in the definition of “Contribution Indebtedness.”

141

      “Cash Equivalents” means:

      (1) U.S. dollars, pounds sterling, euros, or, in the case of any Foreign Subsidiary that is a Restricted Subsidiary, such local currencies held by it from time to time in the ordinary course of business;

      (2) securities issued or directly and fully guaranteed or insured by the government of, or any agency or instrumentality thereof, the United States of America, Australia, Great Britain, Canada, the Netherlands or any other member state of the European Union, in each case with maturities not exceeding two years after the date of acquisition;

      (3) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances, in each case with maturities not exceeding one year and overnight bank deposits and demand deposits (in their respective local currencies), in each case with any commercial bank having capital and surplus in excess of $500.0 million or the foreign currency equivalent thereof and whose long-term debt is rated “A” or the equivalent thereof by Moody’s or S&P (or, in the case of an obligor domiciled outside of the United States, reasonably equivalent ratings of another internationally recognized credit rating agency);

      (4) repurchase obligations for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;

      (5) commercial paper issued by a corporation (other than an Affiliate of the Company) rated at least “A-1” or the equivalent thereof by Moody’s or S&P (or, in the case of an obligor domiciled outside of the United States, reasonably equivalent ratings of another internationally recognized credit rating agency) and in each case maturing within one year after the date of acquisition;

      (6) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody’s or S&P in each case with maturities not exceeding two years from the date of acquisition;

      (7) Indebtedness issued by Persons (other than the Sponsor or any of their Affiliates) with a rating of “A” or higher from S&P or “A-2” or higher from Moody’s (or, in the case of an obligor domiciled outside of the United States, reasonably equivalent ratings of another internationally recognized credit rating agency) in each case with maturities not exceeding two years from the date of acquisition; and

      (8) investment funds investing at least 95% of their assets in securities of the types described in clauses (1) through (7) above.

      “Code” means the Internal Revenue Code of 1986, as amended.

      “Collateral” means all the assets and properties subject to the Liens created by the Security Documents.

      “consolidated” means, with respect to any Person, such Person consolidated with its Restricted Subsidiaries and shall not include any Unrestricted Subsidiary, but the interest of such Person in an Unrestricted Subsidiary shall be accounted for as an Investment.

      “Consolidated Interest Expense” means, with respect to any Person (the “Specified Person”) for any period, the sum, without duplication, of:

      (1) consolidated interest expense of the Specified Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted in computing Consolidated Net Income (including amortization of original issue discount, the interest component of Capitalized Lease Obligations, and net payments and receipts (if any) pursuant to interest rate Hedging Obligations and excluding amortization of deferred financing fees and expensing of any bridge or other financing fees);

142

      (2) consolidated capitalized interest of the Specified Person and its Restricted Subsidiaries for such period, whether paid or accrued;

      (3) commissions, discounts, yield and other fees and charges Incurred for such period in connection with any Receivables Financing of the Specified Person or any of its Restricted Subsidiaries which are payable to Persons other than the Company and its Restricted Subsidiaries;

      (4) dividends accrued for such period in respect of all Disqualified Stock of the Specified Person and any of its Restricted Subsidiaries and all Preferred Stock (including Designated Preferred Stock) of any such Restricted Subsidiaries, in each case held by Persons other than the Company or a Wholly Owned Subsidiary (in each such case other than (x) dividends payable solely in Capital Stock (other than Disqualified Stock) of the Company and (y) dividends that are payable only at such time as there are no notes outstanding); and

      (5) interest accruing for such period on any Indebtedness of any other Person to the extent such Indebtedness is guaranteed by (or secured by the assets of) the Specified Person or any of its Restricted Subsidiaries;

      less

      (6) interest income of the Specified Person and its Restricted Subsidiaries for such period.

      “Consolidated Net Income” means, with respect to any Person for any period, the aggregate Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis; provided, however, that:

      (1) any net after-tax extraordinary or nonrecurring gains, losses, income, expenses or charges, including any severance expenses and fees, expenses or charges related to any offering of Equity Interests, Permitted Investment, acquisition or Indebtedness permitted to be Incurred by the Indenture (in each case, whether or not successful), including any such fees, expenses, charges or change in control payments related to the Transactions, in each case, shall be excluded; provided, however, that with respect to each nonrecurring item, the Company shall have delivered to the Trustee an Officers’ Certificate specifying and quantifying such item and stating that such item is a nonrecurring item;

      (2) any increase in amortization or depreciation or anyone-time non-cash charges (such as purchased in-process research and development or capitalized manufacturing profit in inventory) resulting from purchase accounting in connection with the Transactions or any acquisition that is consummated after the Issue Date shall be excluded;

      (3) the Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period;

      (4) any net after-tax income or loss from discontinued operations and any net after-tax gains or losses on disposal of discontinued operations shall be excluded;

      (5) any net after-tax gains or losses, or any subsequent charges or expenses, attributable to business dispositions or asset dispositions having occurred at any time other than in the ordinary course of business (as determined in good faith by the Board of Directors of the Company) shall be excluded;

      (6) any net after-tax gains or losses attributable to the early extinguishment of Indebtedness shall be excluded;

      (7) the Net Income for such period of any Person that is not a Subsidiary of such Person, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be included only to the extent of the amount of dividends or distributions or other payments paid in cash (or to the extent converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period;

143

      (8) solely for the purpose of determining the amount available for Restricted Payments under clause (a)(iii)(1) of the first paragraph of “— Certain Covenants — Limitation on Restricted Payments,” the Net Income for such period of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restrictions with respect to the payment of dividends or similar distributions have been legally waived; provided, however, that the net loss of any such Restricted Subsidiary for such period shall be included;

      (9) an amount equal to the amount of Tax Distributions actually made by such Person to the holders of Capital Stock of such Person or any parent company of such Person in respect of such period in accordance with clause (b)(12) of the covenant described under “— Certain Covenants — Limitation on Restricted Payments” shall be included, to the extent not otherwise deducted, as though such amounts had been paid as income taxes directly by such Person for such period;

      (10) any non-cash impairment charges or asset write-off or write-down resulting from the application of Statement of Financial Accounting Standards No. 142 or Statement of Financial Accounting Standards No. 144, and the amortization of intangibles arising pursuant to Statement of Financial Accounting Standards No. 141, shall be excluded;

      (11) any non-cash expense realized or resulting from any employee benefit plans or post-employment benefit plans or any deferred stock compensation plan or grants of stock appreciation or similar rights, stock options, restricted stock or other rights to officers, directors and employees of such Person or any of its Restricted Subsidiaries shall be excluded;

      (12) solely for purposes of calculating Adjusted EBITDA, (a) the Net Income of any Person and its Restricted Subsidiaries shall be calculated without deducting the income attributable to, or adding the losses attributable to, the minority equity interests of third parties in any non-wholly-owned Restricted Subsidiary except to the extent of dividends declared or paid in respect of such period or any prior period on the shares of Capital Stock of such Restricted Subsidiary held by such third parties and (b) any ordinary course dividend, distribution or other payment paid in cash and received from any Person in excess of amounts included in clause (7) above shall be included;

      (13) non-cash gains, losses, income and expenses resulting from fair value accounting required by Statement of Financial Accounting Standards No. 133 shall be excluded;

      (14) accruals and reserves that are established within twelve months after the Issue Date and that are so required to be established in accordance with GAAP shall be excluded; and

      (15) non-cash charges for deferred tax asset valuation allowances shall be excluded.

      Notwithstanding the foregoing, for the purpose of the covenant described under “— Certain Covenants Limitation on Restricted Payments” only, there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances or other transfers of assets from Unrestricted Subsidiaries of the Company or a Restricted Subsidiary of the Company to the extent such dividends, repayments or transfers increase the amount of Restricted Payments permitted under such covenant pursuant to clauses (iii)(4) and (5) of paragraph (a) thereof.

      “Consolidated Non-cash Charges” means, with respect to any Person for any period, the aggregate depreciation, amortization and other non-cash expenses or other non-cash items of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person for such period on a consolidated basis and otherwise determined in accordance with GAAP, but excluding any such charge which consists of or requires an accrual of, or cash reserve for, anticipated cash charges for any future period.

144

      “Consolidated Secured Debt Ratio” means, as of any date of determination, the ratio of (a) Consolidated Total Indebtedness of the Company and its Restricted Subsidiaries on the date of determination that constitutes the notes, any Other Pari Passu Lien Obligations or any Lenders Debt to (b) the aggregate amount of Adjusted EBITDA for the then most recent four fiscal quarters for which internal financial statements of the Company and its Restricted Subsidiaries are available in each case with such pro forma adjustments to Consolidated Total Indebtedness and Adjusted EBITDA as are consistent with the pro forma adjustment provisions set forth in the definition of Fixed Charge Coverage Ratio.

      “Consolidated Taxes” means provision for taxes based on income, profits or capital, including state, franchise and similar taxes and any Tax Distributions taken into account in calculating Consolidated Net Income.

      “Consolidated Total Debt Ratio” means, as of any date of determination, the ratio of (a) the Consolidated Total Indebtedness of the Company and its Restricted Subsidiaries on the date of determination to (b) the aggregate amount of Adjusted EBITDA for the then most recent four fiscal quarters for which internal financial statements of the Company and its Restricted Subsidiaries are available in each case with such pro forma adjustments to Consolidated Total Indebtedness and Adjusted EBITDA as are consistent with the pro forma adjustment provisions set forth in the definition of Fixed Charge Coverage Ratio.

      “Consolidated Total Indebtedness” means, as of any date of determination, an amount equal to the sum of (1) the aggregate principal amount of all outstanding Indebtedness of the Company and its Restricted Subsidiaries (excluding Hedging Obligations and any undrawn letters of credit issued in the ordinary course of business) and (2) the aggregate amount of all outstanding Disqualified Stock of the Company and its Restricted Subsidiaries and all Preferred Stock of Restricted Subsidiaries of the Company, with the amount of such Disqualified Stock and Preferred Stock equal to the greater of their respective voluntary or involuntary liquidation preferences, in each case determined on a consolidated basis in accordance with GAAP.

      “Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent:

      (1) to purchase any such primary obligation or any property constituting direct or indirect security therefor,

      (2) to advance or supply funds:

      (a) for the purchase or payment of any such primary obligation; or

      (b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or

      (3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.

      “Contribution Indebtedness” means Indebtedness of the Company or any of its Restricted Subsidiaries that is a Guarantor in an aggregate principal amount not greater than twice the aggregate amount of cash contributions (other than Excluded Contributions) made to the capital of the Company (including by the purchase of Equity Interests to the extent such proceeds of the purchase of Equity Interests are excluded from the calculation under clause (a)(iii) of the covenant “— Certain Covenants — Limitation on

145

Restricted Payments”) by any stockholder of the Company (other than a Restricted Subsidiary) after the Issue Date; provided, however, that:

      (1) if the aggregate principal amount of such Contribution Indebtedness is greater than one times such cash contributions to the capital of the Company the amount in excess shall be Indebtedness (other than Secured Indebtedness) with a Stated Maturity later than the Stated Maturity of any notes then outstanding,

      (2) such Contribution Indebtedness (a) is Incurred within 180 days after the making of such cash contributions and (b) is so designated as Contribution Indebtedness pursuant to an Officers’ Certificate on the Incurrence date thereof; and

      (3) such cash contribution is not and has not been included in the calculation of permitted Restricted Payments under the covenant described in “— Certain Covenants — Limitation on Restricted Payments.”

      “Credit Agreement” means (i) the ABL Facility or (ii) whether or not the ABL Facility is outstanding, if designated by the Company to be included in the definition of “Credit Agreement,” one or more (A) debt facilities or commercial paper facilities, providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrow from lenders against such receivables) or letters of credit, (B) debt securities, indentures or other forms of debt financing (including convertible or exchangeable debt instruments), or (C) instruments or agreements evidencing any other Indebtedness in each case, as amended, supplemented, modified, extended, restructured, renewed, refinanced, restated, replaced or refunded in whole or in part from time to time.

      “Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.

      “Designated Non-cash Consideration” means the non-cash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an Officers’ Certificate.

      “Designated Preferred Stock” means Preferred Stock of the Company or any direct or indirect parent company of the Company, as applicable (other than Disqualified Stock), that is issued for cash (other than to the Company or any of its Subsidiaries or an employee stock ownership plan or trust established by the Company or any of its Subsidiaries) and is so designated as Designated Preferred Stock, pursuant to an Officers’ Certificate, on the issuance date thereof, the cash proceeds of which are excluded from the calculation set forth in clause (a)(iii) of the covenant described under “— Certain Covenants — Limitation on Restricted Payments.”

      “Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is redeemable or exchangeable), or upon the happening of any event:

      (1) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than as a result of a change of control or asset sale; provided, however, that the relevant asset sale or change of control provisions, taken as a whole, are no more favorable in any material respect to holders of such Capital Stock than the asset sale and change of control provisions applicable to the notes and any purchase requirement triggered thereby may not become operative until compliance with the asset sale and change of control provisions applicable to the notes (including the purchase of any notes tendered pursuant thereto)),

      (2) is convertible or exchangeable for Indebtedness or Disqualified Stock of such Person, or

      (3) is redeemable at the option of the holder thereof, in whole or in part,

      in each case prior to 91 days after the last maturity date of the notes;

146

provided, however, that only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; provided further, however, that if such Capital Stock is issued to any employee or to any plan for the benefit of employees of the Company or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Company in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability; provided further, however, that any class of Capital Stock of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of Capital Stock that is not Disqualified Stock shall not be deemed to be Disqualified Stock.

      “Domestic Subsidiary” means a Restricted Subsidiary that is not a Foreign Subsidiary.

      “Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

      “Equity Offering” means an underwritten primary public offering of common stock of the Company or any direct or indirect parent company of the Company, as applicable, in each case pursuant to an effective registration statement under the Securities Act.

      “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

      “Excluded Assets” means the collective reference to (i) all interests in real property other than fee interests, (ii) any fee interest in real property if the greater of the cost and the book value of such fee interest is less than $750,000; (iii) any property or asset to the extent that the grant of a security interest in such property or asset is prohibited by any applicable law or requires a consent not obtained of any governmental authority pursuant to applicable law; (iv) any vehicle or other item of personal property with a fair market value less than $150,000, a lien in which cannot be obtained by filing a financing statement under Article 9 of the Uniform Commercial Code; (v) those assets that would constitute ABL Collateral but as to which the Bank Collateral Agent shall not have required a lien or security interest; (vi) any right, title or interest in any permit, lease, license, contract or agreement held by any Grantor or to which any Grantor is a party or any of its right, title or interest thereunder to the extent, but only to the extent, that such a grant would, under the terms of such permit, lease, license, contract or agreement, result in a breach of the terms of, or constitute a default under, any permit, lease, license, contract or agreement held by such Grantor or to which such Grantor is a party (other than to the extent that any such term would be rendered ineffective pursuant to Section 9-406, 9-408 or 9-409 of the Uniform Commercial Code or any other applicable law (including Title 11 of the United States Code) or principles of equity); provided, that immediately upon the ineffectiveness, lapse or termination of any such provision, such right, title or interest in such permit, lease, license, contract or agreement shall cease to be an “Excluded Asset”; and (vii) Capital Stock of a Person that constitutes a Subsidiary (other than a Wholly Owned Subsidiary) the pledge of which would violate a contractual obligation to the owners of the other Capital Stock of such Person (other than any such owners that are Affiliates of the Sponsor) that is binding on or relating to such Capital Stock; provided, however, that Excluded Assets will not include any proceeds, substitutions or replacements of any Excluded Assets referred to in clause (iii) (unless such proceeds, substitutions or replacements would constitute Excluded Assets referred to in clause (iii)).

      “Excluded Contributions” means the net cash proceeds received by the Company after the Issue Date from:

      (1) contributions to its common equity capital, and

      (2) the sale (other than to a Subsidiary of the Company or to any Company or Subsidiary management equity plan or stock option plan or any other management or employee benefit plan or agreement) of Capital Stock (other than Disqualified Stock and Designated Preferred Stock) of the Company,

147

in each case designated as Excluded Contributions pursuant to an Officers’ Certificate executed by an Officer of the Company, the cash proceeds of which are excluded from the calculation set forth in clause (a)(iii) of “— Certain Covenants — Limitation on Restricted Payments.”

      “Fair Market Value” means, with respect to any asset or property, the price which could be negotiated in an arm’s-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Except as expressly provided to the contrary, the Fair Market Value of assets or property other than cash shall be determined in good faith by the Company and (1) in the event of property with a Fair Market Value in excess of $4.0 million, shall be set forth in an Officers’ Certificate or (2) in the event of property with a Fair Market Value in excess of $12.0 million, shall be set forth in a resolution approved by at least a majority of the Board of Directors of the Company.

      “Fixed Charge Coverage Ratio” means, with respect to any Person for any period, the ratio of Adjusted EBITDA of such Person for such period to the Consolidated Interest Expense of such Person for such period. In the event that the Company or any of its Restricted Subsidiaries Incurs or redeems any Indebtedness (other than in the case of revolving credit borrowings or revolving advances under any Qualified Receivables Financing, in which case interest expense shall be computed based upon the average daily balance of such Indebtedness during the applicable period) or issues or redeems Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such Incurrence or redemption of Indebtedness, or such issuance or redemption of Preferred Stock, as if the same had occurred at the beginning of the applicable four-quarter period.

      For purposes of making the computation referred to above, Investments, acquisitions or dispositions of operating units of a business, mergers, consolidations, discontinued operations (as determined in accordance with GAAP), and business realignment projects and initiatives, restructurings and reorganizations (each a “pro forma event”) that the Company or any of its Restricted Subsidiaries has both determined to make and made after the Issue Date and during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Calculation Date shall be calculated on a pro forma basis assuming that all such Investments, acquisitions or dispositions of an operating unit of a business, mergers, consolidations, discontinued operations and business realignment projects and initiatives, restructurings and reorganizations (and the change of any associated fixed charge obligations, consolidated interest expense and the change in Adjusted EBITDA resulting therefrom) had occurred on the first day of the four-quarter reference period. If, since the beginning of such period any Person that subsequently became a Restricted Subsidiary of the Company or was merged with or into the Company or any Restricted Subsidiary of the Company since the beginning of such period shall have made any Investment, acquisition or disposition of an operating unit of a business, merger, consolidation, discontinued operation or business realignment project or initiative, restructuring or reorganization, that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, discontinued operation, merger, consolidation, business realignment project or initiative, restructuring, or reorganization had occurred at the beginning of the applicable four-quarter period.

      For purposes of this definition, whenever pro forma effect is to be given to any pro forma event, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness if such Hedging Obligation has a remaining term in excess of 12 months). Any such pro forma calculation may include adjustments appropriate, in the reasonable good faith determination of the Company as set forth in an Officers’ Certificate, to reflect (i) operating expense reductions, other operating improvements or synergies reasonably expected to result from the applicable pro forma event (including, to the extent applicable, from the Transactions) and (ii) all adjustments used in connection

148

with the calculation of Adjusted EBITDA to the extent such adjustments, without duplication, continue to be applicable to such four quarter period.

      “Flag Intermediate” means Flag Intermediate Holdings Corporation, a Delaware corporation, and its successors.

      “Flow Through Entity” means an entity that is treated as a partnership not taxable as a corporation, an S-corporation or a disregarded entity for U.S. federal income tax purposes or subject to treatment on a comparable basis for purposes of state, local or foreign tax law.

      “Foreign Subsidiary” means a Restricted Subsidiary not organized or existing under the laws of the United States of America or any state or territory thereof or the District of Columbia.

      “GAAP” means generally accepted accounting principles set forth in (i) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (ii) statements and pronouncements of the Financial Accounting Standards Board and (iii) in such other statements by such other entity as have been approved by a significant segment of the accounting profession, in each case which are in effect on the Issue Date.

      “Government Obligations” means securities that are:

      (1) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged, or

      (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in each case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any such U.S. Government Obligations or a specific payment of principal of or interest on any such U.S. Government Obligations held by such custodian for the account of the holder of such depository receipt; provided, however, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations evidenced by such depository receipt.

      “guarantee” means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations.

      “Guarantee” means any guarantee of the obligations of the Company under the Indenture and the notes by any Person in accordance with the provisions of the Indenture.

      “Guarantor” means any Person that Incurs a Guarantee with respect to the notes; provided, however, that upon the release or discharge of such Person from its Guarantee in accordance with the Indenture, such Person ceases to be a Guarantor.

      “Hedging Obligations” means, with respect to any Person, the obligations of such Person under:

      (1) currency exchange, interest rate or commodity swap agreements, currency exchange, interest rate or commodity cap agreements and currency exchange, interest rate or commodity collar agreements; and

      (2) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates, interest rates or commodity prices.

      “holder,” “Holder,” or “noteholder” means the Person in whose name a Note is registered on the Registrar’s books.

149

      “Incur” means issue, assume, guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Subsidiary.

      “Indebtedness” means, with respect to any Person:

      (1) the principal and premium (if any) of any indebtedness of such Person, whether or not contingent, (a) in respect of borrowed money, (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without duplication, reimbursement agreements in respect thereof), (c) representing the deferred and unpaid purchase price of any property, except any such balance that constitutes a trade payable or similar obligation to a trade creditor due within six months from the date on which it is Incurred (provided that in each case such trade payable or similar Obligation to a trade creditor is Incurred in the ordinary course of business), which purchase price is due more than six months after the date of placing the property in service or taking delivery and title thereto, (d) in respect of Capitalized Lease Obligations, or (e) representing any Hedging Obligations, if and to the extent that any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability on a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP;

      (2) to the extent not otherwise included, any obligation of such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business);

      (3) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person); provided, however, that the amount of such Indebtedness will be the lesser of: (a) the Fair Market Value of such asset at such date of determination, and (b) the amount of such Indebtedness of such other Person; and

      (4) to the extent not otherwise included, with respect to the Company and its Restricted Subsidiaries, the amount then outstanding (including amounts advanced, and received by, and available for use by, the Company or any of its Restricted Subsidiaries) under any Receivables Financing (as set forth in the books and records of the Company or any Restricted Subsidiary and confirmed by the agent, trustee or other representative of the institution or group providing such Receivables Financing); provided, however, that Contingent Obligations incurred in the ordinary course of business shall be deemed not to constitute Indebtedness.

      “Independent Financial Advisor” means an accounting, appraisal or investment banking firm or consultant to Persons engaged in a Similar Business, in each case of nationally recognized standing that is, in the good faith determination of the Company, qualified to perform the task for which it has been engaged.

      “Industrial Revenue Bonds” means the Company’s obligations in connection with certain outstanding Industrial Revenue Bonds payable on May 1, 2016.

      “Initial Purchasers” means Credit Suisse First Boston LLC and CIBC World Markets Corp.

      “Intercreditor Agreement” means the Lien Subordination and Intercreditor Agreement dated as of the Issue Date among the Bank Collateral Agent, the Trustee, the Notes Collateral Agent, the Company and each Guarantor, as it may be amended from time to time in accordance with the Indenture.

      “Investment Grade Securities” means:

      (1) securities issued or directly and fully guaranteed or insured by the U.S. government or any agency or instrumentality thereof (other than Cash Equivalents) and in each case with maturities not exceeding two years from the date of acquisition,

150

      (2) investments in any fund that invests exclusively in investments of the type described in clause (1) which fund may also hold immaterial amounts of cash pending investment or distribution, and

      (3) corresponding instruments in countries other than the United States customarily utilized for high quality investments and in each case with maturities not exceeding two years from the date of acquisition.

      “Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding accounts receivable, trade credit and advances to customers and commission, travel and similar advances to officers, employees and consultants made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet of the Company in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property. For purposes of the definition of “Unrestricted Subsidiary” and the covenant described under “— Certain Covenants — Limitation on Restricted Payments”:

      (1) “Investments” shall include the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of a Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however,that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary equal to an amount (if positive) equal to:

      (A) the Company’s “Investment” in such Subsidiary at the time of such redesignation less

      (B) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and

      (2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Company.

      “Issue Date” means November 30, 2005, the date on which the notes are originally issued.

      “Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York.

      “Lenders Debt” means any (i) Indebtedness outstanding from time to time under the ABL Facility, (ii) any Indebtedness which has a priority security interest relative to the notes in the ABL Collateral, (iii) all Obligations with respect to such Indebtedness and any Hedging Obligations directly related to any Lenders Debt and (iv) all cash management Obligations incurred with any Bank Lender (or their affiliates).

      “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any other agreement to give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction); provided, however, that in no event shall an operating lease or an agreement to sell other than as described above be deemed to constitute a Lien.

      “Management Group” means all of the individuals consisting of the directors, executive officers and other management personnel of the Company or any direct or indirect parent company of the Company, as the case may be, on the Issue Date together with (1) any new directors whose election by such boards of directors or whose nomination for election by the shareholders of the Company or any direct or indirect parent company of the Company, as the case may be, as applicable, was approved by (x) a vote of a

151

majority of the directors of the Company or any direct or indirect parent of the Company as applicable, then still in office who were either directors on the Issue Date or whose election or nomination was previously approved as described in this definition or (y) the Permitted Holders and (2) executive officers and other management personnel of the Company or any direct or indirect parent company of the Company, as the case may be, as applicable, hired at a time when the directors on the Issue Date together with the directors so approved constituted a majority of the directors of the Company or any direct or indirect parent company of the Company, as the case may be, as applicable.

      “Merger Agreement” means the Agreement and Plan of Merger, dated May 18, 2005, among Flag Intermediate, Flag Acquisition and the Company, as amended up to and including the Issue Date.

      “Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.

      “Net Income” means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of Preferred Stock dividends.

      “Net Proceeds” means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including any cash received in respect of or upon the sale or other disposition of any Designated Non-cash Consideration received in any Asset Sale and any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding the assumption by the acquiring Person of Indebtedness relating to the disposed assets or other consideration received in any other non-cash form), net of the direct costs relating to such Asset Sale and the sale or disposition of such Designated Non-cash Consideration (including legal, accounting and investment banking fees, and brokerage and sales commissions), and any relocation expenses Incurred as a result thereof, taxes paid or payable as a result thereof, amounts required to be applied to the repayment of principal, premium (if any) and interest on Indebtedness required (other than pursuant to paragraph (b) of the covenant described under “— Certain Covenants — Asset Sales”) to be paid as a result of such transaction (including to obtain any required consent therefor), and any deduction of appropriate amounts to be provided by the Company as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by the Company after such sale or other disposition thereof, including, without limitation, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction. In the case of any Asset Sale that involves the sale of any Capital Stock of any Restricted Subsidiary that owns assets that constitute ABL Collateral, the Net Proceeds of such Asset Sale attributable to such Capital Stock shall also be net of the Fair Market Value of the assets of such Restricted Subsidiary constituting ABL Collateral.

      “Note” or “Notes” means the 11¹/8 % Senior Secured Notes Due 2015 of the Company.

      “Notes Collateral” means the portion of the Collateral as to which the notes have a priority security interest relative to Lenders Debt.

      “Notes Collateral Agent” means Wells Fargo Bank, N .A., in its capacity as “Collateral Agent” under the Indenture and under the Security Documents, and any successor thereto in such capacity.

      “Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements (including, without limitation, reimbursement obligations with respect to letters of credit and bankers’ acceptances), damages

and other liabilities payable under the documentation governing any Indebtedness; provided, however, that Obligations with respect to the notes shall not include fees or indemnifications in favor of the Trustee and other third parties other than the holders of such notes.

      “Off-Balance Sheet Financing Amount” means, at any date, with respect to any Qualified Receivables Financing, the face or notional amount of any interest in assets of the type described in the definition of the term Qualified Receivables Financing transferred to a Receivables Subsidiary in connection with such Qualified Receivables Financing by or on behalf of the Company or any of its Subsidiaries.

152

      “Officer” means the Chairman of the Board, Chief Executive Officer, President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the Company.

      “Officers’ Certificate” means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company that meets the requirements set forth in the Indenture.

      “Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee.

      “Other Pari Passu Lien Obligations” means any Additional Notes and any other Indebtedness having substantially identical terms as the notes (other than issue price, interest rate, yield and redemption terms) and issued under an indenture substantially identical to the Indenture and any Indebtedness that refinances or refunds (or successive refinancings and refundings) any notes or Additional Notes and all Obligations with respect to such Indebtedness; provided, that such Indebtedness may (a) have a stated maturity date that is equal to or longer than the notes, (b) contain terms and covenants that are, in the reasonable opinion of the Company, less restrictive than the terms and covenants under the notes and (c) contain terms and covenants that are more restrictive than the terms and covenants under the notes so long as prior to or substantially simultaneously with the issuance of any such Indebtedness, the notes and the Indenture are amended to contain any such more restrictive terms and covenants.

      “Pari Passu Indebtedness” means:

      (1) with respect to the Company, the notes and any Indebtedness which ranks pari passu in right of payment to the notes; and

      (2) with respect to any Guarantor, its Guarantee and any Indebtedness which ranks pari passu in right of payment to such Guarantor’s Guarantee.

      “Permitted Collateral Liens” means:

      (1) Liens securing the notes outstanding on the Issue Date, the exchange notes issued in exchange for such notes, Refinancing Indebtedness with respect to such notes or exchange notes, the Guarantees relating thereto and any Obligations with respect to such notes, exchange notes, Refinancing Indebtedness and Guarantees;

      (2) Liens securing any Other Pari Passu Lien Obligations in an aggregate principal amount not to exceed $40.0 million at anyone time outstanding;

      (3) Liens securing any Other Pari Passu Lien Obligations in an aggregate principal amount not to exceed $30.0 million at anyone time outstanding; provided that after giving effect to the Incurrence of such Other Pari Passu Lien Obligations, the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first sentence of the covenant “— Certain Covenants — Limitation on Indebtedness”;

      (4) Liens securing any Other Pari Passu Lien Obligations, which Liens are not permitted pursuant to clause (2) or (3) of this definition; provided, however, that, at the time of Incurrence of such Other Pari Passu Lien Obligations and after giving pro forma effect thereto, the Consolidated Secured Debt Ratio would be no greater than 3.75 to 1.0;

      (5) Liens existing on the Issue Date (other than Liens specified in clause (1) above);

      (6) Liens described in clauses (2), (3), (5), (9), (10), (12) (but only with respect to obligations secured by Liens described in clauses (1), (2), (3) or (4) above), (14), (15), (17), (19) (but only with respect to clauses (9) and (10) referred to therein), (20), (21) and (22) of the definition of Permitted Liens; and

      (7) Liens on the Notes Collateral in favor of any collateral agent relating to such collateral agent’s administrative expenses with respect to the Notes Collateral.

153

      For purposes of determining compliance with this definition, (A) Other Pari Passu Lien Obligations need not be Incurred solely by reference to one category of permitted Other Pari Passu Lien Obligations described in clauses (1) through (7) of this definition but are permitted to be Incurred in part under any combination thereof and (B) in the event that an item of Other Pari Passu Lien Obligations (or any portion thereof) meets the criteria of one or more of the categories of permitted Other Pari Passu Lien Obligations described in clauses (1) through (7) above, the Company shall, in its sole discretion, classify (but not reclassify) such item of Other Pari Passu Lien Obligations (or any portion thereof) in any manner that complies with this definition and will only be required to include the amount and type of such item of Other Pari Passu Lien Obligations in one of the above clauses and such item of Other Pari Passu Lien Obligations will be treated as having been Incurred pursuant to only one of such clauses.

      “Permitted Holders” means, at any time, each of (i) the Sponsor and (ii) the Management Group. Any person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer is made in accordance with the requirements of the Indenture will thereafter, together with its Affiliates, constitute an additional Permitted Holder.

      “Permitted Investments” means:

      (1) any Investment in the Company or any Restricted Subsidiary of the Company;

      (2) any Investment in Cash Equivalents or Investment Grade Securities;

      (3) any Investment by the Company or any Restricted Subsidiary of the Company in a Person that is primarily engaged, directly or indirectly, in a Similar Business if as a result of such Investment (a) such Person becomes a Restricted Subsidiary of the Company, or (b) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys all or substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company;

      (4) any Investment in securities or other assets not constituting Cash Equivalents and received in connection with an Asset Sale made pursuant to the provisions of “— Certain Covenants — Asset Sales” or any other disposition of assets not constituting an Asset Sale;

      (5) any Investment existing on the Issue Date;

      (6) advances to employees not in excess of $10.0 million outstanding at any one time in the aggregate;

      (7) any Investment acquired by the Company or any of its Restricted Subsidiaries (a) in exchange for any other Investment or accounts receivable or claims held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable, or (b) as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

      (8) Hedging Obligations permitted under clause (j) of the “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” covenant;

      (9) any Investment by the Company or any of its Restricted Subsidiaries in a Similar Business (other than an Investment in an Unrestricted Subsidiary) having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (9), not to exceed $45.0 million (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value); provided, however, that if any Investment pursuant to this clause (9) is made in any Person that is not a Restricted Subsidiary of the Company at the date of the making of such Investment and such Person becomes a Restricted Subsidiary of the Company after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause (9) for so long as such Person continues to be a Restricted Subsidiary;

154

      (10) additional Investments by the Company or any of its Restricted Subsidiaries having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (10), not to exceed the greater of (a) $55.0 million and (b) 7.5% of Total Assets at the time of such Investment (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value);

      (11) loans and advances to officers, directors and employees for business-related travel expenses, moving expenses and other similar expenses, in each case Incurred in the ordinary course of business;

      (12) Investments the payment for which consists of Equity Interests (other than Disqualified Stock) of the Company or any direct or indirect parent company of the Company, as applicable; provided, however, that such Equity Interests will not increase the amount available for Restricted Payments under clause (a)(iii) of the covenant described under “— Certain Covenants — Limitation on Restricted Payments”;

      (13) any transaction to the extent it constitutes an Investment that is permitted by and made in accordance with the provisions of the second paragraph of the covenant described under “— Certain Covenants — Transactions with Affiliates” (except transactions described in clauses (2), (6), (7) and (11) of such paragraph);

      (14) Investments consisting of the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons;

      (15) guarantees issued in accordance with the covenants described under “— Certain Covenants Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” and “— Certain Covenants — Future Guarantors”;

      (16) any Investment by Restricted Subsidiaries of the Company in other Restricted Subsidiaries of the Company and Investments by Subsidiaries that are not Restricted Subsidiaries in other Subsidiaries that are not Restricted Subsidiaries of the Company;

      (17) Investments consisting of purchases and acquisitions of real estate, inventory, supplies, materials and equipment or purchases of contract rights or licenses or leases of intellectual property, in each case in the ordinary course of business;

      (18) any Investment in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Financing, including Investments of funds held in accounts permitted or required by the arrangements governing such Qualified Receivables Financing or any related Indebtedness; provided, however, that any Investment in a Receivables Subsidiary is in the form of a Purchase Money Note, contribution of additional receivables or an equity interest; and

      (19) Investments resulting from the receipt of non-cash consideration in an Asset Sale received in compliance with the covenant described under “— Certain Covenants — Asset Sales.”

      “Permitted Liens” means, with respect to any Person:

      (1) pledges or deposits by such Person under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or U.S. government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business;

      (2) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review;

155

      (3) Liens for taxes, assessments or other governmental charges not yet due or payable or subject to penalties for nonpayment or which are being contested in good faith by appropriate proceedings;

      (4) Liens in favor of issuers of performance and surety bonds or bid bonds or with respect to other regulatory requirements or letters of credit (or deposits to secure letters of credit or surety bonds for the same purpose) issued pursuant to the request of and for the account of such Person in the ordinary course of its business;

      (5) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not Incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

      (6) Liens securing Indebtedness (including Capitalized Lease Obligations) Incurred to finance the purchase, lease or improvement of property (real or personal) or equipment (whether through the direct purchase of assets or Capital Stock of any Person owning such assets, where such Person has no other material assets) of such Person; provided, however, that the Lien may not extend to any other property owned by such Person or any of its Restricted Subsidiaries at the time the Lien is Incurred (other than assets and property affixed or appurtenant thereto and except for customary cross collateral arrangements with respect to property or equipment financed by the same financing source pursuant to the same financing scheme), and the Indebtedness (other than any interest thereon) secured by the Lien may not be Incurred more than 180 days after the latest of the (i) acquisition of the property subject to the Lien, (ii) completion of construction, repair, improvement or addition of the property subject to the Lien and (iii) commencement of full operation of the property subject to the Lien;

      (7) Liens securing Indebtedness of a Foreign Subsidiary Incurred pursuant to the first paragraph of, or clause (a), (1) or (t) (or (m) to the extent it guarantees any such Indebtedness) of the second paragraph of, the covenant described under “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; provided, however, that such Liens do not extend to the property or assets of the Company or any Domestic Subsidiary (other than a Domestic Subsidiary that is wholly owned by one or more Foreign Subsidiaries created to enhance the worldwide tax efficiency of the Company and its Subsidiaries);

      (8) Liens existing on the Issue Date;

      (9) Liens on property or shares of stock of a Person at the time such Person becomes a Subsidiary; provided, however, such Liens are not created or Incurred in connection with, or in contemplation of, such other Person becoming such a Subsidiary; provided further, however, that such Liens may not extend to any other property owned by the Company or any Restricted Subsidiary of the Company;

      (10) Liens on property at the time the Company or a Restricted Subsidiary of the Company acquired the property, including any acquisition by means of a merger or consolidation with or into the Company or any Restricted Subsidiary of the Company; provided, however,that such Liens are not created or Incurred in connection with, or in contemplation of, such acquisition; provided further, however, that the Liens may not extend to any other property owned by the Company or any Restricted Subsidiary of the Company;

      (11) Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Company or a Restricted Subsidiary of the Company permitted to be Incurred in accordance with the covenant described under “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

156

      (12) Liens securing Hedging Obligations so long as the related Indebtedness is, and is permitted to be under the Indenture, secured by a Lien on the same property securing such Hedging Obligations;

      (13) Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

      (14) licenses, sublicenses, leases and subleases which do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;

      (15) Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course of business;

      (16) Liens in favor of the Company or any Guarantor or Liens on assets of a Restricted Subsidiary of the Company that is not a guarantor in favor solely of another Restricted Subsidiary of the Company that is not a Guarantor;

      (17) Liens on equipment of the Company or any Restricted Subsidiary granted in the ordinary course of business to the Company’s or such Restricted Subsidiary’s client at which such equipment is located;

      (18) Liens on accounts receivable and related assets of the type specified in the definition of “Receivables Financing” Incurred in connection with a Qualified Receivables Financing;

      (19) Liens to secure any refinancing, refunding, extension or renewal (or successive refinancings, refundings, extensions or renewals) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (6), (7), (8), (9) and (10); provided, however, that (x) such new Lien shall be limited to all or part of the same property (including any after acquired property to the extent it would have been subject to the original Lien) that was subject to the original Lien (plus improvements on such property), and (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (6), (7), (8), (9) and (10) at the time the original Lien became a Permitted Lien under the Indenture, and (B) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, refunding, extension or renewal;

      (20) judgment Liens not giving rise to an Event of Default, so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired;

      (21) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with importation of goods;

      (22) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business;

      (23) Liens securing insurance premium financing arrangements; provided, however, that such Lien is limited to the applicable insurance carriers;

      (24) Liens incurred to secure cash management services in the ordinary course of business; and

      (25) other Liens securing obligations incurred in the ordinary course of business which obligations do not exceed $10.0 million at anyone time outstanding.

157

      “Person” means any individual, sole proprietorship, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

      “Preferred Stock” means any Equity Interest with preferential right of payment of dividends or upon liquidation, dissolution, or winding up.

      “Presumed Tax Rate” means the highest effective marginal statutory combined U.S. federal, state and local income tax rate prescribed for an individual residing in New York City (taking into account (i) the deductibility of state and local income taxes for U.S. federal income tax purposes, assuming the limitation of Section 68(a)(2) of the Code applies and taking into account any impact of Section 68(f) of the Code, and (ii) the character (long-term or short-term capital gain, dividend income or other ordinary income) of the applicable income), or, as applicable, for a corporation.

      “Purchase Agreement” means the Purchase Agreement dated November 21, 2005, among the Company, the Guarantors and the Initial Purchasers.

      “Purchase Money Note” means a promissory note of a Receivables Subsidiary evidencing a line of credit, which may be irrevocable, from the Company or any Subsidiary of the Company to a Receivables Subsidiary in connection with a Qualified Receivables Financing, which note is intended to finance that portion of the purchase price that is not paid by cash or a contribution of equity.

      “Qualified Receivables Financing” means any Receivables Financing of a Receivables Subsidiary that meets the following conditions:

      (1) the Board of Directors of the Company shall have determined in good faith that such Qualified Receivables Financing (including financing terms, covenants, termination events and other provisions) is in the aggregate economically fair and reasonable to the Company and the Receivables Subsidiary,

      (2) all sales of accounts receivable and related assets to the Receivables Subsidiary are made at Fair Market Value (as determined in good faith by the Company), and

      (3) the financing terms, covenants, termination events and other provisions thereof shall be market terms (as determined in good faith by the Company) and may include Standard Securitization Undertakings.

      The grant of a security interest in any accounts receivable of the Company or any of its Restricted Subsidiaries (other than a Receivables Subsidiary) to secure Lenders Debt shall not be deemed a Qualified Receivables Financing.

      “Receivables Financing” means any transaction or series of transactions that may be entered into by the Company or any of its Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell, convey or otherwise transfer to (a) a Receivables Subsidiary (in the case of a transfer by the Company or any of its Subsidiaries), and (b) any other Person (in the case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any of its Subsidiaries, and any assets related thereto including all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable and any Hedging Obligations entered into by the Company or any such Subsidiary in connection with such accounts receivable.

      “Receivables Repurchase Obligation” means any obligation of a seller of receivables in a Qualified Receivables Financing to repurchase receivables arising as a result of a breach of a representation, warranty or covenant or otherwise, including as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, off-set or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.

158

      “Receivables Subsidiary” means a Wholly Owned Restricted Subsidiary of the Company (or another Person formed for the purposes of engaging in a Qualified Receivables Financing with the Company in which the Company or any Subsidiary of the Company makes an Investment and to which the Company or any Subsidiary of the Company transfers accounts receivable and related assets) which engages in no activities other than in connection with the financing of accounts receivable of the Company and its Subsidiaries, all proceeds thereof and all rights (contractual or other), collateral and other assets relating thereto, and any business or activities incidental or related to such business, and which is designated by the Board of Directors of the Company (as provided below) as a Receivables Subsidiary and:

      (a) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Company or any other Subsidiary of the Company (excluding guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the Company or any other Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings, or (iii) subjects any property or asset of the Company or any other Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings,

      (b) with which neither the Company nor any other Subsidiary of the Company has any material contract, agreement, arrangement or understanding other than on terms which the Company reasonably believes to be no less favorable to the Company or such Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company, and

      (c) to which neither the Company nor any other Subsidiary of the Company has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results.

      Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing conditions.

      “Registration Rights Agreement” means the Registration Rights Agreement dated the Issue Date, among the Company, the Guarantors and the Initial Purchasers.

      “Restricted Investment” means an Investment other than a Permitted Investment.

      “Restricted Subsidiary” means, with respect to any Person, any Subsidiary of such Person other than an Unrestricted Subsidiary of such Person. Unless otherwise indicated in this “Description of the Notes,” all references to Restricted Subsidiaries shall mean Restricted Subsidiaries of the Company.

      “Sale/ Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or such Restricted Subsidiary leases it from such Person, other than leases between the Company and a Restricted Subsidiary of the Company or between Restricted Subsidiaries of the Company.

      “S&P” means Standard & Poor’s Ratings Group or any successor to the rating agency business thereof.

      “SEC” means the Securities and Exchange Commission.

      “Secured Indebtedness” means any Indebtedness secured by a Lien.

      “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

      “Security Documents” means the security agreements, pledge agreements, mortgages, collateral assignments and related agreements, as amended, supplemented, restated, renewed, refunded, replaced,

159

restructured, repaid, refinanced or otherwise modified from time to time, creating the security interests in the Collateral as contemplated by the Indenture.

      “Senior Credit Documents” means the collective reference to the Credit Agreement, the notes issued pursuant thereto and the guarantees thereof, and the collateral documents relating thereto, as amended, supplemented, restated, renewed, refunded, replaced, restructured, repaid, refinanced or otherwise modified from time to time.

      “Significant Subsidiary” means any Restricted Subsidiary that would be a “Significant Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

      “Similar Business” means a business, the majority of whose revenues are derived from the activities of the Company and its Subsidiaries as of the Issue Date or any business or activity that is reasonably similar thereto or a reasonable extension, development or expansion thereof or ancillary thereto.

      “Sponsor” means Apollo Management V, L.P., one or more investment funds controlled by Apollo Management V, L.P. and any of their respective Affiliates.

      “Standard Securitization Undertakings” means representations, warranties, covenants, indemnities and guarantees of performance entered into by the Company or any Subsidiary of the Company which the Company has determined in good faith to be customary in a Receivables Financing including those relating to the servicing of the assets of a Receivables Subsidiary, it being understood that any Receivables Repurchase Obligation shall be deemed to be a Standard Securitization Undertaking.

      “Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred).

      “Subordinated Indebtedness” means (a) with respect to the Company, any Indebtedness which is by its terms subordinated in right of payment to the notes, and (b) with respect to any Guarantor, any Indebtedness of such Guarantor which is by its terms subordinated in right of payment to its Guarantee.

      “Subsidiary” means, with respect to any Person (1) any corporation, association or other business entity (other than a partnership, joint venture or limited liability company) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, and (2) any partnership, joint venture or limited liability company of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (y) such Person or any Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity.

      “Subsidiary Guarantor” means any Restricted Subsidiary that Incurs a Guarantee; provided, however, that upon the release or discharge of such Restricted Subsidiary from its Guarantee in accordance with the Indenture, such Restricted Subsidiary will cease to be a Subsidiary Guarantor.

      “Tax Distributions” means any dividends and distributions described in clause (b)(12) of the covenant described under “— Certain Covenants — Limitation on Restricted Payments.”

      “TIA” means the Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect on the date of the Indenture.

      “Total Assets” means the total consolidated assets of the Company and its Restricted Subsidiaries, as shown on the most recent balance sheet of the Company.

160

      “Transactions” means the “Transactions” as defined in this prospectus.

      “Treasury Rate” means, with respect to the notes, as of the applicable redemption date, the yield to maturity as of such redemption date of constant maturity United States Treasury securities (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two business days prior to such redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from such redemption date to December 1, 2010; provided, however, that if no published maturity exactly corresponds with such date, then the Treasury Rate shall be interpolated or extrapolated on a straight-line basis from the arithmetic mean of the yields for the next shortest and next longest published maturities; provided further, however, that if the period from such redemption date to December 1, 2010 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

      “Trust Officer” means:

      (1) any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject, and

      (2) who shall have direct responsibility for the administration of the Indenture.

      “Trustee” means the respective party named as such in the Indenture until a successor replaces it and, thereafter, means the successor.

      “Uniform Commercial Code” means the New York Uniform Commercial Code as in effect from time to time.

      “Unrestricted Subsidiary” means:

      (1) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Company in the manner provided below; and

      (2) any Subsidiary of an Unrestricted Subsidiary.

      The Board of Directors of the Company may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided, however, that the Subsidiary to be so designated and its Subsidiaries do not at the time of designation have and do not thereafter Incur any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries; provided further, however, that either:

      (a) the Subsidiary to be so designated has total consolidated assets of $1,000 or less; or

      (b) if such Subsidiary has consolidated assets greater than $1,000, then such designation would be permitted under the covenant described under “— Certain Covenants — Limitation on Restricted Payments.”

      The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that immediately after giving effect to such designation:

      (x)(1) the Company could Incur $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test described under “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock,” or (2) the Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries would be greater than such ratio for the

161

Company and its Restricted Subsidiaries immediately prior to such designation, in each case on a pro forma basis taking into account such designation, and

      (y) no Event of Default shall have occurred and be continuing.

      Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing provisions.

      “Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

      “Weighted Average Life to Maturity” means, when applied to any Indebtedness or Disqualified Stock, as the case may be, at any date, the quotient obtained by dividing (1) the sum of the products of the number of years from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Disqualified Stock multiplied by the amount of such payment, by (2) the sum of all such payments.

      “Wholly Owned Restricted Subsidiary” is any Wholly Owned Subsidiary that is a Restricted Subsidiary.

      “Wholly Owned Subsidiary” of any Person means a Subsidiary of such Person 100% of the outstanding Capital Stock or other ownership interests of which (other than directors’ or other qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person and one or more Wholly Owned Subsidiaries of such Person.

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

      The following is a summary of material United States federal income tax consequences relevant to a U.S. holder (as defined below) on the exchange of old notes for exchange notes pursuant to the exchange offer, but does not purport to be a complete analysis of all potential tax effects. This summary is based upon the Internal Revenue Code of 1986, as amended, or the “Code,” existing and proposed regulations thereunder, and published rulings and court decisions, all as in effect and existing on the date hereof and all of which are subject to change at any time, which change may be retroactive. This summary is not binding on the Internal Revenue Service or on the courts, and no ruling will be requested from the Internal Revenue Service on any issues described below. There can be no assurance that the Internal Revenue Service will not take a different position concerning the matters discussed below and that such positions of the Internal Revenue Service would not be sustained.

      Except as expressly stated otherwise, this summary applies only to holders that acquired old notes at original issue for cash and holds such old notes as capital assets within the meaning of Section 1221 of the Code. It does not address the tax consequences to taxpayers who are subject to special rules (such as financial institutions, tax-exempt organizations, insurance companies, and holders that are not U.S. holders), nor does it consider the facts and circumstances of any particular holder’s situation or status. In addition, this summary does not consider the effect of any foreign, state, local, gift, estate or other tax laws that may be applicable to a particular holder.

      A “U.S. holder” means a beneficial owner of a note that is, for U.S. federal income tax purposes:

•  a citizen or resident of the United States;

•  a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof;

•  an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

•  a trust if

162

•  a court within the United States is able to exercise primary supervision over the administration of the trust and

•  one or more U.S. fiduciaries have the authority to control all substantial decisions of the trust.

      Holders considering the exchange of old notes for exchange notes should consult their own tax advisors concerning the U.S. federal income tax consequences in light of their particular situations as well as any consequences arising under any state, local, foreign or other tax laws, including gift and estate tax laws, and any tax treaties.

      The exchange by any U.S. holder of an old note for a note should not constitute a taxable exchange for U.S. federal income tax purposes. Accordingly, there should be no U.S. federal income tax consequences to U.S. holders who exchange their old notes for exchange notes in connection with the exchange offer, and any such holder should have the same adjusted tax basis and holding period in the notes as it had in the old notes.

PLAN OF DISTRIBUTION

      Until 90 days after the date of this prospectus, all dealers effecting transactions in the exchange notes, whether or not participating in this distribution, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

      Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for old notes only where such old notes were acquired as a result of market-making activities or other trading activities. We have agreed that, for a period of 180 days from the date on which the exchange offer is consummated, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, all dealers effecting transactions in the exchange notes may be required to deliver a prospectus.

      We will not receive any proceeds from any sale of exchange notes by broker-dealers. Exchanges notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange notes or a combination of such methods of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any exchange notes. Any broker-dealer that resells exchange notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such exchange notes may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of exchange notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

      For a period of 180 days from the date on which the exchange offer is consummated, we will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. We have agreed to pay all expenses incident to the exchange offer, other than commissions or concessions of any broker-dealers and will indemnify the holders of the exchange notes, including any broker-dealers, against certain liabilities, including liabilities under the Securities Act.

163

INTERNAL CONTROL OVER FINANCIAL REPORTING

      As of December 31, 2005 we were not required to comply with SEC rules and regulations requiring management to establish and maintain adequate internal control over financial reporting. Accordingly, we did not conduct a formal evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2005.

LEGAL MATTERS

      Akin Gump Strauss Hauer & Feld LLP will pass upon for us the validity of the exchange notes offered hereby.

EXPERTS

      The consolidated balance sheet of Flag Intermediate Holdings Corporation and subsidiary (the “Successor Company”) as of December 31, 2005 and the related consolidated statements of operations, stockholder’s equity and cash flows for the period from May 9, 2005 (date of inception) to December 31, 2005 and the consolidated balance sheet of Metals USA, Inc. and subsidiaries (the “Predecessor Company”) as of December 31, 2004 and the related consolidated statements of operations, stockholders’ equity and cash flows for the period from January 1, 2005 to November 30, 2005, and the years ended December 31, 2004 and 2003 included in this prospectus have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein (which report expresses an unqualified opinion and includes an explanatory paragraph referring to the Successor Company’s acquisition of the Predecessor Company on December 1, 2005, in a transaction accounted for in accordance with Statement of Financial Accounting Standards No. 141, “Business Combinations” and the lack of comparability of financial information between reporting periods), and have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

AVAILABLE INFORMATION

      Metals USA has historically filed annual, quarterly and current reports, proxy statements and other information with the SEC although it is no longer required to do so. We will be required to file annual and quarterly reports and other information with the SEC after the registration statement described below is declared effective by the SEC. You may read and copy any document we have or will file with the SEC at the SEC’s public website (http://www.sec.gov) or at the Public Reference Room of the SEC located at Room 1580, 100 F Street, N.E., Washington, D.C. 20549. Copies of such materials, including copies of all or any portion of the registration statement, can be obtained from the Public Reference Room of the SEC at prescribed rates. You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room.

      You may obtain copies of this information, including the documents referenced in this prospectus and filed as exhibits to the registration statement of which this prospectus is a part, at no charge by writing or telephoning us at the following address and telephone number:

Investor Relations

Flag Intermediate Holdings Corporation

One Riverway, Suite 1100

Houston, Texas 77506

Telephone: (713) 965-0990

164

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements:

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets at December 31, 2005 and 2004	F-3
Consolidated Statements of Operations — For the Years Ended December 31, 2005, 2004 and 2003	F-4
Consolidated Statements of Stockholders’ Equity (Deficit) — For the Years Ended December 31, 2005, 2004 and 2003	F-5
Consolidated Statements of Cash Flows — For the Years Ended December 31, 2005, 2004 and 2003	F-6
Notes to Consolidated Financial Statements	F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Flag Intermediate Holdings Corporation

      We have audited the accompanying consolidated balance sheet of Flag Intermediate Holdings Corporation and subsidiary (the “Successor Company”) as of December 31, 2005, and the related consolidated statements of operations, stockholder’s equity and cash flows for the period from May 9, 2005 (date of inception) to December 31, 2005. We have also audited the consolidated balance sheet of Metals USA, Inc. and subsidiaries (the “Predecessor Company”) as of December 31, 2004, and the related consolidated statements of operations, stockholders’ equity and cash flows for the period from January 1, 2005 to November 30, 2005, and the years ended December 31, 2004 and 2003. These financial statements are the responsibility of the Successor and Predecessor Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

      We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Successor and Predecessor Company are not required to have, nor were we engaged to perform, an audit of internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Successor Company as of December 31, 2005, and the results of its operations and its cash flows for the period from May 9, 2005 (date of inception) to December 31, 2005, and the financial position of the Predecessor Company as of December 31, 2004, and the results of its operations and its cash flows for the period from January 1, 2005 to November 30, 2005, and the years ended December 31, 2004 and 2003, in conformity with accounting principles generally accepted in the United States of America.

      As discussed in Note 1 to the consolidated financial statements, the Successor Company acquired the Predecessor on December 1, 2005 in a transaction accounted for in accordance with Statement of Financial Accounting Standards No. 141, “Business Combinations.” Accordingly, the assets acquired and liabilities assumed were recorded at fair value on that date by the Successor Company and are not comparable with those of the Predecessor Company.

/s/ DELOITTE & TOUCHE LLP

Houston, Texas

February 28, 2006

F-2

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2005 AND 2004

			Successor			Predecessor
			Company			Company
			December 31,			December 31,
			2005			2004
			(In millions)			(In millions)
ASSETS
CURRENT ASSETS:
	Cash		$	11.3		$	12.6
	Accounts receivable, net of allowance of $7.8 and $7.7, respectively			172.9			173.5
	Inventories			350.7			462.9
	Deferred tax asset			8.3			11.3
	Prepaid expenses and other			25.2			7.7
		Total current assets		568.4			668.0
PROPERTY AND EQUIPMENT — Net				171.6			36.1
GOODWILL — Net				15.8
OTHER ASSETS — Net				39.5			5.9
TOTAL			$	795.3		$	710.0
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
	Accounts payable		$	68.2		$	64.0
	Accrued liabilities			46.3			35.0
	Current portion of long-term debt			0.6			4.0
		Total current liabilities		115.1			103.0
LONG-TERM DEBT — Less current portion				472.9			266.6
DEFERRED INCOME TAX LIABILITY				60.0
OTHER LONG-TERM LIABILITIES				15.3			12.2
		Total liabilities		663.3			381.8
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
	Preferred stock, none at December 31, 2005, $.01 par value — 5,000,000 shares authorized; none issued at December 31, 2004
	Common stock, $.01 par value — 100 shares authorized, issued and outstanding at December 31, 2005
	Common stock, $.01 par value — 200,000,000 shares authorized; 20,260,013 shares issued and outstanding at December 31, 2004						0.2
	Additional paid-in capital			134.0			219.5
	Deferred compensation						(0.2	)
	Retained earnings (deficit)			(2.0	)		108.7
		Total stockholders’ equity		132.0			328.2
TOTAL			$	795.3		$	710.0

See notes to consolidated financial statements.

F-3

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003

			Successor
			Company
						Predecessor Company
			Period From
			May 9, 2005			Period From
			(Date of Inception)			January 1, 2005 to			Year Ended			Year Ended
			to December 31,			November 30,			December 31,			December 31,
			2005			2005			2004			2003
			(In millions)
						(In millions)
NET SALES			$	116.9		$	1,522.1		$	1,509.8		$	963.2
OPERATING COSTS AND EXPENSES:
	Cost of sales (exclusive of operating and delivery, and depreciation and amortization shown below)			92.5			1,189.3			1,080.1			731.6
	Operating and delivery			12.8			139.1			144.4			127.7
	Selling, general and administrative			9.3			108.5			109.6			87.0
	Depreciation and amortization			1.4			3.1			2.0			0.5
		Operating income		0.9			82.1			173.7			16.4
OTHER (INCOME) EXPENSE:
	Interest expense			4.1			12.0			8.4			5.7
	Other (income) expense—net						(0.1	)		(2.5	)		(2.0	)
INCOME (LOSS) BEFORE INCOME TAXES AND DISCONTINUED OPERATIONS				(3.2	)		70.2			167.8			12.7
PROVISION (BENEFIT) FOR INCOME TAXES				(1.2	)		26.7			63.3			5.1
Income (loss) before discontinued operations				(2.0	)		43.5			104.5			7.6
Income (loss) from discontinued operations— net of taxes				0.0			0.0			0.0			(0.1	)
NET INCOME (LOSS)			$	(2.0	)	$	43.5		$	104.5		$	7.5

See notes to consolidated financial statements.

F-4

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Years Ended December 31, 2005, 2004 and 2003

				Additional					Retained
		Common		Paid-In		Deferred			Earnings
		Stock		Capital		Compensation			(Deficit)			Total
		(In millions)
PREDECESSOR COMPANY
BALANCE — January 1, 2003		$	0.2	$	192.1	$	—		$	(3.3	)	$	189.0
	Tax benefit realized from tax attribute carryforwards				4.1								4.1
	Net income									7.5			7.5
BALANCE — December 31, 2003			0.2		196.2		—			4.2			200.6
	Tax benefit realized from tax attribute carryforwards				21.2								21.2
	Stock option exercises, grants and other adjustments				2.1		(0.2	)					1.9
	Net income				0.0					104.5			104.5
BALANCE — December 31, 2004			0.2		219.5		(0.2	)		108.7			328.2
	Tax benefit realized from tax attribute carryforwards				2.4								2.4
	Stock option exercises, grants and other adjustments				0.6		0.2						0.8
	Net income from January 1, 2005 to November 30, 2005									43.5			43.5
BALANCE — November 30, 2005		$	0.2	$	222.5	$	—		$	152.2		$	374.9
SUCCESSOR COMPANY
BALANCE — May 9, 2005 (date of inception)		$	—	$	—	$	—		$	—		$	—
	Capital contribution				134.0								134.0
	Net loss from May 9, 2005 (date of inception) to December 31, 2005									(2.0	)		(2.0	)
BALANCE — December 31, 2005		$	—	$	134.0	$	—		$	(2.0	)	$	132.0

See notes to consolidated financial statements.

F-5

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2005, 2004 and 2003

				Successor Company			Predecessor Company
				Period From
				May 9, 2005			Period From
				(Date of Inception)			January 1, 2005 to			Year Ended			Year Ended
				to December 31,			November 30,			December 31,			December 31,
				2005			2005			2004			2003
				(In millions)
							(In millions)
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income (loss)			$	(2.0	)	$	43.5		$	104.5		$	7.5
	Adjustments to reconcile net income to cash provided by operating activities:
	Net (income) loss from discontinued operations													0.1
	(Gain) loss on sale of property and equipment							(0.1	)		(0.5	)		(0.3	)
	Provision for bad debts, net of recoveries				0.2			2.9			4.0			2.7
	Depreciation and amortization				1.5			3.5			2.0			0.5
	Deferred income taxes				(1.6	)
	Adjustment to Predecessor Company tax attribute valuation allowance							2.4			12.5			4.1
	Changes in operating assets and liabilities, net of effects of Merger:
		Accounts receivable			16.4			(18.8	)		(52.5	)		(14.7	)
		Inventories			(13.4	)		140.6			(222.9	)		(13.5	)
		Prepaid expenses and other			(6.6	)		(0.7	)		1.5			18.7
		Accounts payable and accrued liabilities			12.2			(2.3	)		23.3			27.2
		Other operating — net			0.6			(0.9	)		(0.5	)		(5.5	)
			Net cash provided by (used in) continuing operations		7.3			170.1			(128.6	)		26.8
NET CASH PROVIDED BY DISCONTINUED OPERATIONS														0.1
			Net cash provided by (used in) operations		7.3			170.1			(128.6	)		26.9
CASH FLOWS FROM INVESTING ACTIVITIES:
	Sale of assets							0.1			1.4			5.7
	Purchase of assets				(4.4	)		(15.9	)		(17.4	)		(17.5	)
	Acquisition of Metals USA, Inc., net of cash acquired				(430.1	)
			Net cash provided by (used in) investing activities by continued operations		(434.5	)		(15.8	)		(16.0	)		(11.8	)
NET CASH PROVIDED BY INVESTING ACTIVITIES IN DISCONTINUED OPERATIONS
			Net cash provided by (used in) investing activities		(434.5	)		(15.8	)		(16.0	)		(11.8	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Net borrowings (repayments) on revolving credit facilities				(145.3	)		(107.7	)		147.8			(7.4	)
	Net borrowings (repayments) on the ABL				191.4
	Proceeds from issuance of Senior Secured Notes				275.0
	Repayments of other long-term debt							(10.4	)		(0.6	)		(2.6	)
	Capital contribution				134.0
	Issuance of common stock							0.1			0.4
	Deferred financing costs and other				(16.6	)		(2.7	)		(1.8	)		0.0
			Net cash provided by (used) in financing activities by continuing operations		438.5			(120.7	)		145.8			(10.0	)
NET CASH PROVIDED BY FINANCING ACTIVITIES IN DISCONTINUED OPERATIONS					—			—			—			—
			Net cash provided by (used in) investing activities		438.5			(120.7	)		145.8			(10.0	)
NET INCREASE (DECREASE) IN CASH					11.3			33.6			1.2			5.1
CASH — Beginning of period								12.6			11.4			6.3
CASH — End of period				$	11.3		$	46.2		$	12.6		$	11.4
SUPPLEMENTAL CASH FLOW INFORMATION:
	Cash paid for interest			$	0.5		$	10.5		$	7.2		$	5.4
	Cash paid for income taxes			$	7.0		$	27.6		$	54.5		$	(19.3	)
	Noncash acquisitions of property and equipment			$	—		$	—		$	4.8		$	—

See notes to consolidated financial statements.

F-6

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2005 AND 2004

(In millions, except share amounts)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      On May 18, 2005, Flag Holdings Corporation, a Delaware corporation (“Flag Holdings”), and its wholly owned subsidiary, Flag Acquisition Corporation, a Delaware corporation (“Flag Acquisition”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Metals USA, Inc. (“Metals USA, Inc.”). On November 30, 2005, Flag Acquisition merged with and into Metals USA, Inc., with Metals USA, Inc. being the surviving corporation. Flag Intermediate and Flag Acquisition conducted no operations during the period May 9, 2005 (date of inception) to November 30, 2005. As a result of the Merger described in Note 2, Metals USA, Inc. was delisted from the NASDAQ. See Note 2 — Acquisition for additional information regarding the Merger.

      Flag Intermediate and its wholly owned subsidiary Metals USA, Inc. are referred to collectively herein as the “Company” or “Successor Company” and Metals USA, Inc. prior to the merger on November 30, 2005 is referred to as the “Predecessor Company.” The Company applied Statement of Financial Accounting Standards No. 141, “Business Combinations” on the merger date and, as a result, the merger consideration was allocated to the respective values of the assets acquired and liabilities assumed from the Predecessor Company (see Note 2). As a result of the application of purchase accounting, the Successor Company balances and amounts presented in the consolidated financial statements and footnotes are not comparable with those of Predecessor Company.

      During 2001, the Predecessor Company filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code, from which it emerged on October 31, 2002.

      We are a leading provider of value-added processed steel, stainless steel, aluminum and specialty metals, as well as manufactured metal components. Our operations are organized into three product group segments located entirely in the United States. Approximately 88% of our revenue is derived from the metal service center and distribution activities that are segmented into two groups, Flat Rolled and Plates and Shapes. The remaining portion of our revenue is derived from the Building Products Group, which principally manufactures and distributes aluminum products related to the residential and commercial construction and improvement industry. We purchase metal from primary producers who generally focus on large volume sales of unprocessed metals in standard configurations and sizes. In most cases, we perform customized, value-added processing services required to meet specifications provided by end-use customers. The Flat Rolled Group and Plates and Shapes Group customers are in businesses such as machining, furniture, transportation equipment, power and process equipment, industrial/commercial, construction and fabrication, consumer durables, electrical equipment industries, and machinery and equipment manufacturers. The Building Products Group customers are distributors and contractors engaged in residential and commercial building products.

     Summary of Significant Accounting Policies —

      Use of Estimates and Assumptions — The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires us to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published and (iii) the reported amount of revenues and expenses recognized during the periods presented. We review all significant estimates affecting our consolidated financial statements on a recurring basis and record the effect of any necessary adjustments. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements.

F-7

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

      Principles of Consolidation — Our consolidated financial statements include the accounts of Flag Intermediate and its subsidiary which is wholly-owned. All intercompany accounts and transactions have been eliminated in the consolidated financial statements. Certain reclassifications have been made to prior years’ financial statements to be consistent with the current year’s presentation.

      Concentration of Credit Risk — Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash deposits, trade accounts and notes receivable. Concentrations of credit risk with respect to trade accounts are within several industries. Generally, credit is extended once appropriate credit history and references have been obtained.

      Provisions to the allowance for doubtful accounts are made monthly and adjustments are made periodically based upon our expected ability to collect all such accounts. Additionally, we periodically review the credit history of our customers and generally do not require collateral for the extension of credit.

      Inventories — Inventories are stated at the lower of cost or market. Our inventories are accounted for using a variety of methods including specific identification, average cost and the first-in first-out (“FIFO”) method of accounting.

      Property and Equipment — Property and equipment is stated at cost, and depreciation is computed using the straight-line method, net of estimated salvage values, over the estimated useful lives of the assets. Expenditures for repairs and maintenance are charged to expense when incurred. Expenditures which extend the useful lives of existing equipment, are capitalized and depreciated. Upon retirement or disposition of property and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized. Leasehold improvements are capitalized and amortized over the lesser of the life of the lease or the estimated useful life of the asset.

      Valuation and Qualifying Accounts — We provide reserves for accounts receivable and inventory. The reserves for these activities of the Successor Company for the period from May 9, 2005 (date of inception) to December 31, 2005 and of the Predecessor Company for the period from January 1, 2005 to November 30, 2005, and the years ended December 31, 2004 and 2003 are summarized below:

			Balance at		Amount					Balance at
			Beginning		Charged to		Utilization			End
Description			of Period		Expense		of Reserve			of Period
SUCCESSOR COMPANY —
	Period ended December 31, 2005:
		Allowance for doubtful accounts	$	—	$	8.5	$	(0.7	)	$	7.8
		Inventory valuation allowance		—		7.7		(0.8	)		6.9
PREDECESSOR COMPANY —
	Eleven Months ended November 30, 2005:
		Allowance for doubtful accounts		7.7		2.9		(2.3	)		8.3
		Inventory valuation allowance		5.3		3.1		(0.7	)		7.7
	Year ended December 31, 2004:
		Allowance for doubtful accounts		6.9		4.0		(3.2	)		7.7
		Inventory valuation allowance		5.2		0.3		(0.2	)		5.3
	Year ended December 31, 2003:
		Allowance for doubtful accounts		7.3		2.7		(3.1	)		6.9
		Inventory valuation allowance		5.8		3.5		(4.1	)		5.2

F-8

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

      Impairment of Long-Lived Assets — Long-lived assets are comprised principally of property and equipment. We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be realizable. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the asset’s carrying amount to determine if an impairment of such asset is necessary. The effect of any impairment would be to expense the difference between the fair value of such asset and its carrying value.

      Goodwill — Goodwill represents the excess of the purchase price paid over the fair value of the net assets acquired in connection with the business acquisition plus costs of acquisition. As a result of the Merger described in Note 2, we recorded $16.1 of goodwill in 2005. There was no amortization of goodwill, however, the Successor Company reduced goodwill by $0.3 to recognize the tax benefit related to goodwill of the Predecessor Company (see Note 8.). In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, we will assess the fair value of the net assets underlying all the acquisition related goodwill on a reporting unit basis.

      We will evaluate the recoverability of identifiable intangible assets whenever events or changes in circumstances indicate that an intangible asset’s carrying amount may not be recoverable. Such circumstances could include, but are not limited to: (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset. We measure the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future net cash flows be less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds its fair value. The estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows. The evaluation of asset impairment requires us to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts.

      Intangible Assets — The Successor Company intangible assets consist of customer lists which were recorded as a result of the Merger described in Note 2. We are amortizing the customer lists over five years using an accelerated amortization method which approximates its useful life and value to us.

      As of December 31, 2005, the Successor Company had the following amounts related to intangible assets:

	May 9, 2005					December 31,
	(Date of Inception)					2005
	Gross Carrying		Accumulated			Gross Carrying
	Amortization		Amount			Amortization
Customer lists	$	22.2	$	(0.7	)	$	21.5

F-9

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

      No significant residual value is estimated for these intangible assets. Aggregate amortization expense for the period from May 9, 2005 (date of inception) to December 31, 2005 was $0.7. The following table represents the total estimated amortization of intangible assets for the five succeeding years:

	Estimated
Years Ending	Amortization
December 31	Expense
2006	$	7.8
2007		6.1
2008		4.3
2009		2.5
2010		0.8

      Debt Issuance Costs — We defer certain expenses incurred in connection with our long-term debt and amortize these costs to interest expense over the term of the respective agreements. Debt issuance costs incurred by the Successor Company for the period from May 9, 2005 (date of inception) to December 31, 2005 and for the Predecessor Company for the period from January 1, 2005 to November 30, 2005, and for the years ended December 31, 2004 and 2003 were $16.6, $0.3, $1.1 and $0.0, respectively. Amortization of debt issuance costs recorded by the Successor Company for the period from May 9, 2005 (date of inception) to December 31, 2005 and for the Predecessor Company for the period from January 1, 2005 to November 30, 2005, and for the years ended December 31, 2004 and 2003 were $0.2, $2.4, $0.7 and $0.7, respectively.

      Fair Value of Financial Instruments — The carrying values of cash, accounts receivable and accounts payable approximate fair value due to their short-term nature. The fair value of the long-term debt is estimated based on interest rates for the same or similar debt offered in the open market. At December 31, 2005, the carrying value of our fixed rate long-term debt approximates its fair value based on interest rates for the same or similar debt offered in the open market and the carrying amount of the indebtedness attributable to the Senior Secured Asset-Based Revolving Credit Facility of $191.4 approximates its fair value.

      Revenue Recognition — We recognize revenues when products are shipped and our significant obligations have been satisfied. Shipping and handling costs billed to our customers are accounted for as revenues. Risk of loss for products shipped passes at the time of shipment. Provisions are made currently for estimated returns.

      Delivery Expenses — Delivery expenses consist of distribution costs, including shipping and handling. These expenses totaled $3.3, $39.3, $41.6 and $36.9 for the period from May 9, 2005 (date of inception) to December 31, 2005, the period from January 1, 2005 to November 30, 2005, and the years ended December 31, 2004 and 2003, respectively.

      Income Taxes — Deferred income taxes are recognized for the future tax consequences of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

      New Accounting Pronouncements — In November 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 151 (“SFAS 151”), Inventory Costs-An Amendment of ARB No. 43, Chapter 4, which requires that abnormal amounts of idle facility expense, freight, handling costs and spoilage should be expensed as incurred and not included in overhead, and that

F-10

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

allocation of fixed production overheads to conversion costs should be based on normal capacity of the production facilities. The provisions in Statement 151 are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of SFAS 151 did not have a significant impact on our consolidated financial statements.

      In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123-Revised 2004 (“SFAS 123(R)”), Share-Based Payment. This is a revision of SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes APB No. 25, Accounting for Stock Issued to Employees. As noted in Note 10, we do not record compensation expense for stock-based compensation. Under SFAS 123(R), we will be required to measure the cost of employee services received in exchange for stock based on the grant-date fair value (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award (usually the vesting period). The fair value will be estimated using an option-pricing model. Excess tax benefits, as defined in SFAS 123, will be recognized as an addition to paid-in-capital. In April 2005, the Securities and Exchange Commission delayed the implementation date of this pronouncement to the first annual reporting period that begins after December 15, 2005. The adoption of SFAS 123(R) did not have a significant impact on our consolidated financial statements as the Company does not have any options outstanding.

      In March 2005, the Financial Accounting Standard Board issued FIN Interpretation No. 47, (“FIN 47”), Accounting for Conditional Asset Retirement Obligations — An interpretation of FASB Statement No. 143, which requires that “an entity should recognize the fair value of a liability for an asset retirement obligation in the period in which it is incurred if reasonable estimate of fair value can be made”. The provisions of FIN 47 are effective no later than the year end of fiscal years ending after December 15, 2005. The adoption of FIN 47 has had no significant impact on our consolidated financial statements.

2. ACQUISITION

      On November 30, 2005, Flag Acquisition, a wholly owned subsidiary of Flag Intermediate, merged with and into Metals USA, Inc. with Metals USA, Inc. being the surviving corporation. The Merger was consummated pursuant to the Merger Agreement by and among Metals USA, Inc., Flag Acquisition, and Flag Holdings. As a result of and immediately following the Merger, Metals USA, Inc. became and is a wholly owned subsidiary of Flag Intermediate. Flag Intermediate has no assets other than its investment in Metals USA, Inc., conducts no operations and is a guarantor of both the Senior Secured Asset-Based Revolving Credit Facility and the 11¹/8 % Senior Secured Notes due 2015 of Metals USA, Inc.

F-11

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

      The Merger was accounted for as a purchase by Flag Acquisition of Metals USA, Inc. in accordance with SFAS No. 141, “Business Combinations” (“SFAS 141”). Total Merger consideration was $648.0, including $458.7 for common stock and warrants, $152.5 for the assumption of debt and revolving credit loans, $16.6 for debt issuance costs and $20.2 for direct merger costs (including $2.6 paid by Metals USA, Inc. prior to closing of the Merger). Merger consideration does not include $14.6 paid by Metals USA, Inc. at the closing of the Merger to holders of 1,081,270 vested in-the-money options and holders of 45,437 restricted stock grant awards (recorded as compensation expense in November 2005). Total Merger consideration reconciles to the net acquisition costs as follows:

Total merger consideration		$	648.0
Less:
	Assumption of debt and revolving credit loans		(152.5	)
	Debt issuance costs		(16.6	)
	Use of cash on hand at closing		(46.2	)
	Merger costs paid by Metals USA, Inc.		(2.6	)
Acquisition costs, net of cash acquired		$	430.1

      Consistent with SFAS 141, the total acquisition costs were allocated to the acquired assets and assumed liabilities based upon estimates of their respective fair values as of the closing date of the Merger using valuation and other studies. Based on these studies, the fair value of inventories, property and equipment and intangibles (customer lists) were increased by $14.9, $118.6 and $22.2, respectively. The fair value of deferred taxes and long-term liabilities were increased by $64.8 and $3.1. The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition:

Total assets acquired	$	735.2
Total liabilities assumed		321.2
Net assets acquired	$	414.0

      The excess of aggregate purchase price over the new assets acquired of $16.1 was recorded as goodwill.

      The Merger was financed through cash contributions by Flag Intermediate of $134.0, proceeds from the sale of $275.0 of 11¹/8 % Senior Secured Notes due 2015 and borrowings from a Senior Secured Asset-Based Credit Facility.

      The following unaudited pro forma information presents the Successor Company’s consolidated results of operations for the twelve month period ended December 31, 2005 as if the acquisition had occurred on January 1, 2005.

	Twelve Months
	Ended
	December 31,
	2005
Revenues	$	1,639.0
Net income		15.9

F-12

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

3. INVENTORIES

      Inventories consist of the following:

			Successor		Predecessor
			Company		Company
			December 31,		December 31,
			2005		2004
Raw materials:
	Plates and shapes		$	173.6	$	208.7
	Flat rolled			85.8		169.5
	Building products			24.3		21.0
		Total raw materials		283.7		399.2
Work-in-process and finished goods:
	Plates and shapes Flat rolled			33.0		34.8
	Building products			34.0		28.9
		Total work-in-process and finished goods		67.0		63.7
Total inventories			$	350.7	$	462.9

      As a result of the Merger described in Note 2, the Successor Company analyzed and valued the Predecessor’s Company’s inventory as of November 30, 2005. Based on the determination of replacement cost for the Predecessor Company’s inventory at November 30, 2005, a purchase price adjustment was recorded by the Successor Company to increase inventory values by $14.9 million.

4. PROPERTY AND EQUIPMENT

      Property and equipment consists of the following:

				Successor			Predecessor
				Company			Company
		Estimated		December 31,			December 31,
		Useful Lives		2005			2004
Land				$	11.3		$	1.1
Building and improvements			5–40 years		56.7			10.2
Machinery and equipment			7–25 years		94.1			22.9
Automobiles and trucks			3–10 years		1.3			1.0
Construction in progress					9.0			3.1
	Total property and equipment				172.4			38.3
Less accumulated depreciation					(0.8	)		(2.2	)
Total property and equipment — net				$	171.6		$	36.1

      As a result of the Merger described in Note 2, the Company analyzed and valued the property and equipment as of November 30, 2005. The Predecessor Company’s property and equipment owned as of October 31, 2002 had been written off for book purposes as a result of applying fresh-start adjustments when the Predecessor Company exited from bankruptcy on October 31, 2002. Total assets written off as a result of these adjustments were $108.6. The Predecessor Company continued to use this property and equipment in conducting regular operations.

F-13

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

      Based on the Company’s analysis of the Predecessor Company’s property and equipment at November 30, 2005, the Successor Company’s property and equipment were increased by $118.6 at November 30, 2005, the closing date of the merger date.

      Depreciation expense for the Successor Company for the period from May 9, 2005 (date of inception) to December 31, 2005 and for the Predecessor Company for the period from January 1, 2005 through November 30, 2005, and the years ended December 31, 2004 and 2003, was $0.8, $3.5, $1.9, and $0.4, respectively.

5. OTHER ASSETS

      Other assets consist of the following:

	Successor		Predecessor
	Company		Company
	December 31,		December 31,
	2005		2004
Customer lists	$	21.5	$	—
Deferred financing costs		9.4		2.4
Deferred debt offering costs		7.0
Deferred tax assets				1.2
Other		1.6		2.3
Total other assets	$	39.5	$	5.9

      As a result of the Merger described in Note 2, the fair value of the customer lists and debt offering costs were recorded by the Successor Company. The amortization of the customer lists, deferred financing costs, and the debt offering costs are discussed in Note 1.

6. ACCRUED LIABILITIES

      Accrued liabilities consist of the following:

	Successor		Predecessor
	Company		Company
	December 31,		December 31,
	2005		2004
Accrued salaries and employee benefits	$	14.6	$	15.1
Accrued taxes, other than income		4.8		4.7
Accrued interest		3.3		0.8
Accrued insurance		4.6		4.2
Accrued audit and tax fees		1.6		2.1
Accrued income taxes payable				1.0
Accrued lease terminations		1.2		3.6
Accrued warrants liability		3.4
Accrued management fees		8.7
Other		4.1		3.5
Total accrued liabilities	$	46.3	$	35.0

F-14

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

7. DEBT

      Debt consists of the following:

		Successor		Predecessor
		Company		Company
		December 31,		December 31,
		2005		2004
Senior secured asset-based revolving credit facility		$	191.4	$	—
111/8 % senior secured notes due 2015			275.0
Revolving credit facility					253.0
Industrial Revenue Bond			5.7		5.7
Mortgage note					6.7
Other			1.4		5.2
	Total debt		473.5		270.6
Less current portion of debt			0.6		4.0
Total long-term portion of debt		$	472.9	$	266.6

      Maturities on our debt as of December 31, 2005 were $0.6 in 2006; $0.5 in 2007; $0.1 in 2008; $0.1 in 2009; $0.1 in 2010; and $472.1 in 2011 and thereafter.

      The weighted average interest rate under our Senior Secured Asset-Based Revolving Credit Facility for the period from December 1, 2005 through December 31, 2005, was 7.20%.

      The weighted average interest rates under our Revolving Credit Facility for the period from January 1, 2005 through November 30, 2005, and from the years ended December 31, 2004 and 2003, were 4.89%, 4.12%, and 4.41%, respectively.

      Senior Secured Asset-Based Revolving Credit Facility — On December 1, 2005, the Successor Company entered into a Senior Secured Asset-Based Revolving Credit Facility (the “ABL”) in connection with the Merger.

      The ABL facility permits us to borrow on a revolving basis during the period beginning on December 1, 2005 and ending on the sixth anniversary thereof. Substantially all of our subsidiaries are borrowers under the ABL facility. The ABL provides for borrowings, subject to a borrowing base calculation, of up to $450.0, initially comprised of $415.0 of Tranche A Commitments and $35.0 of the Tranche A-1 Commitments. While the Tranche A-1 Commitments are outstanding, the borrowing base is subject to greater advance rates than would be otherwise in effect. A permanent reduction of the maximum Tranche A-1 Commitments to $25.0 will occur on June 1, 2006, unless previously terminated or reduced below this reduced maximum amount prior to that date at the Company’s option. The Tranche A Commitments will be increased on a dollar-for-dollar basis in an amount equal to such reduction or termination. The maximum availability under the ABL facility is based on eligible receivables and eligible inventory, subject to certain reserves. As of February 10, 2006 and December 31, 2005, we had $196.5 and $166.8, respectively, of additional borrowing capacity under the ABL facility.

      The obligations under the ABL facility are guaranteed by the Company and certain of our future domestic subsidiaries and are secured (i) on a first-priority lien basis by accounts receivable and inventory and (ii) on a second-priority lien basis by other assets, subject to certain exceptions and permitted liens.

      The ABL facility bears interest with respect to loans utilizing the Tranche A Commitments at the bank’s base rate or LIBOR, at our option, plus an applicable margin ranging between 1.25% and 2.00% as

F-15

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

determined in accordance with the loan and security agreement governing the ABL facility. The ABL facility bears interest with respect to the Tranche A-1 Commitments at the bank’s base rate or LIBOR, at our option, plus an applicable margin initially at 3.75% and after the first adjustment rate under the ABL facility, 3.50%. The marginal rates related to the Tranche A Commitments will vary with our financial performance as measured by a fixed charge coverage ratio. The fixed charge coverage ratio is determined by dividing (i) the sum of EBITDA (as defined by and adjusted in accordance with the loan and security agreement governing the ABL facility) minus income taxes paid in cash minus non-financed capital expenditures by (ii) the sum of certain distributions paid in cash, cash interest expense and scheduled principal reductions on debt. As long as our borrowing availability is $45.0 or greater, we do not have to maintain a minimum fixed charge coverage ratio. Should borrowing availability fall below $45.0, we must maintain a fixed charge coverage ratio of 1.0 to 1.0.

      Interest on base rate loans is payable on the last day of each quarter. Interest on LIBOR loans is payable on maturity of the LIBOR loan or on the last day of the quarter if the term of the LIBOR loan exceeds 90 days. A commitment fee is payable on any unused commitments under the ABL facility of 0.25% per annum. The applicable base rate and the effective LIBOR rate for the Tranche A Commitments and Tranche A-1 Commitments were 7.25% and 4.53% as of December 31, 2005.

      The loan and security agreement governing the ABL facility requires us to comply with limited affirmative, negative and subjective covenants, the most significant of which are: (i) the maintenance of a borrowing base availability of at least $45.0, or, if such required borrowing base availability is not maintained, the maintenance of the fixed charge coverage ratio, (ii) restrictions on additional indebtedness and (iii) restrictions on liens, guarantees and quarterly dividends. There are no limitations with respect to capital expenditures.

      The loan and security agreement governing the ABL facility provides for up to $15.0 of swingline loans and up to $100.0 for the issuance of letters of credit. Both the face amount of any outstanding letters of credit and any swingline loans will reduce borrowing availability under the ABL facility on a dollar-for-dollar basis.

      The ABL facility contains customary representations, warranties and covenants as a precondition to lending, which includes a material adverse change in the business, limitations on our ability to incur or guarantee additional debt, subject to certain exceptions, pay dividends, or make redemptions and repurchases, with respect to capital stock, create or incur certain liens, make certain loans or investments, make acquisitions or investments, engage in mergers, acquisitions, asset sales and sale lease-back transactions, and engage in certain transactions with affiliates. In addition, the ABL facility requires a lock-box arrangement, which in the absence of default, is controlled by the Company.

      The ABL facility contains events of default with respect to: default in payment of principal when due, default in the payment of interest, fees or other amounts after a specified grace period, material breach of the representations or warranties, default in the performance of specified covenants, failure to make any payment when due under any indebtedness with a principal amount in excess of a specified amount, certain bankruptcy events, certain ERISA violations, invalidity of certain security agreements or guarantees, material judgments, or a change of control. In the event of default the agreement may: (i) restrict the account or refuse to make revolving loans; (ii) cause customer receipts to be applied against the Company borrowings under the ABL facility causing the Company to suffer a rapid loss of liquidity and the ability to operate on a day-to-day basis; (iii) restrict or refuse to provide Letters of Credit; or ultimately: (iv) terminate the Commitments and this Agreement; (v) declare any or all obligations to be immediately due and payable if such default is not cured in the specified period required. Any payment default or acceleration under the ABL facility would also result in a default under the Notes

F-16

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

that would provide the holders of the Notes with the right to demand immediate repayment. We are in compliance with all covenants as of December 31, 2005 and as of February 28, 2006.

      Costs related to the establishment of the ABL facility were capitalized and are being charged to interest expense over the life of the ABL facility. Unamortized issuance costs of $9.4 as of December 31, 2005, are included in other long-term assets.

      11¹/8% Senior Secured Notes Due 2015 — On November 30, 2005, Flag Acquisition sold an aggregate principal amount of our 11 ¹/8% Senior Secured Notes Due 2015 (the “Notes”). The Notes will bear interest at a rate per annum equal to 11¹/8 %, payable semi-annually in arrears, on June 1 and December 1 of each year, commencing on June 1, 2006. The Notes will mature on December 1, 2015. We may redeem some or all of the Notes at any time on or after December 1, 2010 at a predetermined redemption price plus accrued and unpaid interest and additional interest, if any, to the applicable redemption date. In addition, on or prior to December 1, 2008, we may redeem up to 35% of the aggregate principal amount of the Notes with the net proceeds of certain equity offerings. If we experience a change of control and we do not redeem the Notes, we will be required to make an offer to repurchase the Notes at a price equal to 101% of the principal amount, plus accrued and unpaid interest and additional interest, if any, to the date of repurchase.

      As a result of the Merger described in Note 2, Metals USA, Inc. assumed the obligations of Flag Acquisition including the Notes. All operating subsidiaries of Metals USA, Inc, have agreed, jointly and severally with Flag Intermediate (“Guarantors”), to unconditionally and irrevocably guarantee Metals USA, Inc.’s obligations under the Notes and Indenture Agreement dated as of November 30, 2005. Additionally, Flag Intermediate has unconditionally guaranteed to be a primary obligor of the due and punctual payment and performance of the obligations under the Indenture.

      The indebtedness evidenced by the Notes and the guarantees will rank: equally with all of our and the Guarantors existing and future senior indebtedness; junior in priority as to collateral that secures the ABL facility on a first-priority lien basis with respect to our and the Guarantors’ obligations under the ABL facility, any other debt incurred after December 1, 2005 that has a priority security interest relative to the Notes in the collateral that secures the ABL facility, any hedging obligations related to the foregoing debt and all cash management obligations incurred with any lender under the ABL facility; equal in priority as to collateral that secures the Notes and the guarantees on a first-priority lien basis with respect to our and the Guarantors’ obligations under any other equivalent priority lien obligations incurred after December 1, 2005; and senior to all of our and the Guarantors’ existing and future subordinated indebtedness. The Notes will also be effectively junior to the liabilities of the non-guarantor subsidiaries.

      The Notes contain customary representations, warranties and covenants for the type and nature of an asset-based senior secured revolving credit facility, including limitations on our, the other borrowers’, or the guarantors’ ability to incur or guarantee additional debt, subject to certain exceptions, pay dividends, or make redemptions and repurchases, with respect to capital stock, create or incur certain liens, make certain loans or investments, make acquisitions or investments, engage in mergers, acquisitions, asset sales and sale lease-back transactions, and engage in certain transactions with affiliates.

      The Notes contain events of default with respect to: default in payment of principal when due, default in the payment of interest, fees or other amounts after a specified grace period, material breach of the representations or warranties, default in the performance of specified covenants, failure to make any payment when due under any indebtedness with a principal amount in excess of a specified amount, certain bankruptcy events, certain ERISA violations, invalidity of certain security agreements or guarantees, material judgments, or a change of control. We are in compliance with all covenants as of December 31, 2005.

F-17

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

      Costs related to the establishment of the Notes were capitalized and are being charged to interest expense over the life of the Notes. Unamortized issuance costs of $7.0 as of December 31, 2005, are included in other long-term assets.

      Revolving Credit Facility — On October 31, 2002, the Predecessor Company entered into our Revolving Credit Facility with a group of lenders (the “Revolving Credit Facility”). On March 24, 2004, the Predecessor Company executed the second amendment to its Revolving Credit Facility with Bank of America, as agent for the lenders, to expand the size of the facility from $200.0 to $250.0 and to extend the maturity date to October 31, 2006. On November 9, 2004, the Predecessor Company again amended its Revolving Credit Facility, to expand the size of the facility from $250.0 to $350.0. Further, this third amendment lowered the Predecessor Company’s borrowing costs, increased its borrowing availability and extended the maturity date to November 9, 2009. On November 30, 2005, the Revolving Credit Facility was terminated in accordance with its terms as a result of the Merger described in Note 2, and all amounts outstanding and amounts due were paid in full.

      The Revolving Credit Facility bore interest at the bank’s base rate or LIBOR, at the Predecessor Company’s option, plus an applicable margin based on a ratio of earnings before interest, taxes, depreciation and amortization (“EBITDA” as defined and adjusted) to cash interest expense (the “fixed charge coverage ratio”). The fixed charge coverage ratio was determined by dividing EBITDA by the sum of net capital expenditures, income taxes paid in cash, dividends, or other preference payments, interest expense paid in cash and scheduled principal reductions on debt. The applicable margin for base rate loans ranged from 0.00% to 0.50%. Prior to the third amendment the LIBOR margin loans ranged from 2.00% to 3.00%. The third amendment lowered the LIBOR margins to a range from 1.50% to 2.50%. These marginal rates varied with the Predecessor Company’s financial performance as measured by the fixed charge coverage ratio. Additionally, the third amendment provided for a further reduction in the marginal LIBOR rates of 0.25% if the Predecessor Company maintained a trailing twelve month EBITDA of $100.0 and maintained a fixed charge coverage ratio of 2.0 to 1. A commitment fee was payable on any unused portion of the Revolving Credit Facility. The commitment fee varied between 0.250% and 0.375% per annum, based on the fixed charge coverage ratio. The applicable base rate and the effective LIBOR rate were 7.00% and 4.41% as of November 30, 2005. The applicable base rate and the effective LIBOR rate were 5.25% and 3.81% as of December 31, 2004.

      Industrial Revenue Bond — The Industrial Revenue Bond (“IRB”) is payable on May 1, 2016 in one lump sum payment. The interest rate assessed on the IRB varies from month to month and was 3.68% at December 31, 2005 and 1.96% at December 31, 2004. The IRB is secured by real estate and equipment acquired with proceeds from the IRB. The IRB places various restrictions on certain of our subsidiaries, including but not limited to maintenance of required insurance coverage, maintenance of certain financial ratios, limits on capital expenditures and maintenance of tangible net worth and is supported by a letter of credit. We are in compliance with all covenants as of December 31, 2005.

      Mortgage Note — The mortgage note was retired on May 31, 2005. The mortgage note had a fixed interest note of 6.88% per annum.

F-18

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

8. INCOME TAXES

      The components of the provision (benefit) for income taxes are as follows:

		Successor Company			Predecessor Company
		Period From
		May 9, 2005			Period From
		(Date of Inception)			January 1, 2005 to		Year Ended		Year Ended
		to December 31,			November 30,		December 31,		December 31,
		2005			2005		2004		2003
Federal:
	Current	$	0.3		$	20.1	$	54.2	$	0.9
	Deferred		(1.4	)		3.0		1.3		4.1
			(1.1	)		23.1		55.5		5.0
State:
	Current		0.1			3.1		0.4		0.1
	Deferred		(0.2	)		0.5		7.4
			(0.1	)		3.6		7.8		0.1
Total provision (benefit)		$	(1.2	)	$	26.7	$	63.3	$	5.1

      The provision (benefit) differs from an amount computed at the statutory rates as follows:

		Successor Company			Predecessor Company
		Period From
		May 9, 2005			Period From
		(Date of Inception)			January 1, 2005 to			Year Ended			Year Ended
		to December 31,			November 30,			December 31,			December 31,
		2005			2005			2004			2003
Federal income taxes at statutory rates		$	(1.1	)	$	24.6		$	58.8		$	4.4
State taxes, net of federal income tax benefit			(0.1	)		2.4			5.1			0.4
Nondeductible expenses and other:
	Valuation allowance								(1.1	)
	Other					(0.3	)		0.5			0.3
Total provision (benefit)		$	(1.2	)	$	26.7		$	63.3		$	5.1

F-19

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

      The significant items giving rise to the deferred tax assets (liabilities) are as follows:

			Successor			Predecessor
			Company			Company
			December 31,			December 31,
			2005			2004
Deferred tax assets:
	Accounts receivable and inventories		$	2.7		$	3.7
	Accrued liabilities			6.7			5.8
	Tax attributes and carryforwards			18.3			18.0
	Property and equipment			12.1			26.5
	Other			2.0			2.1
Total deferred tax assets				41.8			56.1
Deferred tax liabilities:
	Foreign DISC			(1.2	)		(1.2	)
	Property and equipment			(53.8	)
	Intangible assets			(8.5	)
	Other			(1.0	)		(0.2	)
		Total deferred tax liabilities		(64.5	)		(1.4	)
Valuation allowance				(29.0	)		(42.2	)
Deferred tax assets (liabilities) — net			$	(51.7	)	$	12.5

      As of December 31, 2005 we have both federal and state current net deferred tax assets of $8.3 which are captioned “Deferred tax asset” on the December 31, 2005 Consolidated Balance Sheet, and we have both federal and state non-current deferred tax liabilities of $60.0 which are captioned “Deferred income tax liability” on the December 31, 2005 Consolidated Balance Sheet. As of December 31, 2004, we had both federal and state net deferred tax assets of which $11.3 are included as a current asset captioned “Deferred tax asset”, and $1.2 are included as a non-current asset within the amounts captioned “Other assets, net” on the December 31, 2004 Consolidated Balance Sheet.

      As of December 31, 2005, we have net operating loss (“NOL”) carryforwards for U.S. federal income taxes of approximately $32.0 which begin to expire in 2023. Such NOLs and other tax attributes are subject to limitations of Internal Revenue Code Section 382 related to changes in ownership from the bankruptcy reorganization and the Merger. The lowest applicable annual limitation is approximately $5.7. The carryovers are based on tax returns as currently filed. Our tax returns are subject to periodic audit by the various jurisdictions in which we operate. These audits, including those currently underway, can result in adjustments of taxes due or adjustments of the NOLs which are available to offset future taxable income.

      Effective December 1, 2005 in conjunction with the Merger, additional deferred tax liabilities of $61.2 were recorded as a result of purchase price adjustments to property and equipment, intangible assets and inventories, and additional deferred tax assets of $1.2 were recorded as a result of purchase price adjustments to accrued and other long-term liabilities. As of November 30, 2005, the Predecessor Company had tax assets related to pre-bankruptcy goodwill of $16.5. The tax benefits of goodwill amortization will be available to the Successor Company. Under purchase accounting, we have not recorded a deferred tax asset for the future benefit of tax amortization, but we will apply the tax benefit first as a reduction of goodwill related to the Merger (to zero), then as a reduction of non-current

F-20

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

intangible assets related to the Merger as the benefit is realized. In the period December 1, 2005 through December 31, 2005, goodwill was reduced by $0.3 to recognize the tax benefit related to pre-bankruptcy goodwill of the Predecessor Company.

      In conjunction with the Merger and corresponding adjustments to deferred taxes, a valuation allowance of $29.0 was recorded, related to uncertainties in realizing the benefit of certain deferred tax assets. In assessing the realizability of carryforwards and other deferred tax assets, we considered whether it was more likely than not that some portion or all of the deferred tax assets would be realized. The valuation allowance will be adjusted in periods that we determine it is more likely than not that deferred tax assets will be realized. As we recognize the benefit of those tax assets, the resulting credit will first reduce goodwill to zero, then reduce non-current intangible assets. During the period May 9, 2005 (date of inception) to December 31, 2005, the Successor Company did not adjust the valuation allowance.

      Valuation allowances of $67.5 were recorded as a part of the fresh-start adjustments of the Predecessor Company on October 31, 2002. Valuation allowances were established for uncertainties in realizing the benefit of certain tax loss carryforwards and other deferred tax assets. In assessing the realizability of carryforwards and other deferred tax assets, the Predecessor Company considered whether it was more likely than not that some portion or all of the deferred tax assets would be realized. The valuation allowance was adjusted in the periods that the Predecessor Company determined it was more likely than not that deferred tax assets would be realized. As the Predecessor Company recognized the benefit of those tax assets, the resulting credit was reflected as an increase in paid-in-capital. During the periods January 1, 2005 through November 30, 2005 and the year ended December 31, 2004, the Predecessor Company adjusted the valuation allowance by $2.4 and $22.3, respectively, which represented the recognition of tax benefits realized during those periods, along with Predecessor Company tax benefits expected to be realized in future periods.

9. STOCKHOLDERS’ EQUITY

      Common Stock — In accordance with its Certificate of Incorporation dated November 3, 2005, Flag Intermediate was authorized to issue 100 shares of capital stock, all of which was shares of common stock, $.01 par value. All such shares are issued and outstanding at December 31, 2005 and are owned by Flag Holdings.

      Immediately prior to the effective time of the Merger, all outstanding shares of common stock were cancelled in exchange for a cash payment of $22.00 per share of common stock. As a result of the Merger described in Note 2, all of issued and outstanding capital stock of Metals USA, Inc. is held indirectly by Flag Holdings through Flag Intermediate, its wholly-owned subsidiary. Investment funds associated with Apollo own approximately 97% of the capital stock of Flag Holdings (or approximately 92% on a fully-diluted basis). The remainder of the capital stock of Flag Holdings is held by Metals USA, Inc. management participants. See Note 14 for further information on Related Party transactions.

10. STOCK BASED COMPENSATION

      Predecessor Company — 2002 Incentive Plan — The Reorganization Plan of the Predecessor Company established the 2002 Long Term Stock Incentive Plan (the “2002 Incentive Plan”) for employees was administered by the Board of Directors of the Predecessor Company and up to 2,015,000 shares of Common Stock were reserved for issuance under the 2002 Incentive Plan. Options granted under the 2002 Incentive Plan were issued at exercise prices which were equal to or above the closing price on the date of the grant. One-third of the options granted under the 2002 Incentive Plan vested on each of the first three anniversary dates following the date granted, and had a term of five years. Under the provisions of the 2002 Incentive Plan, the Compensation Committee of the Board of Directors of the Predecessor Company

F-21

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

(the “Committee”) was authorized to award shares of common stock whereby physical delivery of such shares occurs upon vesting (“stock grants”). In 2004, there were 906,565 options outstanding, of which zero were anti-dilutive.

      The Predecessor Company recognized compensation expense for stock grants using the straight-line method. During 2004, 57,600 (having a weighted average fair value of $9.90) stock grants were awarded, of which 23,200 shares were issued during 2004, 17,200 were issued on February 1, 2005, and 17,200 shares were expected to be issued on February 1, 2006. Further, on January 28, 2005, the Committee awarded 28,237 (having a weighted average fair value of $17.22) shares of stock grants, which were to vest on January 28, 2008.

      In conjunction with the closing of the Merger, the Predecessor Company paid $14.6 to holders of 1,081,270 vested in-the-money options and holders of 45,437 restricted stock grant awards. These payments were recorded as compensation expense of the Predecessor Company.

      The following is a summary of stock option activity for the Predecessor Company:

		Weighted				Weighted
		Average		Exercise		Average
		Fair Value		Price		Price per		Number of
		per Share		per Share		Share		Shares
Balance — December 31, 2003									815,000
	Granted to directors	$	4.84		$10.71–17.36	$	14.03		170,000
	Granted to employees		3.78		10.71		10.71		24,000
	Exercised		1.28		4.75		4.80		(82,103	)
	Canceled or expired		1.83		4.75–10.71		5.63		(20,332	)
Balance — December 31, 2004									906,565
	Granted to directors Granted to employees		8.47		17.22		17.22		180,272
	Exercised		3.30		9.57		9.57		(5,567	)
	Canceled or expired Cash settled		2.74		3.08–17.36		9.42		(1,081,270	)
Balance — November 30, 2005									—
Exercisable as of:
	November 30, 2005					$	—		—
	December 31, 2004						6.02		306,239
	December 31, 2003						3.08		62,500

		Years
Weighted average remaining contractual life:
	November 30, 2005		—
	December 31, 2004		3.4
	December 31, 2003		4.2

F-22

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

      The fair value of these option grants, in 2005, were estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Expected dividend yield	0.0	%
Expected stock price volatility	60.0
Risk free interest rate	3.7
Expected life of options	4.0

11. SEGMENT AND RELATED INFORMATION

      We are organized into three product group segments. Each segment is described as follows:

      Plates and Shapes consists of 21 facilities that maintain an inventory focusing on carbon products such as structural plate, beams, bars and tubing. This segment provides processing services such as cutting, cambering/leveling, punching, bending, shearing, cut-to-length, blast and paint, and tee-splitting.

      Flat Rolled consists of 12 facilities that maintain an inventory of cold rolled, coated, and hot rolled steel products and various nonferrous flat rolled products including aluminum, stainless steel, copper and brass. This segment provides processing services such as slitting, precision blanking, leveling, cut-to-length, punching, bending and shearing.

      Building Products consists of 17 operating locations and 25 sales and distribution centers that produce and distribute aluminum and steel building products consisting of covered canopies and walkways, awnings, sunrooms, solariums and other products primarily for the commercial and residential building products industries. We have one facility that is sublet, and at present we are trying to sublease 8 of our vacant facilities. Furthermore, we moved from one of our facilities in January of 2006.

      The following table summarizes financial information regarding these segments:

			Plates and		Flat		Building			Corp, Elims
			Shapes		Rolled		Products			and Other			Total
Successor Company:
	Period from May 9, 2005 (date of inception) to December 31, 2005:
		Net sales	$	54.5	$	51.0	$	13.2		$	(1.8	)	$	116.9
		Operating income (loss)		4.0		0.6		(0.7	)		(3.0	)		0.9
		Total assets		292.9		191.1		103.0			208.3			795.3
		Capital expenditures		4.1		0.2		0.1						4.4
		Depreciation and amortization(1)		0.4		0.3		0.1			0.7			1.5
Predecessor Company:
	Period from January 1, 2005 to November 30, 2005:
		Net sales		640.2		719.9		181.9			(19.9	)		1,522.1
		Operating income (loss)		64.4		34.9		17.5			(34.7	)		82.1
		Total assets		235.0		115.5		92.5			189.9			632.9
		Capital expenditures		9.6		2.3		3.1			0.9			15.9
		Depreciation and amortization(1)		1.5		0.4		0.5			1.1			3.5

F-23

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

		Plates and		Flat		Building		Corp, Elims
		Shapes		Rolled		Products		and Other			Total
Year ended December 31, 2004:
	Net sales		621.0		723.2		183.0		(17.4	)		1,509.8
	Operating income (loss)		103.2		81.8		7.9		(19.2	)		173.7
	Total assets		274.4		211.3		79.2		145.1			710.0
	Capital expenditures		10.3		2.3		2.2		2.6			17.4
	Depreciation and amortization		0.9		0.3		0.4		0.4			2.0
Year ended December 31, 2003:
	Net sales		354.1		463.6		165.2		(19.7	)		963.2
	Operating income (loss)		11.6		7.7		12.4		(15.3	)		16.4
	Total assets		143.6		107.7		62.1		93.8			407.2
	Capital expenditures		11.0		3.1		2.4		1.0			17.5
	Depreciation and amortization		0.2		0.1		0.2					0.5

(1)  Includes depreciation expense reflected in cost of goods sold for the Building Products Group.

      We evaluate segment performance on the basis of operating income. The amounts shown as an operating loss under the column heading “Corp, Elims and Other” consist primarily of general and administrative costs that are not allocated to the segments.

      The reconciliation of operating income (loss) to income (loss) before taxes and discontinued operations is shown within the Consolidated Statements of Operations and therefore is not separately presented.

      Our areas of operations are solely in the U.S. No geographic area is significant to the consolidated operations. We have a broad customer base within the U.S. with no single customer being significant to consolidated operations.

12. EMPLOYEE BENEFIT PLANS

      The Metals USA, Inc. 401(k) Plan (the “Plan”) was established on June 1, 1998. Effective January 1, 2004, participants are eligible to join the Plan on hire date. Employee contributions are limited to the Internal Revenue Service established annual dollar limits. Prior to January 1, 2004, participants were eligible to join the Plan after completing six full calendar months of service and contributions were limited to 15% of eligible compensation.

      Effective December 31, 2003, active employees are 100% vested in both prior and future Company matching contributions and earnings. Employees hired after December 31, 2003 become 50% vested in Company matching contributions and earnings after completing one year of service and fully vested after completing two years of service. On January 1, 2004, the Predecessor Company match was reinstated after being suspended on October 1, 2001. We match 100% of the first 2% of each employee’s contributions.

      The Metals USA, Inc. Union 401(k) Plan was established on October 1, 1998 to provide a standard defined contribution savings plan for all employees covered under the terms of a collective bargaining agreement (the “Union Plan”). Metals USA, Inc. is not obligated by the Union Plan to make contributions, unless required by the operative collective bargaining agreement. The Union Plan allows the employee to contribute up to 25% of their eligible compensation. The Metals USA, Inc. match for the Union Plan is 1/2% up to the first 6% of an employee’s contribution. Matching contributions by the Successor Company for both plans for the period from May 9, 2005 (date of inception) to December 31,

F-24

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

2005 were $0.8. Matching contributions by the Predecessor Company for the period from January 1, 2005 to November 30, 2005 were $2.4 for both plans. In 2004 and 2003, the Predecessor Company’s matching contributions were $1.7 and $0.0, for both plans.

13. COMMITMENTS AND CONTINGENCIES

      Operating Lease Agreements — Our minimum lease obligations for continuing operations under certain long-term non-cancelable operating lease agreements for office space, warehouse space and equipment are as follows: 2006 — $15.9; 2007 — $14.7; 2008 — $12.9; 2009 — $10.0; 2010 — $9.4 thereafter — $25.2. Rent expense for the Successor Company for the period from May 9, 2005 (date of inception) to December 31, 2005 and for the Predecessor Company for the period January 1, 2005 to November 30, 2005 and the years ended December 31, 2004 and 2003, was $1.2, $13.2, $17.0 and $10.9, respectively. Certain of these leases are with individuals and companies previously affiliated with the Predecessor Company.

      Letters of Credit — We have entered into a letter of credit in the amount of $5.7 in conjunction with the IRB (see Note 7) and other letters of credit aggregating $12.8 as of December 31, 2005. Other letters of credit consist primarily of collateral support for our property and casualty insurance program. All letters of credit reduce the amount available to borrow under the ABL Facility. The Predecessor Company entered into a letter of credit in the amount of $5.7 in conjunction with the IRB (see Note 7) and other letters of credit aggregating $18.5 as of December 31, 2004.

      Contingencies — We are involved in a variety of claims, lawsuits and other disputes arising in the ordinary course of business. We believe the resolution of these matters and the incurrence of their related costs and expenses should not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

14. RELATED PARTY TRANSACTIONS

      Upon completion of the Merger, we and Flag Holdings entered into a management agreement with Apollo pursuant to which Apollo or its affiliates will provide us with management services. Pursuant to such agreement, Apollo will receive an annual management fee equal to $2.0, payable on March 15 of every year, starting on March 15, 2006. Apollo elected to waive $0.5 of the annual management fee indefinitely, and reserved the right to revoke this waiver. The management agreement will terminate on December 31, 2012, unless earlier terminated by Apollo. The payment obligation has been recorded as a current liability (see Note 6), at the present value of minimum future annual payments of $1.5. A discount rate of 6.1% was used in the determination of present value, which approximated our incremental borrowing rate at the inception of the agreement. Deferred management fees of $8.6 million were recorded as a current asset, and are being amortized using the straight-line method over the term of the management agreement. In the period May 9, 2005 (date of inception) to December 31, 2005, amortization of deferred management fees were $0.1, and were recorded as an administrative expense.

      The management agreement also provides that affiliates of Apollo will be entitled to receive a fee in connection with certain subsequent financing, acquisition, disposition and change of control transactions with a value of $20.0 or more, such fee to be equal to 1% of the gross transaction value of any such transaction.

      Upon a termination of the management agreement prior to December 31, 2012, Apollo will be entitled to receive the present value of (a) $14.0, less (b) the aggregate amount of management fees that were paid to it under the agreement prior to such termination, and less (c) management fees waived. Both the management agreement and transaction fee agreement contain customary indemnification provisions in

F-25

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

favor of Apollo and its affiliates, as well as expense reimbursement provisions with respect to expenses incurred by Apollo and its affiliates in connection with its performance of services thereunder.

      The Successor Company has no stock-based compensation arrangements of its own, but its indirect parent, Flag Holdings, has adopted a stock-based 2005 Stock Incentive Plan which permits the issuance of options and restricted stock awards on Flag Holdings stock to employees or directors of, or consultants to, the Company, except that consultants may only receive awards with the consent of the president of the Metals USA, Inc., and directors may only receive awards if they are not employees of Apollo or any of its affiliates. The 2005 Stock Incentive Plan has a term of ten years. The date of grant, vesting and pricing of options granted under the option plan are subject to the discretion of the compensation committee of Flag Holdings.

      As of December 31, 2005, 779,261 options and 57,600 restricted stock awards had been granted by Flag Holdings under the 2005 Stock Incentive Plan. Since the employees to whom the options and restricted stock awards were issued are employed by the Successor Company, the Successor Company is required to reflect the stock-based compensation expense related to these options and restricted stock awards within its consolidated statement of operations. A total of $0.4 was recorded as stock-based employee compensation related to the restricted stock awards granted in December 2005. No stock-based employee compensation for stock options was recorded to compensation expense for December 2005, as all stock options granted under the 2005 Stock Incentive Plan had an exercise price equal to the fair market value of the underlying common stock on the date of grant.

      Related party transactions with the Predecessor Company’s directors, executive officers, principal shareholders or affiliates were at terms that were no less favorable to the Predecessor Company than those available from third parties and were approved in advance by a majority of disinterested members of the Board of Directors. During the period from January 1, through November 30, 2005 and for the years ended December 31, 2004 and 2003, the Predecessor Company’s Board of Directors received fees of $5.6, $0.6, and $0.7, respectively. A subsidiary of the Predecessor Company sells scrap to Metal Management, Inc., a company where the Predecessor Company shared three common directors until November 30, 2005. One of these directors, Mr. Daniel Dienst, served as the Chairman of the Board of Directors of the Predecessor Company, and serves as Chairman of the Board of Directors and Chief Executive Officer of Metal Management Inc. Sales of scrap to Metal Management Inc. for the period from January 1, 2005 through November 30, 2005, and for the years ended December 31, 2004 and 2003, the periods from November 1, 2002 through December 31, 2002 and from January 1, 2002 through October 31, 2002 were $1.6, $2.0, and $0.9, respectively, and were transacted at prevailing market rates.

F-26

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

15. OPERATIONS HELD FOR SALE

      On April 5, 2002, the Predecessor Company announced planned divestitures of 11 business units that resulted in a significant downsizing. These divestitures were a part of the Bankruptcy Reorganization Plan. The accounting for disposal of these operations was governed by the provisions of Statement of Financial Accounting Standards No. 144 (“SFAS 144”), Accounting for the Impairment or Disposal of Long-Lived Assets. This pronouncement requires that the operational results of the operations held for sale be recorded as discontinued operations on the statement of operations. Operational information included in the consolidated statements of operations with respect to the businesses classified as discontinued operations under SFAS 144 are as follows:

		Predecessor
		Company
		Year Ended
		December 31,
		2003
Statement of operations data:
	Net sales	$	3.4
	Cost of sales (exclusive of operating and delivery, and depreciation and amortization shown below in operating expenses)		2.8
	Operating expenses		0.7
	Operating income (loss)		(0.1	)
	Provision for taxes
Net loss		$	(0.1	)

      Total proceeds received from the sale of assets held for sale under SFAS 144 during the year ended December 31, 2003 were $5.4.

      During the first quarter of 2003, the remaining unsold operating unit, which had been included in assets held for sale since April 2002 and for which the Predecessor Company had no interested purchasers, was returned to hold for use status and the results of operations were reclassified and included in results of continuing operations for all periods presented.

F-27

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

16. GUARANTOR/ NON-GUARANTOR SUBSIDIARY FINANCIAL INFORMATION

      The following condensed consolidating financial information is for the parent company, Flag Intermediate, a holding company with no assets or operations and Metals USA, Inc., a management holding company which owns 100% of the guarantor and non-guarantor subsidiaries.

				Flag										Adjustments
				Intermediate			Metals			Guarantor		Non-guarantor		and
As of December 31, 2005				Holdings, Inc			USA, Inc.			Subsidiaries		Subsidiaries		Eliminations			Consolidated
				ASSETS
CURRENT ASSETS:
	Cash			$	—		$	5.7		$	5.6	$	—	$	—		$	11.3
	Accounts receivable										172.9							172.9
	Inventories										350.7							350.7
	Deferred tax asset							8.3										8.3
	Prepaid expenses and other							19.1			6.1							25.2
			Total current assets		—			33.1			535.3		—		—			568.4
	Property and equipment — net										171.6							171.6
	Goodwill — net							15.8										15.8
	Investment in subsidiaries — net				132.0			201.3							(333.3	)
	Other assets — net							38.2			1.3							39.5
Total assets				$	132.0		$	288.4		$	708.2	$	—	$	(333.3	)	$	795.3
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable				$	—		$	—			68.2	$	—	$	—		$	68.2
Accrued liabilities					0.4			15.7			30.2							46.3
Current portion of long-term debt								0.6										0.6
		Total current liabilities			0.4			16.3			98.4		—		—			115.1
Long-term debt — less current portion								466.8			6.1							472.9
Deferred income tax liability								60.0										60.0
Intercompany payable (receivable)					(0.4	)		(392.2	)		355.3		37.3
Other long-term liabilities								5.5			9.8							15.3
Total liabilities					—			156.4			469.6		37.3		—			663.3

F-28

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

			Flag											Adjustments
			Intermediate			Metals			Guarantor		Non-guarantor			and
As of December 31, 2005			Holdings, Inc			USA, Inc.			Subsidiaries		Subsidiaries			Eliminations			Consolidated
COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY:
	Common stock, $.01 par value, 100 shares authorized, issued and outstanding at December 31, 2005
	Additional paid-in capital			134.0			134.0			149.8		20.1			(303.9	)		134.0
	Deferred compensation
	Retained earnings			(2.0	)		(2.0	)		88.8		(57.4	)		(29.4	)		(2.0	)
		Total stockholders’ equity		132.0			132.0			238.6		(37.3	)		(333.3	)		132.0
Total liabilities and stockholders’ equity			$	132.0		$	288.4		$	708.2	$	—		$	(333.3	)	$	795.3

		Flag											Adjustments
For the Period From May 9, 2005 (Date of		Intermediate			Metals			Guarantor			Non-guarantor		and
Inception) to December 31, 2005		Holdings, Inc			USA, Inc.			Subsidiaries			Subsidiaries		Eliminations			Consolidated
NET SALES		$	—		$	—		$	116.9		$	—	$	—		$	116.9
OPERATING COSTS AND EXPENSES:
	Cost of sales (exclusive of operating and delivery, and depreciation and amortization shown below)								92.5								92.5
	Operating and delivery								12.8								12.8
	Selling, general, and administrative					0.2			9.1								9.3
	Depreciation and amortization					0.7			0.7								1.4
OPERATING INCOME (LOSS)			—			(0.9	)		1.8			—		—			0.9
OTHER (INCOME) EXPENSE:
	Interest expense					4.1											4.1
	Intercompany charges					(4.1	)		4.1
	Loss (gain) on securitized receivables Equity in earnings of subsidiaries		2.0			2.3								(4.3	)
	Other (income) expense — net
Income (loss) before income taxes			(2.0	)		(3.2	)		(2.3	)		—		4.3			(3.2	)
Provision (benefit) for income taxes						(1.2	)										(1.2	)
NET INCOME (LOSS)		$	(2.0	)	$	(2.0	)	$	(2.3	)	$	—	$	4.3		$	(2.0	)

F-29

FLAG INTERMEDIATE HOLDINGS CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(In millions, except share amounts)

			Flag											Adjustments
For the Period From May 9, 2005 (Date of Inception) to			Intermediate			Metals			Guarantor			Non-guarantor		and
December 31, 2005			Holdings, Inc			USA, Inc.			Subsidiaries			Subsidiaries		Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income (loss)		$	(2.0	)	$	(2.0	)	$	(2.3	)	$	—	$	4.3		$	(2.0	)
Adjustments for non-cash and non-operating items:
	(Gain) loss on sale of property and equipment
	Equity in earnings of subsidiaries			2.0			2.3								(4.3	)
	Provision for bad debts — net of recoveries									0.2								0.2
	Depreciation and amortization						0.7			0.8								1.5
	Deferred income taxes						(1.6	)										(1.6	)
Changes in operating assets and liabilities — net of effects of Merger:
	Accounts receivable									16.4								16.4
	Inventories									(13.4	)							(13.4	)
	Prepaid expenses and other						(6.9	)		0.3								(6.6	)
	Accounts payable and accrued liabilities			0.4			6.1			5.7								12.2
	Other operating — net						0.6											0.6
		Net cash provided by (used in) operating activities		0.4			(0.8	)		7.7			—		—			7.3
CASH FLOWS FROM INVESTING ACTIVITIES:
	Sale of assets Purchase of assets									(4.4	)							(4.4	)
	Investment in subsidiary			(134.0	)										134.0
	Acquisition of Metals USA, Inc. — net of cash			—			(430.1	)		—								(430.1	)
		Net cash provided by (used in) investing activities		(134.0	)		(430.1	)		(4.4	)		—		134.0			(434.5	)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Net borrowings (repayments) on revolving credit facilities						(145.3	)										(145.3	)
	Net borrowings (repayments) on the ABL						191.4											191.4
	Proceeds from issuance of Senior Secured Notes						275.0											275.0
	(Repayments) on long-term debt Capital contribution			134.0			134.0								(134.0	)		134.0
	Issuance of common stock Deferred financing costs and other						(16.6	)										(16.6	)
	Net change in intercompany balances			(0.4	)		(1.9	)		2.3								—
		Net cash provided by (used) in financing activities		133.6			436.6			2.3			—		(134.0	)		438.5
NET INCREASE (DECREASE) IN CASH							5.7			5.6								11.3
CASH:
	Beginning of period End of period		$	—		$	5.7		$	5.6		$	—	$	—		$	11.3

F-30

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers.

      Section 145(a) of the General Corporation Law of the State of Delaware (the “DGCL”) provides that a Delaware corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no cause to believe his conduct was unlawful.

      Section 145(b) of the DGCL provides that a Delaware corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted under similar standards, except that no indemnification may be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine that despite the adjudication of liability, such person is fairly and reasonably entitled to be indemnified for such expenses which the court shall deem proper.

      Section 145 of the DGCL further provides that to the extent a director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to in subsections (a) and (b) or in the defense of any claim, issue, or matter therein, he shall be indemnified against any expenses actually and reasonably incurred by him in connection therewith; that indemnification provided for by Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and that the corporation may purchase and maintain insurance on behalf of a director, officer, employee or agent of the corporation against any liability asserted against him or incurred by him in any such capacity or arising out of his status as such whether or not the corporation would have the power to indemnify him against such liabilities under Section 145.

      Section 102(b)(7) of the DGCL provides that a corporation in its original certificate of incorporation or an amendment thereto validly approved by stockholders may eliminate or limit personal liability of members of its board of directors or governing body for breach of a director’s fiduciary duty. However, no such provision may eliminate or limit the liability of a director for breaching his duty of loyalty, failing to act on good faith, engaging in intentional misconduct or knowingly violating a law, paying a dividend or approving a stock repurchase which was illegal or obtaining an improper personal benefit. A provision of this type has no effect on the availability of equitable remedies, such as injunction or rescission, for breach of fiduciary duty.

      Our Amended and Restated Certificate of Incorporation (as amended and restated, the “Certificate of Incorporation”) contains a provision which limits the liability of our directors to us or our stockholders for monetary damages for breach of fiduciary duty as a director to the fullest extent permitted by the DGCL. In addition, our Certificate of Incorporation and our Amended and Restated Bylaws (as amended and restated, the “Bylaws”), subject to certain exemptions and conditions, require us to indemnify to the full extent permitted by the laws of the State of Delaware in the event each person who is involved in legal proceedings by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving at our request as a director, officer, employee or agent of another corporation,

II-1

partnership or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to our best interests and except that no indemnification shall be made in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable to us unless and only to the extent that the Delaware Court of Chancery or the court in which such action or suit was brought shall determine that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper. We are also required to advance to such persons expenses incurred in defending a proceeding to which indemnification might apply, provided the recipient provides an undertaking agreeing to repay all such advanced amounts if it is ultimately determined that he is not entitled to be indemnified. In addition, the Bylaws specifically provide that the indemnification rights granted thereunder are non-exclusive.

      We currently have an insurance policy covering our directors and officers to insure against certain losses incurred by them.

Item 21. Exhibits and Financial Statement Schedules.

      (a) Exhibits

Exhibit Number			Description
	2	.1*	Agreement and Plan of Merger dated May 18, 2005 between Metals USA, Inc., Flag Acquisition Corporation and Flag Intermediate Corporation
	3	.1*	Amended and Restated Certificate of Incorporation of Metals USA, Inc. dated November 30, 2005
	3	.2*	Amended and Restated Bylaws of Metals USA, Inc. as amended by Amendment No. 1 effective as of May 17, 2004
	3	.4*	Certificate of Incorporation of Flag Intermediate Holdings Corporation
	3	.5*	Bylaws of Flag Intermediate Holdings Corporation
	4	.1*	Form of Common Stock Certificate of Flag Intermediate Holdings Corporation.
	4	.5*	Loan and Security Agreement, dated as of November 30, 2005, among Credit Suisse, as the Administrative Agent, Bank of America, N.A., as the Collateral Agent, Flag Intermediate Holdings Corporation, Metals USA, Inc. (formerly Flag Acquisition Corporation) and certain Subsidiaries of Metals USA, Inc. party thereto
	4	.6*	Indenture, dated November 30, 2005, by and among Metals USA, Inc. (formerly Flag Acquisition Corporation), Flag Intermediate Holdings Corporation, the Subsidiary Guarantors and Wells Fargo Bank, N.A., as trustee, and the Notes Collateral Agent
	4	.7	Form of 111/8 % Senior Secured Note due 2015 (included in Exhibit 4.6)
	4	.8*	Registration Rights Agreement, dated as of November 30, 2005, by and among Metals USA, Inc. (formerly Flag Acquisition Corporation), Flag Intermediate Holdings Corporation and Credit Suisse First Boston, L.L.C., as representative of the Initial Purchasers
	4	.9*	Supplemental Indenture dated as of November 30, 2005, among Metals USA, Inc., Flag Intermediate Holdings Corporation, the Subsidiary Guarantors and Wells Fargo Bank, N.A., as Trustee and Notes Collateral Agent
	4	.10*	Second Supplemental Indenture, dated as of March 31, 2005, among MUSA Newark, LLC, Metals USA, Inc., Flag Intermediate Holdings Corporation, and Wells Fargo Bank, N.A.
	5	.1*	Opinion of Akin Gump Strauss Hauer & Feld LLP as to the legality and binding effect of the notes
	10	.1*	Employment Agreement, dated September 29, 2005, between Metals USA, Inc. and C. Lourenco Goncalves
	10	.2*	Employment Agreement, dated September 29, 2005, between Metals USA, Inc. and John A. Hageman
	10	.3*	Employment Agreement, dated September 29, 2005, between Metals USA, Inc. and Robert C. McPherson, III
	10	.4*	Severance Agreement, dated September 29, 2005, between Metals USA, Inc. and Roger Krohn
	10	.5*	Severance Agreement, dated September 29, 2005, between Metals USA, Inc. and David Martens

II-2

Exhibit Number			Description
	10	.6*	Severance Agreement, dated September 29, 2005, between Metals USA, Inc. and Joe Longo
	10	.7*	2005 Stock Incentive Plan of Flag Holdings Corporation
	10	.8*	Management Agreement, dated as of November 30, 2005, between Metals USA, Inc., Flag Holdings Corporation and Apollo Management V, L.P.
	10	.9*	Director Compensation Plan
	12	.1*	Statement re Computation of Ratios
	21	.1*	List of Subsidiaries of Flag Intermediate Holdings Corporation
	23	.1	Consent of Akin Gump Strauss Hauer & Feld LLP (included in Exhibit 5.1)
	23	.2*	Consent of Deloitte & Touche LLP
	24	.1	Power of Attorney (included in signature pages)
	25	.1*	Statement of Eligibility on Form T-1 of Wells Fargo Bank, N.A.
	99	.1*	Letter of Transmittal
	99	.2*	Notice of Guaranteed Delivery

      * filed herewith

      (b) Financial Statement Schedules

No financial statement schedules are included herein. All other schedules for which provision is made in the applicable accounting regulation of the SEC are not required under the related instructions, are inapplicable, or the information is included in the consolidated financial statements, and have therefore been omitted.

      (c) Reports, Opinions and Appraisals

      None.

Item 22. Undertakings.

      The undersigned registrants hereby undertake:

      (a)(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

      (i) to include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

      (ii) to reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of the prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

      (iii) to include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement.

      (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

      (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

II-3

      (4) That, for purposes of determining any liability under the Securities Act of 1933 to any purchaser each prospectus filed pursuant to Rule 424(b) as part of the registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

      (5) That, for the purpose of determining liability of the registrants under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, in a primary offering of securities of the undersigned registrants pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrants will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

      (i) Any preliminary prospectus or prospectus of the undersigned registrants relating to the offering required to be filed pursuant to Rule 424;

      (ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrants or used or referred to by the undersigned registrants;

      (iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrants or their securities provided by or on behalf of the undersigned registrants; and

      (iv) Any other communication that is an offer in the offering made by the undersigned registrants to the purchaser.

      (6) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not subject of and included in the registration statement when it becomes effective.

      Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions pursuant to which the directors, officers or controlling persons may be indemnified by the registrant or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether the indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of the issue.]

II-4

SIGNATURES — FLAG INTERMEDIATE

      Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on the 31 day of March, 2006.

Flag Intermediate Holdings Corporation

By:  /s/ C. LOURENÇO GONÇALVES

C. Lourenço Gonçalves

Chief Executive Officer

POWER OF ATTORNEY

      Each of the undersigned directors and officers of Flag Intermediate Holdings Corporation hereby constitutes and appoints C. Lourenço Gonçalves, Robert C. McPherson, III and John A. Hageman, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and his name place and stead, in any and all capacities, to execute any and all amendments (including post-effective amendments) to this registration statement, to sign any registration statement filed pursuant to Rule 424(b) of the Securities Act of 1933, and to cause the same to be filed with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and desirable to be done in and about the premises as fully and to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all acts and things that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated below.

Signature	Title	Date
/s/ C. Lourenço Gonçalves C. Lourenço Gonçalves	Chief Executive Officer, President and Director	March 31, 2006
/s/ Robert C. McPherson, III Robert C. McPherson, III	Senior Vice President and Chief Financial Officer	March 31, 2006
/s/ Dan Henneke Dan Henneke	Vice President, Corporate Controller	March 31, 2006
/s/ Joshua J. Harris Joshua J. Harris	Director	March 31, 2006
/s/ Mark E. Becker Mark E. Becker	Director	March 31, 2006
/s/ M. Ali Rashid M. Ali Rashid	Director	March 31, 2006

II-5

Signature	Title	Date
/s/ Eric L. Press Eric L. Press	Director	March 31, 2006
/s/ John T. Baldwin John T. Baldwin	Director	March 31, 2006

II-6

SIGNATURES — METALS USA

      Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on the 31 day of March, 2006.

Metals USA, Inc.

By:  /s/ C. LOURENÇO GONÇALVES

C. Lourenço Gonçalves

Chief Executive Officer

POWER OF ATTORNEY

      Each of the undersigned directors and officers of Metals USA, Inc. hereby constitutes and appoints C. Lourenço Gonçalves, Robert C. McPherson, III and John A. Hageman, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and his name place and stead, in any and all capacities, to execute any and all amendments (including post-effective amendments) to this registration statement, to sign any registration statement filed pursuant to Rule 424(b) of the Securities Act of 1933, and to cause the same to be filed with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and desirable to be done in and about the premises as fully and to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all acts and things that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated below.

Signature	Title	Date
/s/ C. Lourenço Gonçalves C. Lourenço Gonçalves	Chief Executive Officer, President and Director	March 31, 2006
/s/ Robert C. McPherson, III Robert C. McPherson, III	Senior Vice President and Chief Financial Officer	March 31, 2006
/s/ Dan Henneke Dan Henneke	Vice President, Corporate Controller	March 31, 2006
/s/ Joshua J. Harris Joshua J. Harris	Director	March 31, 2006
/s/ Mark E. Becker Mark E. Becker	Director	March 31, 2006
/s/ M. Ali Rashid M. Ali Rashid	Director	March 31, 2006

II-7

Signature	Title	Date
/s/ Eric L. Press Eric L. Press	Director	March 31, 2006
/s/ John T. Baldwin John T. Baldwin	Director	March 31, 2006

II-8

SIGNATURES — ADDITIONAL REGISTRANT GUARANTORS SIGNATURE

      Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on the 31 day of March, 2006.

Each Additional Registrant Guarantor

By:  /s/ C. LOURENÇO GONÇALVES

C. Lourenço Gonçalves(1)

POWER OF ATTORNEY

      Each of the undersigned directors and officers of each additional subsidiary registrant guarantor hereby constitutes and appoints C. Lourenço Gonçalves, Robert C. McPherson, III and John A. Hageman, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and his name place and stead, in any and all capacities, to execute any and all amendments (including post-effective amendments) to this registration statement, to sign any registration statement filed pursuant to Rule 424(b) of the Securities Act of 1933, and to cause the same to be filed with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and desirable to be done in and about the premises as fully and to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all acts and things that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated below.

Signature	Title	Date
/s/ C. Lourenço Gonçalves C. Lourenço Gonçalves	(1)	March 31, 2006
/s/ Robert C. McPherson, III Robert C. McPherson, III	(2)	March 31, 2006
/s/ John A. Hageman John A. Hageman	(3)	March 31, 2006
/s/ Dan Henneke Dan Henneke	(4)	March 31, 2006

II-9

(1)	C. Lourenco Gonçalves has signed this registration statement as Chief Executive Officer and Director of Allmet GP, Inc., for itself and as general partner of Metals USA Building Products, L.P., Allmet LP, Inc., for itself and as limited partner of Metals USA Building Products, L.P., Interstate Steel Supply Co. of Maryland, Inc., Intsel GP, Inc., for itself and as general partner of Metals USA Plates and Shapes Southwest Limited Partnership, Intsel LP, Inc., for itself and as limited partner Metals USA Plates and Shapes Southwest, Limited Partnership, I-Solutions Direct, Inc., Jeffreys Real Estate Corporation, Levinson Steel GP, Inc., for itself and as general partner of Metals USA Plates and Shapes Northeast, L.P., for itself and as sole member of MUSA Newark, L.L.C., Levinson Steel LP, Inc., for itself and as limited partner of Metals USA Plates and Shapes Northeast, L.P., Metals Receivables Corporation, Metals USA Carbon Flat Rolled Inc., Metals USA Finance Corp., Metals USA Flat Rolled Central Inc., Metals USA Plates and Shapes Southcentral, Inc., Metals USA Plates and Shapes Southeast, Inc., for itself and as sole member of Queensboro, L.L.C. and Jeffreys Steel Holdings, L.L.C., Metals USA Realty Company, Metals USA Specialty Metals Northcentral, Inc., MUSA GP, Inc., for itself and as general partner of Metals USA Management Co., L.P., and MUSA LP, Inc., for itself and limited partner of Metals USA Management Co., L.P.
(2)	Robert C. McPherson, III has signed this registration statement as President, Treasurer and Director of Allmet GP, Inc., for itself and as general partner Metals USA Building Products, L.P., Allmet LP, Inc., Interstate Steel Supply Company of Maryland, Inc., Intsel GP, Inc., for itself and as general partner of Metals USA Plates and Shapes Southwest, Limited Partnership, Intsel LP, Inc., Levinson Steel GP, Inc., for itself and as general partner of Metals USA Plates and Shapes Northeast, LP., for itself and as sole member of MUSA Newark, L.L.C., Levinson Steel LP, Inc., Metals Receivables Corporation, Metals USA Finance Corp., Metals USA Realty Company, MUSA GP, Inc, for itself and as general partner of Metals USA Management Co., L.P., and MUSA LP, Inc., and as Vice President, Treasurer and Director of I-Solutions Direct, Inc., Metals USA Carbon Flat Rolled Inc., Metals USA Flat Rolled Central Inc., Metals USA Plates and Shapes Southcentral, Inc., Metals USA Plates and Shapes Southeast, Inc., for itself and as sole member of Queensboro, L.L.C. and Jeffreys Steel Holdings, L.L.C., and Metals USA Specialty Metals Northcentral, Inc.
(3)	John A. Hageman has signed this registration statement as Director of Allmet GP, Inc., for itself and as general partner Metals USA Building Products, L.P., Allmet LP, Inc., Interstate Steel Supply Company of Maryland, Inc., Intsel GP, Inc., for itself and as general partner of Metals USA Plates and Shapes Southwest, Limited Partnership , Intsel LP, Inc., I-Solutions Direct, Inc., Jeffreys Real Estate Corporation, Levinson Steel GP, Inc., for itself and as general partner of Metals USA Plates and Shapes Northeast, LP., for itself and as sole member of MUSA Newark, L.L.C., Levinson Steel LP, Inc., Metals Receivables Corporation, Metals USA Carbon Flat Rolled Inc., Metals USA Finance Corp., Metals USA Flat Rolled Central Inc., Metals USA Plates and Shapes Southcentral, Inc., Metals USA Plates and Shapes Southeast, Inc., for itself and as sole member of Queensboro, L.L.C. and Jeffreys Steel Holdings, L.L.C., Metals USA Realty Company, Metals USA Specialty Metals Northcentral, Inc., MUSA GP, Inc., for itself and as general partner of Metals USA Management Co., L.P., and MUSA LP, Inc. and as manager of Jeffreys Steel Holdings, L.L.C.
(4)	Dan Henneke has signed this registration statement as Vice President, Assistant Treasurer and Assistant Secretary of Allmet GP, Inc., for itself and as general partner Metals USA Building Products, L.P., Allmet LP, Inc., Interstate Steel Supply Company of Maryland, Inc., Intsel GP, Inc., for itself and as general partner of Metals USA Plates and Shapes Southwest, Limited Partnership, Intsel LP, Inc., I-Solutions Direct, Inc., Jeffreys Real Estate Corporation, Levinson Steel GP, Inc., for itself and as general partner of Metals USA Plates and Shapes Northeast, L.P., for itself and as sole member of MUSA Newark, L.L.C., Levinson Steel LP, Inc., Metals Receivables Corporation, Metals USA Carbon Flat Rolled Inc., Metals USA Finance Corp., Metals USA Flat Rolled Central Inc., Metals USA Plates and Shapes Southcentral, Inc., Metals USA Plates and Shapes Southeast, Inc., for itself and as sole member of Queensboro, L.L.C. and Jeffreys Steel Holdings, L.L.C. Metals USA Realty Company, Metals USA Specialty Metals Northcentral, Inc., MUSA GP, Inc., for itself and as general partner of Metals Management Co., L.P., and MUSA LP, Inc.

II-10

EXHIBITS

Exhibit Number			Description
	2	.1*	Agreement and Plan of Merger dated May 18, 2005 between Metals USA, Inc., Flag Acquisition Corporation and Flag Intermediate Corporation
	3	.1*	Amended and Restated Certificate of Incorporation of Metals USA, Inc. dated November 30, 2005
	3	.2*	Amended and Restated Bylaws of Metals USA, Inc. as amended by Amendment No. 1 effective as of May 17, 2004
	3	.4*	Certificate of Incorporation of Flag Intermediate Holdings Corporation
	3	.5*	Bylaws of Flag Intermediate Holdings Corporation
	4	.1*	Form of Common Stock Certificate of Flag Intermediate Holdings Corporation.
	4	.5*	Loan and Security Agreement, dated as of November 30, 2005, among Credit Suisse, as the Administrative Agent, Bank of America, N.A., as the Collateral Agent, Flag Intermediate Holdings Corporation, Metals USA, Inc. (formerly Flag Acquisition Corporation) and certain Subsidiaries of Metals USA, Inc. party thereto
	4	.6*	Indenture, dated November 30, 2005, by and among Metals USA, Inc. (formerly Flag Acquisition Corporation), Flag Intermediate Holdings Corporation, the Subsidiary Guarantors and Wells Fargo Bank, N.A., as trustee, and the Notes Collateral Agent
	4	.7	Form of 111/8 % Senior Secured Note due 2015 (included in Exhibit 4.6)
	4	.8*	Registration Rights Agreement, dated as of November 30, 2005, by and among Metals USA, Inc. (formerly Flag Acquisition Corporation), Flag Intermediate Holdings Corporation and Credit Suisse First Boston, L.L.C., as representative of the Initial Purchasers
	4	.9*	Supplemental Indenture dated as of November 30, 2005, among Metals USA, Inc., Flag Intermediate Holdings Corporation, the Subsidiary Guarantors and Wells Fargo Bank, N.A., as Trustee and Notes Collateral Agent
	4	.10*	Second Supplemental Indenture, dated as of March 31, 2005, among MUSA Newark, LLC, Metals USA, Inc., Flag Intermediate Holdings Corporation, and Wells Fargo Bank, N.A.
	5	.1*	Opinion of Akin Gump Strauss Hauer & Feld LLP as to the legality and binding effect of the notes
	10	.1*	Employment Agreement, dated September 29, 2005, between Metals USA, Inc. and C. Lourenco Goncalves
	10	.2*	Employment Agreement, dated September 29, 2005, between Metals USA, Inc. and John A. Hageman
	10	.3*	Employment Agreement, dated September 29, 2005, between Metals USA, Inc. and Robert C. McPherson, III
	10	.4*	Severance Agreement, dated September 29, 2005, between Metals USA, Inc. and Roger Krohn
	10	.5*	Severance Agreement, dated September 29, 2005, between Metals USA, Inc. and David Martens
	10	.6*	Severance Agreement, dated September 29, 2005, between Metals USA, Inc. and Joe Longo
	10	.7*	2005 Stock Incentive Plan of Flag Holdings Corporation
	10	.8*	Management Agreement, dated as of November 30, 2005, between Metals USA, Inc., Flag Holdings Corporation and Apollo Management V, L.P.
	10	.9*	Director Compensation Plan
	12	.1*	Statement re Computation of Ratios
	21	.1*	List of Subsidiaries of Flag Intermediate Holdings Corporation
	23	.1	Consent of Akin Gump Strauss Hauer & Feld LLP (included in Exhibit 5.1)

II-11

Exhibit Number			Description
	23	.2*	Consent of Deloitte & Touche LLP
	24	.1	Power of Attorney (included in signature pages)
	25	.1*	Statement of Eligibility on Form T-1 of Wells Fargo Bank, N.A.
	99	.1*	Letter of Transmittal
	99	.2*	Notice of Guaranteed Delivery

* filed herewith

II-12 EX-2.1 2 h34178exv2w1.htm AGREEMENT AND PLAN OF MERGER

Exhibit 2.1
EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

FLAG HOLDINGS CORPORATION,

FLAG ACQUISITION CORPORATION,

a wholly owned subsidiary of Flag Holdings Corporation,

and

METALS USA, INC.

May 18, 2005

TABLE OF CONTENTS

			Page
ARTICLE I THE MERGER				2
	1.1	The Merger		2
	1.2	Closing; Effective Time		2
	1.3	Effects of the Merger		2
	1.4	Certificate of Incorporation and Bylaws		2
	1.5	Directors and Officers of the Surviving Corporation		2
	1.6	MUSA Stockholders Meeting		2
	1.7	Additional Actions		4
ARTICLE II CONVERSION OF SECURITIES				4
	2.1	Effect on Capital Stock		4
	2.2	Surrender and Payment		5
	2.3	Treatment of Stock Options; Deferred Stock; Warrants		7
	2.4	Adjustments to Prevent Dilution		9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB				9
	3.1	Organization and Standing		9
	3.2	Corporate Power and Authority		9
	3.3	Conflicts; Consents and Approvals		10
	3.4	Brokerage and Finders’ Fees		11
	3.5	Information Supplied		11
	3.6	Financing		11
	3.7	Capitalization of Merger Sub		12
	3.8	Section 203 of the DGCL		12
	3.9	Solvency		12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MUSA				12
	4.1	Organization and Standing		13
	4.2	Subsidiaries		13
	4.3	Corporate Power and Authority		13
	4.4	Capitalization of MUSA		14
	4.5	Conflicts; Consents and Approvals		15
	4.6	Brokerage and Finders’ Fees; Expenses		15
	4.7	MUSA SEC Documents		16
	4.8	Undisclosed Liabilities		17
	4.9	Disclosure Documents		17
	4.10	Compliance with Law		18
	4.11	Litigation		18
	4.12	Absence of Certain Changes or Events		18
	4.13	Taxes		19
	4.14	Intellectual Property		20
	4.15	Employee Benefit Plans		21

i

			Page
	4.16	Contracts; Indebtedness		24
	4.17	Labor Matters		26
	4.18	Customer/Supplier Relationships		26
	4.19	Environmental Matters		27
	4.20	Insurance		28
	4.21	Properties and Assets		28
	4.22	Real Property		29
	4.23	Inventory		29
	4.24	Accounts Receivable		30
	4.25	Books and Records		30
	4.26	Related Party Transactions		30
	4.27	Opinion of Jefferies & Co. Inc		30
	4.28	Board Recommendation; Required Vote		30
	4.29	Section 203 of the DGCL		31
ARTICLE V COVENANTS OF THE PARTIES				31
	5.1	Mutual Covenants		31
	5.2	Covenants of Parent		33
	5.3	Covenants of MUSA		36
ARTICLE VI CONDITIONS TO THE MERGER				45
	6.1	Conditions to the Obligations of Each Party		45
	6.2	Conditions to Obligations of Parent and Merger Sub		46
	6.3	Conditions to Obligation of MUSA		48
ARTICLE VII TERMINATION; FEES AND EXPENSES				48
	7.1	Termination by Mutual Consent		48
	7.2	Termination by Either Parent or MUSA		48
	7.3	Termination by MUSA		49
	7.4	Termination by Parent		49
	7.5	Effect of Termination and Abandonment		49
	7.6	Fees and Expenses		49
ARTICLE VIII MISCELLANEOUS				51
	8.1	Non-Survival of Representations and Warranties		51
	8.2	Notices		52
	8.3	Interpretation		53
	8.4	Counterparts		53
	8.5	Entire Agreement		53
	8.6	Third-Party Beneficiaries		53
	8.7	Governing Law		53
	8.8	Consent to Jurisdiction; Venue; Jury Trial		54
	8.9	Assignment		54
	8.10	Amendment		55
	8.11	Extension; Waiver		55
	8.12	No Presumption Against Drafter		55
	8.13	Severability		55

ii

INDEX OF DEFINED TERMS

Defined Term	Section
2002 Plan	2.3(a)
Acquisition Proposal	5.3(b)(ix)(A)
Action	4.11
Agreement	Preamble
Applicable Laws	1.6(a)
Appraisal Shares	2.1(d)
Board	Recitals
Certificate	2.1(b)
Certificate of Merger	1.2
Change in the MUSA Board Recommendation	5.3(b)(iv)
Closing	1.2
Closing Date	1.2
Code	2.2(g)
Commission	1.6(b)
Committee	2.3(a)
Confidentiality Agreement	5.3(b)(iii)
Controlled Group Liability	4.15(a)(i)
Costs	4.15(a)(i)
Covered Proposal	7.6(a)(i)
Debt Financing	3.6
Debt Financing Agreement	3.6
Delaware Secretary of State	1.2
DGCL	1.1
Effective Time	1.2
Employment Agreement	Recitals
Encumbrance	3.3(b)
Environmental Law	4.19
Environmental Permit	4.19
Equity Financing	3.6
Equity Financing Letter	3.6
ERISA	4.15(a)(ii)
ERISA Affiliate	4.15(a)(iii)
Exchange Act	1.6(b)
Exchange Fund	2.2(a)
Expenses	7.6(b)(iv)
Financing	3.6
Financing Agreements	3.6
Foreign Antitrust Laws	3.3(d)
Foreign Antitrust Laws	3.3(d)(i)
GAAP	4.7(a)
Governmental Authority	3.3(d)
Hazardous Material	4.19
HSR Act	3.3(d)(i)

iii

Defined Term	Section
Indemnified Directors and Officers	5.2(a)(i)
Insurance Amount	5.2(a)(ii)
Intellectual Property Right	4.14(a) (i)
Key MUSA Individuals	5.3(a)(viii)
Lease Agreement	4.22
Leased Real Property	4.22
Loan Agreement	5.1(f)(i)
Material Adverse Effect	8.3
Material Contracts	4.16(a)
Merger	Recitals
Merger Consideration	2.1(b)
Merger Sub	Preamble
Multiemployer Plan	4.15(f)
Multiple Employer Plan	4.15(f)
MUSA	Preamble
MUSA Board Recommendation	4.28
MUSA Bylaws	1.6(a)
MUSA Certificate	1.6(a)
MUSA Common Stock	Recitals
MUSA Deferred Stock Right	2.3(b)
MUSA Disclosure Documents	1.6(b)
MUSA Disclosure Schedule	4.2
MUSA Intellectual Property Right	4.14(a) (ii)
MUSA Option	2.3(a)
MUSA Permits	4.10
MUSA SEC Documents	4.7(a)
MUSA Stockholders	1.6(a)
MUSA Stockholders Meeting	1.6(a)
MUSA Warrants	2.3(d)
Note	5.1(f)(ii)
Owned Real Property	4.22
Parent	Preamble
Parent Disclosure Documents	5.2(c)
Paying Agent	2.2(a)
Paying Party	7.6(d)
Permitted Encumbrances	4.22
Person	5.3(b)(i)
Plans	4.15(a)(iv)
Proxy Statement	1.6(b)
Qualified Plan	4.15(c)
RCRA	4.19
Real Property	4.22
Required Amounts	3.6
Receiving Party	7.6(d)
Release	4.19
Representatives	5.3(b)(i)

iv

Defined Term	Section
Section 262	2.1(b)
Securities Act	4.4(c)
subsidiary	8.3
Superior Proposal	5.3(b)(ix)(B)
Superior Proposal Notice	5.3(b)(iii)
Support Agreement	Recitals
Surviving Corporation	1.1
Tax Returns	4.13(b)
Taxes	4.13(c)
Termination Date	7.2(a)
Termination Fee	7.6(a)
Transaction Fees	4.6
Transaction Statement	5.2(c)
Transfers	5.3(a)(ii)
Waiting Period	5.3(b)(iii)
Warrant Agreement	2.3(d)

v

AGREEMENT AND PLAN OF MERGER

     This Agreement and Plan of Merger (this “Agreement”) is made and entered into as of the 18th day of May, 2005, by and among Flag Holdings Corporation, a Delaware corporation (“Parent”), Flag Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and Metals USA, Inc., a Delaware corporation (“MUSA”).

RECITALS

     WHEREAS, Parent, Merger Sub and MUSA desire that Parent acquire all of the capital stock of MUSA through the merger of Merger Sub with and into MUSA, with MUSA as the surviving corporation (the “Merger”), pursuant to which each share of Common Stock of MUSA, par value $.01 per share (“MUSA Common Stock”), issued and outstanding at the Effective Time, excluding shares of MUSA Common Stock owned by Parent, Merger Sub or MUSA (or any of their respective direct or indirect wholly owned subsidiaries) and other than the Appraisal Shares, will be converted into the right to receive the Merger Consideration, all as more fully provided in this Agreement; and

     WHEREAS, concurrently with the execution of this Agreement, as a condition and inducement to Parent’s and Merger Sub’s willingness to enter into this Agreement, Parent and certain MUSA Stockholders are entering into a Support Agreement, of even date herewith, in respect of shares of MUSA Common Stock beneficially owned by such stockholders (the “Support Agreement”); and

     WHEREAS, concurrently with the execution of this Agreement, as a condition and inducement to Parent’s and Merger Sub’s willingness to enter into this Agreement, Merger Sub and Lourenco Goncalves are entering into an employment agreement, of even date herewith (the “Employment Agreement”); and

     WHEREAS, it is Parent’s current expectation that one or more members of the management of MUSA will have equity interests in Parent or the Surviving Corporation from and after the consummation of the Merger; and

     WHEREAS, the board of directors (the “Board”) of each of Merger Sub and MUSA has determined that the Merger, upon the terms and subject to the conditions set forth in this Agreement, is advisable, fair to and in the best interests of their respective stockholders; and

     WHEREAS, Parent, Merger Sub and MUSA desire to make those representations, warranties, covenants and agreements specified herein in connection with this Agreement.

     NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, Parent, Merger Sub and MUSA agree as follows:

1

ARTICLE I

THE MERGER

     1.1 The Merger. Upon the terms and subject to the conditions of this Agreement, and in accordance with the provisions of the Delaware General Corporation Law (the “DGCL”), Merger Sub shall be merged with and into MUSA at the Effective Time. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and MUSA shall continue its existence as a wholly owned subsidiary of Parent under the laws of the State of Delaware. MUSA, in its capacity as the corporation surviving the Merger, is hereinafter sometimes referred to as the “Surviving Corporation.”

     1.2 Closing; Effective Time. A closing (the “Closing”) shall be held at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, NY 10019, or such other place as the parties hereto may agree, as soon as practicable but no later than the second business day following the date upon which all conditions set forth in Article VI (other than those conditions that by their nature are to be satisfied or waived at the Closing, but subject to the satisfaction or waiver of those conditions) are satisfied or waived, or at such other date as Parent and MUSA may agree (such date, the “Closing Date”). As promptly as possible on the Closing Date, the parties hereto shall cause the filing with the Secretary of State of the State of Delaware (the “Delaware Secretary of State”) of a certificate of merger (the “Certificate of Merger”) in such form as is required by and executed in accordance with Section 251 of the DGCL. The Merger shall become effective when the Certificate of Merger has been filed with the Delaware Secretary of State or at such later time as shall be agreed upon by Parent and MUSA and specified in the Certificate of Merger (the “Effective Time”).

     1.3 Effects of the Merger. From and after the Effective Time, the Merger shall have the effects set forth in Section 259 of the DGCL.

     1.4 Certificate of Incorporation and Bylaws. The Certificate of Merger shall provide that, at the Effective Time, (a) the Surviving Corporation’s Certificate of Incorporation as in effect immediately prior to the Effective Time shall be amended as of the Effective Time so as to contain the provisions, and only the provisions, contained immediately prior thereto in Merger Sub’s Certificate of Incorporation, except that the Surviving Corporation’s Certificate of Incorporation also shall be amended to provide that the name of the Surviving Corporation shall be “Metals USA, Inc.” and (b) Merger Sub’s Bylaws in effect immediately prior to the Effective Time shall be the Surviving Corporation’s Bylaws; in each case, until amended in accordance with the DGCL and subject to the provisions of Section 5.2(a)(iii).

     1.5 Directors and Officers of the Surviving Corporation . From and after the Effective Time, the officers of MUSA shall be the officers of the Surviving Corporation and the directors of Merger Sub shall be the directors of the Surviving Corporation, in each case, until their respective successors are duly elected and qualified. On or prior to the Closing Date, MUSA shall deliver to Parent evidence satisfactory to Parent of the resignations of the directors of MUSA, such resignations to be effective as of the Effective Time.

     1.6 MUSA Stockholders Meeting.

2

     (a) As promptly as practicable following the date of this Agreement, MUSA shall, in accordance with all applicable laws, statutes, orders, rules or regulations promulgated, or judgments, decisions or orders entered by any Governmental Authority, in each case, to the extent applicable (collectively, “Applicable Laws”) and MUSA’s Amended and Restated Certificate of Incorporation as in effect on the date of this Agreement (the “MUSA Certificate”) and MUSA’s Amended and Restated Bylaws as in effect on the date of this Agreement (the “MUSA Bylaws”), duly call, give notice of, convene and hold a meeting of the holders of shares of MUSA Common Stock (the “MUSA Stockholders”) to consider and vote upon the adoption and approval of this Agreement and the Merger (the “MUSA Stockholders Meeting”). MUSA shall ensure that the MUSA Stockholders Meeting is called, noticed, convened, held and conducted, and that all proxies solicited in connection with the MUSA Stockholders Meeting are solicited in compliance with Applicable Laws.

     (b) As promptly as reasonably practicable following the date of this Agreement, MUSA shall prepare and file with the Securities and Exchange Commission (the “Commission”) a proxy statement (together with any amendments thereof or supplements thereto, the “Proxy Statement,” and together with each other document required to be filed by MUSA with the Commission relating to the transactions contemplated hereby, including the Merger, the “MUSA Disclosure Documents”) that meets the requirements of Applicable Laws to seek the approval of this Agreement and the Merger. MUSA shall respond promptly to any comments made by the Commission with respect to the Proxy Statement and any preliminary version thereof filed by it, and shall cause such Proxy Statement to be mailed to the MUSA Stockholders as promptly as reasonably practicable. MUSA shall promptly notify Parent of the receipt of any comments of the Commission with respect to the Proxy Statement and any other MUSA Disclosure Document, and shall provide to Parent copies of any comments received from the Commission in connection with the Proxy Statement and any other MUSA Disclosure Document. Parent will cooperate with MUSA at its reasonable request in the preparation of the Proxy Statement, including furnishing to MUSA the information relating to it and Merger Sub required by the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the “Exchange Act”) to be set forth in the Proxy Statement. Parent and its counsel shall be given a reasonable opportunity to review and comment on all MUSA Disclosure Documents, including the Proxy Statement and all mailings to the MUSA Stockholders in connection with the Merger prior to their being filed with the Commission or mailed, as applicable, and MUSA shall give reasonable consideration to all comments proposed by Parent or its counsel.

     (c) The MUSA Board shall make the MUSA Board Recommendation. The MUSA Board Recommendation shall be included in the Proxy Statement, and the MUSA Board shall use its reasonable best efforts to obtain the necessary approval and adoption of this Agreement and the Merger by the MUSA Stockholders. In the event that subsequent to the date of this Agreement, the MUSA Board determines, after consultation with outside counsel, that its fiduciary duties under Applicable Laws require it to withdraw, modify or qualify the MUSA Board Recommendation in a manner adverse to Parent, the MUSA Board may so withdraw, modify or qualify the MUSA Board Recommendation; provided, however, that the MUSA Board may not recommend

3

any Acquisition Proposal (other than this Agreement and the transactions contemplated hereby, including the Merger), except as specifically contemplated by, and in accordance with, Section 5.3(b)(iii); provided, further, however, that unless this Agreement is theretofore terminated, MUSA shall nevertheless submit this Agreement to the MUSA Stockholders for adoption at the MUSA Stockholders Meeting.

     1.7 Additional Actions. If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any further deeds, assignments or assurances in law or any other acts are necessary or desirable to (a) vest, perfect or confirm, of record or otherwise, in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of MUSA or (b) otherwise carry out the provisions of this Agreement, MUSA and its officers and directors shall be deemed to have granted to the Surviving Corporation an irrevocable power of attorney to execute and deliver all such deeds, assignments or assurances in law and to take all acts necessary, proper or desirable to vest, perfect or confirm title to and possession of such rights, properties or assets in the Surviving Corporation and otherwise to carry out the provisions of this Agreement, and the officers and directors of the Surviving Corporation are authorized in the name of MUSA or otherwise to take any and all such action.

ARTICLE II

CONVERSION OF SECURITIES

     2.1 Effect on Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub or MUSA or their respective stockholders:

     (a) Each share of common stock, $0.01 par value, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one fully paid and nonassessable share of common stock, $0.01 par value, of the Surviving Corporation. Such newly issued shares shall thereafter constitute all of the issued and outstanding Surviving Corporation capital stock.

     (b) Subject to the other provisions of this Article II, each share of MUSA Common Stock issued and outstanding immediately prior to the Effective Time (excluding any shares of MUSA Common Stock owned by Parent, Merger Sub or MUSA or any of their respective direct or indirect wholly owned subsidiaries (which shares shall be cancelled and shall cease to exist with no payment being made with respect thereto) and any shares of MUSA Common Stock owned by stockholders properly exercising appraisal rights pursuant to Section 262 of the DGCL (“Section 262”) (which shares shall have the rights as provided in Section 2.1(d))) shall be converted into and represent the right to receive $22.00 in cash, without interest (the “Merger Consideration”). At the Effective Time, all shares of MUSA Common Stock shall no longer be outstanding and automatically shall be cancelled and shall cease to exist, and each holder of a certificate that immediately prior to the Effective Time represented such shares of MUSA Common Stock (a “Certificate”) shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration or, in the case of holders of Appraisal Shares, the right to receive the applicable payments set forth in Section 2.1(d).

4

     (c) Each share of MUSA capital stock held in the treasury of MUSA automatically shall be cancelled and retired and no payment shall be made in respect thereof.

     (d) Notwithstanding anything in this Agreement to the contrary, the shares of MUSA Common Stock issued and outstanding immediately prior to the Effective Time that are held by any MUSA Stockholder that is entitled to demand and properly demands appraisal of shares of MUSA Common Stock pursuant to, and complies in all respects with, the provisions of Section 262 (the “Appraisal Shares”) shall not be converted into the right to receive the Merger Consideration as provided in Section 2.1(b), but, instead, such MUSA Stockholder shall be entitled to such rights (but only such rights) as are granted by Section 262. At the Effective Time, all Appraisal Shares shall no longer be outstanding and automatically shall be cancelled and shall cease to exist, and, except as otherwise provided by Applicable Laws, each holder of Appraisal Shares shall cease to have any rights with respect to the Appraisal Shares, other than such rights as are granted by Section 262. Notwithstanding the foregoing, if any such MUSA Stockholder shall fail to validly perfect or shall otherwise waive, withdraw or lose the right to appraisal under Section 262 or if a court of competent jurisdiction shall determine that such MUSA Stockholder is not entitled to the relief provided by Section 262, then the rights of such MUSA Stockholder under Section 262 shall cease, and such Appraisal Shares shall be deemed to have been converted at the Effective Time into, and shall have become, the right to receive the Merger Consideration as provided in Section 2.1(b) without interest. MUSA shall give prompt notice to Parent of any demands for appraisal of any shares of MUSA Common Stock, and Parent shall have the opportunity to reasonably participate in all negotiations and proceedings with respect to such demands. MUSA shall not, without the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands, or agree to do any of the foregoing.

2.2 Surrender and Payment.

     (a) Paying Agent; Exchange Fund. Prior to the Effective Time, for the benefit of the MUSA Stockholders, Parent shall designate, or shall cause to be designated (pursuant to an agreement in form and substance reasonably acceptable to MUSA), a bank or trust company that is reasonably satisfactory to MUSA to act as agent for the payment of the Merger Consideration in respect of Certificates upon surrender of such Certificates in accordance with this Article II from time to time after the Effective Time (the “Paying Agent”). At or prior to the Effective Time, Parent shall deposit, or cause Merger Sub to deposit, with the Paying Agent cash in an amount sufficient for the payment of the aggregate Merger Consideration pursuant to Section 2.1(b) (assuming no Appraisal Shares but taking into account any MUSA securities to be rolled over or otherwise converted into Parent equity after the Effective Time) upon surrender of such Certificates (such cash, the “Exchange Fund”); provided, however, the portion of such aggregate Merger Consideration allocable to Appraisal Shares shall be returned to Parent or the Surviving Corporation, upon demand by and at the direction of Parent. The Paying Agent shall invest any cash included in the Exchange Fund, as directed by Parent, on a daily basis.

5

     (b) Exchange Procedure. As soon as reasonably practicable after the Effective Time, the Paying Agent shall mail to each holder of record of a Certificate (i) a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates held by such MUSA Stockholder shall pass, only upon proper delivery of the Certificates to the Paying Agent and shall be in such form and have such other customary provisions as Parent may reasonably specify), and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration. Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly completed and validly executed, and such other documents as may reasonably be required by the Paying Agent, the holder of such Certificate shall be entitled to receive in exchange therefor the amount of cash into which the shares of MUSA Common Stock formerly represented by the Certificate shall have been converted pursuant to Section 2.1(b), and the Certificate so surrendered shall be cancelled. In the event of a transfer of ownership of MUSA Common Stock that is not registered in the stock transfer books of MUSA, the proper amount of cash may be paid in exchange therefor to a Person other than the Person in whose name the Certificate so surrendered is registered if the Certificate shall be properly endorsed or otherwise be in proper form for transfer and the Person requesting such payment shall pay any transfer or other Taxes required by reason of the payment to a Person other than the registered holder of the Certificate or establish to the satisfaction of Parent that the Tax has been paid or is not applicable. No interest shall be paid or shall accrue on the cash payable upon surrender of any Certificate.

     (c) Stock Transfer Books. At the close of business on the day on which the Effective Time occurs, the stock transfer books of MUSA shall be closed, and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of MUSA Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation or the Paying Agent for transfer or any other reason, they shall be cancelled and exchanged as provided in this Article II.

     (d) No Liability. None of Parent, Merger Sub, MUSA or the Paying Agent shall be liable to any Person in respect of any cash properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. All funds held by the Paying Agent for payment to the holders of unsurrendered Certificates and unclaimed six months after the Effective Time shall be returned to Parent (along with all other funds in the Exchange Fund, including any interest and other income resulting from investments of the Exchange Fund), after which time any holder of unsurrendered Certificates shall look as a general creditor only to Parent for payment of the funds to which the holder of unsurrendered Certificates may be due, subject to Applicable Laws. If any Certificates shall not have been surrendered prior to six years after the Effective Time (or such earlier date immediately prior to such date as such amounts would otherwise escheat to or become property of any Governmental Authority), any such cash, dividends or distributions in respect of such Certificate shall, to the extent permitted by Applicable Laws, become the property of Parent, free and clear of all claims or interest of any Person previously entitled thereto.

6

     (e) Lost Certificates. If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming a Certificate to be lost, stolen or destroyed and, if required by Parent or the Surviving Corporation, the posting by such Person of a bond in such reasonable amount as Parent or the Surviving Corporation may reasonably direct as indemnity against any claim that may be made against it with respect to the Certificate, the Paying Agent shall pay in respect of the lost, stolen or destroyed Certificate the Merger Consideration.

     (f) No Further Ownership Rights in MUSA Common Stock. The Merger Consideration paid in accordance with the terms of this Article II in respect of Certificates that have been surrendered in accordance with the terms of this Agreement shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of MUSA Common Stock represented thereby.

     (g) Withholding Rights. Each of the Surviving Corporation and Parent shall be entitled to deduct and withhold, or cause the Paying Agent to deduct and withhold, from the consideration otherwise payable pursuant to this Agreement to any MUSA Stockholders or holders of MUSA Options or MUSA Deferred Stock Rights such amounts as it may be required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the “Code”), or any provision of state, local or foreign Tax law. To the extent that amounts are so withheld by the Surviving Corporation, Parent or the Paying Agent, as the case may be, the withheld amounts shall be treated for all purposes of this Agreement as having been paid to the MUSA Stockholders or holders of MUSA Options or MUSA Deferred Stock Rights, as the case may be, in respect of which the deduction and withholding was made by the Surviving Corporation, Parent or the Paying Agent, as the case may be.

2.3 Treatment of Stock Options; Deferred Stock; Warrants.

     (a) Subject to the terms and upon the conditions herein, as of the Effective Time, each option to purchase shares of MUSA Common Stock (a “MUSA Option”) granted under the Metals USA, Inc. 2002 Long-Term Incentive Plan (the “2002 Plan”) or otherwise that is outstanding immediately prior to the Effective Time (whether or not vested) (which MUSA Options, in the aggregate, shall not be exercisable for a number of shares of MUSA Common Stock exceeding that number set forth in Section 4.4(a)) shall, by virtue of the Merger and without any action on the part of the holder thereof, MUSA, Parent or Merger Sub, be cancelled and converted into the right to receive, from Parent or the Surviving Corporation, as soon as practicable following the Effective Time, an amount in cash (less any applicable withholding taxes and without interest) equal to the product of (i) the excess, if any, of (A) the Merger Consideration over (B) the per share exercise price of MUSA Common Stock subject to such MUSA Option, multiplied by (ii) the number of shares of MUSA Common Stock subject to such MUSA Option immediately prior to the Effective Time. As of the Effective Time, all MUSA Options shall no longer be outstanding and shall automatically cease to exist, and each holder of a MUSA Option shall cease to have any rights with respect thereto, except the right to receive the payment described in the immediately preceding sentence. Notwithstanding the foregoing, at the election of Parent, all or any portion of the MUSA Options held by

7

any employee of MUSA or its subsidiaries that enters into an employment agreement or other arrangement with Merger Sub or Parent shall not be cancelled and converted into the right to receive cash as provided above, but shall instead be converted into options to purchase the stock of either Parent or Surviving Corporation in compliance with the requirements of Section 409 of the Code and any regulations thereunder; provided, however, if Parent desires to make such an election, it must do so no later than three business days prior to the Closing Date by delivering written notice to MUSA listing the names of the holders of MUSA Options (and the number of such holders’ MUSA Options to be converted into Parent’s or the Surviving Corporation’s options, the exercise price of such new options and the number and type of shares of Parent or the Surviving Corporation subject to such new options) whose MUSA Options shall be converted, in whole or in part, into options to purchase the stock of Parent or the Surviving Corporation. Prior to the Effective Time, MUSA, the MUSA Board and the compensation committee of the MUSA Board (the “Committee”) shall take any and all actions necessary under the 2002 Plan, the award agreements thereunder and otherwise to effectuate this Section 2.3(a), including amending the 2002 Plan.

     (b) Subject to the terms and upon the conditions herein, as of the Effective Time, each outstanding and unvested right to receive one share of MUSA Common Stock (“MUSA Deferred Stock Right”) granted under the 2002 Plan or otherwise (which MUSA Deferred Stock Rights, in the aggregate, shall not exceed that number set forth in Section 4.4(a)), shall, without any action on the part of the holder thereof, MUSA, Parent or Merger Sub, be cancelled and converted into the right to receive, from Parent or from the Surviving Corporation, as soon as practicable following the Effective Time, an amount in cash (less any applicable withholding taxes and without interest) equal to the Merger Consideration. As of the Effective Time, all MUSA Deferred Stock Rights shall no longer be outstanding and shall automatically cease to exist, and each holder of MUSA Deferred Stock Rights shall cease to have any rights with respect thereto, except the right to receive the payment described in the immediately preceding sentence. Prior to the Effective Time, MUSA, the MUSA Board and the Committee shall take any and all actions necessary under the 2002 Plan, the award agreements thereunder and otherwise to effectuate this Section 2.3(b), including amending the 2002 Plan.

     (c) Prior to the Effective Time, MUSA shall ensure that, except with respect to the portion of MUSA Options for which Parent has made an election in accordance to Section 2.3(a), following the Effective Time, no holder of a MUSA Option, holder of a MUSA Deferred Stock Right or participant in the 2002 Plan or other employee benefit arrangement of MUSA shall have any right thereunder to acquire or receive any capital stock (including payment of cash in settlement of any unit award, “phantom” stock or stock appreciation rights) of MUSA or the Surviving Corporation. Prior to the Effective Time, MUSA shall deliver to the holders of MUSA Options, holders of MUSA Deferred Stock Rights and other participants in the 2002 Plan appropriate notices, in form and substance reasonably acceptable to Parent, setting forth such holders’ or participants’ rights pursuant to this Agreement.

     (d) Subject to the terms and upon the conditions set forth herein, as of the Effective Time, each warrant to purchase MUSA Common Stock (“MUSA Warrants”)

8

issued pursuant to the Warrant Agreement by and between MUSA and Equiserve Trust Company, N.A., dated as of October 31, 2002 (the “Warrant Agreement”), or otherwise, shall, in accordance with the Warrant Agreement and without any action on the part of the holder thereof, MUSA, Parent or Merger Sub, no longer represent the right to receive shares of MUSA Common Stock upon the due exercise thereof, and shall thereafter represent the right to receive (upon surrender of such MUSA Warrant and the payment to the Surviving Corporation of the exercise price thereunder) an amount in cash equal to the product of (i) the number of shares of MUSA Common Stock subject to such MUSA Warrant immediately prior to the Effective Time, multiplied by (ii) the Merger Consideration. Prior to the Effective Time, MUSA shall take any and all actions necessary to effectuate this Section 2.3(d), including (x) no later than twenty (20) days prior to the Effective Time, delivering to the holders of MUSA Warrants and the warrant agent under the Warrant Agreement the notice required to be given by it pursuant to Section 12.2 of the Warrant Agreement and (y) executing and delivering to the warrant agent under the Warrant Agreement the written instrument required to be executed and delivered by it pursuant to Section 5.1(h) of the Warrant Agreement. On the Closing Date, MUSA shall, in accordance with Sections 3.2(b)(ii) and 12.1 of the Warrant Agreement, give notice to the Warrant Agent (as defined in the Warrant Agreement) and the holders of MUSA Warrants that MUSA has elected to accelerate the expiration of the MUSA Warrants to the 60th day following the Closing Date.

     2.4 Adjustments to Prevent Dilution. In the event that MUSA changes the number of shares of MUSA Common Stock, or securities convertible or exchangeable into or exercisable for shares of MUSA Common Stock, issued and outstanding prior to the Effective Time as a result of a reclassification, stock split (including a reverse stock split), stock dividend or distribution, recapitalization, merger, subdivision, issuer tender or exchange offer, or other similar transaction, the Merger Consideration shall be equitably adjusted to reflect such change and as so adjusted shall, from and after the date of such event, be the Merger Consideration, subject to further adjustment in accordance with this sentence.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

     In order to induce MUSA to enter into this Agreement, Parent and Merger Sub represent and warrant to MUSA that the statements contained in this Article III are true, correct and complete.

     3.1 Organization and Standing. Each of Parent and Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware with full corporate power and authority to own, lease, use and operate its properties and to conduct its business as and where now owned, leased, used, operated and conducted.

     3.2 Corporate Power and Authority. Each of Parent and Merger Sub has all requisite corporate power and authority to enter into and deliver this Agreement, to perform its obligations under this Agreement, and to consummate the transactions contemplated by this Agreement. The execution, performance and delivery of this Agreement and the consummation of the

9

transactions contemplated by this Agreement by Parent and Merger Sub have been duly authorized by all necessary corporate action on the part of each of Parent and Merger Sub. No other corporate proceedings on the part of Parent or Merger Sub are necessary to authorize or approve this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by each of Parent and Merger Sub, and, assuming the due authorization, execution and delivery by MUSA, constitutes a legal, valid and binding obligation of each of Merger Sub and Parent enforceable against each of them in accordance with its terms, except that such enforceability (a) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors’ rights generally and (b) is subject to general principles of equity.

     3.3 Conflicts; Consents and Approvals. Neither the execution and delivery of this Agreement by Parent or Merger Sub nor the consummation of the transactions contemplated by this Agreement will:

     (a) conflict with, or result in a breach of any provision of Parent’s Certificate of Incorporation, or Parent’s Bylaws, or Merger Sub’s Certificate of Incorporation or Merger Sub’s Bylaws;

     (b) violate, or conflict with, or result in a breach of any provision of, or constitute a default (or an event that, with the giving of notice, the passage of time or otherwise, would constitute a default) under, or entitle any Person (with the giving of notice, the passage of time or otherwise) to terminate, accelerate, modify or call a default under, or result in the creation of any lien, security interest, pledge, mortgage, charge, option, hypothecation, easement, restriction or other encumbrance (an “Encumbrance”) upon any of the properties or assets of Parent or any of its subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, contract, undertaking, agreement, lease or other instrument or obligation to which Parent or any of its subsidiaries is a party;

     (c) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Parent or any of its subsidiaries or their respective properties or assets; or

     (d) require any action or consent or approval of, or review by, or registration or filing by Parent or any of its subsidiaries with, any third party or any local, domestic, foreign or multinational court, arbitral tribunal, administrative agency or commission or other governmental or regulatory body, agency, instrumentality or authority (each of the foregoing, a “Governmental Authority”), other than (i) actions required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (together with the rules and regulations thereunder, the “HSR Act”) and applicable laws, rules and regulations in foreign jurisdictions governing antitrust or merger control matters (“Foreign Antitrust Laws”), (ii) compliance with any United States federal and state securities laws and any other applicable takeover laws and (iii) the filing with the Delaware Secretary of State of the Certificate of Merger; except in the case of clauses (b), (c) and (d) above for any of the foregoing that would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on Parent.

10

     3.4 Brokerage and Finders’ Fees. Except for Parent’s obligations to Credit Suisse First Boston LLC, neither Parent, Merger Sub nor any of their respective directors, officers or employees has incurred or will incur on behalf of Parent or Merger Sub any brokerage, finders’, advisory or similar fee in connection with the transactions contemplated by this Agreement.

     3.5 Information Supplied.

     (a) The information with respect to Parent and its subsidiaries that Parent, Merger Sub or any affiliate thereof furnishes to MUSA in writing specifically for use in any MUSA Disclosure Document will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading (i) in the case of the Proxy Statement, at the time the Proxy Statement is first mailed to MUSA Stockholders, at the time the MUSA Stockholders vote on adoption of this Agreement and at the Effective Time, and (ii) in the case of any MUSA Disclosure Document other than the Proxy Statement, at the time of the filing thereof, at the time of any distribution thereof and at the time of the MUSA Stockholders Meeting.

     (b) The Parent Disclosure Documents, if and when filed, will comply as to form in all material respects with the applicable requirements of the Exchange Act and will not at the time of the filing thereof or at the time of any distribution thereof, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty will not apply to statements or omissions in the Parent Disclosure Documents based upon (i) information in the Proxy Statement (other than information with respect to Parent and its subsidiaries furnished by Parent, Merger Sub or any affiliate thereof to MUSA in writing specifically for use in the Proxy Statement) or (ii) information furnished to Parent in writing by MUSA specifically for use therein.

     3.6 Financing. Parent has delivered to MUSA copies of (a) a commitment letter, dated May 18, 2005 (the “Equity Financing Letter”), pursuant to which Apollo Management V, L.P. has committed, subject to the terms and conditions set forth therein, to contribute (or cause to be contributed) capital to Parent (the “Equity Financing”), and (b) a commitment letter dated May 13, 2005 (the “Debt Financing Agreement” and, together with the Equity Financing Letter, the “Financing Agreements”), pursuant to which Credit Suisse First Boston and CIBC World Markets Corp. have committed, subject to the terms and conditions set forth therein, to (i) make senior secured increasing rate bridge loans to Merger Sub, and (ii) enter into a credit agreement providing for senior secured asset-based revolving loans to Merger Sub (the “Debt Financing”). As used in this Agreement, the financing to be provided under clause (a) above shall be referred to as the “Equity Financing”, the financing to be provided under clause (b) above shall be referred to as the “Debt Financing”, and the Equity Financing and Debt Financing shall collectively be referred to as the “Financing.” The aggregate proceeds of the Financing are in an amount sufficient to consummate the transactions contemplated hereby, including to pay the aggregate Merger Consideration, to pay the amounts required under Section 2.3(a) and 2.3(b), to pay the amounts required to holders of MUSA Warrants if such holders exercise such MUSA Warrants on or after the Closing Date (taking into account the payment of the exercise price by

11

such holders to MUSA or the Surviving Corporation), to repay certain existing indebtedness of MUSA and its subsidiaries in accordance with Section 5.1(f) and to pay related fees and expenses (such amounts, the “Required Amounts”). As of the date hereof, none of the Financing Agreements has been withdrawn and Parent does not know of any facts or circumstances that may reasonably be expected to result in any of the conditions set forth in the Financing Agreements not being satisfied.

     3.7 Capitalization of Merger Sub. As of the date of this Agreement, the authorized capital stock of Merger Sub consists of 100 shares of common stock, par value $0.01 per share, all of which shares are validly issued and outstanding. All of the issued and outstanding capital stock of Merger Sub is, and at the Effective Time will be, owned by Parent or a direct or indirect wholly owned subsidiary of Parent. Merger Sub has not conducted any business prior to the date hereof and has no, and prior to the Effective Time will have no, assets, liabilities or obligations of any nature other than those incident to its formation and pursuant to this Agreement and the Merger and the other transactions contemplated by this Agreement (including the Financing).

     3.8 Section 203 of the DGCL. Neither Parent nor Merger Sub is, and at no time during the last three years has been, an “interested stockholder” of MUSA (as defined in Section 203 of the DGCL). Neither Parent nor Merger Sub owns (directly or indirectly, beneficially or of record), or is a party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, in each case, any shares of capital stock of MUSA (other than as contemplated by this Agreement and the Support Agreement).

     3.9 Solvency. As of the date hereof, Parent believes, based upon its current understanding of the business, results of operations, assets, liabilities, operations, prospects and condition (financial and otherwise) of MUSA and its subsidiaries, and assuming that (a) the representations and warranties of MUSA set forth in Article IV are true and correct as of the date hereof and will be true and correct as of the Closing Date, (b) the projections of the performance (financial and otherwise) of MUSA and its subsidiaries provided by MUSA to Parent are accurate and correct and reflect the actual future performance of MUSA, (c) the due diligence materials provided to Parent prior to the date hereof by or on behalf of MUSA are true, correct and complete as of the date hereof and will be so true, correct and complete as of the Closing Date, (d) prior to the Closing Date, there shall not have been any event, change, circumstance, effect or state of facts that is or has a material adverse effect on the business, assets, liabilities, results of operations or financial condition of MUSA and its subsidiaries taken as a whole, and (e) assuming the Financing shall have been obtained on terms substantially comparable to those reflected in the Financing Agreements that, upon consummation of the Merger, the Surviving Corporation will not have unreasonably small capital to conduct its business, and will generally be able to pay its obligations as they become due in the ordinary course.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF MUSA

     In order to induce Merger Sub and Parent to enter into this Agreement, MUSA hereby represents and warrants to Parent and Merger Sub that the statements contained in this Article IV are true, correct and complete.

12

     4.1 Organization and Standing. MUSA is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware with full corporate power and authority to own, lease, use and operate its properties and to conduct its business as and where now owned, leased, used, operated and conducted. Each of MUSA’s subsidiaries is an organization duly incorporated or organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation with full corporate power and authority to own, lease, use and operate its properties and to conduct its business as and where now owned, leased, used, operated and conducted. Each of MUSA and its subsidiaries is duly qualified to do business and is in good standing in each jurisdiction in which the nature of the business conducted by it or the property it owns, leases or operates requires it to so qualify, except where the failure to be so qualified or in good standing in such jurisdiction would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA. MUSA is not in default in the performance, observance or fulfillment of any provision of the MUSA Certificate or the MUSA Bylaws. MUSA has heretofore furnished to Parent complete and correct copies of the MUSA Certificate and the MUSA Bylaws and the certificates of incorporation and bylaws or similar organizational documents for each of MUSA’s subsidiaries.

     4.2 Subsidiaries. MUSA does not own, directly or indirectly, any equity or other ownership interest in any corporation, partnership, joint venture or other entity or enterprise, except for the subsidiaries set forth in Section 4.2 of the disclosure schedule delivered by MUSA to Parent and dated the date of this Agreement (the “MUSA Disclosure Schedule”). MUSA is not subject to any obligation or requirement to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any such entity or any other Person. MUSA owns, directly or indirectly, each of the outstanding shares of capital stock (or other ownership interests having by their terms ordinary voting power to elect a majority of directors or others performing similar functions with respect to such subsidiary) of each of its subsidiaries. Each of the outstanding shares of capital stock or other ownership interests of each of MUSA’s subsidiaries is duly authorized, validly issued, fully paid and nonassessable, and is owned, directly or indirectly, by MUSA free and clear of all Encumbrances. The following information for each of MUSA’s subsidiaries is set forth in Section 4.2 of the MUSA Disclosure Schedule, as applicable: (a) its name and jurisdiction of incorporation or organization; (b) its authorized capital stock or share capital; and (c) the number of issued and outstanding shares of capital stock or share capital and the record owner(s) thereof. There are no outstanding subscriptions, options, warrants, puts, calls, agreements, understandings, claims or other commitments or rights of any type relating to the issuance, sale or transfer of any securities of any of MUSA’s subsidiaries, nor are there outstanding any securities that are convertible into or exchangeable for any shares of capital stock or other voting securities or ownership interests of any of MUSA’s subsidiaries.

     4.3 Corporate Power and Authority. MUSA has all requisite corporate power and authority to enter into and deliver this Agreement, to perform its obligations under this Agreement, and, subject to approval and adoption of this Agreement and the transactions contemplated by this Agreement by the MUSA Stockholders, to consummate the transactions contemplated by this Agreement. The execution, performance and delivery of this Agreement by MUSA have been duly authorized by all necessary corporate action on the part of MUSA, subject to adoption of this Agreement and the transactions contemplated by this Agreement by the MUSA Stockholders, and no other corporate proceedings on the part of MUSA are necessary

13

to authorize or approve this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by MUSA, and, assuming the due authorization, execution and delivery by Parent and Merger Sub, constitutes the legal, valid and binding obligation of MUSA enforceable against it in accordance with its terms, except that such enforceability (a) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors’ rights generally and (b) is subject to general principles of equity.

     4.4 Capitalization of MUSA.

     (a) As of the date hereof, MUSA’s authorized capital stock consisted solely of (i) 200,000,000 shares of MUSA Common Stock, of which20,282,790 shares are issued and outstanding, and (ii) 5,000,000 shares of preferred stock, par value $.01 per share, of which no shares were issued and outstanding or reserved for future issuance under any agreement, arrangement or understanding. As of the date hereof, there are outstanding MUSA Options to purchase an aggregate of 1,081,270 shares of MUSA Common Stock, there are outstanding 45,437 MUSA Deferred Stock Rights and there are outstanding MUSA Warrants to purchase an aggregate of 3,556,703 shares of MUSA Common Stock.

     (b) Other than as set forth in Section 4.4(a), there are no outstanding (i) shares of MUSA capital stock or MUSA voting securities, (ii)subscriptions, options, warrants, puts, calls, agreements, understandings, claims or other commitments or rights of any type relating to the issuance, sale, repurchase or transfer of any securities of MUSA, or (iii) securities that are convertible into or exchangeable for any shares of MUSA capital stock or MUSA voting securities, and neither MUSA nor any of its subsidiaries has any obligation of any kind to issue any additional securities or to pay for, repurchase, redeem or otherwise acquire any securities of MUSA or any of its subsidiaries or any of their respective predecessors. No subsidiary of MUSA owns any MUSA capital stock, option or warrant to acquire MUSA capital stock or other interest determined by reference to the value of MUSA capital stock.

     (c) Each outstanding share of MUSA capital stock is, and each share of MUSA capital stock that may be issued will be, when issued, duly authorized and validly issued, fully paid and nonassessable, and not subject to any preemptive or similar rights. The issuance and sale of all of the shares of capital stock described in this Section 4.4 have been in compliance with United States federal and state securities laws. Section 4.4 of the MUSA Disclosure Schedule states the number of shares of MUSA Common Stock issuable to each holder of MUSA Options as of the date of this Agreement, including the applicable vesting schedule, exercise price and whether the MUSA Option is intended to qualify as an “incentive stock option” (within the meaning of Section 422 of the Code). Section 4.4 of the MUSA Disclosure Schedule states the number of shares of MUSA Common Stock issuable to each holder of MUSA Warrants as of the date of this Agreement, including the exercise price and scheduled expiration thereof. Section 4.4 to the MUSA Disclosure Schedule accurately sets forth the names of all holders of MUSA Deferred Stock Rights and holders of MUSA capital stock subject to any transfer restrictions, including the number of shares of each class of MUSA capital stock held by

14

that holder and the vesting schedule with respect to such MUSA capital stock. Neither MUSA nor any of its subsidiaries has agreed to register any securities under the Securities Act of 1933, as amended (together with the rules and regulations thereunder, the “Securities Act”) or under any state securities law or granted registration rights to any individual or entity.

     4.5 Conflicts; Consents and Approvals. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will:

     (a) conflict with, or result in a breach of any provision of, the MUSA Certificate or the MUSA Bylaws;

     (b) except as set forth in Section 4.5(b) of the MUSA Disclosure Schedule, violate, or conflict with, or result in a breach of any provision of, or constitute a default (or an event that, with the giving of notice, the passage of time or otherwise, would constitute a default) under, or entitle any Person (with the giving of notice, the passage of time or otherwise) to terminate, accelerate, modify or call a default under, or result in the creation of any Encumbrance upon any of the properties or assets of MUSA or any of its subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, contract, undertaking, agreement, lease or other instrument or obligation to which MUSA or any of its subsidiaries is a party;

     (c) violate any order, writ, injunction, decree, statute, rule or regulation applicable to MUSA or any of its subsidiaries or any of their respective properties or assets; or

     (d) require any action or consent or approval of, or review by, or registration or filing by MUSA or any of its affiliates with, any third party or any Governmental Authority, other than (i) approval of this Agreement and the transactions contemplated by this Agreement by MUSA Stockholders, (ii) actions required by the HSR Act and Foreign Antitrust Laws, (iii) registrations or other actions required under United States federal and state securities laws, (iv) consents or approvals of any Governmental Authority set forth in Section 4.5(d) of the MUSA Disclosure Schedule, and (v) the filing with the Delaware Secretary of State of the Certificate of Merger;

other than in the case of Sections 4.5(b), 4.5(c) and 4.5(d) those exceptions that would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA.

     4.6 Brokerage and Finders’ Fees; Expenses. Except for MUSA’s obligations to CIBC World Markets Corp. and Jefferies & Co., Inc. (true and complete copies of all agreements relating to such obligations having previously been provided to Parent), neither MUSA nor any stockholder, director, officer, employee or affiliate of MUSA, has incurred or will incur on behalf of MUSA or its subsidiaries, any brokerage, finders’, advisory or similar fee in connection with the transactions contemplated by this Agreement. MUSA’s good faith estimate of the aggregate amount of all fees and expenses that will be paid or will be payable by MUSA and its subsidiaries to all attorneys, accountants and investment bankers in connection with the Merger

15

and the transactions contemplated by this Agreement, and the negotiation of the related agreements (excluding any reasonable out-of-pocket third party costs that are solely and directly attributable to the cooperation required of MUSA and its subsidiaries pursuant to Section 5.3(e)) (the “Transaction Fees”) is set forth on Section 4.6 of the MUSA Disclosure Schedule.

     4.7 MUSA SEC Documents.

     (a) MUSA and its subsidiaries have timely filed with the Commission all registration statements, prospectuses, forms, reports, schedules, statements and other documents (as supplemented and amended since the time of filing, collectively, the “MUSA SEC Documents”) required to be filed by them since January 1, 2002 under the Exchange Act or the Securities Act. The MUSA SEC Documents, including any financial statements or schedules included in the MUSA SEC Documents, at the time filed (and, in the case of registration statements and proxy statements, on the dates of effectiveness and the dates of mailing, respectively, and, in the case of any MUSA SEC Document amended or superseded by a filing prior to the date of this Agreement, then on the date of such amending or superseding filing) (i) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and (ii) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as the case may be. The financial statements of MUSA and its subsidiaries included in the MUSA SEC Documents (i) have been prepared from, and are in accordance with, the books and records of MUSA and its subsidiaries, (ii) at the time filed (and, in the case of registration statements and proxy statements, on the dates of effectiveness and the dates of mailing, respectively, and, in the case of any MUSA SEC Document amended or superseded by a filing prior to the date of this Agreement, then on the date of such amending or superseding filing) complied as to form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect thereto, (iii) were prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto, or, in the case of unaudited statements, as permitted by Form 10-Q of the Commission), and (iv) fairly present in all material respects (subject, in the case of unaudited statements, to normal, recurring audit adjustments) the consolidated financial position of MUSA and its subsidiaries as at the dates thereof and the consolidated results of their operations and cash flows for the periods then ended. None of MUSA’s subsidiaries is subject to the periodic reporting requirements of the Exchange Act or required to file any form, report or other document with the Commission, The Nasdaq Stock Market, any stock exchange or any other comparable Governmental Authority.

     (b) With respect to each Annual Report on Form 10-K and each Quarterly Report on Form 10-Q included in the MUSA SEC Documents filed since August 29, 2002, the financial statements and other financial information included in such reports fairly present (within the meaning of the Sarbanes-Oxley Act of 2002) in all material respects the financial condition and results of operations of MUSA as of, and for, the periods presented in the MUSA SEC Documents. Since August 29, 2002, MUSA’s

16

principal executive officer and its principal financial officer have disclosed to MUSA’s auditors and the audit committee of the MUSA Board (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that could adversely affect MUSA’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in MUSA’s internal controls and MUSA has provided to Parent copies of any written materials relating to the foregoing. MUSA has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-14 under the Exchange Act); such disclosure controls and procedures are designed to ensure that material information relating to MUSA, including its consolidated subsidiaries, is made known to MUSA’s principal executive officer and its principal financial officer by others within those entities, particularly during the periods in which the periodic reports required under the Exchange Act are being prepared; and, to the knowledge of MUSA, such disclosure controls and procedures are effective in timely alerting MUSA’s principal executive officer and its principal financial officer to material information required to be included in MUSA’s periodic reports required under the Exchange Act. Except as set forth in Section 4.7(b) of the MUSA Disclosure Schedule, there are no outstanding loans made by MUSA or any of its subsidiaries to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of MUSA. Since the enactment of the Sarbanes-Oxley Act of 2002, neither MUSA nor any of its subsidiaries has made any loans to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of MUSA or any of its subsidiaries.

     4.8 Undisclosed Liabilities. Except (a) as and to the extent disclosed or reserved against on the balance sheet of MUSA as of December 31, 2004 included in the MUSA SEC Documents or (b) as incurred since the date thereof in the ordinary course of business consistent with prior practice, neither MUSA nor any of its subsidiaries has any liabilities or obligations of any nature, whether known or unknown, absolute, accrued, contingent or otherwise and whether due or to become due, that would (i) be required by GAAP to be reflected on a consolidated balance sheet of MUSA and its subsidiaries (or disclosed in the notes thereto) or (ii) otherwise reasonably be expected to be material to MUSA and its subsidiaries taken as a whole.

     4.9 Disclosure Documents.

     (a) The information with respect to MUSA and its subsidiaries that MUSA furnishes in writing to Parent specifically for use in the Parent Disclosure Documents will not, at the time of the filing thereof, at the time of any distribution thereof and at the time of the MUSA Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

     (b) Each MUSA Disclosure Document will, when filed, comply as to form in all material respects with the applicable requirements of the Exchange Act. Each MUSA Disclosure Document will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading (i) in the case of the

17

Proxy Statement, at the time the Proxy Statement is first mailed to stockholders of MUSA, at the time the stockholders vote on adoption of this Agreement and at the Effective Time, and (ii) in the case of any MUSA Disclosure Document other than the Proxy Statement, at the time of the filing thereof, at the time of any distribution thereof and at the time of the MUSA Stockholders Meeting; provided, however, that this representation and warranty will not apply to statements or omissions in the MUSA Disclosure Documents based upon information with respect to Parent and its subsidiaries furnished to MUSA in writing by Parent specifically for use therein.

     4.10 Compliance with Law. MUSA and its subsidiaries hold all franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders of all Governmental Authorities necessary for the lawful conduct of their respective businesses (the “MUSA Permits”), except for failures to hold such MUSA Permits that would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA. MUSA and its subsidiaries are in compliance with the terms of the MUSA Permits, except where the failure so to comply would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA. The businesses of MUSA and its subsidiaries are not being conducted in violation of any Applicable Laws, except for violations that would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA. No investigation or review by any Governmental Authority with respect to MUSA or any of its subsidiaries is pending or, to the knowledge of MUSA, threatened, nor has any Governmental Authority indicated in writing an intention to conduct any such investigation or review, other than, in each case, those the outcome of which would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA.

     4.11 Litigation. Except as set forth in Section 4.11 of the MUSA Disclosure Schedule, there is no suit, claim, action, proceeding, hearing, notice of violation, investigation or demand letter (an “Action”) pending or, to the knowledge of MUSA, threatened, against MUSA or any of its subsidiaries or any executive officer or director of MUSA or any of its subsidiaries that would, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA. There is no outstanding order, writ, injunction, judgment, award, rule or decree against MUSA or any of its subsidiaries or by which any property, asset or operation of MUSA or any of its subsidiaries is bound or affected that would, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA.

     4.12 Absence of Certain Changes or Events.

     (a) From December 31, 2004 through the date of this Agreement, there has not been any Material Adverse Effect on MUSA or any event, change, effect or development that would, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA.

     (b) Since December 31, 2004, MUSA and its subsidiaries have conducted their business and operated their properties in the ordinary course of business consistent with past practice.

18

     (c) There has not been any action taken by MUSA or any of its subsidiaries from December 31, 2004 through the date of this Agreement that, if taken during the period from the date of this Agreement through the Effective Time, would constitute a breach of Section 5.3(a).

     4.13 Taxes.

     (a) Except as set forth in Section 4.13 of the MUSA Disclosure Schedule: (i) MUSA and each of its subsidiaries have timely filed all United States federal, state, local and foreign income Tax Returns required to be filed by it, and all other Tax Returns required to be filed by it, except where the failure to file such Tax Returns would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA; (ii) all such Tax Returns were true, correct and complete in all material respects; (iii) MUSA and each of its subsidiaries have paid or caused to be paid all Taxes in respect of the periods covered by such Tax Returns, except where the failure to pay such Taxes would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA; (iv) the most recent consolidated financial statements of MUSA included in the MUSA SEC Documents filed prior to the date of this Agreement reflect an adequate reserve in accordance with GAAP for all Tax liabilities of MUSA and its subsidiaries through the date thereof; (v) each of MUSA and its subsidiaries has timely withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, creditor, independent contractor, MUSA Stockholder or other third party, except where the failure to withhold and pay such amounts would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA; (vi) neither MUSA nor any of its subsidiaries is currently the beneficiary of any extension of time within which to file any material Tax Return; (vii) there are no security interests on any of the assets of MUSA or any of its subsidiaries that arose in connection with any failure to pay any Tax, except where such security interest would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA; (viii) there is no claim or dispute concerning any Tax liability of MUSA or its subsidiaries either (A) claimed or raised by any Governmental Authority in writing or (B) as to which any of the directors and officers (and employees responsible for Tax matters) of MUSA and its subsidiaries has knowledge based on personal contact with any agent of such Governmental Authority, except where such claim or dispute would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA; (ix) all income Tax Returns required to be filed by or with respect to MUSA or any of its subsidiaries through the year 1997 have been examined by the Internal Revenue Service or other appropriate Governmental Authority and the examination concluded, or are Tax Returns with respect to which the period during which any assessments may be made by the Internal Revenue Service or other appropriate Governmental Authority has expired (taking into account any extension or waiver thereof), and all deficiencies and assessments asserted as a result of such examinations or other audits by federal, state, local or foreign Governmental Authorities have been paid, fully settled or adequately provided for in the MUSA SEC

19

Documents filed prior to the date of this Agreement, and no issue or claim has been asserted in writing for Taxes by any Governmental Authority for any prior period, other than those heretofore paid or provided for in the MUSA SEC Documents filed prior to the date of this Agreement; (x) there are no outstanding agreements or waivers extending the statutory period of limitation applicable to any Tax Return of MUSA or any of its subsidiaries; (xi) neither MUSA nor any of its subsidiaries (A) has been a member of a group filing consolidated returns for United States federal income Tax purposes (except for the group of which MUSA is the common parent), (B) has any liability for the Taxes of any Person (other than MUSA and its subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferor or successor, by contract or otherwise, (C) is a party to a Tax sharing or Tax indemnity agreement or any other agreement of a similar nature involving a material amount of Taxes that remains in effect, or (D) has been a party to any “reportable transaction” (within the meaning of Treasury Regulations Section 1.6011-4(b)); (xii) neither MUSA nor any of its subsidiaries has been required to include in income any material adjustment pursuant to Section 481 of the Code by reason of a voluntary change in accounting method initiated by MUSA or any of its subsidiaries, and the Internal Revenue Service has not initiated or proposed any such material adjustment or change in accounting method (including any method for determining reserves for bad debts maintained by MUSA or any subsidiary); (xiii) MUSA has not constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code); and (xiv) MUSA has not been a United States real property holding corporation (within the meaning of Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

     (b) “Tax Returns” means returns, reports, forms or other documentation (including any additional or supporting material and any amendments or supplements) required to be filed with any Governmental Authority of the United States or any other relevant jurisdiction responsible for the imposition or collection of Taxes, including any information returns, claims for refunds, amended returns, or declarations of estimated Taxes.

     (c) “Taxes” means (i) all taxes (whether United States federal, state or local or foreign) based upon or measured by income and any other tax whatsoever, including gross receipts, profits, sales, use, occupation, value added, ad valorem, transfer, franchise, withholding, payroll, employment, unemployment, net worth, social security, worker’s compensation, excise, or property taxes, together with any interest, penalties, additions to tax and additional amounts imposed with respect thereto and (ii) any obligations under any agreements or arrangements with respect to any taxes described in clause (i) above.

     4.14 Intellectual Property.

     (a) For purposes of this Agreement, (i) “Intellectual Property Right” means any trademark, service mark, trade name, mask work, invention, patent, trade secret, copyright, know-how or proprietary information contained on any website, processes, formulae, products, technologies, discoveries, apparatus, Internet domain names, trade dress and general intangibles of like nature (together with goodwill), customer lists, confidential information, licenses, software, databases and compilations including any

20

and all collections of data and all documentation thereof (including any registrations or applications for registration of any of the foregoing) or any other similar type of proprietary intellectual property right, and (ii) “MUSA Intellectual Property Right” means all Intellectual Property Rights owned or licensed and used or held for use by MUSA or any of its subsidiaries.

     (b) MUSA and its subsidiaries own, or are licensed or otherwise have the right to use, all Intellectual Property Rights used in the conduct of their businesses, except where the failure to own or possess the right to use such Intellectual Property Rights would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA. No MUSA Intellectual Property Right is subject to any outstanding judgment, injunction, order, decree or agreement restricting the use thereof by MUSA or any of its subsidiaries or restricting the licensing thereof by MUSA or any of its subsidiaries to any Person, except for any judgment, injunction, order, decree or agreement that would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA. Neither MUSA nor any of its subsidiaries is infringing on any other Person’s Intellectual Property Rights, and, to the knowledge of MUSA, no Person is infringing on any MUSA Intellectual Property Rights, except, in either case, as would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA. Except for such matters as would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA, (i) neither MUSA nor any of its subsidiaries is a defendant in any Action relating to, or otherwise was notified in writing of, any claim alleging infringement by MUSA or any of its subsidiaries of any Intellectual Property Right and (ii) MUSA and its subsidiaries have no pending Action for any continuing infringement by any other Person of any MUSA Intellectual Property Rights.

     (c) None of the past or present employees, officers, directors or shareholders of MUSA has any ownership rights in any of the MUSA Intellectual Property Rights owned and registered by MUSA or any of its subsidiaries.

     4.15 Employee Benefit Plans.

     (a) For purposes of this Section 4.15, the following terms have the definitions given below:

     (i) “Controlled Group Liability” means any and all liabilities (A) under Title IV of ERISA, (B) under Section 302 of ERISA, (C) under Sections 412 and 4971 of the Code, (D) resulting from a violation of the continuation coverage requirements of Section 601 et seq. of ERISA and Section 4980B of the Code or the group health plan requirements of Chapter 100 of the Code and Section 609 of ERISA and (E) under corresponding or similar provisions of foreign laws or regulations.

     (ii) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, together with the rules and regulations thereunder.

21

     (iii) “ERISA Affiliate” means, with respect to any entity, trade or business, any other entity, trade or business that is a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes the first entity, trade or business, or that is a member of the same “controlled group” as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.

     (iv) “Plans” means all employee benefit plans, programs and other arrangements providing benefits to any employee or former employee in respect of services provided to MUSA or any of its subsidiaries or to any beneficiary or dependent thereof, and whether covering one individual or more than one individual, sponsored or maintained by MUSA or any of its subsidiaries or to which MUSA or any of its subsidiaries contributes or is obligated to contribute or could have any liability. Without limiting the generality of the foregoing, the term “Plans” includes any defined benefit or defined contribution pension plan, profit sharing plan, stock ownership plan, deferred compensation agreement or arrangement, vacation pay, health, sickness, life, disability or death benefit plan (whether provided through insurance, on a funded or unfunded basis or otherwise), employee stock option or stock purchase plan, bonus or incentive plan or program, severance pay plan, agreement, arrangement or policy (including statutory severance and termination indemnity plans), practice or agreement, employment agreement, retiree medical benefits plan and each other employee benefit plan, program or arrangement including each “employee benefit plan” (within the meaning of Section 3(3) of ERISA).

     (b) Section 4.15(b) of the MUSA Disclosure Schedule lists all Plans. With respect to each Plan, MUSA has provided to Parent a true, correct and complete copy of the following (where applicable): (i) each writing constituting a part of such Plan, including, without limitation, all plan documents (including amendments), benefit schedules, trust agreements, and insurance contracts and other funding vehicles; (ii) the two most recent Annual Reports (Form 5500 Series) and accompanying schedules, if any; (iii) the current summary plan description, if any; (iv) the most recent annual financial report, if any; (v) the two most recent actuarial valuations for any defined pension benefit plans; (vi) any material notices provided either to any participants in any Plan or to any Governmental Authority relative to any Plan in the past three years; and (vii) the most recent determination letter from the Internal Revenue Service, if any. Except as specifically provided in the foregoing documents provided to Parent, there are no amendments to any Plan that have been adopted or approved, nor has MUSA or any of its subsidiaries undertaken to make any such amendments or to adopt or approve any new Plan.

     (c) The Internal Revenue Service has issued a favorable determination letter with respect to each Plan that is intended to be a “qualified plan”(within the meaning of Section 401(a) of the Code) (a “Qualified Plan”). Except as set forth on Section 4.15(c) of the MUSA Disclosure Schedule, there are no existing circumstances nor any events that have occurred that would reasonably be expected to adversely affect the qualified status of any Qualified Plan or the related trust.

22

     (d) Except as set forth on Section 4.15(d) of the MUSA Disclosure Schedule, all contributions required to be made by MUSA or any of its subsidiaries or any of their respective ERISA Affiliates to any Plan by Applicable Laws or by the terms of any Plan and all premiums due or payable with respect to insurance policies funding any Plan, for any period through the date hereof have been timely made or paid in full and through the Closing Date will be timely made or paid in full.

     (e) MUSA and its subsidiaries and their respective ERISA Affiliates have complied, and are now in compliance with all provisions of ERISA, the Code and all laws and regulations (including any local Applicable Laws) applicable to the Plans in all material respects. Each Plan has been operated in compliance with its terms in all material respects. There is not now, and to the knowledge of MUSA there are no existing circumstances that would reasonably be expected to give rise to, any requirement for the posting of security with respect to a Plan or the imposition of any Encumbrance on the assets of MUSA or any of its subsidiaries or any of their respective ERISA Affiliates under ERISA or the Code.

     (f) Except as set forth in Section 4.15(f) of the MUSA Disclosure Schedule, no Plan is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the Code. Except as set forth in Section 4.15(f) of the MUSA Disclosure Schedule, no Plan is a “multiemployer plan” (within the meaning of Section 4001(a)(3) of ERISA) (a “Multiemployer Plan”) or a plan that has two or more contributing sponsors at least two of whom are not under common control (within the meaning of Section 4063 of ERISA) (a “Multiple Employer Plan”), nor has MUSA or any of its subsidiaries or any of their respective ERISA Affiliates, at any time within six years before the date of this Agreement, contributed to or been obligated to contribute to any Multiemployer Plan or Multiple Employer Plan. Each Plan that is subject to Section 302 of ERISA and Section 412 of the Code meets the minimum funding standards of Section 302 of ERISA and Section 412 of the Code (without regard to any funding waiver). Neither MUSA nor any of its ERISA Affiliates is required to provide security to such Plan pursuant to Section 307 of ERISA or Section 501(a) of the Code. Since its last valuation date, there have been no amendments to such Plan that materially increase the present value of accrued benefits.

     (g) There does not now exist, and there are no existing circumstances that would reasonably be expected to result in, any material Controlled Group Liability that would be a liability of MUSA or any of its subsidiaries following the Closing. Without limiting the generality of the foregoing, neither MUSA nor any of its subsidiaries nor any of their respective ERISA Affiliates has engaged in any transaction described in Section 4069 or 4212(c) of ERISA.

     (h) Except for health continuation coverage as required by Section 4980B of the Code or Part 6 of Title I of ERISA and except as set forth on Section 4.15(h) of the MUSA Disclosure Schedule, neither MUSA nor any of its subsidiaries has any material liability for life, health, medical or other welfare benefits to former employees or beneficiaries or dependents thereof. There has been no communication to employees of MUSA or any of its subsidiaries that could reasonably be expected or interpreted to

23

promise or guarantee such employees retiree health or life insurance benefits or other retiree death benefits on a permanent basis.

     (i) Except as disclosed in Section 4.15(i) of the MUSA Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will result in, cause the accelerated vesting or delivery of, or increase the amount or value of, any payment or benefit to any employee, officer, director or consultant of MUSA or any of its subsidiaries (either alone or in conjunction with any other event). Without limiting the generality of the foregoing, no amount paid or payable by MUSA or any of its subsidiaries in connection with the transactions contemplated by this Agreement, either solely as a result thereof or as a result of the transactions contemplated by this Agreement in conjunction with any other events, will be an “excess parachute payment” (within the meaning of Section 280G of the Code). Section 4.15(i) of the MUSA Disclosure Schedule sets forth the maximum aggregate amount of any such excess parachute payments.

     (j) There are no pending, or, to the knowledge of MUSA, threatened, Actions (other than claims for benefits in the ordinary course) that have been asserted or instituted against any Plan, any fiduciaries thereof with respect to their duties to any Plan or the assets of any of the trusts under any Plan that could reasonably be expected to result in any material liability of MUSA or any of its subsidiaries to the Pension Benefit Guaranty Corporation, the United States Department of the Treasury, the United States Department of Labor or any Multiemployer Plan.

     (k) No Plan is subject to the laws of any jurisdiction outside of the United States.

     (l) Except as disclosed in Section 4.15(l) of the MUSA Disclosure Schedule, no disallowance of a deduction under Section 162(m) of the Code for employee reimbursement or compensation of any amount paid or payable by MUSA or any of its subsidiaries has occurred or is reasonably expected to occur.

     (m) Since January 1, 2003, MUSA and its subsidiaries have been and are in compliance in all material respects with Applicable Laws with respect to employment, employment practices, employee and independent contractor classification, labor relations, safety and health, wages, hours and terms and conditions of employment. MUSA and its subsidiaries have complied with their payment obligations to all employees of MUSA and its subsidiaries in respect of all wages, salaries, commissions, bonuses, benefits and other compensation due and payable to such employees under each MUSA policy, practice, agreement, plan, program or Applicable Laws in all material respects.

     4.16 Contracts; Indebtedness.

     (a) Except as set forth in Section 4.16(a) of the MUSA Disclosure Schedule or as listed as an exhibit to MUSA’s Annual Report on Form 10-Kfor the year ended December 31, 2004, neither MUSA nor any of its subsidiaries is a party to, and none of

24

their respective properties or assets are bound by, (i) any agreement containing covenants purporting to limit the freedom of MUSA or any of its subsidiaries to compete in any line of business or sell, supply or distribute any service or product, in each case, in any geographic area or to hire any individual or group of individuals, (ii) any agreement that, after the Effective Time, would have the effect of limiting the freedom of Parent or any of its subsidiaries to compete in any line of business or sell, supply or distribute any product or service, in each case, in any geographic area or to hire any individual or group of individuals, (iii) any joint venture or partnership agreement, (iv) any agreement with a supplier or a customer with a term in excess of one year, (v) any agreement that is terminable by the other party or parties upon a change in control of MUSA or any of its subsidiaries, (vi) (I) any agreement that involves future expenditures or receipts by MUSA or any of its subsidiaries of more than $750,000 in any one-year period, except for any such agreement with a customer or a supplier made in the ordinary course of business consistent with past practice or (II) any agreement that involves future expenditures or receipts by MUSA or any of its subsidiaries of more than $5,000,000 in any one-year period, (vii) any agreement that by its terms limits the payment of dividends or other distributions by MUSA or any of its subsidiaries, (viii) any agreement that grants any right of first refusal or right of first offer or similar right or that limits or purports to limit the ability of MUSA or any of its subsidiaries to own, operate, sell, transfer, pledge or otherwise dispose of any material amount of assets or businesses, (ix) any acquisition agreement with a purchase price in excess of $1,000,000 or that contains “earn-out” provisions or other contingent payment obligations, (x) any divestiture agreement with a purchase price in excess of $1,000,000 or that contains ongoing indemnification obligations or other material obligations or (xi) any other “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the Commission) (the contracts listed in Section 4.16(a) of the MUSA Disclosure Schedule or such exhibit list being referred to as the “Material Contracts”). Each such Material Contract is a valid, binding and enforceable obligation of MUSA or its subsidiaries and, to MUSA’s knowledge, of the other party or parties thereto, in accordance with its terms, and in full force and effect, except where the failure to be valid, binding, enforceable and in full force and effect would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA. MUSA has not received any notice from any other party to any such Material Contract, and otherwise has no knowledge that such third party intends to terminate, or not renew, any such Material Contract. Prior to the date hereof, MUSA has made available to Parent true, correct and complete copies of all such Material Contracts. Neither MUSA nor any of its subsidiaries, and, to the knowledge of MUSA, no other party thereto, is in violation of or in default under (nor does there exist any condition which upon the passage of time or the giving of notice or both would cause such a violation of or default under) any loan or credit agreement, bond, note, mortgage, indenture, lease or other contract, agreement, obligation, commitment, arrangement, understanding, instrument, permit or license to which it is a party or by which it or any of its properties or assets is bound, except for violations or defaults that would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA.

     (b) Section 4.16(b) of the MUSA Disclosure Schedule sets forth (i) a list of all agreements, instruments and other obligations pursuant to which any indebtedness for

25

borrowed money of MUSA or any of its subsidiaries in an aggregate principal amount in excess of $1,000,000 is outstanding or may be incurred and (ii) the respective principal amounts outstanding thereunder as of the date of this Agreement.

     4.17 Labor Matters.

     (a) Section 4.17(a) of the MUSA Disclosure Schedule lists all collective bargaining, labor or similar agreements, including material local or side agreements in effect that MUSA or any of its subsidiaries or their respective assets or properties is bound by or subject to. Copies of all such agreements have been made available to Parent. MUSA and each of its subsidiaries has complied in all material respects with its obligations to, and is not in default under, any collective bargaining, labor or similar agreement that MUSA or any of its subsidiaries or their respective assets or properties is bound by or subject to. There is no labor strike, dispute, lockout or stoppage pending, or, to the knowledge of MUSA or any of its subsidiaries, threatened, against MUSA or any of its subsidiaries, and neither MUSA nor any of its subsidiaries has experienced any labor strike, dispute, lockout or stoppage or other material labor difficulty involving its employees since January 1, 2001. To the knowledge of MUSA or any of its subsidiaries, since January 1, 2001, no campaign or other attempt for recognition has been made by any labor organization or employees with respect to employees of MUSA or any of its subsidiaries. Neither MUSA nor any of its subsidiaries is engaged in any unfair labor practice and there is no unfair labor practice charge or complaint against MUSA or any of its subsidiaries or involving their respective assets or properties that is pending or, to the knowledge of MUSA or any of its subsidiaries, threatened before the National Labor Relations Board. There is no pending or, to the knowledge of MUSA or any of its subsidiaries, threatened employee or governmental claim or investigation regarding employment matters, including any charges to the Equal Employment Opportunity Commission or state employment practice agency, or, to the knowledge of MUSA or any of its subsidiaries, investigations regarding Fair Labor Standard Acts compliance or audits by the Office of Federal Contractor Compliance.

     (b) To MUSA’s knowledge, no executive officer or employee of MUSA or any of its subsidiaries earning in excess of $100,000 per year has given notice to MUSA or any of its subsidiaries, nor is MUSA or any of its subsidiaries otherwise aware that any such employee intends to terminate his or her employment with MUSA or any of its subsidiaries.

     4.18 Customer/Supplier Relationships. Except as set forth in Section 4.18 of the MUSA Disclosure Schedule, since December 31, 2004, no material customer of MUSA or any of its subsidiaries has indicated that it will stop or materially decrease purchasing services, materials or products from MUSA or such subsidiary, and no material supplier or service provider of MUSA or any of its subsidiaries has indicated that it will stop or materially decrease the supply of materials, products or services to MUSA or such subsidiary, or, in each case, is otherwise involved in, or is threatening, a material dispute with MUSA or such subsidiaries. Section 4.18 of the MUSA Disclosure Schedule describes each termination or nonrenewal that has occurred during the 2004 calendar year with respect to any contract with any customer involving payments in excess of $3,000,000 per year or any supplier involving payments in

26

excess of $3,000,000 per year. Section 4.18 of the MUSA Disclosure Schedule also describes each termination or nonrenewal that has occurred between January 1, 2005 and the date of this Agreement with respect to any contract with any customer involving payments reasonably expected to be in excess of $3,000,000 for the 2005 calendar year or any supplier involving payments reasonably expected to be in excess of $3,000,000 for the 2005 calendar year.

     4.19 Environmental Matters. Except for such matters as would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA: (a) MUSA and its subsidiaries and the properties owned, operated and leased by MUSA and its subsidiaries are in compliance with all applicable Environmental Laws and Environmental Permits and any and all past non-compliance of MUSA or any of its subsidiaries with any Environmental Laws or Environmental Permits has been resolved without any pending, ongoing or future obligations, costs or liabilities; (b) MUSA and its subsidiaries hold all required Environmental Permits; (c) neither MUSA, nor its subsidiaries or any property owned, operated or leased by MUSA or its subsidiaries is subject to any existing, pending, or, to the knowledge of MUSA, threatened, Action under any Environmental Laws; (d) there has been no Release of any Hazardous Material (as defined below) in violation of Environmental Laws and no Hazardous Materials are present in violation of Environmental Laws, in each case, at, in, to, from, on or under any property currently or formerly owned, operated or leased by MUSA, its subsidiaries or their respective predecessors, in each case, that could result in a liability to or Action against MUSA or its subsidiaries; (e) neither MUSA nor its subsidiaries has knowledge of or has received notice of any past, present or future events, conditions, circumstances, activities, practices, incidents, actions or plans which are likely to interfere with or prevent compliance or continued compliance by MUSA or its subsidiaries with any Environmental Laws, based on or related to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling, or the Release or exposure to or of any Hazardous Material; (f) neither MUSA nor its subsidiaries, any predecessors of MUSA or its subsidiaries, nor any entity previously owned by MUSA or its subsidiaries, has transported or arranged for the treatment, storage, handling, disposal, or transportation of any Hazardous Material to any off-site location that could result in a liability to or Action against MUSA or its subsidiaries; (g) there are no (i) underground storage tanks, (ii) polychlorinated biphenyl containing equipment, or (iii) asbestos-containing materials at any property owned, operated or leased by MUSA or its subsidiaries; (h) neither MUSA nor its subsidiaries has, either expressly or by operation of law, assumed or undertaken, or agreed to assume or undertake, responsibility for any liability or obligation of any other Person, arising under or relating to Environmental Laws; (i) to MUSA’s knowledge, there have been no environmental investigations, studies, audits, tests, reviews or other analyses that are in the possession of MUSA or its subsidiaries (or any representatives thereof) with respect to any real property owned, operated or leased by MUSA or its subsidiaries that have not been delivered to Parent prior to execution of this Agreement; and (j) neither MUSA nor its subsidiaries is party to any consent decrees, orders, settlement agreements or other agreements with any Governmental Authority pursuant to or related to Environmental Laws. “Environmental Law” means any and all federal, state, local, provincial and foreign, civil and criminal laws, statutes, ordinances, orders, common law, codes, rules, regulations, Environmental Permits, policies, guidance documents, judgments, decrees, injunctions, or agreements with any Governmental Authority, relating to the protection of health and the environment, worker health and safety, and/or governing the handling, use, generation, treatment, storage, transportation, disposal, manufacture, distribution, formulation, packaging, labeling, or Release of or exposure to

27

Hazardous Materials, including but not limited to: the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Hazardous Material Transportation Act 49 U.S.C. § 1801 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act 7 U.S.C. § 136 et seq.; the Resource Conservation and Recovery Act of 1976 (“RCRA”), 42 U.S.C. § 6901 et seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; the Occupational Safety & Health Act of 1970, 29 U.S.C. § 651 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq.; and the state analogies thereto, all as amended or superseded from time to time; and any common law doctrine, including, but not limited to, negligence, nuisance, trespass, personal injury, or property damage related to or arising out of the presence, Release, or exposure to a Hazardous Material. “Environmental Permit” means any permit, approval, grant, consent, exemption, certificate order, easement, variance, franchise, license or other authorization required under or issued pursuant to any applicable Environmental Laws. “Hazardous Material” means petroleum, petroleum hydrocarbons or petroleum products, petroleum by-products, radioactive materials, asbestos or asbestos-containing materials, gasoline, diesel fuel, pesticides, radon, mold, urea formaldehyde, lead or lead-containing materials, polychlorinated biphenyls; and any other chemicals, materials, substances or wastes in any amount or concentration which are defined as or included in the definition of “hazardous substances,” “hazardous materials,” “hazardous wastes,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “pollutants,” “regulated substances,” “solid wastes,” or “contaminants” or words of similar import, under any Environmental Law. “Release” means any spilling, leaking, pumping, pouring, emitting, emptying, migrating, discharging, injecting, escaping, leaching, dumping, or disposing of a Hazardous Material.

     4.20 Insurance. Section 4.20 of the MUSA Disclosure Schedule sets forth a list of all insurance policies maintained by MUSA or any of its subsidiaries. All premiums payable under such policies have been duly paid to date and each such policy is in full force and effect. No notice of cancellation or termination has been received with respect to any such policy. There is no material claim by MUSA or any of its subsidiaries pending under any of such policies and no material claim made since January 1, 2003 has been denied or, in the case of any pending claim, questioned or disputed by the underwriters of such policies. Such policies have been issued by insurers that are reputable and financially sound and provide coverage for the operations conducted by MUSA and its subsidiaries of a scope and coverage consistent with customary industry practice. Neither MUSA nor any of its subsidiaries has been refused any insurance with respect to any of its assets or operations, nor has its coverage been limited, by any insurance carrier to which it has applied for any such insurance or with which it has carried insurance.

     4.21 Properties and Assets. MUSA and its subsidiaries have, and immediately following the Effective Time will continue to have, good and valid title to their owned assets, or in the case of assets and properties they lease, license, or have other rights in, valid rights by lease, license, or other agreement to use, all assets and properties (in each case, tangible and intangible) necessary and desirable to permit MUSA and its subsidiaries to conduct their business as currently conducted, except for such failures to hold valid titles or rights to lease that would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA. The assets and properties (in each case, tangible and intangible) owned or used by MUSA and its subsidiaries are in satisfactory condition and repair for their

28

continued use as they have been used and adequate in all material respects for their current use, subject to reasonable wear and tear.

     4.22 Real Property. Section 4.22(a) of the MUSA Disclosure Schedule sets forth a true and complete list of all real property and interests in real property owned in fee by MUSA or any of its subsidiaries (collectively, the “Owned Real Property”) and the address for each Owned Real Property. Section 4.22(b) of the MUSA Disclosure Schedule sets forth (i) a true and complete list of all real property leased, subleased or otherwise occupied by MUSA or any of its subsidiaries (collectively, the “Leased Real Property” and, together with the Owned Real Property, the “Real Property”), (ii) the address for each Leased Real Property, (iii) an identification of the applicable lease, sublease or other agreement therefor and any and all amendments, modifications, side letters relating thereto, and (iv) current rent amounts payable by MUSA or any of its subsidiaries thereunder. Each of MUSA and its subsidiaries holds good, valid and marketable fee title to the Owned Real Property, free and clear of all Encumbrances, except for Permitted Encumbrances. All buildings, structures, improvements and fixtures located on, under, over or within the Real Property are in a state of good operating condition and repair and are sufficient for the ordinary conduct of business, subject to reasonable wear and tear between the date hereof and the Closing Date. All of the leases, subleases and other agreements (each, a “Lease Agreement”) pursuant to which MUSA or its subsidiaries occupy the Leased Real Property are valid, binding and in full force and effect. True and complete copies of the Lease Agreements have previously been delivered to Parent. To MUSA’s knowledge, there are no outstanding defaults or circumstances which, upon the giving of notice or passage of time or both, would constitute a default or breach by either party under any Lease Agreement. There is no pending or, to MUSA’s knowledge, threatened proceeding that is reasonably likely to interfere with the quiet enjoyment of any lessee or sublessee of a Leased Real Property. “Permitted Encumbrances” means (i) liens and encumbrances consisting of zoning or planning restrictions, easements, permits and other restrictions or limitations on the use of real property or irregularities in title thereto, in each case, that do not materially detract from the value of, or materially impair the use of, such property by MUSA or any of its subsidiaries in the operation of their respective business, (ii) liens and encumbrances of carriers, warehousemen, mechanics, suppliers, materialmen or repairmen arising in the ordinary course of business not in excess of $2 million in the aggregate, (iii) interests of a lessor to any leased property, (iv) liens and encumbrances listed in Section 4.22(c) of the MUSA Disclosure Schedule or (v) liens for Taxes not yet due and payable or that are being contested in good faith by appropriate proceedings and as to which adequate reserves have been established in accordance with GAAP, consistently applied, in the books and records of MUSA or its subsidiaries.

     4.23 Inventory. All of the inventory of MUSA and its subsidiaries reflected on the balance sheet of MUSA as of December 31, 2004 included in the MUSA SEC Documents or thereafter acquired (and not subsequently sold in the ordinary course of business) consists of items of a quality and quantity useable and saleable in the ordinary course of the business of MUSA and its subsidiaries as quality goods at prices having a value at least equal to the amount reflected on the balance sheet of MUSA as of December 31, 2004 included in the MUSA SEC Documents, except as to obsolete and below standard quality inventory, the value of which has been written down on the balance sheet of MUSA as of December 31, 2004 included in the MUSA SEC Documents and on MUSA’s books and records to realizable market value. All items of inventory are valued on the balance sheet of MUSA as of December 31, 2004 included in the

29

MUSA SEC Documents at the lower of cost or estimated realizable market value, in accordance with GAAP. The inventories and supplies for the business of MUSA and its subsidiaries are at adequate levels for the continuation of the business of MUSA and its subsidiaries (assuming the continuation of operations as currently conducted).

     4.24 Accounts Receivable. The accounts receivable of MUSA and its subsidiaries that are reflected on the balance sheet of MUSA as of December 31, 2004 included in the MUSA SEC Documents constitute all of the accounts receivable of MUSA and its subsidiaries as of December 31, 2004, other than those reserved for in the allowance for doubtful accounts on such balance sheet. All of such accounts receivable represent, and those existing on the Closing Date will represent, valid obligations arising from sales actually made or services actually performed and are not and will not be subject to any material contest, claim, or right of set-off, other than returns and adjustments in the ordinary course of business.

     4.25 Books and Records. The books and records of MUSA and its subsidiaries have been fully, properly and accurately maintained in material compliance with applicable legal and accounting requirements, and such books and records accurately reflect in all material respects all dealings and transactions in respect of the business, assets, liabilities and affairs of MUSA and its subsidiaries.

     4.26 Related Party Transactions. Except as set forth in Section 4.26 of the MUSA Disclosure Schedule, there are no outstanding amounts payable to or receivable from, or advances by MUSA or any of its subsidiaries to, and neither MUSA nor any of its subsidiaries is otherwise a creditor or debtor to, or party to any contract, agreement or transaction with, any holder of 5% or more of MUSA Common Stock or any director, officer, employee or affiliate of MUSA or any of its subsidiaries, or to MUSA’s knowledge any relative of any of the foregoing, except for employment or compensation agreements or arrangements with directors, officers and employees made in the ordinary course consistent with past practice. Since December 31, 2004, no event has occurred that would be required to be reported by MUSA under Item 404 of Regulation S-K promulgated by the Commission.

     4.27 Opinion of Jefferies & Co. Inc. The MUSA Board has received the written opinion of Jefferies & Co. Inc., dated as of the date of this Agreement, to the effect that, as of the date of this Agreement, the consideration to be received by the MUSA Stockholders pursuant to the Merger is fair to the MUSA Stockholders (other than Parent and its affiliates and other than MUSA Stockholders who will have a continuing investment in Parent or Surviving Corporation) from a financial point of view. MUSA shall provide a complete and correct signed copy of such opinion to Parent solely for informational purposes as soon as practicable after the date of this Agreement.

     4.28 Board Recommendation; Required Vote. The MUSA Board, at a meeting duly called and held, has, by unanimous vote of those directors present and voting with the only director then in office not voting being C. Lourenco Goncalves, who abstained from the vote, (a) determined that this Agreement and the transactions contemplated hereby, including the Merger, are advisable, fair to and in the best interests of the MUSA Stockholders; (b) declared advisable and in all respects approved and adopted this Agreement, and the transactions contemplated by this Agreement (other than the transactions contemplated by the Employment Agreement and the

30

Support Agreement), including the Merger, taking into account the terms of the Support Agreement; and (c) resolved to recommend that the MUSA Stockholders approve and adopt this Agreement and the Merger (the “MUSA Board Recommendation”), and the MUSA Board Recommendation has not been withdrawn, modified, qualified or otherwise changed in a manner adverse to Parent, provided that any withdrawal, modification or qualification of such recommendation in accordance with Section 1.6(c) shall not be deemed a breach of this representation. Assuming that the representations and warranties of Parent and Merger Sub set forth in Section 3.8 are true and correct, the affirmative vote of holders of a majority of the outstanding shares of MUSA Common Stock to approve and adopt this Agreement and the Merger is the only vote of the holders of any class or series of capital stock of MUSA necessary to approve and adopt this Agreement and approve the transactions contemplated by this Agreement, including the Merger.

     4.29 Section 203 of the DGCL. Prior to the date of this Agreement, the MUSA Board has taken all action necessary so that the restrictions on business combinations contained in Section 203 of the DGCL will not apply with respect to or as a result of this Agreement, the Support Agreement or the transactions contemplated hereby or thereby, including the Merger, without any further action on the part of the MUSA Stockholders or the MUSA Board. No other state takeover statute is applicable to the Merger.

ARTICLE V

COVENANTS OF THE PARTIES

     The parties hereto agree that:

     5.1 Mutual Covenants.

     (a) Reasonable Best Efforts. Subject to the terms and conditions of this Agreement, MUSA and Parent will use (and will cause their respective subsidiaries to use) their reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under this Agreement or Applicable Laws to consummate and make effective as soon as reasonably practicable, the Merger and the other transactions contemplated by this Agreement, including working together to ensure a smooth transition with respect to, and to maintain existing relationships with, employees, customers and suppliers of MUSA and its subsidiaries.

     (b) HSR Act.

     (i) MUSA and Parent shall, promptly after the execution and delivery of this Agreement, file with the Federal Trade Commission and the United States Department of Justice the notification required to be filed with respect to the transactions provided in this Agreement under the HSR Act (and request early termination of the waiting period) and shall file promptly with the appropriate Governmental Authorities all notifications (if any) required under applicable Foreign Antitrust Laws. Each of MUSA and Parent shall, in connection therewith, cooperate as necessary to promptly amend such filings or supply additional

31

information and documentary material as may be requested pursuant to the HSR Act or Foreign Antitrust Laws.

     (ii) Each party hereto, through outside counsel, will (A) promptly notify every other party hereto of any written communication to that party from any Governmental Authority concerning this Agreement or the transactions contemplated hereby and, if practicable, permit each other party’s counsel to review in advance any proposed written communication to any such Governmental Authority concerning this Agreement or the transactions contemplated hereby and incorporate each other party’s reasonable comments; (B) not agree to participate in any substantive meeting or discussion with any such Governmental Authority in respect of any filing, investigation or inquiry concerning this Agreement or the transactions contemplated hereby unless it consults with each other party’s counsel in advance, and, to the extent permitted by such Governmental Authority, gives each other party the opportunity to attend; and (C) furnish to each other party’s counsel copies of all correspondence, filings, and written communications between them and their respective representatives on the one hand, and any such Governmental Authority or its respective staff on the other hand, with respect to this Agreement or the transactions contemplated hereby; provided, however, that, in each case, any references to the valuation of the Merger and the transactions contemplated hereby may be redacted from the information or documentation furnished or made available to such other party’s counsel.

     (c) Public Announcements. Parent and MUSA will consult with each other before issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby, except as may be required by Applicable Laws or any listing agreement with or any rules of national securities exchange, in which case the issuing party will use its commercially reasonable effort to consult with the other party before it issues any such press release or make any such public statement.

     (d) Conveyance Taxes. MUSA and Parent shall cooperate in the preparation, execution and filing of all Tax Returns, questionnaires, applications or other documents regarding any real property transfer or gains, sales, use, transfer, value added, stock transfer and stamp taxes, any transfer, recording, registration and other fees, and any similar Taxes that become payable in connection with the transactions contemplated by this Agreement that are required or permitted to be filed on or before the Effective Time.

     (e) Notice of Certain Events. Each of MUSA and Parent shall promptly notify the other of:

     (i) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

32

     (ii) any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; and

     (iii) any Actions commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting MUSA, Parent or any of their respective subsidiaries that relate to the consummation of the transactions contemplated by this Agreement, including the Merger.

(f) Repayment of Certain Existing Indebtedness of MUSA.

     (i) On the Closing Date, simultaneously with the Closing, subject to the terms and conditions set forth herein, Parent shall provide the necessary funds to allow MUSA or the Surviving Corporation to, and Parent and MUSA shall cause MUSA or Surviving Corporation to, repay in full any Obligations (as defined in the Loan Agreement) outstanding under the Loan and Security Agreement, dated as of October 31, 2002 (as amended, the “Loan Agreement”), among MUSA, its subsidiaries, Bank of America, National Association, as administrative agent, and the other lenders named therein.

     (ii) MUSA shall (or shall cause its subsidiaries to) either (A) prepay in full all amounts due (including the Prepayment Premium (as defined in the Note)) under the Promissory Note, from Metals USA Carbon Flat Rolled, Inc. to Bank One, N.A., dated October 31, 2002 (the “Note”), such prepayment to occur on June 30, 2005, or (B) obtain on or prior to June 30, 2005 a written consent from Bank One, N.A. (or the assignee thereof, if applicable), in form and substance reasonably satisfactory to Parent, providing for the right of Metals USA Carbon Flat Rolled, Inc. to prepay in full the Note (without any premium or penalty other than the Prepayment Premium) on the Closing Date, such consent to be obtained without the incurrence (or an agreement to incur) of any cost, expense or other liability, other than incidental administrative or legal costs.

     (g) Actions and Proceedings. In the event that any administrative or judicial Action is instituted (or threatened to be instituted) by a Governmental Authority or private party challenging any transaction contemplated by this Agreement, or any other agreement contemplated hereby, each of Parent and MUSA shall cooperate in all respects with each other and use its respective commercially reasonable efforts to contest and resist any such Action and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated by this Agreement.

     5.2 Covenants of Parent.

     (a) Indemnification; Directors’ and Officers’ Insurance.

     (i) Without limiting any additional rights that any employee, officer or director of MUSA or any of its subsidiaries may have under any employment

33

agreement or Plan or under the MUSA Certificate or the MUSA Bylaws, after the Effective Time, Parent shall, and shall cause the Surviving Corporation to, indemnify and hold harmless each present and former officer and director of MUSA and its subsidiaries (the “Indemnified Directors and Officers”), against all claims, losses, liabilities, damages, judgments, inquiries, fines and reasonable fees, costs and expenses, including, attorneys’ fees and disbursements (collectively, “Costs”), incurred in connection with any Action, whether civil, criminal, administrative or investigative, arising out of acts or omission taken or omitted to be taken by them in their capacity as officers or directors at or prior to the Effective Time (including this Agreement and the transactions and actions contemplated hereby), or taken by them at or prior to the Effective Time at the request of MUSA or any MUSA subsidiary, whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent permitted under Applicable Laws for a period of six years from and after the Effective Time and to the extent provided for in the MUSA Certificate and the MUSA Bylaws. Each Indemnified Director and Officer will be entitled, to the extent provided for in the MUSA Certificate and the MUSA Bylaws, to advancement of expenses incurred in the defense of any Action from the Surviving Corporation.

     (ii) From and after the Effective Time, Parent shall cause the Persons serving as directors and officers of MUSA immediately prior to the Effective Time to be covered by directors’ and officers’ liability insurance policy(ies) maintained by Surviving Corporation, with limits, terms and conditions at least as favorable as those in the existing policies of MUSA, for a period of six years from and after the Effective Time with respect to acts or omissions occurring prior to the Effective Time; provided, that Parent may substitute therefor a single premium tail coverage with respect to directors’ and officers’ liability insurance for acts or omissions occurring prior to the Effective Time that were committed by such directors and officers in their capacities as such, with policy limits, terms and conditions at least as favorable as the limits, terms and conditions in the existing policies of MUSA (or with such other limits, terms and conditions as permitted by the final two provisos of this sentence); provided, further, that in no event shall Parent be required to expend an amount pursuant to this Section 5.2(a)(ii) in excess of 200% of the current annual premium paid by MUSA for its existing coverage in the aggregate (the “Insurance Amount”); and provided, further, that if Parent is unable to obtain tail coverage with policy limits, terms and conditions at least as favorable to the limits, terms and conditions in the existing policies of MUSA as a result of the preceding provision, Parent shall obtain the most advantageous tail coverage as is available for the Insurance Amount.

     (iii) The certificate of incorporation and bylaws of the Surviving Corporation shall continue to contain provisions no less favorable with respect to indemnification, advancement of expenses and exculpation of the Indemnified Directors and Officers than are presently set forth in the MUSA Certificate and the MUSA Bylaws, which provisions shall not be amended, repealed or otherwise

34

modified for a period of six years from the Effective Time in any manner that would adversely affect the rights thereunder of any such individuals.

     (iv) Notwithstanding anything herein to the contrary, if any Action (whether arising before, at or after the Closing Date) is made against any Indemnified Director or Officer or any other party covered by directors’ and officers’ liability insurance, on or prior to the sixth anniversary of the Effective Time, the provisions of this Section 5.2(a) shall continue in effect until the final disposition of such Action.

     (v) This Section 5.2(a) is intended to be for the benefit of, and shall be enforceable by, each of the Indemnified Directors and Officers and their respective heirs and legal representatives. The indemnification provided for herein shall not be deemed exclusive of any other rights to which an Indemnified Director or Officer is entitled, whether pursuant to Applicable Laws, contract or otherwise, which contracts or other arrangements are listed in Section 5.2(a)(v) of the MUSA Disclosure Schedule.

     (vi) In the event that the Surviving Corporation or any of its successors or assigns (A) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (B) transfers or conveys all or substantially all of its properties and assets as an entirety in one or a series of related transactions to any Person(s), then, and in each such case, proper provision shall be made so that such continuing or surviving corporation or entity or such Persons(s), as the case may be, shall assume the obligations set forth in this Section 5.2(a); provided that the Surviving Corporation shall not be relieved from such obligation. In addition, the Surviving Corporation shall not distribute, sell, transfer or otherwise dispose of any of its assets in a manner that would reasonably be expected to render the Surviving Corporation (or any successor or assignee of its obligations hereunder) unable to satisfy its obligations under this Section 5.2(a).

     (b) Financing. Parent shall use its reasonable best efforts to obtain the Financing within 30 days after all of the conditions in Article VI (other than the condition set forth in Section 6.2(d)) have been satisfied or are capable of being satisfied, on the terms and conditions set forth in the Financing Agreements. Parent shall keep MUSA informed on a reasonably current basis of the status of the financing process relating thereto. In the event that any portion of the Debt Financing becomes unavailable, regardless of the reason therefor, Parent will (i) use its reasonable best efforts to obtain alternative financing (in an amount sufficient, when taken together with the proceeds from the Equity Financing, to pay the Required Amounts) on substantially comparable or more favorable terms from other sources within 30 days after all of the conditions in Article VI (other than the condition set forth in Section 6.2(d)) have been satisfied or are capable of being satisfied and (ii) promptly notify MUSA of such unavailability and the reason therefor. From the date hereof until the first to occur of a termination of this Agreement in accordance with Article VII or the Effective Time, Parent will not, without the prior written consent of MUSA, (A) amend either of the Financing Agreements in

35

order to include additional conditions to the consummation of the Financing, except for additional conditions that in the ordinary course would be satisfied at or prior to the time the other conditions herein and therein would be satisfied or (B) terminate either of the Financing Agreements, unless the Debt Financing becomes unavailable and Parent is using its reasonable best efforts to obtain alternative financing in accordance with this Section 5.2(b).

     (c) Disclosure Documents. Parent shall promptly prepare and file (separately, or as part of the Proxy Statement) with the Commission, if required, a Rule 13E-3 Transaction Statement (the “Transaction Statement”) with respect to the Merger (together with any supplements or amendments thereto, collectively, the “Parent Disclosure Documents”) that will comply as to form in all material respects with the applicable requirements of the Exchange Act. MUSA and its counsel shall be given an opportunity to review and comment on the Transaction Statement prior to its being filed with the Commission.

     5.3 Covenants of MUSA.

     (a) Conduct of MUSA’s Operations. From the date hereof until the first to occur of a termination of this Agreement in accordance with Article VII or the Effective Time, MUSA shall and shall cause each of its subsidiaries to conduct its business and operate its properties in the ordinary course of business consistent with past practice and MUSA shall and shall cause each of its subsidiaries to use its reasonable best efforts to preserve intact its business organization and relationships with third parties and to keep available the services of its present officers and employees. Without limiting the generality of the foregoing, except with the prior written consent of Parent or as required by this Agreement or as set forth in Section 5.3(a) of the MUSA Disclosure Schedule, from the date hereof until the Effective Time, MUSA shall not:

     (i) do or effect any of the following actions with respect to its securities or the securities of its subsidiaries: (A) adjust, split, combine or reclassify MUSA capital stock or that of its subsidiaries, (B) make, declare or pay any dividend or distribution on (other than dividends or distributions by a direct or indirect wholly owned subsidiary of MUSA to its parent), or, directly or indirectly, redeem, purchase or otherwise acquire, any shares of MUSA capital stock or that of its subsidiaries or any securities or obligations convertible into or exchangeable for any shares of MUSA capital stock or that of its subsidiaries, (C) grant any Person any right or option to acquire any shares of MUSA capital stock or that of its subsidiaries or any other equity-based compensation award based on shares of MUSA capital stock or that of its subsidiaries, (D) issue, deliver, sell, pledge or encumber or agree to issue, deliver, sell, pledge or encumber any shares of MUSA capital stock or any securities or obligations convertible into or exchangeable or exercisable for any shares of MUSA capital stock or such securities (except pursuant to (1) the exercise of MUSA Options that are outstanding as of the date of this Agreement and in accordance with the existing terms of such MUSA Options, (2) the vesting of any MUSA Deferred Stock Right outstanding as of the date of this Agreement, or (3) issuances of shares of MUSA

36

Common Stock upon conversion of MUSA Warrants) or the capital stock or such securities of its subsidiaries, or (E) enter into any agreement, understanding or arrangement with respect to the sale, voting, registration or repurchase of MUSA capital stock or that of its subsidiaries;

     (ii) directly or indirectly, sell, transfer, lease, pledge, mortgage, encumber or otherwise dispose of its property or assets (including stock or other ownership interests of its subsidiaries) (collectively, “Transfers”), other than Transfers in the ordinary course of business consistent with past practice;

     (iii) make or propose any changes in the MUSA Certificate or the MUSA Bylaws or the organizational documents of any subsidiary;

     (iv) (A) merge or consolidate with any other Person or (B) adopt a plan of complete or partial liquidation, dissolution, recapitalization or other reorganization, other than, with respect to clause (A), mergers or consolidations consummated to effectuate an acquisition pursuant to clause (v) immediately below;

     (v) acquire assets or capital stock of any other person, other than acquisitions for consideration not in excess of $1,000,000 individually or $3,000,000 in the aggregate;

     (vi) incur, create, assume or otherwise become liable for any indebtedness for borrowed money or assume, guarantee, endorse or otherwise become responsible or liable for the obligations of any other individual, corporation or other entity (not including direct or indirect wholly owned subsidiaries of MUSA), other than in the ordinary course of business, consistent with past practice, and not, in any case, in an aggregate amount in excess of $1,000,000;

     (vii) (A) create any subsidiaries, other than, with respect to this clause (A), as permitted pursuant to clauses (iv) and (v) above or (B) alter through merger, liquidation, reorganization, restructuring or in any other fashion the corporate structure or ownership of any of its existing subsidiaries;

     (viii) (A) establish, or increase compensation or benefits provided under, any of its Plans or employment or consulting agreements, except for increases to base salary in the ordinary course of business consistent with past practices for employees of MUSA or its subsidiaries who earn less than $150,000 per year and other than as provided in clause (D) below, (B) except as otherwise provided in Sections 2.3(a) and (b), otherwise increase or accelerate the vesting or payment of the compensation payable or the benefits provided or to become payable or provided to any of its current or former directors, officers, employees, consultants or service providers or those of any subsidiary, or otherwise pay any amounts not due such individual, including without limitation, with respect to severance, (C) enter into any new or amend any existing employment or consulting agreement

37

with any director or officer of MUSA (such directors and officers, taken together, the “Key MUSA Individuals”), (D) without the prior written consent of Parent, enter into any new or amend any existing employment or consulting agreement with any employee, consultant or service provider or hire or retain the services of any such person if the compensation (base salary and any guaranteed and/or signing bonuses) shall exceed $50,000, provided that this clause (D) shall not apply (x) to the Key MUSA Individuals, (y) to outside counsel retained in the ordinary course of business or (z) with respect to the incurrence of Transaction Fees, subject to Section 5.3(f), .(E) establish, adopt or enter into any collective bargaining agreement, or (F) fund or make any contribution to any Plan or any related trust or other funding vehicle, other than regularly scheduled contributions to trusts funding qualified plans, except in each of clauses (A), (B), (D), (E) and (F) as may be required to comply with Applicable Law, any Plans or existing contractual arrangements;

     (ix) except as permitted under clause (viii) above or as contemplated by this Agreement, enter into, adopt or amend any Plan (or any new arrangement that would constitute a Plan), except as shall be required by Applicable Laws;

     (x) change any method or principle of Tax or financial accounting, except to the extent required by GAAP or Applicable Law as advised by MUSA’s regular independent tax advisors or accountants;

     (xi) renew or enter into any noncompete, exclusivity or similar agreement that would restrict or limit, in any material respect, the operations of MUSA and its subsidiaries, or, after the Effective Time, Parent or its subsidiaries;

     (xii) settle or compromise any material Actions, whether now pending or hereafter made or brought, or waive, release or assign any material rights or claims, or settle any other Actions other than in the ordinary course of business and without any admission of wrongdoing or liability;

     (xiii) (A) enter into any contract that would constitute a Material Contract or any agreement or series of related agreements having an aggregate value over its term greater than $1,000,000, or (B) modify, amend or terminate, or waive, release or assign any material rights or claims with respect to, any Material Contract or any agreement or series of related agreements having an aggregate value over its term greater than $1,000,000;

     (xiv) renew, enter into, amend or waive any material right under any contract with, or loan to, any affiliate of MUSA (other than its director indirect wholly owned subsidiaries);

     (xv) incur or commit to any capital expenditures that, individually or in the aggregate, would cause total capital expenditures of MUSA and its subsidiaries for the calendar year 2005 to exceed $23,326,000;

38

         (xvi) make, revoke or amend any Tax election, enter into any closing agreement, settle or compromise any claim or assessment with respect to Taxes, agree to any adjustment of any Tax attribute, file any claim for a refund of Taxes, execute or consent to any waivers extending the statutory period of limitations with respect to the collection or assessment of any Taxes or, without consulting prior thereto with Parent, file any Tax Returns (including any amended Tax Returns);

         (xvii) permit or cause any of its subsidiaries to do any of the foregoing or agree or commit to do any of the foregoing (it being understood that for purposes of each of clauses (v), (vi) and (xv) of this Section 5.3(a), the aggregate dollar thresholds referred to therein shall be the aggregate thresholds for conduct by MUSA and its subsidiaries taken as a whole with respect to the covenants contained in such clauses); or

     (xviii) agree in writing or otherwise to take any of the foregoing actions.

     (b) Acquisition Proposals.

     (i) Subject to Section 5.3(b)(iii), MUSA agrees that neither it nor any of its subsidiaries nor any of the officers and directors of it or its subsidiaries shall, and that it shall cause its and its subsidiaries’ employees, agents and representatives (including any investment banker, attorney or accountant retained by it or any of its subsidiaries) (“Representatives”) not to, directly or indirectly, (A) initiate, solicit, encourage or facilitate any inquiries with respect to, or the making of, an Acquisition Proposal, (B) engage in any negotiations concerning, or provide any confidential information or data to, have any discussions with, any individual, corporation, general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, Governmental Authority or other entity of any kind or nature (each, a “Person”) relating to, or otherwise facilitate, an Acquisition Proposal, (C) approve or recommend or propose publicly to approve or recommend, any Acquisition Proposal or (D) approve or recommend, or determine to approve or recommend, or execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement, option agreement or other similar agreement (other than a confidentiality agreement as contemplated by and in accordance with Section 5.3(b)(iii)) or propose publicly or agree to do any of the foregoing relating to any Acquisition Proposal.

     (ii) Notwithstanding anything in this Agreement to the contrary, nothing contained in this Agreement shall prevent MUSA or the MUSA Board from complying with its disclosure obligations under Sections 14d-9 and 14e-2 promulgated under the Exchange Act with regard to an Acquisition Proposal; provided, however, that if the MUSA Board either (A) does not re-affirm the MUSA Board Recommendation in any such disclosure document or communication or (B) subject to the compliance with the other provisions of this Section 5.3(b), withdraws, modifies or qualifies the approval of this Agreement

39

by the MUSA Board or the MUSA Board Recommendation in a manner adverse to Parent in such disclosure documents or communications, then, in either such case, Parent shall have the right to terminate this Agreement to the extent set forth in Section 7.4(a) of this Agreement.

     (iii) Notwithstanding anything in this Agreement to the contrary, nothing contained in this Agreement shall prevent MUSA or the MUSA Board from at any time prior to, but not after, the time this Agreement is approved and adopted by the MUSA Stockholders at the MUSA Stockholders Meeting, (A) providing information in response to a request therefor by, or engaging in any negotiations or discussions with, a Person that has made an unsolicited bona fide written Acquisition Proposal (and with respect to such Person and Acquisition Proposal, MUSA has not violated Section 5.3(b)(i)) if the MUSA Board receives from such Person an executed confidentiality agreement on customary terms no less favorable to MUSA than the Confidentiality Agreement, dated as of February 1, 2005, between MUSA and an affiliate of Parent (the “Confidentiality Agreement”); or (B) recommending such an unsolicited bona fide written Acquisition Proposal to the MUSA Stockholders, if and only to the extent that, (1) in each such case referred to in clause (A) or (B) above, (I) the MUSA Board determines in good faith after consultation with outside legal counsel that such action is necessary in order for its directors to comply with their fiduciary duties under Applicable Laws, and (II) such Acquisition Proposal was not solicited by MUSA, any subsidiary thereof or any officer, director, employee, agent or Representative of any of the foregoing acting on behalf of or at the direction of MUSA or any of its subsidiaries and did not otherwise result from a breach of this Section 5.3(b); (2) in the case of clause (A) above, the MUSA Board determines in good faith after consultation with outside legal counsel and outside financial advisors that it is reasonably likely to result in a Superior Proposal; and (3) in the case of clause (B) above, (I) the MUSA Board determines in good faith that such Acquisition Proposal constitutes a Superior Proposal, (II) Parent shall have received written notice (the “Superior Proposal Notice”) of MUSA’s intention to take the action referred to in clause (B) at least four business days prior to the taking of such action by MUSA, and (III) during such four business day period (the “Waiting Period”) MUSA and its advisors shall have negotiated in good faith with Parent and Merger Sub to make adjustments in the terms and conditions of this Agreement and the MUSA Board fully considers any such adjustment and nonetheless concludes in good faith that such Acquisition Proposal constitutes a Superior Proposal. If the MUSA Board recommends an unsolicited bona fide written Acquisition Proposal pursuant to clause (B) above, Parent shall be entitled to terminate this Agreement pursuant to Section 7.4(a) of this Agreement.

     (iv) Except as permitted by Section 1.6(c) or Section 5.3(b)(iii), neither the MUSA Board nor any committee thereof shall (i) withdraw, modify or qualify, or propose publicly to withdraw, modify or qualify, in a manner adverse to Parent, the approval of the Agreement, the Merger, any of the transactions contemplated hereby or the MUSA Board Recommendation or take any action or make any statement in connection with the MUSA Stockholders Meeting

40

inconsistent with such approval or MUSA Board Recommendation (collectively, a “Change in the MUSA Board Recommendation”), or (ii) approve or recommend, or propose publicly to approve or recommend, any Acquisition Proposal. For purposes of this Agreement, a Change in the MUSA Board Recommendation shall include any approval or recommendation (or public proposal to approve or recommend) by the MUSA Board of an Acquisition Proposal, or any failure by the MUSA Board to recommend against an Acquisition Proposal in any case where the MUSA Board is required by Applicable Laws to make a recommendation or otherwise make a statement with respect to an Acquisition Proposal, it being agreed that if an Acquisition Proposal has become publicly known, the MUSA Board will make such a statement as promptly as practicable (having had a reasonable opportunity to consider promptly such Acquisition Proposal) in accordance with Applicable Laws, and the failure by MUSA within such reasonable time period to reaffirm the MUSA Board Recommendation shall be deemed to be a Change in the MUSA Board Recommendation.

     (v) MUSA agrees that it will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any Person (other than the parties hereto) conducted heretofore with respect to any Acquisition Proposal. MUSA agrees that it will take the necessary steps to promptly inform the individuals or entities referred to in the first sentence of Section 5.3(b)(i) of the obligations undertaken in this Section 5.3(b). MUSA also agrees promptly, but in any event, within five days after the date of this Agreement, to request the return or destruction of all information and materials provided prior to the date of this Agreement by it, its subsidiaries or their respective officers, directors, employees, agents or Representatives with respect to the consideration or making of any Acquisition Proposal.

     (vi) From and after the execution of this Agreement, MUSA shall promptly orally notify Parent of any request for information or any inquiries, proposals or offers relating to an Acquisition Proposal, indicating, in connection with such notice, the name of such Person making such request, inquiry, proposal or offer and the material terms and conditions of any proposals or offers and MUSA shall provide to Parent written notice of any such inquiry, proposal or offer within 24 hours of such event, as well as a copy of any such request, inquiry, proposal or offer to the extent in writing. MUSA shall keep Parent informed orally on a current basis of the status of any Acquisition Proposal, including with respect to the status and terms of any such proposal or offer and whether any such proposal or offer has been withdrawn or rejected and MUSA shall provide to Parent prompt written notice of any such developments within 24 hours. MUSA also agrees to provide any information to Parent that it is providing to another Person pursuant to this Section 5.3(b) at the same time it provides such information to such other Person.

     (vii) Without limiting the foregoing, it is understood that any violation of the restrictions set forth in this Section 5.3(b) by any officer, director or

41

(subject to the proviso below) employee of MUSA or any of its subsidiaries or any agent or Representative of MUSA or any of its subsidiaries, whether or not such Person is purporting to act on behalf of MUSA or any of its subsidiaries or otherwise, shall be deemed to be a breach of this Section 5.3(b) by MUSA; provided, however, that with respect to any such violation by an employee of MUSA or any of its subsidiaries, such violation shall not be deemed to be a breach of this Section 5.3(b) by MUSA unless such violation, directly or indirectly, results in, or is reasonably likely to result in, the submission of an Acquisition Proposal by any Person other than Parent or Merger Sub.

     (viii) Notwithstanding anything to the contrary contained herein, this Agreement shall be submitted to the MUSA Stockholders for the purpose of approving and adopting this Agreement and the Merger, regardless of the recommendation or any change in the recommendation of the MUSA Board with respect thereto, unless this Agreement has been validly terminated in accordance with Article VII.

     (ix) For purposes of this Agreement:

     (A) “Acquisition Proposal” means any proposal or offer with respect to (1) a merger, reorganization, share exchange, consolidation, business combination, recapitalization, dissolution, liquidation or similar transaction involving MUSA, (2) any purchase of an equity interest (including by means of a tender or exchange offer) representing an amount equal to or greater than a 25% voting or economic interest in MUSA, or (3) any purchase of assets, securities or ownership interests representing an amount equal to or greater than 25% of the consolidated assets of MUSA and its subsidiaries taken as a whole (including stock of the subsidiaries of MUSA).

     (B) “Superior Proposal” means a bona fide written Acquisition Proposal (except that (i) references in the definition of “Acquisition Proposal” to “25%” shall be replaced by “100%” and (ii) such Acquisition Proposal may include a transaction proposed to be consummated in two related steps, provided that such Person shall be required by the terms of the related acquisition agreement to complete both such steps) made by a Person other than a party hereto that is on terms that the MUSA Board (after consultation with its outside financial advisor and outside counsel) in good faith concludes, taking into account all legal, financial, regulatory and other aspects of the proposal, the likelihood of obtaining financing, the likely consummation date of the transaction contemplated by the proposal, and the Person making the proposal, would, if consummated, result in a transaction more favorable to the MUSA Stockholders from a financial point of view than the transaction contemplated by this Agreement, taking into account any change in the transaction proposed by Parent within the Waiting Period (or any successive Waiting Period).

42

     (c) Third Party Standstill Agreements. During the period from and after the date hereof until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VII, MUSA shall not terminate, amend, modify or waive any provision of any confidentiality or standstill agreement to which it or any of its subsidiaries is a party (other than any involving Parent or its subsidiaries). During such period, MUSA agrees to use commercially reasonable efforts to enforce, to the fullest extent permitted under Applicable Laws, the provisions of any such agreements.

     (d) Access.

     (i) During the period from and after the date hereof until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VII, and subject to Applicable Laws and the Confidentiality Agreement, MUSA shall (A) give Parent, its counsel, financial advisors, auditors and other authorized representatives reasonable access during normal business hours and upon reasonable notice to the offices, properties, books and records of MUSA and its subsidiaries (including, without limitation, all documentation with respect to all required Environmental Permits of MUSA and its subsidiaries and access to any offices, properties, books, records and any other information reasonably requested by Parent regarding the compliance by MUSA and its subsidiaries with occupational safety and health laws and regulations), (B) furnish to Parent, its counsel, financial advisors, auditors and other authorized representatives to the extent reasonably available such financial and operating data and other information as such Persons may reasonably request (including, to the extent reasonably practicable, furnishing to Parent MUSA’s financial results in advance of filing any MUSA SEC Documents containing such financial results), (C) instruct the employees, counsel, financial advisors, auditors and other authorized representatives of MUSA and its subsidiaries to cooperate in all reasonable respects with Parent in its investigation of MUSA and its subsidiaries and (D) promptly advise Parent orally and in writing of any fact or circumstance reasonably likely to have a Material Adverse Effect on MUSA; provided that information provided to Parent and its representatives pursuant to this Section 5.3(d)(i) shall be subject to the Confidentiality Agreement; provided, further, that (1) any investigation pursuant to this Section 5.3(d)(i) shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of MUSA and its subsidiaries; (2) neither MUSA nor any of its subsidiaries shall be required to prepare special records, reports, analyses or other information that they do not prepare in the ordinary course of business, unless such preparation would not impose an unreasonable burden; and (3) neither MUSA nor any of its subsidiaries shall be required to take any action that would constitute a waiver of the attorney-client privilege. No information or knowledge obtained by Parent in any investigation pursuant to this Section 5.3(d)(i) shall affect or be deemed to modify any representation or warranty made by MUSA hereunder.

     (ii) During the period from and after the date hereof until the earlier of the Effective Time and the termination of this Agreement pursuant to Article VII, and subject to the Confidentiality Agreement, MUSA shall cooperate with Parent

43

and its representatives to permit Parent and its representatives to conduct a full review of all claims asserted by or against MUSA, any of its subsidiaries or any of their respective directors, officers or employees in litigation or threatened litigation, including by giving Parent and its representatives, at Parent’s discretion and upon Parent’s reasonable notice, access to MUSA’s (or any subsidiary’s) personnel, books and records (including, but not limited to, electronic communications), counsel (including, without limitation, records or reports of counsel), and other pertinent information deemed necessary by Parent to assess any such claims; provided, however, that to the extent that any portion of the information requested by Parent or its representatives from MUSA’s counsel is subject to the attorney-client privilege, such portion may be withheld from Parent and its representatives unless Parent agrees to enter into a customary joint defense or similar agreement.

     (e) Financing Assistance. From the date of this Agreement until the Effective Time, MUSA and its subsidiaries shall, and shall use their reasonable best efforts to cause each of their respective officers, directors, employees, advisors, attorneys, accountants and representatives to, provide all cooperation reasonably requested by Parent in connection with the arrangement of the Financing (or the arrangement of the alternative financing, if any, contemplated by Section 5.2(b)), including (i) using reasonable best efforts to (A) cause appropriate officers and employees to be available, on a customary basis and on reasonable advance notice, to meet with prospective lenders and investors in meetings, presentations, road shows and due diligence sessions, (B) assist with the preparation of disclosure documents in connection therewith, (C) cause its independent accountants to provide reasonable assistance to Parent, including providing consent to Parent to prepare and use their audit reports and SAS 100 reviews relating to MUSA and its subsidiaries and to provide any necessary “comfort letters” and (D) cause its attorneys to provide reasonable assistance to Parent, including to provide any necessary and customary legal opinions and (ii) executing and delivering any commitment letters, underwriting or placement agreements, registration statements, pledge and security documents, other definitive financing documents, or other requested certificates or documents, including allowing for a certificate of the chief financial officer of MUSA with respect to solvency or other matters; provided that none of the letters, agreements, registration statements, documents and certificates referenced in clause (ii) above shall be executed and delivered except in connection with the Closing (and the effectiveness thereof shall be conditioned upon the occurrence of the Closing); and provided, further, that MUSA shall not be required to provide any such assistance which would interfere unreasonably and materially with the business or operations of MUSA and its subsidiaries. Parent shall promptly, upon request by MUSA, reimburse MUSA for all reasonable out-of-pocket third party costs incurred by MUSA or any of its subsidiaries in connection with such cooperation.

     (f) Expense Certificates. No later than two business days prior to the Closing Date, MUSA shall deliver, or cause to be delivered, to Parent (i) a certificate duly executed by an authorized officer on behalf of MUSA setting forth in detail the true and accurate total of Transaction Fees, and (ii) backup confirmation of such calculation, including statements or certificates from each law firm, accounting firm and investment

44

bank to which fees and expenses have been paid or will be payable by MUSA or its subsidiaries in connection with the Merger and the transactions contemplated by this Agreement, setting forth the aggregate amount of all such fees and expenses, and acknowledging that no further amounts (other than amounts reasonably estimated through the Closing) will be due from MUSA or its subsidiaries in connection herewith and therewith providing the Closing shall occur. After the date hereof, MUSA agrees to consult and cooperate with Parent to the extent that actual Transaction Fees become likely to exceed the estimate provided pursuant to Section 4.6, in an effort to minimize such expenses to the extent reasonably practicable.

     (g) Consents Cooperation. MUSA shall keep Parent informed, and shall consult with Parent in advance, in connection with any action it or any of its subsidiaries take in connection with obtaining any consents or approvals required as a condition to the Closing pursuant to Section 6.2(g). Notwithstanding anything to the contrary herein, with respect to any contract, agreement or other instrument for which a consent or approval is required pursuant to Section 6.2(g), in no event shall MUSA or any of its subsidiaries be permitted, without the prior written consent of Parent (which consent shall not be unreasonably withheld), to incur or agree to incur any costs, expenses or other liabilities in connection with obtaining any such consent or approval, except for incidental administrative and legal costs or similar such costs required to be paid pursuant to such contract, agreement or instrument. Parent and MUSA shall cooperate with each other and use their good faith efforts to agree upon a course of action with respect to obtaining such consents or approvals. MUSA agrees to act in good faith with respect to obtaining the consents required by Section 6.2(g) in order to limit the amount of any such costs. Parent and MUSA shall work together, taking into account relevant legal advice as well as their good faith business judgment, in considering the proper course of action with respect to the consents or approvals required by Section 6.2(g), which actions may include agreeing not to seek such a consent based on applicable requirements or other considerations (in which event such consent shall not be required to be obtained in order to satisfy the condition set forth in Section 6.2(g)).

ARTICLE VI

CONDITIONS TO THE MERGER

     6.1 Conditions to the Obligations of Each Party. The obligations of MUSA, Parent and Merger Sub to consummate the Merger shall be subject to the satisfaction or waiver of the following conditions at or prior to the Effective Time:

     (a) This Agreement shall have been approved and adopted by the MUSA Stockholders in accordance with Applicable Laws, the MUSA Certificate and the MUSA Bylaws.

     (b) The requisite waiting period, if any, under the HSR Act shall have expired or terminated.

45

     (c) All approvals and consents required under applicable Foreign Antitrust Laws as a result of the execution of this Agreement or the consummation of the transactions contemplated hereby shall have been obtained, except for such consents or approvals the failure of which to obtain would not, individually or in the aggregate, have a Material Adverse Effect on MUSA or Parent or materially adversely affect the operation of the business of Surviving Corporation and its subsidiaries from and after the Closing.

     (d) No provision of any Applicable Law and no judgment, temporary restraining order, preliminary or permanent injunction, order, decree or other legal restraint or prohibition shall prohibit the consummation of the Merger.

     6.2 Conditions to Obligations of Parent and Merger Sub. The obligation of Parent and Merger Sub to consummate the Merger shall also be subject to the satisfaction or waiver by Parent at or prior to the Effective Time of the following conditions:

     (a) The representations and warranties set forth in:

     (i) Article IV (other than in the case of the representations and warranties contained in Sections 4.4(a) and (b) and 4.12(a)), disregarding all qualifications and exceptions contained therein relating to materiality, Material Adverse Effect or words of similar import, shall be true and correct on the date hereof and at and as of the Closing Date as if made on and as of such dates (except for representations and warranties that are made as of a specified date, which shall be true and correct only as of such specified date), with only such exceptions as would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA;

     (ii) Sections 4.4(a) and (b) shall be true and correct on the date hereof and at and as of the Closing Date as if made on and as of such dates (except for representations and warranties that are made as of a specified date, which shall be true and correct only as of such specified date) with only such exceptions as would not, individually or in the aggregate, (A) result or reasonably be expected to result in the payment of additional amounts under Article II hereof in excess of $100,000 or (B) impose any other liability on Parent, Merger Sub or the Surviving Corporation; and

     (iii) Section 4.12(a) shall be true and correct in all respects on the date hereof and at and as of the Closing Date as if made on and as of the date hereof.

     (b) MUSA shall have performed and complied with all of its covenants hereunder in all material respects through the Closing, except to the extent that such covenants are qualified by terms such as “material” or “Material Adverse Effect,” in which case MUSA shall have performed and complied with all of such covenants in all respects through the Closing.

46

     (c) MUSA shall have delivered to Parent a certificate duly executed by an authorized officer on behalf of MUSA to the effect that each of the conditions specified in Sections 6.2(a) and (b) is satisfied in all respects.

     (d) The Debt Financing shall have been obtained by Parent and Merger Sub on the terms and conditions set forth in the Debt Financing Agreement, or alternative financing (sufficient, when taken together with the proceeds from the Equity Financing, to pay the Required Amounts) as provided in Section 5.2(b) shall have been obtained.

     (e) The Employment Agreement shall not have been terminated and shall remain in full force and effect as of the Closing Date; provided, however, that a termination of the Employment Agreement or a failure of the Employment Agreement to remain in full force and effect as of the Closing Date shall not be deemed to be a failure of the condition set forth in this Section 6.2(e) if such termination or failure to remain in full force and effect is solely a result of (i) Lourenco Goncalves being unable to perform his duties thereunder due to his death or Disability (as defined in the Employment Agreement), (ii) Lourenco Goncalves’s termination thereunder “without Cause” (as defined in the Employment Agreement) or “without Good Reason” (as defined in the Employment Agreement) or (iii) a commission of an act by Lourenco Goncalves which would not have constituted Cause under the Employment Agreement if the word “significantly” preceded the words “adversely impact” in Section 3(b)(viii) of the Employment Agreement.

     (f) Holders of not more than 10% of the outstanding shares of MUSA Common Stock shall have demanded and validly perfected appraisal of their MUSA Common Stock in accordance with the DGCL.

     (g) (i) Any consent or approval required under the agreements, contracts or other instruments listed on Annex 6.2(g) as a result of the execution of this Agreement or the consummation of the transactions contemplated hereby shall have been received by MUSA, and no such consent or approval shall have been revoked and (ii) all other consents or approvals required under any of the other agreements, contracts or other instruments to which MUSA or any of its subsidiaries is a party (or by which it or any of its respective properties or assets is bound) as a result of the execution of this Agreement or the consummation of the transactions contemplated hereby shall have been received by MUSA (and no such consent or approval shall have been revoked), except for such consents or approvals (A) which are listed in Section 4.5(b) of the MUSA Disclosure Schedules or (B) the failure of which to obtain and not be revoked would not, individually or in the aggregate, materially adversely affect the operation of the business of Surviving Corporation and its subsidiaries from and after the Closing nor result in any material liability.

     (h) Since the date of this Agreement, there has not been any Material Adverse Effect on MUSA or any event, change, effect or development that would, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on MUSA.

47

     6.3 Conditions to Obligation of MUSA. The obligation of MUSA to consummate the Merger shall also be subject to the satisfaction or waiver by MUSA at or prior to the Effective Time of the following conditions:

     (a) The representations and warranties set forth in Article III, disregarding all qualifications and exceptions contained therein relating to materiality, Material Adverse Effect or words of similar import, shall be true and correct on the date hereof and at and as of the Closing Date as if made on and as of such dates (except for representations and warranties that are made as of a specified date, which shall be true and correct only as of such specified date), with only such exceptions as would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect on Parent or Merger Sub.

     (b) Parent and Merger Sub shall have performed and complied with all of their respective covenants hereunder in all material respects through the Closing, except to the extent that such covenants are qualified by terms such as “material” or “Material Adverse Effect,” in which case Parent and Merger Sub shall have performed and complied with all of such covenants in all respects through the Closing.

     (c) Parent shall have delivered to MUSA a certificate executed by an authorized officer on behalf of Parent to the effect that each of the conditions specified in Sections 6.3(a) and (b) is satisfied in all respects.

ARTICLE VII

TERMINATION; FEES AND EXPENSES

     7.1 Termination by Mutual Consent. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the adoption and approval of this Agreement by the MUSA Stockholders referred to in Section 6.1(a), by mutual written consent of MUSA and Parent by action of their respective Boards.

     7.2 Termination by Either Parent or MUSA. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time by action of the Board of either Parent or MUSA if (a) the Merger shall not have been consummated by December 15, 2005 (the “Termination Date”), whether such date is before or after the date of the adoption of this Agreement by the MUSA Stockholders; provided, however, that the right to terminate this Agreement pursuant to this Section 7.2(a) shall not be available to any party hereto whose breach of any provision of this Agreement results in the failure of the Merger to be consummated by the Termination Date, (b) the approval and adoption by the MUSA Stockholders required by Section 6.1(a) shall not have been obtained at the MUSA Stockholders Meeting (after giving effect to any adjournments or postponements thereof), or (c) any Governmental Authority of competent jurisdiction shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the consummation of the Merger and such order, decree or ruling or other action shall have become final and nonappealable; provided that the parties hereto shall have used their commercially reasonable efforts to have any such order, decree or ruling or other action vacated or reversed.

48

     7.3 Termination by MUSA. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the adoption and approval of this Agreement by the MUSA Stockholders referred to in Section 6.1(a), by action of the MUSA Board (a) if there has been a breach of any representations, warranties, covenants or agreements made by Parent or Merger Sub in this Agreement, or any such representations and warranties shall have become untrue or incorrect after the execution of this Agreement, such that the conditions set forth in Sections 6.3(a) or (b) would not be satisfied and such breach or failure to be true and correct is not cured within 15 calendar days following receipt of written notice from MUSA of such breach or failure (or such longer period during which Parent or Merger Sub exercises commercially reasonable efforts to cure), or (b) upon MUSA entering into an agreement with respect to a Superior Proposal if MUSA has taken the action referred to in Section 5.3(b)(iii)(B) and has otherwise complied with its obligations under Section 5.3(b) as they pertain to the Acquisition Proposal that is the subject of the Superior Proposal Notice; provided, however, that prior to any termination pursuant to this Section 7.3(b), (i) the Waiting Period shall have elapsed, and (ii) MUSA shall have paid the Termination Fee and Expenses in accordance with Section 7.6.

     7.4 Termination by Parent. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the adoption and approval of this Agreement by the MUSA Stockholders referred to in Section 6.1(a), by action of the Parent Board (a) if the MUSA Board shall have withdrawn, qualified or modified its approval of this Agreement or the MUSA Board Recommendation in a manner adverse to Parent, or approved or recommended any Acquisition Proposal (other than this Agreement and the Merger) or shall have resolved to do any of the foregoing, or (b) if there has been a breach of any representation, warranty, covenant or agreement made by MUSA in this Agreement, or any such representation and warranty shall have become untrue or incorrect after the execution of this Agreement, such that the conditions set forth in Sections 6.2(a) or (b) would not be satisfied and such breach or failure to be true and correct is not cured within 15 calendar days following receipt of written notice from Parent of such breach or failure (or such longer period during which MUSA exercises commercially reasonable efforts to cure).

     7.5 Effect of Termination and Abandonment. In the event of a termination of this Agreement and the abandonment of the Merger pursuant to this Article VII, this Agreement shall become void and of no effect with no liability on the part of any party hereto (or of any of its directors, officers, employees, agents, legal and financial advisors or other Representatives), other than the provisions of this Section 7.5 and Section 7.6; provided, however, that, except as otherwise provided herein, no such termination shall relieve any party hereto of any liability or damages resulting from any willful or intentional breach of this Agreement.

     7.6 Fees and Expenses.

     (a) In the event that:

     (i) (A)(1) Parent shall have terminated this Agreement pursuant to Section 7.4(b) or (2) Parent or MUSA shall have terminated this Agreement pursuant to Sections 7.2(a) or 7.2(b) (other than a termination pursuant to Section 7.2(a) if (x) at the time of such termination, all of the conditions set forth in

49

Article VI hereof were satisfied or were capable of being satisfied other than the condition set forth in Section 6.2(d) and (y) at no time during the twenty-one (21) days prior to the Termination Date was the condition in Section 6.2(d) capable of being satisfied), (B) on or prior to such time (or in connection with a termination pursuant to Section 7.2(b), on or prior to the MUSA Stockholders Meeting)any Person (other than Parent) shall have made and not withdrawn (or publicly disclosed its intention to make) an Acquisition Proposal (substituting 50.1% for the 25% threshold set forth in the definition of Acquisition Proposal, a “Covered Proposal”), and (C) within 12 months (or, solely with respect to a termination pursuant to Section 7.2(a), 9 months) of termination of this Agreement, MUSA enters into an agreement with respect to a Covered Proposal;

     (ii) This Agreement shall be terminated after Parent shall have become entitled to terminate this Agreement pursuant to Section 7.4(a) (whether or not Parent immediately terminates this Agreement or the Agreement is subsequently terminated pursuant to any other provision under this Article VII); or

     (iii) MUSA shall have terminated this Agreement pursuant to Section 7.3(b),

then, in any such event, MUSA shall pay to Parent (or any affiliate or affiliates of Parent as Parent may designate) a termination fee in cash of $17,000,000 (the “Termination Fee”). Any Termination Fee that becomes payable shall be paid (A) in the case of Section 7.6(a)(i), not later than immediately prior to the time and the date on which MUSA enters into an agreement with respect to a Covered Proposal (provided, however, that if such Covered Proposal was not outstanding at the time of the termination and the Person or Persons making such Covered Proposal had not previously made a Covered Proposal, then the Termination Fee shall be paid upon consummation of the transaction contemplated by such agreement), (B) in the case of Section 7.6(a)(ii), on the date that this Agreement is terminated (and immediately prior to such termination in the case of a termination by MUSA), and (C) in the case of Section 7.6(a)(iii), immediately prior to the termination of this Agreement, in each case payable by wire transfer of same day funds.

     (b) Upon the termination of this Agreement:

     (i) by Parent pursuant to Section 7.4;

     (ii) by Parent or MUSA pursuant to Section 7.2(a) if on or prior to the time of such termination pursuant to Section 7.2(a) any Person(other than Parent) shall have made and not withdrawn (or publicly disclosed its intention to make) a Covered Proposal;

     (iii) by Parent or MUSA pursuant to Section 7.2(b); or

     (iv) by MUSA pursuant to Section 7.3(b),

then, in any such event, MUSA shall pay to Parent (or any affiliate or affiliates of Parent as Parent may designate) all of the out-of-pocket third party charges and expenses actually incurred

50

by Parent or its affiliates in connection with this Agreement and the transactions contemplated by this Agreement, and the negotiation of the related agreements, up to a maximum amount of $4,000,000 (the “Expenses”), payable by wire transfer of same day funds on the date of termination of this Agreement. Parent shall provide to MUSA reasonable documentation of such charges and expenses upon the request of MUSA.

     (c) Upon the termination of this Agreement by MUSA pursuant to Section 7.3(a), Parent shall pay to MUSA all of the out-of-pocket third party charges and expenses actually incurred by MUSA or its subsidiaries in connection with this Agreement and the transactions contemplated by this Agreement, and the negotiation of the related agreements, up to a maximum amount of $1,000,000, payable by wire transfer of same day funds on the date of termination of this Agreement. MUSA shall provide to Parent reasonable documentation of such charges and expenses upon the request of Parent.

     (d) The parties hereto acknowledges that the agreements contained in this Section 7.6 are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, the parties hereto would not have entered into this Agreement; accordingly, if a party hereto obligated to make a payment under this Section 7.6 (the “Paying Party”) fails to promptly pay any amount due pursuant to this Section 7.6, and, in order to obtain such payment, the other party hereto (the “Receiving Party”) commences a suit that results in a judgment against the Paying Party for the fees set forth in this Section 7.6 or any portion of such fees, the Paying Party shall pay to the Receiving Party its reasonable costs and expenses (including reasonable attorneys’ fees) in connection with such suit, together with interest on the amount of the fees at the prime rate of Citibank, N.A. in effect on the date such payment was required to be made from the date such payment was required to be made through the date of payment.

     (e) Except as specifically provided in this Section 7.6, all costs and expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party hereto incurring such expenses, except (i) filing fees incurred in connection with Commission filings relating to the Merger and the transactions contemplated by this Agreement and printing and mailing costs related thereto, all of which shall be shared equally by Parent and MUSA; and (ii) filing fees incurred in connection with Federal Trade Commission and the United States Department of Justice filings relating to the HSR Act and appropriate Governmental Authorities relating to applicable Foreign Antitrust Laws (if any), which shall be borne by Parent and Merger Sub.

ARTICLE VIII

MISCELLANEOUS

     8.1 Non-Survival of Representations and Warranties. The representations, warranties, covenants and agreements in this Agreement shall not survive the consummation of the Merger or the termination of this Agreement. Notwithstanding the foregoing, the agreements and

51

covenants which by their nature are to be performed following the Effective Time shall survive consummation of the Merger.

     8.2 Notices. All notices and other communications under this Agreement shall be in writing and shall be deemed given if delivered personally, telecopied (which is confirmed) or delivered by a nationally recognized overnight courier service to the parties hereto at the following addresses (or at such other address for a party hereto as shall be specified by like notice):

(a)	if to Parent or Merger Sub:
	Eric L. Press
	Flag Holdings Corporation
	c/o Apollo Management, L.P.
	9 West 57th Street
	43rd Floor
	New York, NY 10019
	Telecopy No.: (212) 515-3200
with a copy to
	Andrew J. Nussbaum, Esq.
	Wachtell, Lipton, Rosen & Katz
	51 West 52nd Street
	New York, NY 10019
	Telecopy No.: (212) 403-2000
(b)	if to MUSA:
	Daniel W. Dienst, Chairman of the Board
	c/o Metal Management, Inc.
	750 Lexington Avenue
	New York, NY 10021
	Telecopy No.: (212) 750-7602
with a copy to
	Steven H. Scheinman, Esq.
	Akin Gump Strauss Hauer & Feld LLP
	590 Madison Avenue
	New York, NY 10022
	Telecopy No.: (212) 872-1002

     Notices and communications given (a) by personal delivery shall be deemed to be given, delivered and received as of the time of such delivery, (b) by telecopy shall be deemed to be given, delivered and received as of the time of the confirmation receipt and (c) by a nationally recognized overnight courier service shall be deemed to be given, delivered and received on the

52

business day following the date on which such notice or communication was delivered to the relevant address by such courier service.

     8.3 Interpretation. When a reference is made in this Agreement to an Article or Section, such reference shall be to an Article or Section of this Agreement unless otherwise indicated. The headings, the table of contents and the index of defined terms contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes,” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” For the purposes of this Agreement, “Material Adverse Effect” with respect to any party hereto means any event, change, circumstance, effect or state of facts that is or has a material adverse effect on (a) the business, assets, liabilities, results of operations or financial condition of such party hereto and its subsidiaries taken as a whole, other than any event, change, circumstance, effect or state of facts resulting from (i) changes in general economic conditions or developments in the industry in which such party hereto and its subsidiaries operate, to the extent not having a disproportionate impact on such party hereto and its subsidiaries taken as a whole, relative to its competitors, (ii) the announcement of this Agreement and the transactions contemplated hereby, (iii) any acts of terrorism, war or similar hostilities, (iv) any actions required under this Agreement, including any action to obtain any approval or authorization under applicable antitrust or competition laws for the consummation of the transactions contemplated by this Agreement or (v) changes in any Applicable Laws or applicable accounting regulations or principles, to the extent not having a disproportionate impact on such party hereto and its subsidiaries taken as a whole, relative to its competitors or (b) its ability to consummate the transactions contemplated by this Agreement. For purposes of this Agreement, a “subsidiary,” when used with respect to any party hereto, means any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are directly or indirectly owned by such party hereto.

     8.4 Counterparts. This Agreement may be executed in counterparts, which together shall constitute one and the same agreement. The parties hereto may execute more than one copy of this Agreement, each of which shall constitute an original.

     8.5 Entire Agreement. This Agreement (including the documents and the instruments referred to in this Agreement), together with the Confidentiality Agreement, constitutes the entire agreement among the parties hereto and supersedes all prior agreements and understandings, agreements or representations by or among the parties hereto, written and oral, with respect to the subject matter hereof. The parties hereto agree that the Confidentiality Agreement shall continue in full force and effect in accordance with its terms, except that it shall terminate immediately prior to the Effective Time.

     8.6 Third-Party Beneficiaries. Except for the agreement set forth in Section 5.2(a), which is intended to be for the benefit of the Persons covered thereby and may be enforced by such Persons, nothing in this Agreement, express or implied, is intended or shall be construed to create any third-party beneficiaries.

     8.7 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Delaware without regard to the conflicts of law rules of such state.

53

All Actions arising out of or relating to this Agreement shall be heard and determined in any state or federal court sitting in the State of Delaware.

     8.8 Consent to Jurisdiction; Venue; Jury Trial.

     (a) Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the Court of Chancery in Wilmington, Delaware for the purpose of any Action arising out of or relating to this Agreement, and each of the parties hereto irrevocably agrees that all claims in respect to such Action may be heard and determined exclusively in such court. Each of the parties hereto agrees that a final judgment in any Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

     (b) Each of the parties hereto irrevocably consents to the service of any summons and complaint and any other process in any other Action relating to the Merger, on behalf of itself or its property, by the personal delivery of copies of such process to such party hereto. Nothing in this Section 8.8 shall affect the right of any party hereto to serve legal process in any other manner permitted by law.

     (c) EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY HERETO WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (iii) IT MAKES SUCH WAIVER VOLUNTARILY, AND (iv) IT HAS BEEN INDUCED TO ENTER INTO THIS MERGER AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.8.

     8.9 Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties hereto; provided, however, that Parent shall be permitted to assign this Agreement and any of its rights, interests or obligations under this Agreement (including, without limitation, in connection with the conversion of Parent from a corporation to a limited liability company) without the prior written consent of any party hereto so long as (a) such assignee or successor shall be an affiliate of Apollo Management V, L.P. and (b) Parent’s rights, interests and obligations under each of the Financing Agreements are assigned to such assignee or successor at or prior to the time of the assignment hereunder (it being understood and agreed by each of the parties hereto that such assignment or conversion shall not be deemed to be a breach by Parent or Merger Sub of any of

54

the representations and warranties set forth in Article III, shall not be deemed to result in any such representation or warranty becoming untrue or inaccurate and shall not be deemed to be a breach by Parent or Merger Sub of any covenant or agreement contained herein). Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns.

     8.10 Amendment. This Agreement may be amended by the parties hereto at any time before or after approval of the Merger by the MUSA Stockholders; provided, however, that, after any such approval, no amendment shall be made that by law requires further approval by the MUSA Stockholders without such approval having been obtained. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto.

     8.11 Extension; Waiver. At any time prior to the Effective Time, the parties hereto may (a) extend the time for the performance of any of the obligations or other acts of the other parties, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto or (c) subject to the proviso of Section 8.10, waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party hereto to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights and the single or partial exercise of any rights hereof shall not preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

     8.12 No Presumption Against Drafter. Each of the parties hereto has jointly participated in the negotiation and drafting of this Agreement. In the event of an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by each of the parties hereto and no presumptions or burdens of proof shall arise favoring any party hereto by virtue of the authorship of any of the provisions of this Agreement.

     8.13 Severability. Any term or provision of this Agreement that is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable.

55

     IN WITNESS WHEREOF, Parent, Merger Sub and MUSA have signed this Agreement as of the date first written above.

FLAG HOLDINGS CORPORATION
By:	/s/ ERIC L. PRESS
Name:	Eric L. Press
Title:	Chairman of the Board
FLAG ACQUISITION CORPORATION
By:	/s/ ERIC L. PRESS
Name:	Eric L. Press
Title:	Chairman of the Board
METALS USA, INC.
By:	/s/ DANIEL W. DIENST
Name:	Daniel W. Dienst
Title:	Chairman of the Board

EX-2.1

exv2w1

EX-3.1

Exhibit 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

METALS USA, INC.

ARTICLE I

          The name of the corporation (which is hereinafter referred to as the “Corporation”) is:

METALS USA, INC.

ARTICLE II

          The address of the Corporation’s registered office in the State of Delaware is 2711 Centerville, Suite 400, Wilmington, County of New Castle, Delaware 19808. The name of its registered agent at such address is Corporation Service Company.

ARTICLE III

          The purpose of the Corporation shall be to engage in any lawful act or activity for which corporations may be organized and incorporated under the General Corporation Law of the State of Delaware.

ARTICLE IV

          Section 1. The Corporation shall be authorized to issue 100 shares of capital stock, all of which shall be shares of Common Stock, $.01 par value (“Common Stock”).

          Section 2. Except as otherwise provided by law, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes. Each share of Common Stock shall have one vote, and the Common Stock shall vote together as a single class.

ARTICLE V

          Unless and except to the extent that the By-Laws of the Corporation shall so require, the election of directors of the Corporation need not be by written ballot.

ARTICLE VI

          In furtherance and not in limitation of the powers conferred by law, the Board of Directors of the Corporation (the “Board”) is expressly authorized and empowered to make, alter and repeal the By-Laws of the Corporation by a majority vote at any regular or special meeting of the Board or by written consent, subject to the power of the stockholders of the Corporation to alter or repeal any By-Laws made by the Board.

ARTICLE VII

          The Corporation reserves the right at any time from time to time to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, and any other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed by law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to the right reserved in this Article.

-2-

ARTICLE VIII

          Section 1. Elimination of Certain Liability of Directors. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended.

          Any repeal or modification of the foregoing paragraph shall not adversely affect any right or protection of a director of the Corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification.

     Section 2. Indemnification and Insurance.

          (a) Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended (but, in the case of any such amendment, to the fullest extent permitted by law, only to the extent that such

-3-

amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, amounts paid or to be paid in settlement, and excise taxes or penalties arising under the Employee Retirement Income Security Act of 1974) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in paragraph (b) hereof, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the General Corporation Law of the State of Delaware requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section or otherwise. The Corporation may, by action of the Board, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers.

-4-

          (b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of this Section is not paid in full by the Corporation within thirty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the General Corporation Law of the State of Delaware for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the Corporation (including its Board, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

          (c) Non-Exclusivity of Rights. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Section shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, By-law, agreement, vote of stockholders or disinterested directors or otherwise.

-5-

          (d) Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of the State of Delaware.

-6-

EX-3.2

Exhibit 3.2

AMENDED AND RESTATED

BYLAWS

OF

METALS USA, INC.

*As Amended by

Amendment No. 1

Effective 5-17-2004

(See Attachment A to Amended and Restated Bylaws)

AMENDED AND RESTATED

BYLAWS

OF

METALS USA, INC.

ARTICLE I
STOCKHOLDERS

     SECTION 1. Annual Meeting. The annual meeting of the stockholders of the Corporation shall be held on such date, at such time and at such place, if any, within or without the State of Delaware as may be designated by the Board of Directors, for the purpose of’ electing directors and for the transaction of such other business as may be properly brought before the meeting. Such date shall be within thirteen (13) months subsequent to the latest of the Effective Time, the last annual meeting of stockholders and the last act by written consent to elect directors in lieu of an annual meeting of stockholders.

     SECTION 2. Special Meetings. Unless otherwise provided in the Certificate of Incorporation, special meetings of the stockholders shall be called by the President or the Secretary upon the order in writing of a majority of the Board of Directors or stockholders holding together at least a majority of all the shares of stock of the Corporation entitled to vote at the meeting, and shall be held at such date, time and place, within or without the State of Delaware, as may be specified by such order. Such order of the Board of Directors or the stockholders shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting shall be confined to the purpose(s) stated in such order and any matters reasonably related to thereto.

     SECTION 3. Notice of Stockholder Business and Nominations.

(a)  Annual Meetings of Stockholders.

(i) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (A) pursuant to the Corporation’s notice of meeting, (B) by or at the direction of the Board of Directors or (C) by any stockholder who was a stockholder of record at the time of giving of notice provided for in this Section, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section.

(ii) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to section 3(a)(i)(C) of this Article I, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must otherwise be a proper matter for stockholder action. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the

2

close of business on the sixtieth (60th) day nor earlier than the close of business on the ninetieth (90th) day prior to the first (1st) anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the ninetieth (90th) day prior to such annual meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above. Such stockholder’s notice shall set forth:

(A) as to each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 14a-11 thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected);

(B) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and

(C) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (1) the name and address of such stockholder, as they appear on the Corporations’ books, and of such beneficial owner and (2) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner.

(iii) Notwithstanding anything in the second sentence of Section 3(a)(ii) of this Article I to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least seventy (70) days prior to the first (1st) anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.

3

(b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the order of the Board of Directors or stockholders under which the special meeting has been called in accordance with Section 2 of this Article I. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the order of the Board of Directors or stockholders under which the special meeting has been called in accordance with Section 2 of this Article I (a) by or at the direction of the Board of Directors or (b) by any stockholder who is a stockholder of record at the time of giving of notice provided for in this Section 3, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 3. In the event a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors has been called under order of the Board of Directors or stockholders in accordance with Section 2 of this Article I, any stockholder may nominate a person or persons (as the case may be), for election to such positions(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by Section 3(a)(ii) of this Article I shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the ninetieth (90th) day prior to such special meeting and not later than the close of business on the later of the sixtieth (60th) day prior to such special meeting or the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a stockholder’s notice as described above.

(c) General.

(i) Only such persons who are nominated in accordance with the procedures set forth in this Section 3 shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 3. Except as otherwise provided by applicable law, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 3 and, if any proposed nomination or business is not in compliance with this Section 3, to declare that such defective proposal or nomination shall be disregarded.

(ii) For purposes of this Section 3, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(iii) Notwithstanding the foregoing provisions of this Section 3, a stockholder shall also comply with all applicable requirements of the Exchange Act and the

4

rules and regulations thereunder with respect to the matters set forth in this Section 3. Nothing in this Section 3 shall be deemed to affect any rights (A) of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act; or (B) of the holders of Common Stock or any series of Preferred Stock or any outstanding voting indebtedness to elect directors under specified circumstances.

     SECTION 4. Notice of Meetings. Written notice of all meetings of the stockholders, stating the place, if any, date and hour of the meeting, the place within the city or other municipality or community at which the list of stockholders may be examined, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting shall be mailed or delivered to each stockholder not less than 10 nor more than 60 days prior to the meeting. Notice of any special meeting shall state in general terms the purpose or purposes for which the meeting is to be held as specified in the order of the Board of Directors or stockholders pursuant to which the meeting has been called.

     SECTION 5. Quorum. At any meeting of the stockholders, the holders of a majority in number of the total outstanding shares of stock of the Corporation entitled to vote at such meeting, present in person or represented by proxy, shall constitute a quorum of the stockholders for all purposes. When a quorum is once present, it is not broken by the subsequent withdrawal of any stockholder.

     SECTION 6. Adjourned Meetings. Whether or not a quorum shall be present in person or represented at any meeting of the stockholders, the holders of a majority in number of the shares of stock of the Corporation present in person or represented by proxy and entitled to vote at such meeting shall have the power to adjourn the meeting from time to time until a quorum shall be present or represented. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if at the meeting at which the adjournment is taken the time, place, if any, thereof and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced. At such reconvened meeting at which a quorum shall be present or represented, any business may be transacted that might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting.

     SECTION 7. Organization. Each annual and special meeting of stockholders shall be presided over by a chairman, who shall have the exclusive authority to, among other things, determine (a) whether business and nominations have been properly brought before such meetings, and (b) the order in which business and nominations properly brought before such meeting shall be considered. The chairman of each annual and special meeting shall be the Chairman of the Board or, in the absence (or inability or refusal to act) of the Chairman of the Board, the President or, in the absence (or inability or refusal to act) of the President, such other person as shall be appointed by resolution approved by the majority of the Board of Directors.

     The Secretary of the Corporation shall act as Secretary of all meetings of the stockholders; but in the absence of the Secretary, the Chairman may appoint any person to act as Secretary of the meeting. It shall be the duty of the Secretary to prepare and make, at least ten

5

(10) days before every meeting of stockholders, a complete list of stockholders entitled to vote at such meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting or, if not so specified, at the place where the meeting is to be held, for the ten (10) days next preceding the meeting, to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, and shall be produced and kept at the time and place of the meeting during the whole time thereof and subject to the inspection of any stockholder who may be present. Failure to comply with the requirements of this Section 7 shall not affect the validity of any action taken at said meeting. In the event a meeting of stockholders is to be held solely by means of remote communication as permitted by Section 11 of this Article I, the list of stockholders shall be open to the examination of any stockholder during the whole time of the meeting on a reasonably acceptable electronic network, and the information required to access such list shall be provided to stockholders together with the notice of meeting.

     The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by this Section 7 or the books of the Corporation or to vote in person or by proxy at any meeting of stockholders.

     SECTION 8. Voting. Except as otherwise provided in the Certificate of Incorporation or these Bylaws, each stockholder shall be entitled to one vote for each share of the capital stock of the Corporation registered in the name of such stockholder upon the books of the Corporation on the applicable record dated fixed pursuant to these Bylaws. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting, or a stockholder’s duly authorized attorney-in-fact, may vote in person or authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. Each proxy shall be in writing, executed by the stockholder giving the proxy or by such stockholder’s duly authorized attorney, or electronically transmitted to the proxyholder in a manner such that it can be determined that the transmission was authorized by the stockholder. Unless and until voted, every proxy shall be revocable at the pleasure of the person who executed it, or such person’s legal representatives or assigns, except in those cases where an irrevocable proxy permitted by statute has been given.

     At all elections of directors, the voting may but not need be by ballot. When directed by the presiding officer or upon the demand of any stockholder, the vote upon any other matter before a meeting of stockholders shall be by ballot. The voting by stockholders or proxyholders at any meeting conducted by remote communication may be effected by a ballot submitted by electronic transmission provided that any such electronic transmission sets forth or is submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder or proxyholder.

     Except as otherwise provided by law or by the Certificate of Incorporation, at all meetings of stockholders at which a quorum is present, (i) directors shall be elected by a plurality of the votes cast by the stockholders entitled to vote in the election present in person or by proxy and (ii) all other matters shall be decided by a majority of the votes cast by the stockholders entitled to vote thereon present in person or by proxy.

6

     Shares of the capital stock of the Corporation belonging to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes.

     SECTION 9. Inspectors. When required by law or directed by the presiding officer or upon the demand of any stockholder entitled to vote, but not otherwise, the polls shall be opened and closed, the proxies and ballots shall be received and taken in charge, and all questions touching the qualification of voters, the validity of proxies and the acceptance or rejection of votes shall be decided at any meeting of the stockholders by two or more inspectors who may be appointed by the Board of Directors before the meeting, or if not so appointed, shall be appointed by the presiding officer at the meeting. If any person so appointed fails to appear or act, the vacancy may be filled by appointment in like manner.

     SECTION 10. Action Without Meeting. Unless otherwise provided in the Certificate of Incorporation, any action permitted or required by law, the Certificate of Incorporation or these Bylaws to be taken at a meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by or on behalf of the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in the state of incorporation, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.

     Every written consent shall bear the date of signature of the person who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated consent delivered in the manner required by this Section to the Corporation, written consents signed by or on behalf of a sufficient number of holders to take action are delivered to the Corporation by delivery to its registered office in the state of incorporation, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.

     Any written consent may be delivered by a form of electronic transmission, and such transmission shall be deemed signed and dated for purposes hereof if such transmission sets forth or is delivered with information from which the Company can determine that same was transmitted by or on behalf of a stockholder and the date that the same was transmitted. No consent by electronic transmission shall be deemed to have been delivered unless such consent is reproduced in paper form and delivered to the Company as aforesaid.

     Prompt notice of the taking of corporation action without a meeting by less than a unanimous written consent shall be given by the Secretary to those stockholders who have not consented in writing.

7

     SECTION 11. Remote Meetings. If authorized by the Board of Directors in its sole discretion, and subject to such guidelines and procedures as the Board of Directors may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication:

(A) participate in a meeting of stockholders; and

(B) be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication, provided that (i) the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder, (ii) the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation.

     In the case of any annual meeting of stockholders or any special meeting of stockholders called upon order of the Board of Directors, the Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communications as authorized by this Section 11.

ARTICLE II
BOARD OF DIRECTORS

     SECTION 1. Number and Term of Office. The business, property and affairs of the Corporation shall be managed by or under the direction of a Board of Directors. No director need be a stockholder of the Corporation, a citizen of the United States, or a resident of the State of Delaware. The number of directors constituting the entire Board of Directors shall be (i) until the first annual meeting of stockholders after the Effective Time, six (which number shall be increased to seven upon the Board of Directors determining to increase the size of the Board of Directors to seven and initially to fill the newly created directorship created pursuant to this clause with a person who is an officer of the Corporation (other than the Chairman of the Board) at the time such newly created directorship is so filled, which determination the Board of Directors shall make no later than the date six months after the Effective Date); and (ii) from and after such first annual meeting, seven or such greater number as fixed from time to time by resolution passed by a majority of the directors. The directors shall, except as hereinafter otherwise provided for filling vacancies or any newly created directorships or as otherwise provided in the Certificate of Incorporation, be elected at the annual meeting of stockholders. Directors who are elected by stockholders at an annual meeting of stockholders and directors who are elected in the interim to fill vacancies or newly created directorships shall hold office until the next annual meeting of stockholders and until their respective successors are elected and qualified or until their earlier resignation or removal. The use of the phrase “entire Board” herein refers to the total number of directors which the Corporation would have if there were no vacancies.

8

     SECTION 2. Removal, Vacancies and Additional Directors. Except as otherwise provided in the Certificate of Incorporation, the holders of a majority of the shares of stock outstanding and entitled to vote for the election of directors may remove any director, with or without cause. Except as otherwise provided in the Certificate of Incorporation, vacancies caused by any such removal or by the death or resignation of any director or for any other reason, and any newly created directorship resulting from any increase in the authorized number of directors, may be filled by the affirmative vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director, or at a special meeting of the stockholders by the holders of shares entitled to vote for the election of directors. The Board of Directors shall be authorized to elect a person initially to fill a newly created directorship created pursuant to clause (i) the third sentence of Section 1 of this Article II only if such person is an officer of the Corporation (other than the Chairman of the Board) at the time of such election.

     If there are no directors in office, then an election of directors may be held in the manner provided by law. If, at the time of filling any vacancy or any newly-created directorship, the directors then in office shall constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly-created directorships, or to replace the directors chosen by the directors then in office as aforesaid, such election to be governed by Section 211 of the General Corporation Law of the State of Delaware as far as applicable. No decrease in the size of the Board shall serve to shorten the term of an incumbent director.

     When one or more directors shall resign effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as herein provided in connection with the filling of other vacancies.

     SECTION 3. Place of Meeting. The Board of Directors may hold its meetings in any place or places in the State of Delaware or outside the State of Delaware.

     SECTION 4. Annual Meeting. Following the annual meeting of stockholders, the newly elected Board of Directors shall meet for the purpose of the election of officers and the transaction of such other business as may properly come before the meeting. Such meeting may be held without notice immediately after the annual meeting of stockholders at the same place at which such stockholders’ meeting is held or, if such annual meeting of stockholders is to be held solely by means of remote communication as permitted by Section 11 of Article I, at the principal place of business of the Corporation.

     SECTION 5. Regular Meetings. Regular meetings of the Board of Directors shall be held at such times and places as the Board of Directors from time to time by resolution shall determine. No notice shall be required for any regular meeting of the Board of Directors held at times and places fixed by resolution of the Board of Directors; but the Corporation shall notify each director of the adoption of every resolution fixing or changing the time or place of regular meetings at least five (5) days before the first meeting held pursuant thereto.

9

     SECTION 6. Special Meetings. Special meetings of the Board of Directors shall be held whenever called by order of the Chairman of the Board or the President or by a majority of the directors or the sole director, as the case may be, then in office and shall be held at such date, time and place as may be specified by such order.

     Notice of the day, time and place of each special meeting shall be given to each director by the President or the Secretary at least two (2) days before the meeting if by a recognized express delivery service or at least 24 hours before the meeting if delivered personally or by telephone, facsimile or electronic transmission. Unless otherwise indicated in the notice thereof, any and all business that may be transacted at a regular meeting may be transacted at any special meeting. Except as may be otherwise expressly provided by law, the Certificate of Incorporation, or these Bylaws, neither the business to be transacted at, nor the purpose of, any special meeting need be specified in the notice or waiver of notice of such meeting.

     SECTION 7. Quorum. A majority of the entire Board of Directors shall constitute a quorum for the transaction of business. The vote of the majority of the directors present at any meeting of the Board of Directors at which a quorum is present shall be the act of the Board of Directors. If at any meeting of the Board of Directors there is less than a quorum present, a majority of those present may adjourn the meeting from time to time to another time and place without notice.

     SECTION 8. Organization. The Chairman of the Board or, in the absence (or inability or refusal to act) of the Chairman of the Board, the President shall preside at all meetings of the Board of Directors. In the absence (or inability or refusal to act) of the Chairman of the Board and the President, a chairman shall be elected from the directors present. The Secretary of the Corporation shall act as secretary of all meetings of the directors; but in the absence of the Secretary, the Chairman of the Board may appoint any person to act as secretary of the meeting.

     SECTION 9. Attendance Via Communications Equipment. Unless otherwise restricted by applicable law, the Certificate of Incorporation or these Bylaws, members of the Board of Directors or any committee thereof may hold a meeting by means of telephone conference or other method of remote communications by means of which all persons participating in the meeting can effectively communicate with each other. Such participation in a meeting shall constitute presence in person at the meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

     SECTION 10. Consent of Directors or Committee in Lieu of Meeting. Unless otherwise restricted by the Certificate of Incorporation or by these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings or the electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee, as the case may be. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

10

     SECTION 11. Compensation of Directors. Directors shall be paid their reasonable and necessary expenses, if any, of attendance at each meeting of the Board of Directors or any committee thereof and, as and to the extent authorized by the Board of Directors, a fixed sum for attendance at each meeting of the Board of Directors or any committee thereof and a stated fee as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of standing or other committees of the Board of Directors may be allowed like compensation for attending committee meetings.

ARTICLE III
COMMITTEES OF DIRECTORS

     SECTION 1. Establishment. The Board of Directors may from time to time by resolution establish, name or dissolve one or more committees, each committee to consist of one or more of the directors. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. There shall exist the following standing committees, which committees shall have and may exercise the following powers and authority:

(a) Audit Committee. The Audit Committee shall from time to time, but no less than two times per year, meet to review and monitor the financial and cost accounting practices and procedures of the Corporation and all of its subsidiaries and to report its findings and recommendations to the Board of Directors for final action. The Audit Committee shall not be empowered to approve any corporate action of whatever kind or nature, and the recommendations of the Audit Committee shall not be binding on the Board of Directors, except when, pursuant to the provisions of Section 2 of this Article III, such power and authority have been specifically delegated to such committee by the Board of Directors by resolution. In addition to the foregoing, the specific duties of the Audit Committee shall be determined by the Board of Directors by resolution.

(b) Compensation Committee. The Compensation Committee shall from time to time meet to review the various compensation plans, policies and practices of the Corporation and all of its subsidiaries and to report its findings and recommendations to the Board of Directors for final action. The Compensation Committee shall not be empowered to approve any corporate action of whatever kind or nature, and the recommendations of the Compensation Committee shall not be binding on the Board of Directors, except when, pursuant to the provisions of Section 2 of this Article III, such power and authority have been specifically delegated to such committee by the Board of Directors by resolution. In addition to the foregoing, the specific duties of the Compensation Committee shall be determined by the Board of Directors by resolution.

     SECTION 2. Available Powers. Any committee established pursuant to Section 1 of this Article III, including the Audit Committee and the Compensation Committee, but only to the extent provided in the resolution of the Board of Directors establishing such committee or otherwise delegating specific power and authority to such committee and as limited by law, the Certificate of Incorporation, and these Bylaws, shall have and may exercise all of the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it. Without limiting the foregoing, such committee may, but only to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board

11

of Directors as provided in Section 151(a) of the General Corporation Law of the State of Delaware, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation.

     SECTION 3. Unavailable Powers. No committee of the Board of Directors shall have the power or authority to (1) approve or adopt, or recommend to the stockholders, any action or matter expressly required by the General Corporation Law of the State of Delaware to be submitted to stockholders for approval or (2) adopt, amend or repeal any provision of these Bylaws.

     SECTION 4. Alternate Members. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee.

     SECTION 5. Procedures. Time, place, and notice, if any, of meetings of a committee shall be determined by such committee. At meetings of a committee, a majority of the number of members designated by the Board of Directors shall constitute a quorum for the transaction of business. The act of a majority of the members present at any meeting at which a quorum is present shall be the act of the committee, except as otherwise specifically provided by law, the Certificate of Incorporation or these Bylaws. If a quorum is not present at a meeting of a committee, the members present may adjourn the meeting from time to time, without notice other than an announcement at the meeting, until a quorum is present.

     SECTION 6. Term; Termination. In the event any person shall cease to be a director of the Corporation, such person shall simultaneously therewith cease to be a member of any committee appointed by the Board of Directors.

ARTICLE IV
OFFICERS

     SECTION 1. Officers. The Board of Directors shall elect the officers of the Corporation, which shall include a President, one or more Vice Presidents (any one or more of whom may be given an additional designation of rank or function), a Secretary and a Treasurer, and such additional officers, if any, as shall be elected by the Board of Directors pursuant to the provisions of Section 7 of this Article IV. The Board of Directors shall elect officers at its first meeting after the Effective Time and after each annual meeting of the stockholders thereafter. The failure to hold such election shall not of itself terminate the term of office of any officer. Any officer may resign at any time upon written notice to the Corporation. Officers may, but need not, be a stockholder or, except in the case of the Chairman of the Board, a director. Any number of offices may be held by the same person.

     All officers, agents and employees shall be subject to removal, with or without cause, at any time by the Board of Directors. The removal of an officer without cause shall be without prejudice to such officer’s contract rights, if any. The election or appointment of an officer shall not of itself create contract rights. All agents and employees other than officers elected by the

12

Board of Directors shall also be subject to removal, with or without cause, at any time by the officers appointing them.

     Any vacancy caused by the death, resignation, or removal of any officer or otherwise shall be filled by the Board of Directors.

     In addition to the powers and duties of the officers of the Corporation as set forth in these Bylaws, the officers shall have such authority and shall perform such duties as from time to time may be provided by law or the Certificate of Incorporation or as may be assigned by the Board of Directors or the President.

     *SECTION 2. Powers and Duties of the Chairman of the Board. The Chairman of the Board shall preside when present at all meetings of the stockholders and at all meetings of the Board of Directors. The Chairman of the Board shall advise and counsel the President and other officers and shall have such other powers and perform such other duties as may from time to time be assigned to the Chairman of the Board by these Bylaws or by the Board of Directors. The Chairman of the Board may execute bonds, mortgages, and other contracts requiring a seal under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. The Chairman of the Board may delegate all or any of the powers or duties of the Chairman of the Board to the President, if and to the extent deemed by the Chairman of the Board to be desirable or appropriate.

     *SECTION 3. Powers and Duties of the President. The President shall be the chief executive officer of the Corporation and, subject to the control of the Board of Directors, shall have general and active management of the business and affairs, and general charge and control of the operations, of the Corporation and shall have all powers and shall perform all duties incident to the office of President. In the absence of the Chairman of the Board or in the event of the inability or refusal to act of the Chairman of the Board, the President shall preside at all meetings of the stockholders and at all meetings of the Board of Directors and perform all other duties and exercise all other powers of the Chairman of the Board. The President shall have such other powers and perform such other duties as may from time to time be assigned to the President by these Bylaws or by the Board of Directors.

     SECTION 4. Powers and Duties of the Vice Presidents. In the absence of the President or in the event of the President’s inability or refusal to act, except as otherwise expressly provided in these Bylaws, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election or appointment) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Each Vice President shall have all such other powers and shall perform all such other duties incident to the office of Vice President and shall have such other powers and perform such other duties as may from time to time be assigned to such Vice President by these Bylaws or by the Board of Directors or the President.

     SECTION 5. Powers and Duties of the Secretary. The Secretary shall have the duty to record the proceedings of all meetings of the Board of Directors and all meetings of the

13

stockholders in books to be kept for that purpose; the Secretary shall attend to the giving or serving of all notices of the Corporation; the Secretary shall have custody of the corporate seal of the Corporation and shall affix the same to such documents and other papers as the Board of Directors or the President shall authorize and direct; the Secretary shall have charge of the stock certificate books, transfer books and stock ledgers and such other books and papers as the Board of Directors or the President shall direct, all of which shall at all reasonable times be open to the examination of any director, upon application, at the office of the Corporation during business hours; and whenever required by the Board of Directors or the President shall render statements of such accounts; and the Secretary shall have all powers and shall perform all duties incident to the office of Secretary and shall also have such other powers and shall perform such other duties as may from time to time be assigned to the Secretary by these Bylaws or by the Board of Directors or the President.

     SECTION 6. Powers and Duties of the Treasurer. Unless the Board of Directors by resolution otherwise provides, the Treasurer shall be the chief accounting and financial officer of the Corporation. The Treasurer shall have custody of, and when proper shall pay out, disburse or otherwise dispose of, all funds and securities of the Corporation which may have come into the hands of the Treasurer; the Treasurer may endorse on behalf of the Corporation for collection checks, notes and other obligations and shall deposit the same to the credit of the Corporation in such bank or banks or depositary or depositaries as the Board of Directors may designate; the Treasurer shall sign all receipts and vouchers for payments made to the Corporation; the Treasurer shall enter or cause to be entered regularly in the books of the Corporation kept for the purpose full and accurate accounts of all moneys received or paid or otherwise disposed of by the Treasurer and whenever required by the Board of Directors or the President shall render statements of such accounts; the Treasurer shall, at all reasonable times, exhibit the Treasurer’s books and accounts to any director of the Corporation upon application at the office of the Corporation during business hours; and Treasurer shall have all powers and the Treasurer shall perform all duties incident to the office of the Treasurer and shall also have such other powers and shall perform such other duties as may from time to time be assigned to the Treasurer by these Bylaws or by the Board of Directors or the President.

     SECTION 7. Additional Officers. The Board of Directors may from time to time elect such other officers, including a Controller, Assistant Treasurers, Assistant Secretaries and Assistant Controllers, as the Board of Directors may deem advisable and such officers shall have such authority and shall perform such duties as may from time to time be assigned to them by the Board of Directors or the President.

     The Board of Directors may from time to time by resolution delegate to any Assistant Treasurer or Assistant Treasurers any of the powers or duties herein assigned to the Treasurer; and may similarly delegate to any Assistant Secretary or Assistant Secretaries any of the powers or duties assigned to the Secretary.

     The Board of Directors may delegate the power to appoint such other officers, assistant officers, and agents, and may also remove such officers and agents or delegate the power to remove same, as it shall from time to time deem necessary.

     SECTION 8. Surety Bonds. Such officers and agents of the Corporation (if any) as the President or the Board of Directors may direct, from time to time, shall be bonded for the faithful

14

performance of their duties and for the restoration to the Corporation, in case of their death, resignation, retirement, disqualification or removal from office, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation, in such amounts and by such surety companies as President or the Board of Directors may determine. The premiums on such bonds shall be paid by the Corporation and the bonds so furnished shall be in the custody of the Secretary.

     SECTION 9. Proxies in Respect of Securities of Other Corporations. The President, any Vice President, or the Secretary from time to time may, or may appoint an attorney or attorneys or an agent or agents for the Corporation to, in the name and on behalf of the Corporation, attend meetings or vote or consent in respect of, or otherwise exercise the powers and rights that the Corporation may have as the holder of, stock or other securities in any other corporation or other entity held by the Corporation, and the President, any Vice President, or the Secretary may instruct any person or persons so appointed as to the manner of exercising such powers and rights; and the President, any Vice President or the Secretary may execute or cause to be executed, in the name and on behalf of the Corporation and under its corporate seal or otherwise, all such written proxies, powers of attorney, consents or other instruments as such officer may deem necessary or proper in order that the Corporation may exercise such powers and rights.

     SECTION 10. Compensation of Officers. The officers of the Corporation shall be entitled to receive such compensation for their services as shall from time to time be determined by the Board of Directors.

     SECTION 11. Term of Office. All officers shall serve until their successors are duly elected and qualified or until their earlier death, resignation, or removal from office.

ARTICLE V
INDEMNIFICATION

     SECTION 1. General. Subject to Section 4 of this Article V, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, or investigative (other than an action by or in the right of the Corporation), by reason of the fact that the person is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, have reasonable cause to believe that the person’s conduct was unlawful.

15

     SECTION 2. Actions by or in the Right of the Corporation. Subject to Section 4 of this Article V, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, or trust or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

     SECTION 3. Indemnification Against Expenses. To the extent that a present or former director or officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit, or proceeding referred to in Section 1 and Section 2 of this Article V, or in defense of any claim, issue, or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.

     SECTION 4. Board Determinations; Limitation on Indemnification. Any indemnification under Section 1 and Section 2 of this Article V (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in Section 1 and Section 2 of this Article V. Such determination shall be made (1) by a majority vote of the directors who were not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such disinterested directors or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders. Notwithstanding anything contained in this Article V to the contrary, except for proceedings to enforce rights to indemnification, the Corporation shall not be obligated to indemnify any person (or such person’s heirs, executors, or representatives) in connection with any action, suit, or proceeding (or part thereof) initiated by such person unless such action, suit, or proceeding was authorized or consented to by the Board of Directors.

     SECTION 5. Advancement of Expenses. Expenses (including attorneys’ fees) incurred by an officer, director, employee or agent in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit, or proceeding upon receipt of an undertaking by or on behalf of such director, officer, employee or agent to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized by law or in this Article V.

16

     SECTION 6. Nonexclusive. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article V shall not be deemed exclusive of any other rights to which any director, officer, employee, or agent of the Corporation seeking indemnification or advancement of expenses may be entitled under any Bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office, and shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee, or agent of the Corporation and shall inure to the benefit of the heirs, executors, and administrators of such a person.

     SECTION 7. Insurance. The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against any liability asserted against such person and incurred by such person in any such capacity or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of applicable statutes, the Certificate of Incorporation, or this Article V.

     SECTION 8. Certain Definitions. For purposes of this Article V, (a) references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger that, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees, or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, shall stand in the same position under the provisions of this Article V with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued; (b) references to “other enterprises” shall include employee benefit plans; (c) references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; (d) references to “serving at the request of the Corporation” shall include any service as a director, officer, employee, or agent of the Corporation that imposes duties on, or involves services by, such director, officer, employee, or agent with respect to any employee benefit plan, its participants, or beneficiaries; and (e) a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article V.

     SECTION 9. Change in Governing Law; Effect of Amendment or Repeal of this Article. In the event of any amendment or addition to Section 145 of the General Corporation Law of the State of Delaware or the addition of any other section to such law that limits indemnification rights thereunder, the Corporation shall, to the extent then permitted by the General Corporation Law of the State of Delaware, indemnify to the fullest extent authorized or permitted hereunder, any person who was or is a party or is threatened to be made a party to any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (including an action by or in the right of the Corporation), by reason of the fact that such person is or was a director, officer, employee, or agent of the

17

Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against expenses (including attorneys’ fees), judgments, fines, and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit, or proceeding. Any amendment or repeal of this Article V shall not adversely affect any rights to indemnification of a director or officer of the Corporation existing at the time of such amendment or repeal with respect to any acts or omissions occurring prior to such amendment or repeal.

ARTICLE VI
STOCK-SEAL-FISCAL YEAR

     SECTION 1. Certificates For Shares of Stock. Every holder of shares of the capital stock of the Corporation, unless and to the extent the Board by resolution provides that any or all classes or series of stock shall be uncertificated, shall be entitled to have a certificate that certifies the number of shares owned by such holder. The certificates for shares of stock of the Corporation shall be in such form, not inconsistent with the Certificate of Incorporation, as shall be approved by the Board of Directors. All certificates shall be signed by the Chairman of the Board, the President or a Vice President and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer, and shall not be valid unless so signed. Any and all signatures on any such certificate may be facsimiles.

     In case any officer or officers, transfer agent or registrar who shall have signed any such certificate or certificates shall cease to be such officer or officers, transfer agent or registrar of the Corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered as though the person or persons who signed such certificate or certificates had not ceased to be such officer or officers, transfer agent or registrar of the Corporation at such time of delivery.

     All certificates for shares of stock shall be consecutively numbered as the same are issued. The Secretary or such other person designated by the Board of Directors shall maintain as part of the books of the Corporation a stock ledger in which the name of each person owning any shares of capital stock of the Corporation, whether or not represented by certificates, the number and class of such shares and the date of issue thereof shall be entered.

     Except as hereinafter provided, all certificates surrendered to the Corporation for transfer shall be canceled, and no new certificates shall be issued until former certificates for the same number of shares have been surrendered and canceled.

     If the Corporation shall be authorized to issue more than one class of capital stock or more than one series of any class, a statement of the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall, unless the Board of Directors shall by resolution provide that such class or series of stock shall be uncertificated, be set forth in full or summarized on the face or back of any certificate that the Corporation shall issue to represent such class or series of stock; provided, however, that, to the extent allowed by law, in lieu of such statement, the face or back of such certificate may state

18

that the Corporation will furnish a copy of such statement without charge to each requesting stockholder.

     SECTION 2. Lost, Stolen or Destroyed Certificates. Whenever a person owning a certificate for shares of stock of the Corporation alleges that it has been lost, stolen or destroyed, such person shall file in the office of the Corporation an affidavit setting forth, to the best of such person’s knowledge and belief, the time, place and circumstances of the loss, theft or destruction, and, if required by the Board of Directors, the President or the Secretary, a bond of indemnity or other indemnification sufficient in the opinion of the Board of Directors, the President or the Secretary to indemnify the Corporation and its agents against any claim that may be made against it or them on account of the alleged loss, theft or destruction of any such certificate or the issuance of a new certificate in replacement therefor. Thereupon the Corporation may cause to be issued to such person a new certificate in replacement for the certificate alleged to have been lost, stolen or destroyed. Upon the stub of every new certificate so issued shall be noted the fact of such issue and the number, date and the name of the registered owner of the lost, stolen or destroyed certificate in lieu of which the new certificate is issued.

     SECTION 3. Transfer of Shares. Shares of stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof, in person or by such holder’s attorney duly authorized in writing, upon surrender and cancellation of certificates for the number of shares of stock to be transferred.

     SECTION 4. Fractional Shares. The Corporation may, but shall not be required to, issue certificates for fractions of a share where necessary to effect authorized transactions, or the Corporation may pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or it may issue scrip in registered or bearer from over the manual or facsimile signature of an offer of the Corporation or of its agent, exchangeable as therein provided for full shares, but such scrip shall not entitle the holder to any rights of a stockholder except as therein provided.

     SECTION 5. Regulations. The Board of Directors shall have power and authority to make such rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates for shares of stock of the Corporation.

     SECTION 6. Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix, in advance, a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten days prior to any such action. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

19

     In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is otherwise required, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

     In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

     SECTION 7. Dividends. Dividends on the capital stock of the Corporation, paid in cash, property, or securities of the Corporation and as may be limited by applicable law and applicable provisions of the Certificate of Incorporation (if any), may be declared by the Board of Directors in its discretion, and it shall not be required at any time, against such discretion, to divide or pay any part of such funds among or to the stockholders as dividends or otherwise.

     Subject to the provisions of the Certificate of Incorporation, any dividends declared upon the stock of the Corporation shall be payable on such date or dates as the Board of Directors shall determine. If the date fixed for the payment of any dividend shall in any year fall upon a legal holiday, then the dividend payable on such date shall be paid on the next day not a legal holiday.

     Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, determines proper as a reserve or reserves to meet contingencies, for equalizing dividends, for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall determine to be in the best interest of the Corporation; and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.

     SECTION 8. Issuance and Payment. Subject to the provisions of law, the Certificate of Incorporation or these Bylaws, shares may be issued for such consideration and to such persons

20

as the Board of Directors may determine from time to time. Shares may not be issued until the full amount of the consideration has been paid, unless upon the face or back of each certificate issued to represent any partly paid shares of capital stock there shall have been set forth the total amount of the consideration to be paid therefor and the amount paid thereon up to and including the time said certificate is issued.

     SECTION 9. Registered Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, vote and be held liable for calls and assessments and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any person other than such registered owner, whether or not it shall have express or other notice thereof, except as otherwise provided by law.

     SECTION 10. Corporate Seal. The Board of Directors shall provide a suitable seal, containing the name of the Corporation, which seal shall be kept in the custody of the Secretary. A duplicate of the seal may be kept and be used by any officer of the Corporation designated by the Board of Directors or the President. The seal may be used by causing it or a facsimile thereof to be impressed, affixed or otherwise reproduced.

     SECTION 11. Fiscal Year. The fiscal year of the Corporation shall be the calendar year or such other fiscal year as the Board of Directors from time to time by resolution shall determine.

ARTICLE VII
AMENDMENTS

     The Board of Directors shall have the power to adopt, amend and repeal from time to time Bylaws of the Corporation, subject to the right of the stockholders entitled to vote with respect thereto to amend or repeal such Bylaws and to adopt new Bylaws as adopted or amended by the Board of Directors; and the stockholders may prescribe that any Bylaws made by them shall not be altered, amended or repealed by the Board of Directors.

ARTICLE VIII
MISCELLANEOUS PROVISIONS

     SECTION 1. Bank Accounts, Checks, Notes, Etc. In addition to such bank accounts as may be authorized by the Board of Directors, the Treasurer or any person designated by the Treasurer, whether or not an employee of the Corporation, may authorize such bank accounts to be opened or maintained in the name and on behalf of the Corporation as the Treasurer may deem necessary or appropriate.

     All checks, drafts, bills of exchange, acceptances, notes or other obligations or orders for the payment of money by the Corporation shall be signed and, if so required by the Board of Directors, countersigned by the Treasurer or such other officers of the Corporation or other persons as the Board of Directors from time to time shall designate.

     Checks, drafts, bills of exchange, acceptances, notes, obligations and orders for the payment of money made payable to the Corporation may be endorsed for deposit to the credit of

21

the Corporation with a duly authorized depository by the Treasurer or such other officers or persons as the Board of Directors from time to time may designate.

     SECTION 2. Loans. No loans and no renewals of any loans shall be contracted on behalf of the Corporation except as authorized by the Board of Directors and permitted under applicable law. When authorized so to do, any officer or agent of the Corporation may effect loans and advances for the Corporation from any bank, trust company or other institution or from any firm, corporation or individual, and for such loans and advances may make, execute and deliver promissory notes, bonds or other evidences of indebtedness of the Corporation. When authorized so to do, any officer or agent of the Corporation may pledge, hypothecate or transfer, as security for the payment of any and all loans, advances, indebtedness and liabilities of the Corporation, any and all stocks, securities and other personal property at any time held by the Corporation, and to that end may endorse, assign and deliver the same. Such authority may be general or confined to specific instances.

     SECTION 3. Contracts. Except as otherwise provided in these Bylaws or by law or as otherwise directed by the Board of Directors, the President or any Vice President shall be authorized to execute and deliver, in the name and on behalf of the Corporation, all agreements, bonds, contracts, deeds, mortgages, and other instruments, either for the Corporation’s own account or in a fiduciary or other capacity, and the seal of the Corporation, if appropriate, shall be affixed thereto by any of such officers or the Secretary or an Assistant Secretary. The Board of Directors, the President or any Vice President designated by the Board of Directors or the President may authorize any other officer, employee or agent to execute and deliver, in the name and on behalf of the Corporation, agreements, bonds, contracts, deeds, mortgages, and other instruments, either for the Corporation’s own account or in a fiduciary or other capacity, and, if appropriate, to affix the seal of the Corporation thereto. The grant of such authority by the Board of Directors or any such officer may be general or confined to specific instances.

     SECTION 4. Means of Giving Notice. Whenever under applicable law, the Certificate of Incorporation or these Bylaws notice is required to be given to any director or stockholder, such notice may be given in writing and delivered personally, by a recognized express delivery service (such as Federal Express) or (subject, in the case of notices to stockholders, as specified below) by means of facsimile transmission or other form of electronic transmission or, solely in the case of notices to stockholders, through the United States mail, in any such case addressed to such director or stockholder at such director or stockholder’s address or facsimile transmission or electronic mail address, as the case may be, appearing on the records of the Corporation, with postage and fees thereon prepaid if required. Such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail or with an express delivery service or when transmitted, as the case may be. Notice of any meeting of the Board of Directors may also be given to a director by telephone and shall be deemed given in such circumstances when actually received by the director. Any notice given to any stockholder shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given, to the extent permitted by, and subject to the conditions set forth in, Section 232 of the General Corporation Law of the State of Delaware.

     SECTION 5. Waivers of Notice. Whenever any notice whatever is required to be given by law, by the Certificate of Incorporation or by these Bylaws to any person or persons, a waiver thereof in writing, signed by the person or persons entitled to the notice, or a waiver by

22

electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent thereto. All such waivers shall be filed with the corporate records. Attendance at a meeting shall constitute a waiver of notice of such meeting, except where a person attends for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

     SECTION 6. Offices Outside of Delaware. Except as otherwise required by the laws of the State of Delaware, the Corporation may have an office or offices and keep its books, documents and papers outside of the State of Delaware at such place or places as from time to time may be determined by the Board of Directors or the President.

     SECTION 7. Reports to Stockholders. The Board of Directors shall present at each annual meeting of stockholders, and at any special meeting of stockholders when called for by vote of the stockholders, a statement of the business and condition of the Corporation.

     SECTION 8. Books and Records. The Corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of the stockholders and the Board of Directors and committees thereof and shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of its stockholders, giving the names and addresses of all stockholders and the number and class of the shares held by each.

     SECTION 9. Resignation. Any director, committee member, officer, or agent may resign by delivering notice in writing or by electronic transmission to the Chairman of the Board, the President or the Secretary. The resignation shall take effect at the time specified therein (which shall be no earlier than the time of such delivery) or immediately if no time is specified. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

     SECTION 10. Ratification. Any transaction, questioned in any law suit on the ground of lack of authority, defective or irregular execution, adverse interest of director, officer or stockholder, non-disclosure, miscomputation, or the application of improper principles or practices of accounting, may be ratified before or after judgment, by the Board of Directors or by the stockholders, and if so ratified shall have the same force and effect as if the questioned transaction had been originally duly authorized. Such ratification shall be binding upon the Corporation and its stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned transaction.

     SECTION 11. Defined Terms. All capitalized terms used herein but not defined herein shall have the meanings assigned to such terms in the Certificate of Incorporation.

23

     Effective as of 9:00 a.m. C.S.T., on October 31, 2002.

/s/ John Hageman
Secretary

24

Attachment A

AMENDMENT NO. 1
TO
AMENDED AND RESTATED BYLAWS
OF
METALS USA, INC.

     This Amendment No. 1 (this “Amendment”) to the Amended and Restated Bylaws (the “Bylaws”) of Metals USA, Inc., a Delaware corporation (the “Corporation”), is effective as of May 17, 2004, and hereby amends the Bylaws as follows:

     1. Section 2 of Article IV of the Bylaws is hereby deleted in its entirety and replaced with the following:

“SECTION 2. Powers and Duties of the Chairman of the Board. The Chairman of the Board shall be an officer of the Company, but a non-executive officer. The Chairman of the Board shall preside when present at all meetings of the stockholders and at all meetings of the Board of Directors. The Chairman of the Board shall advise and counsel the President and other officers and shall have such other powers and perform such other duties as may from time to time be assigned to the Chairman of the Board by these Bylaws or by the Board of Directors. The Chairman of the Board may delegate all or any of the powers or duties of the Chairman of the Board to the President, if and to the extent deemed by the Chairman of the Board to be desirable or appropriate.”

     2. Section 3 of Article IV of the Bylaws is hereby deleted in its entirety and replaced with the following:

“SECTION 3. Powers and Duties of the President. The President shall be the chief executive officer of the Corporation and, subject to the control of the Board of Directors, shall have general and active management of the business and affairs, and general charge and control of the operations, of the Corporation and shall have all powers and shall perform all duties incident to the office of President. In the absence of the Chairman of the Board or in the event of the inability or refusal to act of the Chairman of the Board, the President shall preside at all meetings of the stockholders and at all meetings of the Board of Directors and perform all other duties and exercise all other powers of the Chairman of the Board. The President may execute bonds, mortgages, and other contracts whether requiring a seal or otherwise, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. The President shall have such other powers and perform such other duties as may from time to time be assigned to the President by these Bylaws or by the Board of Directors.”

     The undersigned certifies that this Amendment has been adopted by the Board on the date set forth in the preamble above.

Signature:	/s/ John Hageman
Name:	John Hageman
Title:	Secretary

EX-3.4

Exhibit 3.4

CERTIFICATE OF INCORPORATION

OF

FLAG INTERMEDIATE HOLDINGS CORPORATION

          I, the undersigned, for the purpose of incorporating and organizing a corporation under the General Corporation Law of the State of Delaware, do hereby execute this Certificate of Incorporation and do hereby certify as follows:

ARTICLE I

          The name of the corporation (which is hereinafter referred to as the “Corporation”) is:

FLAG INTERMEDIATE HOLDINGS CORPORATION

ARTICLE II

          The address of the Corporation’s registered office in the State of Delaware is The Corporation Trust Center, 1209 Orange Street in the City of Wilmington, County of New Castle, State of Delaware 19801. The name of the Corporation’s registered agent at such address is The Corporation Trust Company.

ARTICLE III

          The purpose of the Corporation shall be to engage in any lawful act or activity for which corporations may be organized and incorporated under the General Corporation Law of the State of Delaware.

ARTICLE IV

          Section 1. The Corporation shall be authorized to issue 100 shares of capital stock, all of which shall be shares of Common Stock, $.01 par value (“Common Stock”).

          Section 2. Except as otherwise provided by law, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes. Each share of Common Stock shall have one vote, and the Common Stock shall vote together as a single class.

ARTICLE V

          Unless and except to the extent that the By-Laws of the Corporation shall so require, the election of directors of the Corporation need not be by written ballot.

ARTICLE VI

          In furtherance and not in limitation of the powers conferred by law, the Board of Directors of the Corporation (the “Board”) is expressly authorized and empowered to make, alter and repeal the By-Laws of the Corporation by a majority vote at any regular or special meeting of the Board or by written consent, subject to the power of the stockholders of the Corporation to alter or repeal any By-Laws made by the Board.

ARTICLE VII

          The Corporation reserves the right at any time from time to time to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, and any other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed by law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons

-2-

whomsoever by and pursuant to this Certificate of Incorporation in its present form or as hereafter amended are granted subject to the right reserved in this Article.

ARTICLE VIII

          Section 1. Elimination of Certain Liability of Directors. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended.

          Any repeal or modification of the foregoing paragraph shall not adversely affect any right or protection of a director of the Corporation existing hereunder with respect to any act or omission occurring prior to such repeal or modification.

          Section 2. Indemnification and Insurance.

          (a) Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the General Corporation

-3-

Law of the State of Delaware, as the same exists or may hereafter be amended (but, in the case of any such amendment, to the fullest extent permitted by law, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, amounts paid or to be paid in settlement, and excise taxes or penalties arising under the Employee Retirement Income Security Act of 1974) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in paragraph (b) hereof, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the General Corporation Law of the State of Delaware requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section or otherwise. The Corporation may, by action

-4-

of the Board, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers.

          (b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of this Section is not paid in full by the Corporation within thirty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the General Corporation Law of the State of Delaware for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the General Corporation Law of the State of Delaware, nor an actual determination by the Corporation (including its Board, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

          (c) Non-Exclusivity of Rights. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Section shall not be exclusive of any other right which any person may have or hereafter

-5-

acquire under any statute, provision of the Certificate of Incorporation, By-law, agreement, vote of stockholders or disinterested directors or otherwise.

          (d) Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the General Corporation Law of the State of Delaware.

ARTICLE IX

          The name and mailing address of the incorporator is Derek O. Zaba, c/o Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York 10019.

-6-

          IN WITNESS WHEREOF, I, the undersigned, being the incorporator hereinbefore named, do hereby further certify that the facts hereinabove stated are truly set forth and, accordingly, I have hereunto set my hand this 3rd day of November, 2005.

/s/ Derek O. Zaba

Derek O. Zaba

Incorporator

-7-

EX-3.5

Exhibit 3.5

BY-LAWS

OF

FLAG INTERMEDIATE HOLDINGS CORPORATION

ARTICLE I

OFFICES

          SECTION 1. REGISTERED OFFICE — The registered office of Flag Intermediate Holdings Corporation (the “Corporation”) shall be established and maintained at the office of The Corporation Trust Center at 1209 Orange Street in the City of Wilmington, County of New Castle, State of Delaware, 19801 and said The Corporation Trust Center shall be the registered agent of the Corporation in charge thereof.

          SECTION 2. OTHER OFFICES — The Corporation may have other offices, either within or without the State of Delaware, at such place or places as the Board of Directors may from time to time select or the business of the Corporation may require.

ARTICLE II

MEETINGS OF STOCKHOLDERS

          SECTION 1. ANNUAL MEETINGS — Annual meetings of stockholders for the election of directors, and for such other business as may be stated in the notice of the meeting, shall be held at such place, either within or without the State of Delaware, and at such time and date as the Board of Directors, by resolution, shall determine and as set forth in the notice of the meeting. If the Board of Directors fails so to determine the time, date and place of meeting, the annual meeting of stockholders shall be held at the registered office of the Corporation on the first Tuesday in April. If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day. At each annual meeting, the stockholders entitled to vote shall elect a Board of Directors and they may transact such other corporate business as shall be stated in the notice of the meeting.

          SECTION 2. SPECIAL MEETINGS — Special meetings of the stockholders for any purpose or purposes may be called by the Chairman of the Board, the President or the Secretary, or by resolution of the Board of Directors.

          SECTION 3. VOTING — Each stockholder entitled to vote in accordance with the terms of the Certificate of Incorporation of the Corporation and these By-Laws may vote in

          SECTION 1. person or by proxy, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. All elections for directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Certificate of Incorporation or the laws of the State of Delaware.

          A complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is entitled to be present.

          SECTION 2. QUORUM — Except as otherwise required by law, by the Certificate of Incorporation of the Corporation or by these By-Laws, the presence, in person or by proxy, of stockholders holding shares constituting a majority of the voting power of the Corporation shall constitute a quorum at all meetings of the stockholders. In case a quorum shall not be present at any meeting, a majority in interest of the stockholders entitled to vote thereat, present in person or by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted that might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof.

          SECTION 3. NOTICE OF MEETINGS — Written notice, stating the place, date and time of the meeting, and the general nature of the business to be considered, shall be given to each stockholder entitled to vote thereat, at his or her address as it appears on the records of the Corporation, not less than ten nor more than sixty days before the date of the meeting. No business other than that stated in the notice shall be transacted at any meeting without the unanimous consent of all the stockholders entitled to vote thereat.

          SECTION 4. ACTION WITHOUT MEETING — Unless otherwise provided by the Certificate of Incorporation of the Corporation, any action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.

ARTICLE III

DIRECTORS

          SECTION 1. NUMBER AND TERM — The business and affairs of the Corporation shall be managed under the direction of a Board of Directors which shall consist of not less than one person. The exact number of directors shall initially be four and may thereafter be fixed from time to time by the Board of Directors. Directors shall be elected at the annual meeting of stockholders and each director shall be elected to serve until his or her successor shall be elected and shall qualify. A director need not be a stockholder.

          SECTION 2. RESIGNATIONS — Any director may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time be specified, at the time of its receipt by the Chairman of the Board, the President or the Secretary. The acceptance of a resignation shall not be necessary to make it effective.

          SECTION 3. VACANCIES — If the office of any director becomes vacant, the remaining directors in the office, though less than a quorum, by a majority vote, may appoint any qualified person to fill such vacancy, who shall hold office for the unexpired term and until his or her successor shall be duly chosen. If the office of any director becomes vacant and there are no remaining directors, the stockholders, by the affirmative vote of the holders of shares constituting a majority of the voting power of the Corporation, at a special meeting called for such purpose, may appoint any qualified person to fill such vacancy.

          SECTION 4. REMOVAL — Except as hereinafter provided, any director or directors may be removed either for or without cause at any time by the affirmative vote of the holders of a majority of the voting power entitled to vote for the election of directors, at an annual meeting or a special meeting called for the purpose, and the vacancy thus created may be filled, at such meeting, by the affirmative vote of holders of shares constituting a majority of the voting power of the Corporation.

          SECTION 5. COMMITTEES — The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board of Directors, designate one or more committees, each committee to consist of one or more directors of the Corporation.

          Any such committee, to the extent provided in the resolution of the Board of Directors, or in these By-Laws, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it.

          SECTION 6. MEETINGS — The newly elected directors may hold their first meeting for the purpose of organization and the transaction of business, if a quorum be present, immediately after the annual meeting of the stockholders; or the time and place of such meeting may be fixed by consent of all the Directors.

-3-

          Regular meetings of the Board of Directors may be held without notice at such places and times as shall be determined from time to time by resolution of the Board of Directors.

          Special meetings of the Board of Directors may be called by the Chairman of the Board or the President, or by the Secretary on the written request of any director, on at least one day’s notice to each director (except that notice to any director may be waived in writing by such director) and shall be held at such place or places as may be determined by the Board of Directors, or as shall be stated in the call of the meeting.

          Unless otherwise restricted by the Certificate of Incorporation of the Corporation or these By-Laws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in any meeting of the Board of Directors or any committee thereof by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

          SECTION 7. QUORUM — A majority of the Directors shall constitute a quorum for the transaction of business. If at any meeting of the Board of Directors there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned. The vote of the majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors unless the Certificate of Incorporation of the Corporation or these By-Laws shall require the vote of a greater number.

          SECTION 8. COMPENSATION — Directors shall not receive any stated salary for their services as directors or as members of committees, but by resolution of the Board of Directors a fixed fee and expenses of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity as an officer, agent or otherwise, and receiving compensation therefor.

          SECTION 9. ACTION WITHOUT MEETING — Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board of Directors or such committee.

ARTICLE IV

OFFICERS

     SECTION 1. OFFICERS — The officers of the Corporation shall be a Chairman of the Board, a Chief Executive Officer, a President, a Chief Financial Officer, a Treasurer and a Secretary, all of whom shall be elected by the Board of Directors and shall hold office until

-4-

their successors are duly elected and qualified. In addition, the Board of Directors may elect such Vice Presidents, Assistant Secretaries and Assistant Treasurers as they may deem proper. The Board of Directors may appoint such other officers and agents as it may deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.

          SECTION 2. CHAIRMAN OF THE BOARD — Unless someone has been elected Chief Executive Officer of the Corporation, the Chairman of the Board shall be the Chief Executive Officer of the Corporation. He or she shall preside at all meetings of the Board of Directors and shall have and perform such other duties as may be assigned to him or her by the Board of Directors. The Chairman of the Board shall have the power to execute bonds, mortgages and other contracts on behalf of the Corporation, and to cause the seal of the Corporation to be affixed to any instrument requiring it, and when so affixed the seal shall be attested to by the signature of the Secretary or the Treasurer or the Chief Financial Officer or an Assistant Secretary or an Assistant Treasurer.

          SECTION 3. CHIEF EXECUTIVE OFFICER — the Chief Executive Officer of the Corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the Corporation. The Chief Executive Officer shall preside at all meetings of the stockholders and at all meetings of the Board of Directors, unless the Chairman of the Board of Directors has been appointed and is present. The Chief Executive Officer shall have the power to execute bonds, mortgages and other contracts on behalf of the Corporation, and to cause the seal of the Corporation to be affixed to any instrument requiring it, and when so affixed the seal shall be attested to by the signature of the Secretary or the Treasurer or the Chief Financial Officer or an Assistant Secretary or an Assistant Treasurer.

          SECTION 4. PRESIDENT — The President shall be the Chief Operating Officer of the Corporation. He or she shall have the general powers and duties of supervision and management usually vested in the office of President of a corporation. The President shall have the power to execute bonds, mortgages and other contracts on behalf of the Corporation, and to cause the seal to be affixed to any instrument requiring it, and when so affixed the seal shall be attested to by the signature of the Secretary or the Treasurer or the Chief Financial Officer or an Assistant Secretary or an Assistant Treasurer.

          SECTION 5. VICE PRESIDENTS — Each Vice President, if any, shall have such powers and shall perform such duties as shall be assigned to him or her by the Board of Directors.

          SECTION 6. CHIEF FINANCIAL OFFICER — The Chief Financial Officer shall have the custody of the Corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the Corporation. He or she shall deposit all moneys and other valuables in the name and to the credit of the Corporation in such depositaries as may be designated by the Board of Directors. He or she shall disburse the funds of the Corporation as may be ordered by the Board of Directors, the Chairman of the Board, or

-5-

the President, taking proper vouchers for such disbursements. He or she shall render to the Chairman of the Board, the President and Board of Directors at the regular meetings of the Board of Directors, or whenever they may request it, an account of all his or her transactions as Chief Financial Officer and of the financial condition of the Corporation. If required by the Board of Directors, he or she shall give the Corporation a bond for the faithful discharge of his or her duties in such amount and with such surety as the Board of Directors shall prescribe. The Chief Executive Officer may direct the Treasurer to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer, and the Treasurer shall perform other duties commonly incident to his office and shall also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer shall designate from time to time.

          SECTION 7. SECRETARY — The Secretary shall give, or cause to be given, notice of all meetings of stockholders and of the Board of Directors and all other notices required by law or by these By-Laws, and in case of his or her absence or refusal or neglect so to do, any such notice may be given by any person thereunto directed by the Chairman of the Board or the President, or by the Board of Directors, upon whose request the meeting is called as provided in these By-Laws. He or she shall record all the proceedings of the meetings of the Board of Directors, any committees thereof and the stockholders of the Corporation in a book to be kept for that purpose, and shall perform such other duties as may be assigned to him or her by the Board of Directors, the Chairman of the Board or the President. He or she shall have the custody of the seal of the Corporation and shall affix the same to all instruments requiring it, when authorized by the Board of Directors, the Chairman of the Board or the President, and attest to the same.

          SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES — Assistant Treasurers and Assistant Secretaries, if any, shall be elected and shall have such powers and shall perform such duties as shall be assigned to them, respectively, by the Board of Directors.

ARTICLE V

MISCELLANEOUS

          SECTION 1. CERTIFICATES OF STOCK — A certificate of stock shall be issued to each stockholder certifying the number of shares owned by such stockholder in the Corporation. Certificates of stock of the Corporation shall be of such form and device as the Board of Directors may from time to time determine.

          SECTION 2. LOST CERTIFICATES — A new certificate of stock may be issued in the place of any certificate theretofore issued by the Corporation, alleged to have been lost or destroyed, and the Board of Directors may, in its discretion, require the owner of the lost or destroyed certificate, or such owner’s legal representatives, to give the Corporation a bond, in such sum as they may direct, not exceeding double the value of the stock, to indemnify the

-6-

Corporation against any claim that may be made against it on account of the alleged loss of any such certificate, or the issuance of any such new certificate.

          SECTION 3. TRANSFER OF SHARES — The shares of stock of the Corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives, and upon such transfer the old certificates shall be surrendered to the Corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers, or to such other person as the Board of Directors may designate, by whom they shall be cancelled, and new certificates shall thereupon be issued. A record shall be made of each transfer and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer.

          SECTION 4. STOCKHOLDERS RECORD DATE — In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and which record date: (1) in the case of determination of stockholders entitled to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, not be more than sixty nor less than ten days before the date of such meeting; (2) in the case of determination of stockholders entitled to express consent to corporate action in writing without a meeting, shall not be more than ten days from the date upon which the resolution fixing the record date is adopted by the Board of Directors; and (3) in the case of any other action, shall not be more than sixty days prior to such other action. If no record date is fixed: (1) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (2) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting when no prior action of the Board of Directors is required by law, shall be the first day on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in accordance with applicable law, or, if prior action by the Board of Directors is required by law, shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action; and (3) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

          SECTION 5. DIVIDENDS — Subject to the provisions of the Certificate of Incorporation of the Corporation, the Board of Directors may, out of funds legally available therefor at any regular or special meeting, declare dividends upon stock of the Corporation as and when they deem appropriate. Before declaring any dividend there may be set apart out of

-7-

any funds of the Corporation available for dividends, such sum or sums as the Board of Directors from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the Board of Directors shall deem conducive to the interests of the Corporation.

          SECTION 6. SEAL — The corporate seal of the Corporation shall be in such form as shall be determined by resolution of the Board of Directors. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise imprinted upon the subject document or paper.

          SECTION 7. FISCAL YEAR — The fiscal year of the Corporation shall be determined by resolution of the Board of Directors.

          SECTION 8. CHECKS — All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, or agent or agents, of the Corporation, and in such manner as shall be determined from time to time by resolution of the Board of Directors.

          SECTION 9. NOTICE AND WAIVER OF NOTICE — Whenever any notice is required to be given under these By-Laws, personal notice is not required unless expressly so stated, and any notice so required shall be deemed to be sufficient if given by depositing the same in the United States mail, postage prepaid, addressed to the person entitled thereto at his or her address as it appears on the records of the Corporation, and such notice shall be deemed to have been given on the day of such mailing. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by law. Whenever any notice is required to be given under the provisions of any law, or under the provisions of the Certificate of Incorporation of the Corporation or of these By-Laws, a waiver thereof, in writing and signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to such required notice.

ARTICLE VI

AMENDMENTS

          These By-Laws may be altered, amended or repealed at any annual meeting of the stockholders (or at any special meeting thereof if notice of such proposed alteration, amendment or repeal to be considered is contained in the notice of such special meeting) by the affirmative vote of the holders of shares constituting a majority of the voting power of the Corporation. Except as otherwise provided in the Certificate of Incorporation of the Corporation, the Board of Directors may by majority vote of those present at any meeting at which a quorum is present alter, amend or repeal these By-Laws, or enact such other By-Laws as in their judgment may be advisable for the regulation and conduct of the affairs of the Corporation.

-8-

EX-4.1

Exhibit 4.1

EX-4.5

Exhibit 4.5
EXECUTION COPY

LOAN AND SECURITY AGREEMENT

Dated as of November 30, 2005

among

EACH OF THE FINANCIAL INSTITUTIONS PARTY HERETO,
as the Lenders,

CREDIT SUISSE,

as the Administrative Agent,

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

FLAG INTERMEDIATE HOLDINGS CORPORATION,

FLAG ACQUISITION CORPORATION (to be merged with and into Metals USA, Inc.),

and

CERTAIN OF ITS SUBSIDIARIES PARTY HERETO

CREDIT SUISSE,
as Sole Bookrunner,

CREDIT SUISSE

and

BANC OF AMERICA SECURITIES LLC,

as Joint Lead Arrangers,

BANK OF AMERICA, N.A.

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Co-Syndication Agents,

and

WACHOVIA BANK, NATIONAL ASSOCIATION

and

WELLS FARGO FOOTHILL, LLC,

as Co-Documentation Agents

TABLE OF CONTENTS

			Page
ARTICLE 1 INTERPRETATION OF THIS AGREEMENT				1
	Section 1.1	Definitions		1
	Section 1.2	Accounting Terms		42
	Section 1.3	Interpretive Provisions		43
ARTICLE 2 LOANS AND LETTERS OF CREDIT				43
	Section 2.1	Total Facility		43
	Section 2.2	Revolving Loans		44
	Section 2.3	Letters of Credit		52
	Section 2.4	Bank Products		59
ARTICLE 3 INTEREST AND FEES				60
	Section 3.1	Interest		60
	Section 3.2	Conversion and Continuation Elections		61
	Section 3.3	Maximum Interest Rate		62
	Section 3.4	Unused Line Fee		63
	Section 3.5	Letter of Credit Fee		64
	Section 3.6	Other Fees		64
ARTICLE 4 PAYMENTS AND PREPAYMENTS				64
	Section 4.1	Revolving Loans		64
	Section 4.2	Reduction of Commitments; Termination of Facility		65
	Section 4.3	[Reserved]		66
	Section 4.4	Payments by the Borrowers		66
	Section 4.5	Payments as Revolving Loans		67
	Section 4.6	Apportionment, Application, and Reversal of Payments		67
	Section 4.7	Indemnity for Returned Payments		68
	Section 4.8	The Agents’ and the Lenders’ Books and Records; Monthly Statements		69
ARTICLE 5 TAXES, YIELD PROTECTION, AND ILLEGALITY				69
	Section 5.1	Taxes		69
	Section 5.2	Illegality		70
	Section 5.3	Increased Costs and Reduction of Return		71
	Section 5.4	Funding Losses		72
	Section 5.5	Inability to Determine Rates		72
	Section 5.6	Certificates of Lenders		72
	Section 5.7	Survival		73
	Section 5.8	Claims Under Section 5.1 and Section 5.3		73
	Section 5.9	Replacement of Affected Lender		73

i

TABLE OF CONTENTS
(continued)

			Page
ARTICLE 6 COLLATERAL				73
	Section 6.1	Grant of Security Interest		73
	Section 6.2	Perfection and Protection of Security Interest		75
	Section 6.3	Location of Collateral		77
	Section 6.4	Title to, Liens on, and Sale and Use of Collateral		77
	Section 6.5	Appraisals		78
	Section 6.6	Access and Examination; Confidentiality		78
	Section 6.7	Collateral Reporting		79
	Section 6.8	Accounts		80
	Section 6.9	Collection of Accounts; Payments		81
	Section 6.10	Inventory; Perpetual Inventory		83
	Section 6.11	Documents, Instruments, and Chattel Paper		83
	Section 6.12	Right to Cure		84
	Section 6.13	Power of Attorney		84
	Section 6.14	The Collateral Agent’s and the Lenders’ Rights, Duties, and Liabilities		84
	Section 6.15	Guaranties; Third Party Joinder		85
	Section 6.16	Voting Rights, Distributions, Etc. in Respect of Investment Property		85
	Section 6.17	Personal Property		87
	Section 6.18	Intercreditor Agreement Governs		88
ARTICLE 7 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES				89
	Section 7.1	Books and Records		89
	Section 7.2	Financial Information		89
	Section 7.3	Notices to the Lenders		91
ARTICLE 8 GENERAL WARRANTIES AND REPRESENTATIONS				92
	Section 8.1	Authorization, Validity, and Enforceability of this Agreement and the Loan Documents; No Conflicts		93
	Section 8.2	Validity and Priority of Security Interest		93
	Section 8.3	Organization and Qualification		94
	Section 8.4	Corporate Name; Prior Transactions		94
	Section 8.5	Subsidiaries		94
	Section 8.6	Financial Statements and Projections		94
	Section 8.7	Solvency		95
	Section 8.8	[Reserved]		95
	Section 8.9	Transaction Documents		95
	Section 8.10	Title to Property		95
	Section 8.11	Real Estate; Leases		96
	Section 8.12	Proprietary Rights		96
	Section 8.13	Trade Names		96

ii

TABLE OF CONTENTS
(continued)

			Page
	Section 8.14	Litigation		96
	Section 8.15	[Reserved]		96
	Section 8.16	Labor Matters		96
	Section 8.17	Environmental Matters		97
	Section 8.18	No Violation of Law		98
	Section 8.19	[Reserved]		98
	Section 8.20	Pension Plans		98
	Section 8.21	Taxes		98
	Section 8.22	Regulated Entities		99
	Section 8.23	Use of Proceeds; Margin Regulations		99
	Section 8.24	No Material Adverse Change		99
	Section 8.25	Full Disclosure		99
	Section 8.26	[Reserved]		99
	Section 8.27	Bank Accounts		99
	Section 8.28	Governmental Authorization		99
	Section 8.29	Investment Property		99
	Section 8.30	Common Enterprise		100
ARTICLE 9 AFFIRMATIVE AND NEGATIVE COVENANTS				100
	Section 9.1	Taxes and Other Obligations		100
	Section 9.2	Existence and Good Standing		101
	Section 9.3	Compliance with Law and Agreements; Maintenance of Licenses		101
	Section 9.4	Maintenance of Property		101
	Section 9.5	Insurance		101
	Section 9.6	Condemnation		102
	Section 9.7	Environmental Laws		102
	Section 9.8	[Reserved]		102
	Section 9.9	Mergers, Consolidations, Sales, Acquisitions		102
	Section 9.10	Distributions; Capital Change; Restricted Investments		104
	Section 9.11	[Reserved]		106
	Section 9.12	[Reserved]		106
	Section 9.13	Indebtedness		106
	Section 9.14	Prepayment of Indebtedness and Agreements		108
	Section 9.15	Transactions with Affiliates		108
	Section 9.16	Restrictive Agreements		110
	Section 9.17	Business Conducted		111
	Section 9.18	Liens		112
	Section 9.19	Sale and Leaseback Transactions		112
	Section 9.20	New Subsidiaries		112
	Section 9.21	Fiscal Year		112
	Section 9.22	[Reserved]		112
	Section 9.23	[Reserved]		112
	Section 9.24	Minimum Availability		112
	Section 9.25	Margin Stock		112

iii

TABLE OF CONTENTS
(continued)

			Page
	Section 9.26	Use of Proceeds		113
	Section 9.27	Further Assurances		113
	Section 9.28	Bank as Depository		113
ARTICLE 10 CONDITIONS OF LENDING				113
	Section 10.1	Conditions Precedent to Making of Revolving Loans on the Closing Date		113
	Section 10.2	Conditions Precedent to Each Revolving Loan		118
ARTICLE 11 DEFAULT REMEDIES				118
	Section 11.1	Events of Default		118
	Section 11.2	Right to Cure		121
	Section 11.3	Remedies		122
ARTICLE 12 TERM AND TERMINATION				124
ARTICLE 13 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS				124
	Section 13.1	No Waivers; Cumulative Remedies		124
	Section 13.2	Amendments and Waivers		125
	Section 13.3	Assignments; Participations		127
ARTICLE 14 THE AGENTS				131
	Section 14.1	Appointment and Authorization		131
	Section 14.2	Delegation of Duties		132
	Section 14.3	Liability of the Agents		132
	Section 14.4	Reliance by the Agents		132
	Section 14.5	Notice of Default		133
	Section 14.6	Credit Decision		133
	Section 14.7	Indemnification		133
	Section 14.8	The Agents in Individual Capacity		134
	Section 14.9	Successor Agents		134
	Section 14.10	Withholding Tax		134
	Section 14.11	Collateral Matters		136
	Section 14.12	Restrictions on Actions by Lenders; Sharing of Payments		137
	Section 14.13	Agency for Perfection		138
	Section 14.14	Payments by the Administrative Agent to the Lenders		138
	Section 14.15	Concerning the Collateral and the Related Loan Documents		138
	Section 14.16	Field Audit and Examination Reports; Disclaimer by Lenders		139
	Section 14.17	Relation Among Lenders		139

iv

TABLE OF CONTENTS
(continued)

			Page
ARTICLE 15 MISCELLANEOUS				140
	Section 15.1	Cumulative Remedies; No Prior Recourse to Collateral		140
	Section 15.2	Severability		140
	Section 15.3	Governing Law; Choice of Forum		140
	Section 15.4	Waiver of Jury Trial		141
	Section 15.5	Survival of Agreement		142
	Section 15.6	Other Security and Guaranties		142
	Section 15.7	Fees and Expenses		142
	Section 15.8	Notices		143
	Section 15.9	Waiver of Notices		144
	Section 15.10	Binding Effect		144
	Section 15.11	Indemnity of the Agents and the Lenders by the Borrowers		144
	Section 15.12	Limitation of Liability		146
	Section 15.13	Final Agreement		146
	Section 15.14	Counterparts		146
	Section 15.15	Captions		146
	Section 15.16	Right of Set-off		146
	Section 15.17	Joint and Several Liability		147
	Section 15.18	Contribution and Indemnification among the Borrowers		148
	Section 15.19	Agency of Parent for Each Other Borrower		149
	Section 15.20	Additional Borrowers		149
	Section 15.21	Express Waivers By Borrowers In Respect of Cross Guaranties and Cross Collateralization		149
	Section 15.22	USA PATRIOT Act Notice		150

v

Schedules:
Schedule 1.1(A)	—	Permitted Liens
Schedule 1.1(B)	—	Permitted Investments
Schedule 1.1(C)	—	Mortgaged Properties
Schedule 1.1(D)	—	Existing Letters of Credit
Schedule 1.1(E)	—	Contractor Accounts
Schedule 1.1(F)	—	Unrestricted Subsidiaries
Schedule 1.1(G)	—	Acceptable Appraisers
Schedule 6.1	—	Commercial Tort Claims
Schedule 6.3	—	Location of Collateral
Schedule 6.7	—	Information Contained in Monthly Reports
Schedule 8.2	—	Filing Offices
Schedule 8.3	—	Organization and Qualification
Schedule 8.4	—	Corporate Names
Schedule 8.5	—	Subsidiaries
Schedule 8.11	—	Real Estate; Leases
Schedule 8.12	—	Proprietary Rights
Schedule 8.13	—	Trade Names
Schedule 8.14	—	Litigation
Schedule 8.16	—	Labor Matters
Schedule 8.20	—	ERISA Matters
Schedule 8.27	—	Bank Accounts
Schedule 8.29	—	Investment Property
Schedule 9.13	—	Debt
Schedule 9.15	—	Affiliate Transactions
Exhibits:
Exhibit A-1	—	Form of Tranche A Revolving Note
Exhibit A-2	—	Form of Tranche A-1 Revolving Note
Exhibit B	—	Form of Borrowing Base Certificate
Exhibit C	—	Form of Notice of Borrowing
Exhibit D	—	Form of Notice of Conversion/Continuation
Exhibit E	—	Form of Assignment and Acceptance
Exhibit F	—	Form of Compliance Certificate
Exhibit G	—	Form of Perfection Certificate
Exhibit H	—	Form of Administrative Questionnaire
Exhibit I	—	Form of Guaranty Agreement

vi

LOAN AND SECURITY AGREEMENT

     This Loan and Security Agreement, dated as of November 30, 2005, among the financial institutions listed on the signature pages hereof (such financial institutions, together with their respective successors and assigns, are referred to hereinafter each individually as a “Lender” and collectively as the “Lenders”), Credit Suisse, with an office located at Eleven Madison Avenue, New York, NY 10010, as administrative agent for the Lenders (in its capacity as administrative agent, the “Administrative Agent”), Bank of America, N.A., with an office located at 9 West 57^th Street, New York, NY 10019, as collateral agent for the Lenders (in its capacity as collateral agent, the “Collateral Agent”), Flag Intermediate Holdings Corporation, a Delaware corporation, Flag Acquisition Corporation, a Delaware corporation, to be merged with and into Metals USA, Inc., a Delaware corporation, and each Subsidiary of Metals USA, Inc. party hereto.

     A. Pursuant to or in connection with the Merger Agreement (such term and each other capitalized term used but not defined in this introductory statement having the meaning given it in Article 1), (a) Merger Sub will merge (the “Merger”) with and into Parent, with (i) each share of the outstanding capital stock of Parent being converted into the right to receive approximately $22.00 in cash (the “Merger Consideration”), subject to dissenters’ rights, (ii) Parent surviving as a wholly owned Subsidiary of Holdings and (iii) Parent assuming by operation of law all of the Obligations of Merger Sub under this Agreement and the other Loan Documents and (b) Parent will issue up to $275,000,000 aggregate principal amount of its Senior Secured Notes.

     B. The Borrowers have requested the Lenders to make available to the Borrowers a revolving line of credit for loans and letters of credit in an aggregate amount of $450,000,000, which extensions of credit the Borrowers will use for the purposes set forth in Section 9.26.

     C. The Lenders have agreed to make available to the Borrowers such credit facility upon the terms and conditions set forth in this Agreement.

     Accordingly, in consideration of the mutual conditions and agreements set forth in this Agreement, and for good and valuable consideration, the receipt of which is hereby acknowledged, the Lenders, the Administrative Agent, the Collateral Agent, Holdings and the Borrowers hereby agree as follows.

ARTICLE 1

INTERPRETATION OF THIS AGREEMENT

          Section 1.1 Definitions. As used herein:

     “Acceptable Appraiser” means (a) any Person listed on Schedule 1.1(G) or (b) any other experienced and reputable appraiser reasonably acceptable to Parent and the Agents.

     “Account” means, with respect to a Person, any of such Person’s now owned and hereafter acquired or arising accounts, as defined in the UCC, including any rights to payment for the sale or lease of goods or rendition of services, whether or not they have been earned by

Loan And Security Agreement — Page 1

performance, and “Accounts” means, with respect to any such Person, all of the foregoing in each case, other than any Excluded Assets.

     “Account Debtor” means each Person obligated on an Account.

     “ACH Transactions” means any cash management or related services including the automated clearing house transfer of funds by a Bank or any Lender for the account of any Borrower pursuant to agreement or overdrafts.

     “Adjusted EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication, to the extent the same was deducted in calculating Consolidated Net Income:

     (1) Consolidated Taxes; plus

     (2) Consolidated Interest Expense; plus

     (3) Consolidated Non-cash Charges; plus

     (4) the amount of management, monitoring, consulting and advisory fees and related expenses paid to the Equity Investor (or any accruals relating to such fees and related expenses) during such period not to exceed the amounts permitted by Section 9.15; plus

     (5) facility closure and severance costs and charges; plus

     (6) impairment charges, including the write-down of investments; plus

     (7) non-operating expenses; plus

     (8) restructuring expenses and charges including retention, severance, system establishment or excess pension costs; plus

     (9) the non-cash portion of straight-line rent expenses;

     less, without duplication, to the extent the same was used to increase Consolidated Net Income during such period,

     (i) non-cash items increasing Consolidated Net Income for such period (excluding any items which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period, including the amortization of employee benefit plan prior service costs); minus

     (ii) non-operating income.

     “Administrative Agent” means Credit Suisse, solely in its capacity as the administrative agent for the Lenders, and any successor administrative agent.

     “Administrative Questionnaire” means an Administrative Questionnaire in the form of Exhibit H, or such other form as may be supplied from time to time by the Administrative Agent.

Loan And Security Agreement — Page 2

     “Affiliate” means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract, or otherwise. For purposes of Section 9.15, the term “Affiliate” shall also include, as to any Person, any other Person that directly or indirectly owns ten percent (10.0%) or more of the ordinary voting power for the election of directors of such Person. For purposes of clause (h) of the definition of Eligible Accounts, the term “Affiliate”, however, with respect to any Loan Party or the Equity Investors, shall exclude any Apollo Operating Company.

     “Agent Advances” has the meaning specified in Section 2.2(i).

     “Agents” means the Administrative Agent and the Collateral Agent and, for the avoidance of doubt, any reference to the discretion of the Agents, the exercise of Reasonable Credit Judgment by the Agents, or any other determination to be made by the Agents means the joint exercise, joint determination and/or joint discretion of each of the Administrative Agent and the Collateral Agent in agreement with the other.

     “Aggregate Revolver Outstandings” means, at any time: the sum of (a) the unpaid balance of Revolving Loans, (b) the aggregate amount of Pending Revolving Loans, (c) one hundred percent (100%) of the aggregate undrawn amount of all outstanding Letters of Credit, and (d) without duplication of any amounts included in clause (b), the aggregate amount of any unpaid reimbursement obligations in respect of Letters of Credit.

     “Agreement” means this Loan and Security Agreement as it may be amended, restated or otherwise modified from time to time.

     “Apollo Operating Company” means a Person engaged in the business of producing goods or providing services that but for the last sentence of the definition of Affiliate would be an Affiliate of the Equity Investors.

     “Applicable Margin” means (a) during the period commencing on the Closing Date, and ending on but not including the first adjustment date set forth herein below (which shall occur when an Applicable Margin Calculation or applicable Financial Statements, as the case may be, are delivered to the Administrative Agent covering a period of at least the six full Fiscal Periods following the Closing Date), (i) -0.250% with respect to Tranche A Base Rate Revolving Loans and 1.50% with respect to Tranche A LIBOR Rate Revolving Loans and (ii) 1.75% with respect to Tranche A-1 Base Rate Revolving Loans and 3.75% with respect to Tranche A-1 LIBOR Rate Revolving Loans, and (b) on such first adjustment date set forth herein below and thereafter, in each case subject to adjustment from time to time thereafter to the applicable percentage specified corresponding to the Fixed Charge Coverage Ratio, as set forth below, respectively:

Loan And Security Agreement — Page 3

	Tranche A			Tranche A			Tranche A-1			Tranche A-1
	Base Rate			LIBOR Rate			Base Rate			LIBOR Rate
	Revolving			Revolving			Revolving			Revolving
Fixed Charge Coverage Ratio	Loans			Loans			Loans			Loans
Category 1
Less than 1.10 to 1.00		0.00	%		2.00	%		1.50	%		3.50	%
Category 2
Greater than or equal to 1.10 to 1.00, but less than 1.30 to 1.00		0.00	%		1.75	%		1. 50	%		3. 50	%
Category 3
Greater than or equal to 1.30 to 1.00, but less than 1.50 to 1.00		-0.25	%		1.50	%		1. 50	%		3. 50	%
Category 4
Greater than or equal to 1.50 to 1.00		-0.25	%		1.25	%		1. 50	%		3. 50	%

For the purpose of determining any such adjustments to the Applicable Margin, the Fixed Charge Coverage Ratio shall be determined as of the last day of each Fiscal Period of Parent based upon Parent’s Financial Statements for the three immediately preceding Fiscal Periods (provided, however, if a Fiscal Period in which the Applicable Margin is being determined ends on a Fiscal Quarter end or a Fiscal Year end, the Borrowers will have the option, pursuant to Section 7.2(b), of providing an Applicable Margin Calculation in lieu of Financial Statements for Fiscal Periods ending after such Fiscal Quarter or Fiscal Year, whichever is applicable, within thirty (30) days after the end of such Fiscal Period for purposes of this calculation), delivered to the Administrative Agent as described by Section 7.2(b), and such adjustment, if any, shall become effective (A) with respect to the Base Rate Revolving Loans and all other Obligations on and after the first day of the Fiscal Period following the Fiscal Period in which such Financial Statements are (or, such optional Applicable Margin Calculation is) delivered to the Administrative Agent and (B) with respect to LIBOR Rate Revolving Loans as of the date on or after the first day of the Fiscal Period following the Fiscal Period in which such Financial Statements are (or, such optional Applicable Margin Calculation is) delivered to the Administrative Agent when any LIBOR Rate Revolving Loan is outstanding; provided, however, in the event that, with respect to any Fiscal Quarter or Fiscal Year, the Financial Statements of the Borrowers required by Section 7.2(a) or Section 7.2(b) shall indicate that the Fixed Charge Coverage Ratio is (i) less than that reflected in the Financial Statements or Applicable Margin Calculations provided at the end of any Fiscal Period pursuant to Section 7.2(b), the Applicable Margin shall be adjusted retroactively (to the effective date of the Applicable Margin which was determined based upon the delivery of such Financial Statements or Applicable Margin Calculations delivered pursuant to Section 7.2(b)) to reflect an Applicable Margin based upon the Fixed Charge Coverage Ratio determined by such Financial Statements delivered with respect to such Fiscal Quarter or Fiscal Year pursuant to Section 7.2(a) or Section 7.2(b) and each of the Borrowers shall make payments to the Administrative Agent on behalf of the Lenders to the extent of such difference in the Applicable Margin if an interest payment has been made at the lower Applicable Margin, or (ii) more than that reflected in the Financial Statements or Applicable Margin Calculations provided at the end of any Fiscal Period pursuant to Section 7.2(b), the Applicable Margin shall be adjusted retroactively (to the effective date of the Applicable Margin which was determined based upon the delivery of such Financial Statements or Applicable

Loan And Security Agreement — Page 4

Margin Calculations delivered pursuant to Section 7.2(b)) to reflect an Applicable Margin based upon the Fixed Charge Coverage Ratio determined by such Financial Statements delivered with respect to such Fiscal Quarter or Fiscal Year pursuant to Section 7.2(a) or Section 7.2(b).

     “Applicable Margin Calculation” means a Fixed Charge Coverage Ratio calculation to determine the Applicable Margin in accordance with the terms of this Agreement and in form and substance reasonably satisfactory to the Administrative Agent.

     “Assignee” has the meaning specified in Section 13.3(a).

     “Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an assignee and accepted by the Administrative Agent, in the form of Exhibit E or such other form as shall be approved by the Administrative Agent.

     “Attorney Costs” means and includes all reasonable, documented and customary fees, expenses, and disbursements of any law firm or other outside counsel engaged by an Agent or Letter of Credit Issuer.

     “Availability” means, at any time, (a) the Borrowing Base minus (b) the Aggregate Revolver Outstandings.

     “Availability Triggering Event” shall occur at any time that (a) the Availability is less than $45,000,000 or (b) an Event of Default shall have occurred and be continuing. Once occurred, an Availability Triggering Event described in clause (a) shall be deemed to be continuing until such time as the Availability is $45,000,000 or greater for 10 consecutive days.

     “Bank” means Credit Suisse, acting through any of its branches or Affiliates, Bank of America, N.A., a national banking association, or any successor entity to any of the foregoing.

     “Bank Products” means any one or more of the following types of services or facilities extended to any Borrower by a Bank, a Lender or any of their Affiliates: (a) credit cards; (b) ACH Transactions; (c) Hedge Agreements; (d) treasury management services, and (e) foreign exchange contracts.

     “Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. § 101 et seq.).

     “Base Rate” means for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Rate in effect on such day plus 1/2 of 1%. If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, the Base Rate shall be determined without regard to clause (b) of the preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Rate, as the case may be.

     “Base Rate Revolving Loan” means a Revolving Loan during any period in which it

Loan And Security Agreement — Page 5

bears interest based on the Base Rate.

     “Blocked Account” means any deposit/collection account established pursuant to a Blocked Account Agreement; collectively, such accounts are referred to as the “Blocked Accounts.”

     “Blocked Account Agreement” means an agreement among one or more of the Loan Parties, the Collateral Agent, and a Clearing Bank, in form and substance satisfactory to the Collateral Agent, concerning the collection of payments which represent the proceeds of Accounts and other Collateral of a Loan Party.

     “Borrower” means, prior to the Merger, Flag Acquisition Corporation, and, after the Merger, separately and individually, any of Parent, Allmet GP, Inc., Allmet LP, Inc., Interstate Steel Supply Co. of Maryland, Inc., Intsel GP, Inc., Intsel LP, Inc., i-Solutions Direct, Inc., Jeffreys Real Estate Corporation, Jeffreys Steel Holdings, L.L.C., Levinson Steel GP, Inc., Levinson Steel LP, Inc., Metals Receivables Corporation, Metals USA Building Products, L.P., Metals USA Carbon Flat Rolled, Inc., Metals USA Finance Corp., Metals USA Flat Rolled Central, Inc., Metals USA Management Co., L.P., Metals USA Plates and Shapes Northeast, L.P., Metals USA Plates and Shapes Southcentral, Inc., Metals USA Plates and Shapes Southeast, Inc., Metals USA Plates and Shapes Southwest, Limited Partnership, Metals USA Realty Company, Metals USA Specialty Metals Northcentral, Inc., MUSA GP, Inc., MUSA LP, Inc., Queensboro, L.L.C., and any other Person who becomes a party to this Agreement as a “Borrower” pursuant to the terms hereof, jointly, severally, and collectively, and “Borrowers” means more than one or all of the foregoing Persons, jointly, severally, and collectively, as the context requires.

     “Borrowing” means a borrowing hereunder consisting of Revolving Loans made on the same day by the Lenders, by the Swingline Lender (in the case of a Borrowing funded by a Swingline Loan), or by the Administrative Agent (in the case of a Borrowing consisting of an Agent Advance) to a Borrower, or the issuance of Letters of Credit hereunder.

     “Borrowing Base” means, at any time, an amount equal to the lesser of

     (a) the Maximum Tranche A Revolver Amount plus the Maximum Tranche A-1 Revolver Amount, and

     (b) the result of (x) the sum of:

(i) eighty-five percent (85.0%) of the Net Amount of Eligible Accounts,

     plus

(ii) the lesser of the following:

(A) seventy percent (70.0%) of the lesser of the original cost or market value of Eligible Inventory, and

Loan And Security Agreement — Page 6

(B) ninety percent (90.0%) of the Orderly Liquidation Value of Eligible Inventory,

     plus

(iii) at all times prior to the termination of the Tranche A-1 Commitments, an amount equal to the Incremental Availability.

     minus

(y) all Reserves which the Agents deem necessary in the exercise of their Reasonable Credit Judgment to maintain with respect to any Loan Party, including Reserves for any amounts which either Agent or any Lender may be obligated to pay in the future for the account of any Loan Party.

     The specified percentages set forth in this definition (and the definition of Incremental Availability) will not be reduced without the consent of Parent. Any determination by the Agents in respect of the Borrowing Base shall be based on the Agents’ Reasonable Credit Judgment. The parties understand that the exclusionary criteria in the definitions of Eligible Accounts and Eligible Inventory, any Reserves that may be imposed as provided herein, any deductions or other adjustments to determine “lower of cost or market value” and Net Amount of Eligible Accounts and factors considered in the calculation of Orderly Liquidation Value of Eligible Inventory have the effect of reducing the Borrowing Base, and, accordingly, whether or not any provisions hereof so state, all of the foregoing shall be determined without duplication so as not to result in multiple reductions in the Borrowing Base for the same facts or circumstances.

     “Borrowing Base Certificate” means a certificate by a Responsible Officer of Parent, substantially in the form of Exhibit B (or another form acceptable to the Agents) setting forth the calculation of the Borrowing Base, including a calculation of each component thereof (including, to the extent a Borrower has received notice of any such Reserve from the Agents, any of the Reserves included in such calculation pursuant to clause (y) of the definition of the Borrowing Base), all in such detail as shall be reasonably satisfactory to the Agents. All calculations of the Borrowing Base in connection with the preparation of any Borrowing Base Certificate shall be made by Parent and certified to the Agents.

     “Business Day” means any day other than a Saturday, Sunday or day on which banks in New York City are authorized or required by law to close; provided, however, that when used in connection with the LIBOR Rate or LIBOR Rate Revolving Loans, the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

     “Capital Adequacy Regulation” means any guideline, request, or directive of any central bank or other Governmental Authority, or any other law, rule, or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank.

     “Capital Expenditures” means expenditures (whether paid in cash or by entering into any

Loan And Security Agreement — Page 7

Indebtedness, including any Capital Leases) required to be included in or reflected by the property, plant, equipment, or similar fixed asset accounts reflected in the consolidated balance sheet of Parent and its Subsidiaries, excluding (a) expenditures incurred in connection with the Transaction and Permitted Acquisitions, (b) expenditures paid from, or that have been reimbursed by proceeds of, a policy of insurance or a condemnation award, (c) capitalized interest, (d) expenditures that are accounted for as capital expenditures that are actually paid for by a third party (excluding Holdings, Parent or any Subsidiary) and for which none of Holdings, Parent or any Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such third party or any other Person in respect of such expenditure and (e) the purchase price of equipment purchased in the ordinary course of business to the extent that the consideration therefor consists of any combination of (i) used or surplus equipment traded in at the time of such purchase and (ii) the proceeds of a concurrent sale of used or surplus equipment.

     “Capital Lease” means, with respect to any Person, any lease of property which, in accordance with GAAP, should be reflected as a capital lease on a balance sheet of such Person.

     “Capital Stock” means any and all corporate stock, units, shares, partnership interests, membership interests, equity interests, rights, securities, or other equivalent evidences of ownership (however designated) issued by any Person.

     “Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP.

     “Change of Control” shall be deemed to have occurred if (a) prior to a Qualified Public Offering, the Permitted Holders shall fail to beneficially own, directly or indirectly, shares representing at least 51% of the aggregate ordinary voting power represented by the issued and outstanding Capital Stock of Holdings, (b) after a Qualified Public Offering, any “person” or “group” (within the meaning of Rule 13d 5 of the Securities Exchange Act of 1934 as in effect on the date hereof) shall beneficially own, directly or indirectly, shares representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding Capital Stock of Holdings, and the Permitted Holders shall beneficially own less than such person or group of the ordinary voting power represented by the issued and outstanding Capital Stock of Holdings; (c) a majority of the seats (other than vacant seats) on the board of directors of Holdings shall at any time be occupied by Persons who were neither (i) nominated by the board of directors of Holdings or nominated or elected by the Permitted Holders nor (ii) appointed by directors so nominated or elected; (d) any change in control (or similar event, however denominated) with respect to Holdings or Parent shall occur under and as defined in any indenture or agreement in respect of Indebtedness in excess of $20,000,000 to which Holdings or any Borrower is a party, or (e) Holdings shall cease to directly own, beneficially and of record, 100% of the issued and outstanding Capital Stock of Parent.

     “Chattel Paper” means any “chattel paper”, as such term is defined in the UCC, now owned or hereafter acquired by any Person and, in any event, shall include, without limitation, all Electronic Chattel Paper, and Tangible Chattel Paper, in each case, other than any Excluded

Loan And Security Agreement — Page 8

Assets.

     “Clearing Bank” means either Bank or any other banking institution with whom a Payment Account has been established pursuant to a Blocked Account Agreement.

     “Class”, when used in reference to any Revolving Loan or Borrowing, refers to whether such Revolving Loan, or the Revolving Loans comprising such Borrowing, are Tranche A Revolving Loans or Tranche A-1 Revolving Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Tranche A Commitment or a Tranche A-1 Commitment.

     “Closing Date” means the date of this Agreement.

     “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute, and the regulations promulgated thereunder.

     “Collateral” has the meaning specified in Section 6.1.

     “Collateral Agent” means Bank of America, N.A., a national banking association, and any successor collateral agent.

     “Collateral Agent’s Liens” means the Liens in the Collateral granted to the Collateral Agent, for the benefit of the Secured Parties, pursuant to this Agreement and the other Loan Documents.

     “Commercial Tort Claims” means, with respect to a Person, all of such Person’s now owned or hereafter acquired commercial tort claims, as defined by the UCC, including those commercial tort claims identified on Schedule 6.1 and in any event, shall include, without limitation, any claim now owned or hereafter acquired by any Person, arising in tort with respect to which: (a) the claimant is an organization; or (b) the claimant is an individual and the claim (i) arose in the course of the claimant’s business or profession and (ii) does not include damages arising out of personal injury to or the death of an individual, in each case, other than any Excluded Assets.

     “Commitment” means, at any time with respect to a Lender, the principal amount set forth beside such Lender’s name under the heading “Commitment” on the signature pages of this Agreement (being the aggregate of the Tranche A Commitments and the Tranche A-1 Commitments specified on such signature page) or in the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder, or the most recent Assignment and Acceptance to which such Lender is a party, in accordance with the provisions of Section 13.3, and “Commitments” means, collectively, the aggregate amount of the Commitments of all of the Lenders (being the aggregate of the Tranche A Commitments and the Tranche A-1 Commitments of all the Lenders).

     “Compliance Certificate” has the meaning specified in Section 7.2(c).

     “Confidential Information Memorandum” means the Confidential Information Memorandum of Parent dated November, 2005.

Loan And Security Agreement — Page 9

     “Consolidated Interest Expense” means, with respect to any Person (the “Specified Person”) for any period, the sum, without duplication, of:

     (1) consolidated interest expense solely with respect to Indebtedness of the Specified Person and its Subsidiaries for such period, to the extent such expense was deducted in computing Consolidated Net Income (including amortization of original issue discount, the interest component of Capitalized Lease Obligations, and net payments and receipts (if any) pursuant to interest rate Hedging Obligations and excluding amortization of deferred financing fees and expensing of any bridge or other financing fees);

     (2) consolidated capitalized interest of the Specified Person and its Subsidiaries for such period, whether paid or accrued;

     (3) commissions, discounts, yield and other fees and charges incurred for such period in connection with any receivables financing of the Specified Person or any of its Subsidiaries which are payable to Persons other than Parent and its Subsidiaries;

     (4) dividends accrued for such period in respect of all Disqualified Stock of the Specified Person and any of its Subsidiaries and all preferred stock of any such Subsidiaries, in each case held by Persons other than Parent or a Wholly-Owned Subsidiary (in each such case other than dividends payable solely in Capital Stock (other than Disqualified Stock) of Parent); and

     (5) interest accruing for such period on any Indebtedness of any other Person to the extent such Indebtedness is guaranteed by (or secured by the assets of) the Specified Person or any of its Subsidiaries;

     less, interest income of the Specified Person and its Subsidiaries for such period.

     “Consolidated Net Income” means, with respect to any Person for any period, the aggregate Net Income of such Person and its Subsidiaries for such period, on a consolidated basis; provided, however, that the following items shall be excluded:

     (1) any net after-tax extraordinary or nonrecurring or unusual gains or losses or income or expenses or charges, including any severance expenses and fees, expenses or charges related to any equity offering, investment, acquisition or Indebtedness permitted hereunder (in each case, whether or not successful), including any such fees, expenses, charges or change in control payments related to the Transactions;

     (2) any increase in amortization or depreciation or any one-time non-cash charges (such as purchased in-process research and development or capitalized manufacturing profit in inventory) resulting from purchase accounting in connection with the Transactions or any acquisition that is consummated after the Closing Date;

     (3) the Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period;

     (4) any net after-tax income or loss from discontinued operations and any net after-tax gains or losses on disposal of discontinued operations;

Loan And Security Agreement — Page 10

     (5) any net after-tax gains or losses, or any subsequent charges or expenses, attributable to business dispositions or asset dispositions having occurred at any time other than in the ordinary course of business as determined in good faith by the board of directors of Parent;

     (6) any net after-tax gains or losses attributable to the early extinguishment of Indebtedness;

     (7) the Net Income for such period of any Person (other than the referent Person) that is not a Subsidiary of such Person, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting; provided, however, there shall be included the amount of dividends or distributions or other payments paid in cash (or to the extent converted into cash) to the referent Person or a Subsidiary thereof in respect of such period;

     (8) any non-cash impairment charges or asset write-off or write-down resulting from the application of Statement of Financial Accounting Standards No. 142;

     (9) any non-cash expense realized or resulting from any employee benefit plans, post-employment benefit plans, deferred stock compensation plan or grants of stock appreciation or similar rights, stock options, restricted stock or other rights to officers, directors and employees of such Person or any of its Subsidiaries;

     (10) non-cash gains, losses, income and expenses resulting from fair value accounting required by Statement of Financial Accounting Standards No. 133;

     (11) accruals and reserves that are established within twelve months after the Closing Date and that are so required to be established in accordance with GAAP; and

     (12) non-cash charges for deferred tax asset valuation allowances.

     “Consolidated Non-cash Charges” means, with respect to any Person for any period, the aggregate depreciation, amortization and other non-cash expenses or other non-cash items of such Person and its Subsidiaries reducing Consolidated Net Income of such Person for such period on a consolidated basis and otherwise determined in accordance with GAAP, but excluding any such charge which consists of or requires an accrual of, or cash reserve for, anticipated cash charges for any future period.

     “Consolidated Taxes” means provision for taxes based on income, profits or capital, including state, franchise and similar taxes taken into account in calculating Consolidated Net Income.

     “Contaminant” means any waste, pollutant, hazardous substance, toxic substance, hazardous waste, special waste, petroleum or petroleum-derived substance or waste, asbestos in any form or condition, polychlorinated biphenyls (“PCBs”), or any constituent of any such substance or waste.

     “Conversion/Continuation Date” means the effective date of (a) any conversion of LIBOR Rate Revolving Loans to Base Rate Revolving Loans or of Base Rate Revolving Loans to LIBOR Rate Revolving Loans or (b) any continuation of LIBOR Rate Revolving Loans as

Loan And Security Agreement — Page 11

LIBOR Rate Revolving Loans.

     “Copyright, Patent, and Trademark Agreements” means each Copyright Security Agreement, Patent Security Agreement, and Trademark Security Agreement executed and delivered by a Loan Party to the Collateral Agent to evidence and perfect the Collateral Agent’s security interest in such Loan Party’s present and future copyrights, patents, trademarks, and related licenses and rights, in each case, other than any Excluded Assets, for the benefit of the Secured Parties.

     “Default” means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured, waived, or otherwise remedied during such time) constitute an Event of Default.

     “Default Rate” means a fluctuating per annum interest rate at all times equal to the sum of (a) the otherwise applicable Interest Rate plus (b) two percent (2.0%). Each Default Rate shall be adjusted simultaneously with any change in the applicable Interest Rate. In addition, with respect to Letters of Credit, the Default Rate shall mean the Letter of Credit Fee Percentage, plus two percent (2.0%).

     “Defaulting Lender” has the meaning specified in Section 2.2(g)(iii).

     “Disqualified Stock” shall mean, with respect to any Person, any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is redeemable or exchangeable), or upon the happening of any event:

     (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,

     (b) is convertible or exchangeable for Indebtedness or Disqualified Stock of such Person, or

     (c) is redeemable at the option of the holder thereof, in whole or in part,

     in each case prior to 91 days after the Termination Date;

provided, however, that only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; provided, further, however, that (x) if such Capital Stock is issued to any employee or to any plan for the benefit of employees of Parent or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by Parent in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability and (y) such Capital Stock shall not constitute Disqualified Stock if such Capital Stock matures or is mandatorily redeemable or is redeemable at the option of the holders thereof as a result of a change of control or asset sale; provided, further, that any class of Capital Stock of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of Capital Stock that is not Disqualified Stock shall not be deemed to be Disqualified Stock.

Loan And Security Agreement — Page 12

     “Distribution” means, with respect to any Person: (a) the payment or making of any dividend or other distribution of property in respect of such Person’s Capital Stock (or any options or warrants for, or other rights with respect to, such Capital Stock), other than distributions solely in such Person’s Capital Stock (or any options or warrants for, or other rights with respect to, such Capital Stock) other than Disqualified Stock; or (b) the redemption or other acquisition by such Person of any Capital Stock (or any options or warrants for, or other rights with respect to, such Capital Stock) other than with such Person’s Capital Stock other than Disqualified Stock.

     “DOL” means the United States Department of Labor or any successor department or agency.

     “Dollar” and “$” means dollars in the lawful currency of the United States.

     “Electronic Chattel Paper” means any “electronic chattel paper”, as such term is defined in the UCC, now owned or hereafter acquired by any Person.

     “Eligible Accounts” means all Accounts of the Loan Parties reflected in the most recent Borrowing Base Certificate, except any Account with respect to which any of the exclusionary criteria set forth below applies (unless the Agents in their sole discretion elect to include such Account), such excluded Accounts being Accounts:

     (a) with respect to which more than one hundred twenty (120) days have elapsed since the date of the original invoice therefor or which is more than sixty (60) days past due; provided that Accounts listed on Schedule 1.1(E) (as updated from time to time by Parent (with the consent of the Agents, not to be unreasonably withheld or delayed) in accordance with its normal credit approval procedure) shall be ineligible pursuant to this clause (a) only if they are more than sixty (60) days past due or one hundred eighty (180) days from the invoice date;

     (b) with respect to which any of the representations, warranties, covenants, and agreements contained in Section 6.8 are not or have ceased to be correct or have been breached;

     (c) with respect to which Account (or any other Account due from such Account Debtor), in whole or in part, a check, promissory note, draft, trade acceptance, or other instrument for the payment of money has been received, presented for payment, and returned uncollected for any reason;

     (d) which represents a progress billing; provided that for the purposes hereof, “progress billing” means any invoice for goods sold or leased or services rendered under a contract or agreement pursuant to which the Account Debtor’s obligation to pay such invoice is conditioned upon such Loan Party’s completion of any further performance under the contract or agreement;

     (e) with respect to which any one or more of the following events has occurred to the Account Debtor on such Account: (i) death or judicial declaration of incompetency of an Account Debtor who is an individual; (ii) the filing by or against the Account Debtor of a request or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudication as a bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or similar laws of the

Loan And Security Agreement — Page 13

United States, any state or territory thereof, or any foreign jurisdiction, now or hereafter in effect; (iii) the making of any general assignment by the Account Debtor for the benefit of creditors; (iv) the appointment of a receiver or trustee for the Account Debtor or for any of the assets of the Account Debtor, including, without limitation, the appointment of or taking possession by a “custodian”, as defined in the Bankruptcy Code; (v) the institution by or against the Account Debtor of any other type of insolvency proceeding (under the Bankruptcy Code or otherwise) or of any formal or informal proceeding for the dissolution or liquidation of, settlement of claims against, or winding up of affairs of, the Account Debtor; (vi) the sale, assignment, or transfer of all or substantially all of the assets of the Account Debtor; (vii) the nonpayment generally by the Account Debtor of its debts as they become due; or (viii) the cessation of the business of the Account Debtor as a going concern;

     (f) if fifty percent (50.0%) or more of the aggregate Dollar amount of outstanding Accounts owed at such time by the Account Debtor thereon is classified as ineligible under clause (a) preceding;

     (g) owed by an Account Debtor which: (i) does not maintain its chief executive office in the United States or Canada; or (ii) is not organized under the laws of the United States or Canada or any political subdivision, state, or province thereof; or (iii) is the government of any foreign country or sovereign state, or of any state, province, municipality, or other political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof; except to the extent that such Account is insured by the Export-Import Bank of the United States or secured or payable by a letter of credit satisfactory to the Collateral Agent in its reasonable discretion;

     (h) Intercompany Accounts or other Accounts owed by an Account Debtor which is an Affiliate or employee of such Loan Party (not including, for the avoidance of doubt, any Apollo Operating Company);

     (i) except as agreed by the Agents as provided in clause (g) preceding or clause (l) following regarding political subdivisions of the United States but not the U.S. federal government, with respect to which either the perfection, enforceability, or validity of the Collateral Agent’s Lien in such Account, or the Collateral Agent’s right or ability to obtain direct payment to the Collateral Agent of the proceeds of such Account, is governed by any federal, state, or local statutory requirements other than those of the UCC;

     (j) owed by an Account Debtor to which a Loan Party or any of their respective Subsidiaries is indebted in any way, or which is subject to any right of set-off or recoupment by the Account Debtor, unless the Account Debtor has entered into an agreement acceptable to the Collateral Agent to waive set-off rights; or if the Account Debtor thereon has disputed liability or made any claim with respect to any other Account due from such Account Debtor; but in each such case only to the extent of such indebtedness, set-off, recoupment, dispute, or claim;

     (k) with respect to which such Loan Party at the time of determination deems such Account as uncollectible;

Loan And Security Agreement — Page 14

     (l) owed by any state of the United States or any municipality, or other political subdivision, department, agency, public corporation, or other instrumentality thereof, and as to which the Collateral Agent determines that its Lien therein is not or cannot be perfected;

     (m) which represents a sale on a bill-and-hold, guaranteed sale, sale and return, sale on approval, consignment, or other repurchase or return basis;

     (n) which is evidenced by a promissory note or other instrument or by chattel paper;

     (o) [Reserved];

     (p) in the Agents’ Reasonable Credit Judgment upon thirty (30) days’ prior notice to Parent, with respect to which the Account Debtor is located in any state requiring the filing of a Notice of Business Activities Report or similar report in order to permit such Loan Party to seek judicial enforcement in such state of payment of such Account, unless such Loan Party has qualified to do business in such state or has filed a Notice of Business Activities Report or equivalent report for the then current year;

     (q) which arises out of a sale not made in the ordinary course of such Loan Party’s business;

     (r) with respect to which the goods giving rise to such Account have not been shipped and delivered to, or have been rejected or objected to, by the Account Debtor or the services giving rise to such Account have not been performed by such Loan Party, and, if applicable, accepted by the Account Debtor, or the Account Debtor revokes its acceptance of such goods or services, but, in each case, only to the extent of the portion of such Account applicable to goods or services in question;

     (s) which arises out of an enforceable contract or order which, by its terms, validly forbids, restricts, or makes void or unenforceable the granting of a Lien by such Loan Party to the Collateral Agent with respect to such Account;

     (t) which is not subject to a first priority and perfected security interest in favor of the Collateral Agent, for the benefit of the Collateral Agent and the Lenders, or which is subject to any other Lien other than Noteholder Liens and Permitted Liens arising by operation of law; and

     (u) which is an Account owed to a Newly Obligated Party acquired in a Permitted Acquisition under this Agreement, for which the Collateral Agent has not been given the opportunity for a reasonable period (which shall not be required to be longer than thirty (30) days (or, in the case of acquisitions of less than $50,000,000, twenty (20) days)) to complete such due diligence as it deems, in the exercise of Reasonable Credit Judgment, to be necessary in the circumstances.

     If any Account at any time ceases to be an Eligible Account, then such Account shall promptly be excluded from the calculation of the Borrowing Base; provided, however, that if any Account ceases to be an Eligible Account because of the adjustment of or imposition of new exclusionary criteria pursuant to the succeeding paragraph, the Agents will not require exclusion

Loan And Security Agreement — Page 15

of such Account from the Borrowing Base until fifteen (15) days following the date on which an Agent gives notice to Parent of such ineligibility.

     The Agents reserve the right, at any time and from time to time after the Closing Date, to adjust any of the exclusionary criteria set forth above and to establish new criteria, in their Reasonable Credit Judgment (based on an analysis of material facts or events first occurring, or first discovered by the Agents, after the Closing Date), subject to the approval of Required Lenders in the case of adjustments or new criteria which have the effect of making more credit available than would have been available based upon the criteria in effect on the Closing Date. The Agents acknowledge that as of the Closing Date they do not know of any circumstance or condition with respect to the Accounts that would require the adjustment or imposition of any of the exclusionary criteria set forth above.

     “Eligible Assignee” means (a) a commercial bank, commercial finance company, or other asset based lender having total assets in excess of $1,000,000,000; (b) any Lender; (c) any Affiliate of any Lender; (d) any other asset based lender which is regularly engaged in making, purchasing, or investing in loans which are similar to the loans provided for in this Agreement and which are in excess of $150,000,000; (e) any mutual fund, insurance company or investment fund that is an “accredited investor” (as defined in Regulation D of the Securities Act of 1933, as amended) and is regularly engaged in making, purchasing or investing in loans of the type to be assigned to it; and (f) any other Person reasonably acceptable to the Administrative Agent, and in each case (other than clauses (b) and (c) preceding), so long as no Event of Default exists hereunder, which assignee is reasonably acceptable to Parent; provided (i) neither Parent nor any Affiliate thereof shall be an Eligible Assignee; (ii) no Person a material portion of whose business consists of buying and/or selling metal or metal products shall be an Eligible Assignee and (iii) at no time shall an Ineligible Institution be an Eligible Assignee.

     “Eligible Inventory” means all Inventory of the Loan Parties reflected in the most recent Borrowing Base Certificate, except any Inventory with respect to which any of the exclusionary criteria set forth below applies (unless the Agents in their sole discretion elect to include any such Inventory):

     (a) Inventory that is not owned by a Loan Party;

     (b) Inventory that is not subject to the Collateral Agent’s Liens, or is subject to any other Lien (other than Permitted Liens arising by operation of law or the Noteholder Liens); provided that (unless such Permitted Liens (A) are junior in priority to the Collateral Agent’s Liens (other than statutory landlord’s Liens to the extent provided otherwise by a Requirement of Law) and (B) do not impair directly or indirectly the ability of the Collateral Agent to realize on or obtain the full benefit of the Collateral), the Agents may, in the exercise of Reasonable Credit Judgment, establish a Reserve against Availability with respect to any Inventory subject to such Permitted Liens in an amount not to exceed (on an aggregate basis for all Inventory from time to time subject to such Permitted Liens) (A) in the case of Inventory subject to Liens described in clause (g) of the definition of Permitted Liens, the greater of (x) an amount equal to the amount which would have to be paid to such Lien claimant in order to obtain a release of such Liens, or (y) an amount equal to thirty (30) days’ rent for the properties or facilities on or at which the applicable Inventory is located and (B) in the case of Inventory subject to Liens described in

Loan And Security Agreement — Page 16

clause (d) of the definition of Permitted Liens, the amount of such taxes, fees, assessments or other charges;

     (c) Inventory that does not consist of finished goods or raw materials;

     (d) Inventory that consists of chemicals, supplies, packing and shipping materials, or advertising or marketing materials (including samples);

     (e) Inventory that is not in good condition, is unmerchantable, or fails to meet all material standards imposed by any Governmental Authority having regulatory authority over such goods, its use, or sale;

     (f) Inventory that is not currently either usable or salable in the normal course of such Loan Party’s business;

     (g) Inventory that is slow-moving (i.e., held by a Loan Party for greater than twelve (12) months), obsolete or defective, or used goods taken in trade;

     (h) Inventory that is not located within the United States (or is in-transit from vendors or suppliers, except that Inventory in-transit will not be deemed ineligible if it has been paid for in advance of shipment and legal ownership thereof has passed to such Loan Party as evidenced by customary documents of title );

     (i) if such Inventory is located in a public warehouse or in possession of a bailee or in a facility leased by such Loan Party, provided that such Inventory will be Eligible Inventory if the warehouseman, the bailee, or the lessor has delivered to the Collateral Agent, if requested by the Agents, a subordination agreement in form and substance reasonably satisfactory to the Agents (or if such Loan Party is unable to obtain any such subordination or such subordination has not been requested, such Inventory shall be Eligible Inventory but the Agents may, in the exercise of Reasonable Credit Judgment, establish a Reserve with respect to any Inventory so located or possessed in an amount not to exceed (on an aggregate basis for all Inventory from time to time so located or possessed) (A) in the case of Inventory located in a public warehouse or leased facility, the greater of (x) an amount equal to the amount which would have to be paid to such claimant in order to obtain a release of any Permitted Lien held by such claimant, or (y) an amount equal to thirty (30) days’ rent or storage fee for the warehouses or facilities on or at which the applicable Inventory is located and (B) in the case of Inventory otherwise in the possession of a bailee, the amount necessary to complete any work being performed on such Inventory and/or to obtain a surrender of the Inventory to the possession of such Loan Party or the Collateral Agent);

     (j) if such Inventory contains or bears any Proprietary Rights licensed to a Loan Party by any third party, the Collateral Agent shall not be reasonably satisfied that it may sell or otherwise dispose of such Inventory in accordance with Article 11 without infringing the rights of the licensor of such Proprietary Rights or violating any contract with such licensor (and without payment of any royalties other than any royalties due with respect to the sale or disposition of such Inventory pursuant to the existing license agreement), and, if the Collateral Agent deems it necessary, such Loan Party shall deliver to the Collateral Agent a consent or

Loan And Security Agreement — Page 17

sublicense agreement from such licensor in form and substance reasonably acceptable to the Collateral Agent; and

     (k) Inventory that is owned by a Newly Obligated Party acquired in a Permitted Acquisition under this Agreement, for which the Collateral Agent has not been given the opportunity for a reasonable period (which shall not be required to be longer than thirty (30) days (or, in the case of acquisitions of less than $50,000,000, twenty (20) days)) to complete such due diligence as it deems, in the exercise of Reasonable Credit Judgment, to be necessary in the circumstances.

     If any Inventory at any time ceases to be Eligible Inventory, such Inventory shall promptly be excluded from the calculation of the Borrowing Base; provided, however, that if any Inventory ceases to be Eligible Inventory because of the adjustment of or imposition of new exclusionary criteria pursuant to the succeeding paragraph, the Agents will not require exclusion of such Inventory from the Borrowing Base until fifteen (15) days following the date on which an Agent gives notice to Parent of such ineligibility.

     The Agents reserve the right, at any time and from time to time after the Closing Date, to adjust any of the exclusionary criteria set forth above and to establish new criteria, in their Reasonable Credit Judgment (based on an analysis of material facts or events first occurring, or first discovered by the Agents, after the Closing Date), subject to the approval of the Required Lenders in the case of adjustments or new criteria which have the effect of making more credit available than would be available based upon the criteria in effect on the Closing Date. The Agents acknowledge that as of the Closing Date they do not know of any circumstance or condition with respect to the Inventory that would require the adjustment or imposition of any of the exclusionary criteria set forth above.

     “Environmental Laws” means all federal, state, or local laws, statutes, common law duties, rules, regulations, ordinances, and codes, together with all administrative orders, directed duties, licenses, authorizations, and permits of, and agreements with, any Governmental Authority, in each case relating to environmental, health, safety, and land use matters.

     “Environmental Lien” means a Lien in favor of any Governmental Authority for (a) any liability under Environmental Laws or (b) damages arising from, or costs incurred by such Governmental Authority in response to, a Release or threatened Release of a Contaminant into the environment.

     “Equipment” means, with respect to a Person, all of such Person’s now owned and hereafter acquired machinery, equipment as defined by the UCC, furniture, furnishings, fixtures, and other tangible personal property (except Inventory), including motor vehicles and other rolling stock with respect to which a certificate of title has been issued, aircraft, dies, tools, jigs, and office equipment, as well as all of such types of property leased by such Person and all of such Person’s rights and interests with respect thereto under such leases (including, without limitation, options to purchase); together with all present and future additions and accessions thereto, replacements therefor, component and auxiliary parts and supplies used or to be used in connection therewith, and all substitutes for any of the foregoing, and all manuals, drawings, instructions, warranties, and rights with respect thereto, wherever any of the foregoing is located.

Loan And Security Agreement — Page 18

     “Equity Contribution” means the contribution by the Equity Investor and the Management Participants of not less than $140,000,000 in cash to Flag Holdings Corporation in the form of common and/or preferred equity, and the purchase of additional common equity of, or the contribution to, Merger Sub in the amount so received.

     “Equity Investors” means one or more investment funds advised, managed or controlled by Apollo Management V, L.P., their Affiliates, and any group in which any such Equity Investors are, in the aggregate, a principal member.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute, and all rules and regulations from time to time promulgated thereunder.

     “ERISA Affiliate” means any entity with which any Borrower is treated as a single employer under Section 414(b) or (c) of the Code.

     “Event of Default” has the meaning specified in Section 11.1.

     “Exchange Act” means the Securities Exchange Act of 1934, and regulations promulgated thereunder.

     “Excluded Assets” means:

     (a) Real Estate and/or Equipment (or any proceeds thereof) to the extent securing the Borrowers’ industrial development revenue bonds outstanding on the Closing Date and as set forth on Schedule 9.13, and any permitted refinancing thereof;

     (b) any right, title or interest in any permit, lease, license, contract or agreement held by any Loan Party or to which any Loan Party is a party or any of its right, title or interest thereunder to the extent, but only to the extent, that such a grant would, under the terms of such permit, lease, license, contract or agreement to which any Loan Party is a party, result in a breach of the terms of, or constitute a default under, any such permit, lease, license, contract or agreement held by such Loan Party or to which such Loan Party is a party (other than to the extent that any such term would be rendered ineffective pursuant to Section 9-406, 9-408 or 9-409 of the UCC or any other applicable law (including Title 11 of the United States Code) or principles of equity); provided, that immediately upon the ineffectiveness, lapse or termination of any such provision, such right, title or interest in such permit, lease, license, contract or agreement shall cease to be an “Excluded Asset”;

     (c) any vehicle covered by a certificate of title or ownership;

     (d) any Letter of Credit Rights to the extent any Loan Party is required by applicable law to apply the proceeds of a drawing of such Letter of Credit for a specified purpose;

     (e) any Investment Property to the extent it constitutes (i) more than 65% of the issued and outstanding voting Capital Stock of any foreign Subsidiary or (ii) Capital Stock of a Person that constitutes a Subsidiary (other than a Wholly-owned Subsidiary) the pledge of which would violate a contractual obligation to the owners of the other Capital Stock of such Person

Loan And Security Agreement — Page 19

(other than any such owners that are Affiliates of the Equity Investor) that is binding on or relating to such Capital Stock; and

     (f) (i) any “Excluded Assets” as defined in the Senior Secured Indenture and the Senior Notes Collateral Agreement or (ii) any other asset which would constitute Notes Collateral (as defined in the Senior Secured Indenture) but for (1) the fact that the Noteholder Collateral Agent has not required a lien on such assets or (2) the operation of Section 11.01(b) in the Senior Secured Indenture, in each case of (i) or (ii) other than (a) any such assets constituting Inventory or Accounts or proceeds thereof and (b) any assets that are required to secure the Obligations following the drawing in full of any IDRB Letter of Credit as contemplated by Section 2.3(e)(i).

     “Excluded Taxes” means (i) any and all taxes imposed on or measured by net income in the United States of America or in any jurisdiction (whether federal, state, local or foreign and including any political subdivision thereof), in each case, imposed on an Agent or Lender as a result of a present or former connection between such Agent or Lender (including its applicable lending office) and the jurisdiction imposing such tax (other than a connection arising solely from such Agent’s or Lender’s having executed, delivered, performed its obligations or received a payment under, or enforced, this Agreement or any other Loan Document), (ii) any branch profits and franchise taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction described in clause (i) above and (iii) in the case of a Non-U.S. Lender, any withholding tax that is imposed on amounts payable to such Non-U.S. Lender at the time such Non-U.S. Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Non-U.S. Lender’s failure to comply with the requirements of Section 14.10, except to the extent such Non-U.S. Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 5.1(c).

     “Existing Credit Agreement” means the Loan and Security Agreement, as amended, dated as of October 31, 2002, among Bank of America, N.A., as administrative agent, Parent and the other Borrowers, as borrowers, and each of the financial institutions party thereto as lenders.

     “Existing Letter of Credit” means each Letter of Credit previously issued for the account of the Borrowers that (a) is outstanding on the Closing Date and (b) is listed on Schedule 1.1(D).

     “Fair Market Value” means, with respect to any asset or property, the price which could be negotiated in an arm’s-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction.

     “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

Loan And Security Agreement — Page 20

Funds Rate for such day shall be the average of the quotations on such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

     “Federal Reserve Board” means the Board of Governors of the Federal Reserve System or any successor thereto.

     “Fee Letter” shall mean the Amended and Restated Fee Letter dated June 8, 2005, among Merger Sub, Credit Suisse, CIBC World Markets Corp., Bank of America, N.A. and Banc of America Securities LLC.

     “Financial Assets” means any “financial asset”, as such term is defined in the UCC, now owned or hereafter acquired by any Person, in each case, other than any Excluded Assets.

     “Financial Statements” means, according to the context in which it is used, the financial statements referred to in Section 8.6 or any other financial statements required to be given to the Administrative Agent or the Lenders pursuant to this Agreement.

     “Fiscal Period” means a calendar month.

     “Fiscal Quarter” means one of the four three (3) calendar month fiscal measurement periods in each Fiscal Year.

     “Fiscal Year” means Parent’s fiscal year for financial accounting purposes. The Fiscal Year of Parent ends on December 31 of each year.

     “Fixed Charge Coverage Ratio” means the ratio of (i) Adjusted EBITDA of Parent for the most recent period of four consecutive Fiscal Quarters for which financial statements are available minus the income taxes paid in cash by Parent and included in the determination of Consolidated Net Income during such period minus non-financed Capital Expenditures of Parent and its Subsidiaries during such period to (ii) the sum of (1) scheduled principal payment required to be made during such period in respect to Indebtedness for borrowed money plus (2) the Consolidated Interest Expense (excluding amortization of any original issue discount, interest paid in kind or added to principal and other noncash interest) for such period plus (3) Distributions pursuant to Section 9.10(a)(ii) or (iii) in each case to the extent paid by Parent in cash.

     For purposes of calculating the Fixed Charge Coverage Ratio with respect to measurement periods that include periods prior to the Closing Date, the components of such ratio for Parent and its Subsidiaries for the following Fiscal Quarters shall be the amounts set forth below:

					Non-Financed				Consolidated
Fiscal Quarter	Adjusted		Income		Capital		Scheduled		Interest
Ending:	EBITDA:		Taxes:		Expenditures:		Principal:		Expense:
March 31, 2005	$	31,700,000	$	6,300,000	$	2,700,000	$	0	$	11,900,000
June 30, 2005	$	27,800,000	$	2,500,000	$	5,600,000	$	0	$	12,400,000
September 30, 2005	$	21,000,000	$	4,200,000	$	5,000,000	$	0	$	11,600,000

Loan And Security Agreement — Page 21

     “Funding Date” means the date on which a Borrowing occurs.

     “GAAP” means generally accepted accounting principles and practices set forth from time to time in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the United States accounting profession).

     “General Intangibles” means, with respect to a Person, all of such Person’s now owned or hereafter acquired general intangibles, as defined in the UCC, including payment intangibles, choses in action and causes of action and all other intangible personal property of such Person of every kind and nature (other than Accounts), including, without limitation, all contract rights, Proprietary Rights, corporate or other business records, inventions, designs, blueprints, plans, specifications, patents, patent applications, trademarks, service marks, trade names, trade secrets, goodwill, copyrights, computer software, customer lists, registrations, licenses, franchises, tax refund claims, any funds which may become due to such Person in connection with the termination of any Plan or other employee benefit plan or any rights thereto and any other amounts payable to such Person from any Plan or other employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, property, casualty or any similar type of insurance and any proceeds thereof, proceeds of insurance covering the lives of key employees on which such Person is beneficiary, rights to receive dividends, distributions, cash, Instruments and other property in respect of or in exchange for pledged equity interests or Investment Property, and any letter of credit, guarantee, claim, security interest, or other security held by or granted to such Person, in each case, other than any Excluded Assets.

     “Governmental Authority” means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory, or administrative functions of or pertaining to government.

     “Guaranty” means, with respect to any Person, all obligations of such Person which in any manner directly or indirectly guarantee or assure, or in effect guarantee or assure, the payment or performance of any Indebtedness, or other obligations of any other Person (the “guaranteed obligations”), or assure or in effect assure the holder of the guaranteed obligations against loss in respect thereof, including any such obligations incurred through an agreement, contingent or otherwise: (a) to purchase the guaranteed obligations or any property constituting security therefor; (b) to advance or supply funds for the purchase or payment of the guaranteed obligations or to maintain a working capital or other balance sheet condition; or (c) to lease property or to purchase any debt or equity securities or other property or services.

     “Guaranty Agreements” means the Guaranty Agreement, substantially in the form of

Loan And Security Agreement — Page 22

Exhibit I hereto, entered into from time to time by the Guarantors party thereto and the Collateral Agent.

     “Guarantors” means Holdings, each Borrower and each Subsidiary (other than any Subsidiary that is a controlled foreign corporation for U.S. federal income tax purposes) and each other Person in each case who now or hereafter Guaranties payment or performance of the whole or any part of the Obligations.

     “Hedge Agreement” means any and all transactions, agreements, or documents now existing or hereafter entered into, which provide for an interest rate, credit, commodity, or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, or any combination of, or option with respect to, these or similar transactions, for the purpose of hedging a Person’s exposure to fluctuations in interest or exchange rates, loan, credit exchange, security, or currency valuations, or commodity prices.

     “Hedging Obligations” means any and all obligations under Hedge Agreements.

     “Holdings” means Flag Intermediate Holdings Corporation, a Delaware corporation.

     “Incremental Availability” means: (a) prior to the date that is six months from the Closing Date, the sum of (i) five percent (5.0%) of the Net Amount of Eligible Accounts plus (ii) ten percent (10.0%) of the Orderly Liquidation Value of Eligible Inventory; and (b) thereafter, the sum of (i) five percent (5.0%) of the Net Amount of Eligible Accounts plus (ii) five percent (5.0%) of the Orderly Liquidation Value of Eligible Inventory.

     “IDRB Letter of Credit” means any standby Letter of Credit issued under or pursuant to or rolled into this Agreement as security for the Borrowers’ existing industrial development revenue bonds as described on Schedule 9.13 and any permitted refinancing thereof, in an aggregate undrawn amount not to exceed at any time $20,000,000.

     “Indebtedness” means with respect to a Person, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all indebtedness of such Person evidenced by bonds, notes, debentures, or other similar instruments, (c) the amount of all indebtedness of such Person under Capital Leases, (d) the amount of all Indebtedness of such Person secured by a Lien existing on property owned by such Person whether or not the Indebtedness secured thereby has been assumed by such Person or is non-recourse to such Person (provided that the amount thereof shall be deemed to be the lesser of the outstanding principal amount thereof or the Fair Market Value of such property (determined in good faith by Parent)), (e) the deferred and unpaid purchase price of property or services (excluding trade accounts payable of such Person arising in the ordinary course of business that are not past due by more than ninety (90) days or that are being contested in good faith by appropriate proceedings diligently pursued and for which adequate reserves have been established in accordance with GAAP), (f) all reimbursement obligations of such Person (whether contingent or otherwise) in respect of letters of credit, bankers’ acceptances, surety or other bonds, and similar instruments, and (g) the imputed principal balance outstanding under any synthetic lease, tax retention operating lease, off balance sheet loan, or similar off balance sheet financing product to which such Person is a party, where such transaction is considered borrowed money indebtedness for tax purposes but is classified as

Loan And Security Agreement — Page 23

an operating lease in accordance with GAAP.

     “Ineligible Institution” shall mean the Persons identified as such in writing to the Agents by Parent on or prior to the Closing Date. Thereafter, Parent may request that additional Persons be “Ineligible Institutions” with the written consent of the Agents, and may specify that previously identified Persons are no longer “Ineligible Institutions”, in each case by delivery of written notice thereof to the Agents setting forth such Person or Persons.

     “Intercompany Accounts” means all assets and liabilities, however arising, which are due to any Loan Party from, which are due from any Loan Party to, or which otherwise arise from any transaction by any Loan Party with, any Affiliate of such Loan Party.

     “Intercompany Obligations” shall mean, collectively, all indebtedness, obligations and other amounts at any time owing to any Loan Party from any of such Loan Party’s Subsidiaries or Affiliates and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such indebtedness, obligations or other amounts in each case other than any Excluded Assets.

     “Intercreditor Agreement” means the Lien Subordination and Intercreditor Agreement dated as of the date hereof, among Holdings, Parent, Parent’s Subsidiaries party thereto, the Collateral Agent, the Noteholder Collateral Agent and the Trustee, as amended, restated, supplemented or otherwise modified from time to time.

     “Interest Period” means, with respect to any LIBOR Rate Revolving Loan, the period commencing on the Funding Date of such Revolving Loan or on the Conversion/Continuation Date on which such Revolving Loan is converted into or continued as a LIBOR Rate Revolving Loan, and ending on the date one, two, three or six months thereafter (or nine or 12 months thereafter, if all Lenders participating therein agree to make an Interest Period of such duration available) as selected by a Borrower in a Notice of Borrowing or a Notice of Conversion/Continuation; provided that:

     (a) if any Interest Period would otherwise end on a day that is not a Business Day, that Interest Period shall be extended to the following Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day;

     (b) any Interest Period pertaining to a LIBOR Rate Revolving Loan 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

     (c) no Interest Period shall extend beyond the Stated Termination Date.

     “Interest Rate” means each or any of the interest rates, including the Default Rate, set forth in Section 3.1.

     “Inventory” means, with respect to a Person, all of such Person’s now owned and hereafter acquired inventory, as defined in the UCC, goods, and merchandise, wherever located,

Loan And Security Agreement — Page 24

in each case to be furnished under any contract of service or held for sale or lease, all returned goods, raw materials, work-in-process, finished goods (including embedded software), other materials, and supplies of any kind, nature, or description which are used or consumed in such Person’s business or used in connection with the packing, shipping, advertising, selling, or finishing of such goods, merchandise, and other property, and all documents of title or other documents representing them.

     “Investment Property” means, with respect to a Person, all of such Person’s right, title, and interest in and to any and all investment property, as defined in the UCC, including, without limitation, all (a) securities whether certificated or uncertificated, (b) securities entitlements, (c) securities accounts, (d) commodity contracts and (e) commodity accounts; together with all other units, shares, partnership interests, membership interests, equity interests, rights, or other equivalent evidences of ownership (howsoever designated) issued by any Person, in each case, other than any Excluded Assets.

     “IRS” means the Internal Revenue Service and any Governmental Authority succeeding to any of its principal functions under the Code.

     “Issuer” has the meaning specified in Section 6.2(d).

     “Lender” and “Lenders” have the meanings specified in the introductory paragraph hereof and shall include the Administrative Agent to the extent of any Agent Advance outstanding and the Swingline Lender to the extent of any Swingline Loan outstanding.

     “Letter of Credit” has the meaning specified in Section 2.3, and shall include the Existing Letters of Credit and any IDRB Letters of Credit.

     “Letter of Credit Fee” has the meaning specified in Section 3.5.

     “Letter of Credit Fee Percentage” means with respect to any Letter of Credit issued by the Letter of Credit Issuer pursuant to the terms of this Agreement, on any date of determination, a per annum percentage equal to the lesser of (a) the Applicable Margin then in effect for LIBOR Rate Tranche A Revolving Loans (or, to the extent the Tranche A-1 Lenders are then participating in Letters of Credit pursuant to Section 2.3(f), for Tranche A-1 Revolving Loans) or (b) the Maximum Rate.

     “Letter of Credit Issuer” means (a) Credit Suisse and Bank of America, N.A., acting through any of their respective Affiliates or branches, in the capacity as the issuer of Letters of Credit hereunder, or any other financial institution that issues any Letter of Credit pursuant to this Agreement or designated as a Letter of Credit Issuer pursuant to Section 2.3(k) and (b) with respect to each Existing Letter of Credit, Bank of America, N.A.

     “LIBOR Interest Payment Date” means, with respect to any LIBOR Rate Revolving Loan, (i) the last day of the Interest Period applicable thereto and (ii) in the case of a LIBOR Rate Revolving Loan with an Interest Period of more than three months’ duration, each day that would have been a LIBOR Interest Payment Date had successive Interest Periods of three months’ duration been applicable to such LIBOR Rate Revolving Loan.

Loan And Security Agreement — Page 25

     “LIBOR Rate” means, for any Interest Period, with respect to LIBOR Rate Revolving Loans, the rate of interest per annum determined pursuant to the following formula:

LIBOR Rate	=	Offshore Base Rate
		1.00 — Eurodollar Reserve Percentage

Where,

     “Eurodollar Reserve Percentage” means, for any day during any Interest Period, the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Federal Reserve Board and any other banking authority, domestic or foreign, to which the Administrative Agent or any Lender (including any branch, Affiliate, or other fronting office making or holding a loan) is subject for Eurocurrency Liabilities (as defined in Regulation D of the Federal Reserve Board). LIBOR Rate Revolving Loans shall be deemed to constitute Eurocurrency Liabilities (as defined in Regulation D of the Federal Reserve Board) and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D. The LIBOR Rate for each outstanding LIBOR Rate Revolving Loan shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.

     “Offshore Base Rate” means with respect to any LIBOR Rate Revolving Loan for any Interest Period, the rate per annum determined by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the commencement of such Interest Period by reference to the British Bankers’ Association Interest Settlement Rates for deposits in Dollars (as set forth by any service selected by the Administrative Agent that has been nominated by the British Bankers’ Association as an authorized information vendor for the purpose of displaying such rates) for a period equal to such Interest Period; provided that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the “Offshore Base Rate” shall be the interest rate per annum determined by the Administrative Agent to be the average of the rates per annum at which deposits in dollars are offered for such relevant Interest Period to major banks in the London interbank market in London, England by the Administrative Agent at approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period.

     “LIBOR Rate Revolving Loan” means a Revolving Loan during any period in which it bears interest based on the LIBOR Rate.

Loan And Security Agreement — Page 26

     “Lien” means, with respect to any asset, any lien arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, agreement, charge, security agreement, conditional sale or trust receipt or a lease, consignment, or bailment for security purposes; provided that an agreement to sell shall not constitute a Lien.

     “Loan Account” means the loan account of the Borrowers, which account shall be maintained by the Administrative Agent.

     “Loan Documents” means collectively this Agreement, the Revolving Notes, the Security Documents, and each other agreement, certificate, document, or instrument executed or delivered by any Loan Party to an Agent or any Lender in connection with this Agreement, the Obligations, or the Collateral whether prior to, on, or after the Closing Date, and any and all renewals, extensions, amendments, modifications, or restatements of any of the foregoing.

     “Loan Parties” means the Borrowers and the Guarantors.

     “Majority Lenders” means, as of any date of determination, the Lenders whose Pro Rata Shares aggregate more than fifty percent (50.0%) as such percentage is determined according to the definition of Pro Rata Share.

     “Management Participants” means members of senior management of Holdings, Parent or any Borrower as of the Closing Date.

     “Margin Stock” means “margin stock” as such term is defined in Regulation T, U, or X of the Federal Reserve Board.

     “Material Adverse Effect” means (i) a material adverse effect on the business, condition (financial or otherwise), operation, performance or properties of the Loan Parties and their Subsidiaries, taken as a whole, which materially impairs the ability of the Loan Parties to perform their material obligations hereunder or under any Loan Document or (ii) a material adverse effect on the validity or enforceability of the Loan Documents, the Collateral Agent’s Liens or the rights and remedies of the Agents or Lenders under the Loan Documents.

     “Maximum Rate” means, at any time, the maximum rate of interest the Lenders may lawfully contract for, charge, or receive in respect of the Obligations as allowed by any Requirement of Law. As provided in Section 15.3, the parties have elected that this Agreement be governed by the laws of the State of New York. If and to the extent, however, it shall be necessary to determine the Maximum Rate under the Requirements of Law of the State of Texas, the applicable rate ceiling shall be (a) the “weekly ceiling” described in and computed in accordance with the provisions of Section 303.003 of the Texas Finance Code, as amended or (b) if the parties subsequently contract as allowed by any Requirement of Law, the “quarterly ceiling” or the “annualized ceiling” computed pursuant to Section 303.008 of the Texas Finance Code, as amended; provided, however, that at any time the “weekly ceiling,” the “quarterly ceiling,” or the “annualized ceiling” shall be less than eighteen percent (18.0%) per annum or more than twenty-four percent (24.0%) per annum, the provisions of Section 303.009(a) and Section 303.009(b) of the Texas Finance Code, as amended, shall control for purposes of such determination, as applicable.

Loan And Security Agreement — Page 27

     “Maximum Revolver Amount” means the sum of the Maximum Tranche A Revolver Amount and the Maximum Tranche A-1 Revolver Amount.

     “Maximum Tranche A Revolver Amount”, means, at any time, the aggregate amount of the Tranche A Commitments at such time.

     “Maximum Tranche A-1 Revolver Amount” means, at any time, the aggregate amount of the Tranche A-1 Commitments at such time.

     “Merger Agreement” means the Agreement and Plan of Merger dated as of May 18, 2005, among Flag Holdings Corporation, Merger Sub and Parent, as amended, restated, supplemented or otherwise modified from time to time.

     “Merger” has the meaning specified in the introductory paragraph hereof.

     “Merger Sub” means Flag Acquisition Corporation, a Delaware corporation.

     “Moody’s” shall mean Moody’s Investors Service, Inc., or any successor thereto.

     “Mortgaged Properties” shall mean, initially, the owned real properties of the Loan Parties specified on Schedule 1.1(C), and shall include each other parcel of real property and improvements thereto with respect to which a Mortgage is granted pursuant to Section 9.27.

     “Mortgages” shall mean the mortgages, deeds of trust, assignments of leases and rents, modifications and other security documents in favor of the Collateral Agent, for the benefit of itself and the Secured Parties, by which the Loan Parties have granted to the Collateral Agent, as security for the Obligations, a Lien upon Real Estate.

     “Multiemployer Plan” has the meaning set forth in Section 4001(a)(3) of ERISA.

     “Net Amount of Eligible Accounts” means, at any time, the gross amount of Eligible Accounts less sales, excise, or similar taxes, and less returns, discounts, claims, credits, and allowances of any nature at any time issued, owing, granted, outstanding, available, or claimed (in each case without duplication, whether of the exclusionary criteria set forth in the definition of Eligible Accounts, of any Reserve, or otherwise).

     “Net Income” means, with respect to any Person, the net income (or loss) of such Person for the period in question determined in accordance with GAAP and before any reduction in respect of preferred stock dividends.

     “Newly Obligated Party” means each Person, if any, who becomes party to this Agreement as a Loan Party effective as of any date after the Closing Date.

     “Non-U.S. Lender” shall have the meaning specified in Section 14.10(a).

     “Noteholder Collateral Agent” means Wells Fargo Bank, N.A., in its capacity as collateral agent under the Senior Secured Indenture and the Senior Notes Collateral Agreement, and its successors and assigns in such capacity.

Loan And Security Agreement — Page 28

     “Noteholder Liens” has the meaning set forth in the Intercreditor Agreement.

     “Notice of Borrowing” has the meaning specified in Section 2.2(b).

     “Notice of Conversion/Continuation” has the meaning specified in Section 3.2(b).

     “Obligations” means all present and future loans, advances, liabilities, obligations, covenants, duties, and debts owing by Parent, the Loan Parties, or any of them, to an Agent, a Bank, any Lender or any Affiliate of any of the foregoing, arising under or pursuant to (a) this Agreement or any of the other Loan Documents, (b) Letters of Credit and (c) Bank Products, in each case whether or not evidenced by any note, or other instrument or document, whether arising from an extension of credit, opening of a letter of credit, acceptance, loan, guaranty, indemnification, or otherwise, whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, as principal or guarantor, and including all principal, interest, charges, expenses, fees, attorneys’ fees, filing fees, and any other sums chargeable to any Loan Party hereunder or under any of the other Loan Documents.

     “Orderly Liquidation Value” means an amount equal to the most recently determined Orderly Liquidation Value Factor multiplied by the book value of all Eligible Inventory of the Loan Parties.

     “Orderly Liquidation Value Factor” means, with respect to Eligible Inventory of the Loan Parties, the net orderly liquidation value thereof (expressed as a percentage) as determined by an Acceptable Appraiser in accordance with Section 6.5; provided that the Orderly Liquidation Value Factor as of the Closing Date shall be 74.6%, based on the report of Hilco Appraisal Services, LLC dated as of October, 2005.

     “Other Taxes” means any present or future stamp or documentary taxes or any other excise or property taxes, charges, or similar levies (excluding, in the case of each Lender and each Agent, Excluded Taxes) which arise from any payment made hereunder or from the execution, delivery, or registration of, or otherwise with respect to, this Agreement or any other Loan Documents.

     “Parent” means Metals USA, Inc., a Delaware corporation.

     “Participant” means any commercial bank, financial institution, or other Person who shall have been granted the right by any Lender to participate in the financing provided by such Lender under this Agreement, and who shall have entered into a participation agreement in form and substance satisfactory to such Lender; provided that at no time shall Parent, an Affiliate of Parent or an Ineligible Institution be a Participant.

     “Payment Account” means each bank account established pursuant to Section 6.9, to which the funds of the Loan Parties (including proceeds of Accounts and other Collateral) are deposited or credited, and which is maintained in the name of an Agent or any Loan Party, or any of them, as the Agents may determine, on terms acceptable to the Agents.

     “Pending Revolving Loans” means, at any time, the aggregate principal amount of all Revolving Loans requested in any Notice of Borrowing received by the Administrative Agent

Loan And Security Agreement — Page 29

which have not yet been advanced.

     “Perfection Certificate” means a certificate substantially in the form of Exhibit G, completed and supplemented with the schedules and attachments contemplated thereby.

     “Permitted Acquisition” means any acquisition of the Capital Stock of a Person or any acquisition of property which constitutes a significant or material portion of an existing business of a Person, in each case, in a transaction that satisfies each of the following requirements:

     (a) both before and after giving effect to such acquisition and the Revolving Loans (if any) requested to be made in connection therewith, no Default or Event of Default exists or will exist or would result therefrom;

     (b) if such acquisition is an acquisition of the Capital Stock of a Person, the acquisition is structured so that the acquired Person shall become a Subsidiary of Parent (and shall become a Loan Party pursuant to the terms of this Agreement); provided, however, that such acquisition is not hostile, and if such acquisition is an acquisition of assets, the acquisition is structured so that a Loan Party shall acquire such assets;

     (c) with respect to any acquisition whereby the total consideration paid in connection with such acquisition (including any Indebtedness of the acquired entity that is assumed by a Loan Party following such acquisition) exceeds $10,000,000, (i) the Fixed Charge Coverage Ratio, without giving effect to such acquisition, shall be greater than or equal to 1.0 to 1.0 for the most recently completed period of four (4) Fiscal Quarters, (ii) the Pro Forma Fixed Charge Coverage Ratio, after giving effect to such acquisition, shall be greater than or equal to 1.00 to 1.00 and (iii) Parent shall certify (and provide the Administrative Agent with a pro forma calculation in form and substance reasonably satisfactory to the Administrative Agent) to the Administrative Agent and the Lenders that, after giving effect to completion of such acquisition, the Availability is not less than $75,000,000 on a pro forma basis after giving effect to such acquisition; and

     (d) such acquisition is of a business permitted under Section 9.17.

     “Permitted Cure Security” shall mean an equity security of Holdings or Parent having no mandatory redemption, repurchase or similar requirements prior to 91 days after the Termination Date, and upon which all dividends or distributions (if any) shall, prior to 91 days after the Termination Date, be payable solely in additional shares of such equity security.

     “Permitted Holders” shall mean the Equity Investors and any Management Participants.

     “Permitted Liens” means:

     (a) the Collateral Agent’s Liens;

     (b) the Noteholder Liens;

     (c) Liens, if any, which are described on Schedule 1.1(A) on the Closing Date and Liens resulting from the refinancing of the related Indebtedness with Permitted Refinancing

Loan And Security Agreement — Page 30

Indebtedness, provided that such Liens shall secure only those obligations that they secure on the Closing Date (and extensions, renewals and refinancings of such obligations thereof) and shall not subsequently apply to any property or assets other than that to which Liens securing the Indebtedness being refinanced would apply;

     (d) Liens for taxes, fees, assessments, or other charges of a Governmental Authority which are (i) not delinquent (including statutory Liens for taxes not delinquent) or (ii) due and payable and being contested in good faith and by appropriate proceedings and adequate financial reserves have been established in accordance with GAAP on the appropriate Loan Party’s books and records;

     (e) (i) deposits and other Liens made in the ordinary course of business in compliance with the Federal Employers Liability Act or any other workers’ compensation, unemployment insurance and other social security laws or regulations and deposits securing liability to insurance carriers under insurance or self-insurance arrangements in respect of such obligations and (ii) deposits and other Liens securing liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees for the benefit of) insurance carriers providing property, casualty or liability insurance to Parent or any Subsidiary, including those incurred to secure health, safety and environmental obligations in the ordinary course of business;

     (f) deposits and other Liens to secure the performance of bids, trade contracts (other than for Indebtedness), leases (other than Capital Leases), statutory obligations, surety and appeal bonds, performance and return of money bonds, bids, leases, government contracts, trade contracts, agreements with public utilities, and other obligations of a like nature (including letters of credit in lieu of any such bonds or to support the issuance thereof) incurred in the ordinary course of business by Parent or any Subsidiary;

     (g) Liens securing the claims or demands of materialmen, mechanics, repairmen, carriers, warehousemen, landlords, and other like Persons in the ordinary course of business (i) for amounts not due or (ii) for amounts due that are being contested in good faith, and for which reserves have been established for such claim in accordance with GAAP;

     (h) Liens constituting encumbrances in the nature of reservations, exceptions, encroachments, easements, rights of way, covenants running with the land, and other similar title exceptions or encumbrances affecting any Real Estate; provided such Liens do not in the aggregate materially detract from the value of such Real Estate or materially interfere with its use in the ordinary conduct of a Borrower’s business;

     (i) Liens arising from judgments and attachments in connection with court proceedings; provided that the attachment or enforcement of such Liens would not result in an Event of Default hereunder;

     (j) Liens (other than Liens on Inventory) securing purchase money Indebtedness (including obligations under Capital Leases) permitted under Section 9.13(c);

     (k) Liens securing Indebtedness permitted pursuant to Section 9.13(e);

Loan And Security Agreement — Page 31

     (l) Liens arising from precautionary Uniform Commercial Code financing statement filings regarding operating leases or consigned inventory filed against Parent or any of its Subsidiaries;

     (m) Deposits securing obligations in respect of Hedge Agreements permitted under clause (g) of the definition of “Restricted Investments” in an amount not to exceed $7,500,000;

     (n) Liens disclosed by the title insurance policies delivered on or subsequent to the Closing Date and pursuant to Section 9.27 and any replacement, extension or renewal of any such Lien; provided that such replacement, extension or renewal Lien shall not cover any property other than the property that was subject to such Lien prior to such replacement, extension or renewal; provided, further, that the Indebtedness and other obligations secured by such replacement, extension or renewal Lien are permitted by this Agreement;

     (o) any interest or title of a lessor under any leases or subleases entered into by Parent or any Subsidiary in the ordinary course of business;

     (p) Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks not given in connection with the issuance of Indebtedness, (ii) relating to pooled deposit or sweep accounts of Parent or any Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business by Parent and the Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of Parent or any Subsidiary in the ordinary course of business;

     (q) Liens arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights;

     (r) Liens securing obligations permitted to be incurred hereunder in respect of letters of credit; provided, that the Fair Market Value of all assets subject to such Liens at any time does not exceed $10,000,000;

     (s) licenses of intellectual property and software granted in a manner consistent with past practice;

     (t) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

     (u) Liens solely on any cash earnest money deposits made by Parent or any Subsidiary in connection with any letter of intent or purchase agreement permitted hereunder;

     (v) Liens arising out of consignment or similar arrangements for the sale of goods in the ordinary course of business;

     (w) Liens securing insurance premiums financing arrangements, provided that such Liens are limited to the applicable unearned insurance premiums; and

     (x) other Liens securing obligations which do not exceed $10,000,000 at any time outstanding.

Loan And Security Agreement — Page 32

The designation of a Lien as a Permitted Lien shall not limit or restrict the ability of the Agents to establish any Reserve relating thereto.

     “Permitted Refinancing Indebtedness” shall mean any Indebtedness issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund (collectively, to “Refinance”), the Indebtedness being Refinanced (or previous refinancing thereof constituting Permitted Refinancing Indebtedness); provided that (a) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so Refinanced (plus unpaid accrued interest and premium thereon and underwriting discounts, fees, commissions and expenses), (b) the Weighted Average Life to Maturity of such Permitted Refinancing Indebtedness at the time such Refinancing Indebtedness is incurred or issued is greater than or equal to the Weighted Average Life to Maturity at such time of the Indebtedness being Refinanced, (c) if the Indebtedness being Refinanced is subordinated in right of payment to the Obligations under the Loan Documents, such Permitted Refinancing Indebtedness shall be subordinated in right of payment to such Obligations on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being Refinanced, (d) no Permitted Refinancing Indebtedness shall have obligors that are not Loan Parties, or greater Guarantees or security, than the Indebtedness being Refinanced and (e) if the Indebtedness being Refinanced is secured by any Collateral (whether senior to, equally and ratably with, or junior to, the Lenders or otherwise), such Permitted Refinancing Indebtedness may be secured by such collateral on terms no less favorable to the Secured Parties than those contained in the documentation governing the Indebtedness being Refinanced.

     “Permitted Subordinated Debt” means (a) unsecured Indebtedness owing by a Loan Party to a Loan Party, provided that such Indebtedness is subordinated to payment of the Obligations on terms reasonably acceptable to the Administrative Agent, (b) other Indebtedness of Holdings or a Loan Party which has maturities and terms, and which is subordinated to payment of the Obligations on terms reasonably acceptable to the Administrative Agent, and in each such case described in clause (a) and clause (b) preceding, any renewals, modifications, or amendments thereof on terms reasonably acceptable to the Administrative Agent.

     “Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, Governmental Authority, or any other entity.

     “Plan” means an employee benefit plan now or hereafter maintained for employees of any Borrower or any ERISA Affiliate that is covered by Title IV of ERISA or subject to the minimum funding standards of Section 412 of the Code.

     “Pledged Collateral” has the meaning specified in Section 6.16(b).

     “Prime Rate” means the rate of interest per annum determined from time to time by Credit Suisse as its prime rate in effect at its principal office in New York City and notified to Parent.

     “Pro Forma Fixed Charge Coverage Ratio” means the ratio, for any period, determined according to the definition of Fixed Charge Coverage Ratio, provided, that each item thereof

Loan And Security Agreement — Page 33

shall be calculated as of the end of such period on a pro forma basis for the next succeeding (rather than the immediately preceding) four (4) Fiscal Quarters.

     “Prohibited Transaction” has the meaning set forth in Section 406 of ERISA or Section 4975 of the Code, except to the extent covered by a class or other exemption.

     “Projections” means those certain projections of Parent contained in the Confidential Information Memorandum.

     “Pro Rata Share” means, with respect to a Lender, a fraction (expressed as a percentage), the numerator of which is the amount of such Lender’s Commitment and the denominator of which is the sum of the amounts of all of the Lenders’ Commitments, or if no Commitments are outstanding, a fraction (expressed as a percentage), the numerator of which is the principal amount of Obligations owed to such Lender and the denominator of which is the aggregate principal amount of the Obligations owed to the Lenders, in each case giving effect to a Lender’s participation in Swingline Loans and Agent Advances.

     “Proprietary Rights” means, with respect to a Person, all of such Person’s now owned and hereafter arising or acquired licenses, franchises, permits, patents, patent rights, copyrights, works which are the subject matter of copyrights, trademarks, service marks, trade names, trade styles, patent, trademark and service mark applications, and all licenses and rights related to any of the foregoing, including those registered patents and trademarks set forth on Schedule 8.12, and all other rights under any of the foregoing, all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing, and all rights to sue for past, present, and future infringement of any of the foregoing.

     “Qualified Capital Stock” means, with respect to any Person, its Capital Stock excluding Disqualified Stock.

     “Qualified Public Offering” shall mean the initial underwritten public offering of common Capital Stock of Holdings pursuant to an effective registration statement filed with the Securities and Exchange Commission in accordance with the Securities Act of 1933, as amended, that results in at least $50,000,000 of net cash proceeds to Holdings.

     “Real Estate” means, with respect to any Person, all of such Person’s now or hereafter owned or leased estates in real property, including, without limitation, all fees, leaseholds, and future interests, together with all of such Person’s now and hereafter owned or leased interests in the improvements thereon, the fixtures attached thereto, and the easements appurtenant thereto.

     “Reasonable Credit Judgment” means reasonable credit judgment in accordance with customary business practices for comparable asset-based lending transactions and as it relates to the establishment of Reserves or the adjustment or imposition of exclusionary criteria shall require that, (x) such establishment, adjustment or imposition after the Closing Date be based on the analysis of facts or events first occurring or first discovered by the Agents after the Closing Date or are materially different from facts or events occurring or known to the Agents on the Closing Date, (y) the contributing factors to the imposition of any Reserve shall not duplicate (i) the exclusionary criteria set forth in definitions of “Eligible Accounts” and “Eligible Inventory”, as applicable (and vice versa) or (ii) any reserves deducted in computing book value and (z) the

Loan And Security Agreement — Page 34

amount of any such Reserve so established or the effect of any adjustment or imposition of exclusionary criteria be a reasonable quantification of the incremental dilution of the Borrowing Base attributable to such contributing factors.

     “Related Fund” means, with respect to any Lender that is a fund or commingled investment vehicle that invests in bank loans, any other fund that invests in bank loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

     “Related Persons” means with respect to any specified Person, such Person’s Affiliates, and the respective officers, directors, employees, agents, advisors, and attorneys-in-fact of such Person and its Affiliates.

     “Release” means a release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching, or migration of a Contaminant into the indoor or outdoor environment or into or out of any Real Estate or other property, including the movement of Contaminants through or in the air, soil, surface water, groundwater, or Real Estate or other property.

     “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA (other than any events for which the requirement of notice within 30 days is waived by statute or regulation).

     “Required Lenders” means, as of any date of determination, the Lenders whose Pro Rata Shares aggregate more than sixty-six and two-thirds percent (66-2/3%).

     “Requirement of Law” means, as to any Person, any law (statutory or common), treaty, rule, or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject.

     “Reserves” means such reserves against the Borrowing Base that the Agents have, in the exercise of their Reasonable Credit Judgment, established from time to time upon at least five (5) Business Days’ notice to Parent. The Agents acknowledge that as of the Closing Date, except with respect to rent reserves contemplated by clause (b) or (i) of the definition of Eligible Inventory, they do not know of any circumstance or condition with respect to the Accounts, Inventory or Borrowing Base that would require the imposition of a Reserve which has not been imposed as of the Closing Date.

     “Responsible Officer” means, with respect to Holdings or any Loan Party, the chief executive officer, president, vice president, chief financial officer, chief accounting officer, treasurer, or controller and, in each case preceding, any other officer having substantially the same authority and responsibility.

Loan And Security Agreement — Page 35

     “Restricted Investment” means, with respect to Holdings or any of its Subsidiaries, any acquisition by such Person of any Indebtedness, equity interests, or securities of another Person in exchange for cash or other property (excluding Qualified Capital Stock of any direct or indirect parent of Parent), whether in the form of an acquisition of stock, debt, or other Indebtedness or obligation, or a loan, advance or capital contribution, except the following:

(a) current assets acquired in the ordinary course of business of such Person;

     (b) direct obligations of the United States, or any agency thereof, or obligations guaranteed by the United States; provided that such obligations mature within one (1) year from the date of acquisition thereof;

     (c) acquisitions of certificates of deposit maturing within one (1) year from the date of acquisition, bankers’ acceptances, Eurodollar bank deposits, or overnight bank deposits, in each case issued by, created by, or with a bank or trust company organized under the laws of the United States or any state thereof having capital and surplus aggregating at least $100,000,000;

     (d) acquisitions of commercial paper given a rating of “A2” or better by S&P or “P2” or better by Moody’s and maturing not more than ninety (90) days from the date of acquisition thereof;

     (e) investments in mutual funds substantially all of the assets of which are comprised of securities of the types described in clauses (b), (c), and (d) preceding;

     (f) investments in so-called “auction rate” securities rated AAA or higher by S&P or AAA or higher by Moody’s and which have a reset date not more than ninety (90) days from the date of acquisition thereof;

     (g) Hedge Agreements entered into for the purpose of hedging or to mitigate risks to which Holdings or any Subsidiary is exposed in the conduct of its business or the management of its liabilities (including currency, interest rate and commodity pricing risks);

     (h) Permitted Acquisitions;

     (i) (x) investments by Holdings, any Borrower or any Subsidiary in the Capital Stock, or as a contribution to the capital, of any Borrower or any Subsidiary; (y) intercompany loans from Holdings, any Borrower or any Subsidiary to any Borrower or any Subsidiary; and (z) Guaranties by Holdings, any Borrower or any Subsidiary of obligations otherwise expressly permitted hereunder of Holdings, any Borrower or any Subsidiary; provided that the sum of (A) investments (valued at the time of the making thereof and without giving effect to any write-downs or write-offs thereof) after the Closing Date by the Loan Parties pursuant to clause (x) in Subsidiaries that are not Loan Parties, plus (B) net intercompany loans after the Closing Date by Loan Parties to Subsidiaries that are not Loan Parties pursuant to clause (y), plus (C) Guaranties of Indebtedness by Loan Parties after the Closing Date of Subsidiaries that are not Loan Parties pursuant to clause (z), shall not exceed $10,000,000 at any time outstanding; and provided further that intercompany current liabilities incurred in the ordinary course of business in connection with the cash management operations of the Borrower and the Subsidiaries shall not be included in calculating the limitation in this paragraph at any time;

Loan And Security Agreement — Page 36

     (j) investments in existence on, or contractually committed as of, the Closing Date and listed on Schedule 1.1(B), together with renewals and extensions thereof, so long as the principal amount of such renewal or extension does not exceed the original principal amount of such investment;

     (k) investments (including debt obligations and equity securities) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers;

     (l) investments in connection with the purchase, cancellation, or repayment of the Borrower’s existing industrial development revenue bonds (at par or at a premium);

     (m) loans and advances by Holdings and its Subsidiaries to employees or consultants of Holdings and its Subsidiaries in connection with relocations, purchases by such employees of Capital Stock of Parent or any direct or indirect parent of Parent or options or similar rights to purchase Capital Stock of Parent or any direct or indirect parent of Parent and other ordinary course of business purposes (including travel and entertainment expenses) shall be permitted, so long as the aggregate principal amount thereof at any time outstanding (determined without regard to any write-downs or write-offs of such loans and advances) shall not exceed $5,000,000;

     (n) Holdings may acquire and hold obligations of one or more officers or other employees of Holdings or its Subsidiaries in connection with such officers’ or employees’ acquisition of shares of Capital Stock of Parent or any direct or indirect parent of Parent, so long as no cash is actually advanced by Holdings or any of its Subsidiaries to such officers or employees in connection with the acquisition of any such obligations;

     (o) Holdings and its Subsidiaries may receive and hold promissory notes and other non-cash consideration received in connection with any asset sale permitted by Section 9.9;

     (p) Holdings and its Subsidiaries may make advances in the form of a prepayment of expenses, so long as such expenses are being paid in accordance with customary trade terms of Holdings or such Subsidiary;

     (q) investments by Holdings and its Subsidiaries, including loans to any direct or indirect parent of Parent, if Holdings or any other Loan Party would otherwise be permitted to make a Distribution in such amount (provided that the amount of such loan shall also be deemed to be a distribution under the appropriate clause of Section 9.10 for all purposes of this Agreement); and

     (r) additional investments by the Loan Parties having an aggregate Fair Market Value, taken together with all other investments made pursuant to this clause (r), not to exceed at any time outstanding the greater of (a) $40,000,000 and (b) 6.0% of Total Assets immediately prior to such investment (with the Fair Market Value of each investment being measured at the time made and without giving effect to subsequent changes in value).

     “Revolving Facility First Lien Collateral” has the meaning set forth in the Intercreditor Agreement.

Loan And Security Agreement — Page 37

     “Revolving Loans” has the meaning specified in Section 2.2 and includes each Tranche A Revolving Loan, Tranche A-1 Revolving Loan, Agent Advance and Swingline Loan.

     “Revolving Note” means a promissory note made by the Borrowers payable to the order of a Lender evidencing the obligation of the Borrowers to pay the aggregate unpaid principal amount of the Revolving Loans made to each of the Borrowers by such Lender (and any promissory note or notes that may be issued from time to time in substitution, renewal, extension, replacement, or exchange thereof whether payable to such Lender or to a different Lender in connection with a Person becoming a Lender after the Closing Date or otherwise) substantially in the form of Exhibit A-1 with respect to Tranche A Revolving Notes and Exhibit A-2 with respect to Tranche A-1 Revolving Notes, with all of the blanks properly completed, either as originally executed or as such promissory note may be renewed, extended, modified, amended, supplemented, or restated from time to time.

     “S&P” shall mean Standard & Poor’s Ratings Service, or any successor thereto.

     “Secured Parties” means (a) the Lenders, (b) the Administrative Agent, (c) the Collateral Agent, (d) any Letter of Credit Issuer, (e) with respect to Bank Products, each Bank, Lender and their respective Affiliates, as applicable, (f) the beneficiaries of each indemnification obligation undertaken by any Loan Party under any Loan Document and (g) the successors and permitted assigns of each of the foregoing.

     “Security Documents” means the Copyright, Patent, and Trademark Agreements, the Guaranty Agreements, the Intercreditor Agreement, the Mortgages, and each of the security agreements, mortgages and other instruments and documents executed and delivered securing the whole or any part of the Obligations or confirming the existence of the security interests.

     “Senior Liens” has the meaning set forth in the Intercreditor Agreement.

     “Senior Notes Collateral Agreement” means the Senior Notes Collateral Agreement dated the date hereof among Holdings, Parent, Parent’s Subsidiaries party thereto, the Trustee and the Noteholder Collateral Agent.

     “Senior Notes Security Documents” means the Senior Notes Collateral Agreement and the other Noteholder Security Documents (as defined in the Intercreditor Agreement).

     “Senior Secured Indenture” means the Indenture dated as of November 30, 2005, pursuant to which the Senior Secured Notes were issued, as amended, restated, supplemented or otherwise modified from time to time in accordance with the requirements thereof and of this Agreement.

     “Senior Secured Notes” means the $275,000,000 aggregate principal amount of Parent’s 11-1/8% senior secured notes due 2015 issued pursuant to the Senior Secured Indenture.

     “Settlement” and “Settlement Date” have the meanings specified in Section 2.2(j)(i).

     “Solvent” means, with respect to any Person, as of any date, that on and as of such date (both before and after effecting the transactions contemplated by this Agreement and making any

Loan And Security Agreement — Page 38

Revolving Loans or issuing any Letter of Credit or taking any other actions permitted by this Agreement proposed to be taken as of such date) (a) the sum of such Person’s debts is not greater than all of such Person’s property, at a fair valuation, (b) the sum of such Person’s debts is not greater than all of such Person’s assets, at a fair valuation, (c) such Person has sufficient capital with which to conduct its business as such business is now conducted and is proposed to be conducted, (d) such Person does not intend to incur, and does not believe that it will incur, debts that are or would be beyond its ability to pay as such debts mature or become due, and (e) such Person does not intend to hinder, delay, or defraud any creditor of such Person. For this purpose “debts” includes anything included within the definition of “debt” as used in Section 548 of the Bankruptcy Code or as defined or used by Section 270 of the New York Uniform Fraudulent Conveyance Act, and “assets” has the meaning defined or used by Section 270 of the New York Uniform Fraudulent Conveyance Act. Contingent, unliquidated, or disputed obligations or liabilities (if any) are valued at the amount which, in light of all relevant facts and circumstances, is reasonably expected to become absolute, liquidated, or mature.

     “Stated Termination Date” means November 30, 2011.

     “Subsidiary” means, with respect to any Person (the “subject Person”), any corporation, association, partnership, limited liability company, joint venture, or other business entity of which more than fifty percent (50.0%) of the voting stock or other equity interests (in the case of Persons other than corporations), is owned or controlled directly or indirectly by the subject Person, or one or more of the Subsidiaries of the subject Person, or a combination thereof. Unless the context otherwise clearly requires, references herein to a “Subsidiary” refer to a Subsidiary of Parent. Notwithstanding the foregoing (and except for the definition of Unrestricted Subsidiary contained herein), an Unrestricted Subsidiary shall be deemed not to be a Subsidiary of a Borrower or any of its Subsidiaries for purposes of this Agreement.

     “Swingline Lender” means Credit Suisse, acting through any of its Affiliates or branches, in its capacity as lender of Swingline Loans hereunder.

     “Swingline Loan” has the meaning specified in Section 2.2(h).

     “Tangible Chattel Paper” means any “tangible chattel paper”, as such term is defined in the UCC, now owned or hereafter acquired by any Person.

     “Tax Returns” means all returns and reports required to be filed with, or supplied to, any federal, state, local or foreign tax authority with respect to Taxes.

     “Taxes” means any and all present or future taxes, levies, imposts, deductions, charges, or withholdings, excluding, in the case of each Agent and each Lender Excluded Taxes and Other Taxes.

     “Termination Date” means the earliest to occur of (a) the Stated Termination Date, (b) the date the Total Facility is terminated either by the Borrowers pursuant to Section 4.2 or by the Majority Lenders pursuant to Section 11.3, and (c) the date this Agreement is otherwise terminated for any reason whatsoever pursuant to the terms of this Agreement.

     “Total Assets” means the total consolidated assets of Parent and its Subsidiaries, as

Loan And Security Agreement — Page 39

shown on the most recent consolidated balance sheet of Parent.

     “Total Facility” has the meaning specified in Section 2.1.

     “Tranche A Commitment” means, at any time with respect to a Tranche A Lender, the principal amount set forth beside such Tranche A Lender’s name under the heading “Tranche A Commitment” on the signature pages of this Agreement or in the Assignment and Acceptance pursuant to which such Tranche A Lender became a Tranche A Lender hereunder, or the most recent Assignment and Acceptance to which such Tranche A Lender is a party, in accordance with the provisions of Section 13.3, as the same may be reduced or increased or deemed incurred from time to time pursuant to Section 4.2, and “Tranche A Commitments” means, collectively, the aggregate amount of the Tranche A Commitments of all of the Tranche A Lenders. Upon termination or reduction of the Tranche A-1 Commitments in accordance with Section 4.2, all Tranche A-1 Lenders shall be deemed to have increased their respective Tranche A Commitments (or incurred a Tranche A Commitment) by an amount equal to the aggregate amount of the Tranche A-1 Commitment so terminated or reduced, and each Tranche A-1 Lender shall be deemed to have incurred a Tranche A Commitment in (or increased its then existing Tranche A Commitment, if applicable, by) the amount of such termination or reduction in its Tranche A-1 Commitment. On the Closing Date, the Tranche A Commitments equal $415,000,000.

     “Tranche A Lender” means a Lender that holds a Tranche A Commitment or a Tranche A Revolving Loan and any other Person who becomes a “Tranche A Lender” in accordance with this Agreement.

     “Tranche A Pro Rata Share” means, with respect to a Tranche A Lender, a fraction (expressed as a percentage), the numerator of which is the amount of such Tranche A Lender’s Tranche A Commitment and the denominator of which is the sum of the amounts of all of the Tranche A Lenders’ Tranche A Commitments, or if no Tranche A Commitments are outstanding, a fraction (expressed as a percentage), the numerator of which is the principal amount of Obligations owed to such Tranche A Lender and the denominator of which is the aggregate principal amount of the Obligations owed to the Tranche A Lenders, in each case giving effect to a Tranche A Lender’s participation in Swingline Loans and Agent Advances.

     “Tranche A Revolving Loans” means the Revolving Loans made by Tranche A Lenders pursuant to Section 2.2.

     “Tranche A-1 Commitment” means, at any time with respect to a Tranche A-1 Lender, the principal amount set forth beside such Tranche A-1 Lender’s name under the heading “Tranche A-1 Commitment” on the signature pages of this Agreement or in the Assignment and Acceptance pursuant to which such Tranche A-1 Lender became a Tranche A-1 Lender hereunder, or the most recent Assignment and Acceptance to which such Tranche A-1 Lender is a party, in accordance with the provisions of Section 13.3, as the same may be reduced from time to time pursuant to Section 4.2 and “Tranche A-1 Commitments” means, collectively, the aggregate amount of the Tranche A-1 Commitments of all of the Tranche A-1 Lenders. On the Closing Date, the Tranche A-1 Commitments equal $35,000,000.

Loan And Security Agreement — Page 40

     “Tranche A-1 Lender” means a Lender that holds a Tranche A-1 Commitment or a Tranche A-1 Revolving Loan and any other Person who becomes a “Tranche A-1 Lender” in accordance with this Agreement.

     “Tranche A-1 Pro Rata Share” means, with respect to a Tranche A-1 Lender, a fraction (expressed as a percentage), the numerator of which is the amount of such Tranche A-1 Lender’s Tranche A-1 Commitment and the denominator of which is the sum of the amounts of all of the Tranche A-1 Lenders’ Tranche A-1 Commitments, or if no Tranche A-1 Commitments are outstanding, a fraction (expressed as a percentage), the numerator of which is the principal amount of Obligations owed to such Tranche A-1 Lender and the denominator of which is the aggregate principal amount of the Obligations owed to the Tranche A-1 Lenders.

     “Tranche A-1 Revolving Loans” means the Revolving Loans made by Tranche A-1 Lenders pursuant to Section 2.2.

     “Transactions” shall mean, collectively, (a) the execution, delivery and performance by Holdings, Merger Sub and Parent of the Merger Agreement and the consummation of the transactions contemplated thereby, (b) the execution, delivery and performance by the Loan Parties of the Loan Documents to which they are a party and the making of the Borrowings hereunder, (c) the issuance by Merger Sub and/or Parent of the Senior Secured Notes, (d) the repayment of all amounts due or outstanding under, and the termination of, the Existing Credit Agreement, (e) the Equity Contribution and (f) the payment of related fees and expenses.

     “Trustee” means Wells Fargo Bank, N.A., in its capacity as trustee under the Senior Secured Indenture, and its successors and assigns in such capacity.

     “UCC” means the Uniform Commercial Code (or any successor statute), as in effect from time to time, of the State of New York or of any other state the laws of which are required as a result thereof to be applied in connection with the issue of perfection of security interests.

     “Unfunded Advances/Participations” shall mean (a) with respect to the Administrative Agent, the aggregate amount, if any (i) made available to a Borrower on the assumption that each Lender has made its portion of the applicable Borrowing available to the Administrative Agent as contemplated by Section 2.2(g)(iii) hereof, and with respect to which a corresponding amount shall not in fact have been made available to the Administrative Agent by any such Lender and (ii) of participations in respect of any outstanding Agent Advances that shall not have been funded by the Lenders in accordance with Section 2.2(j) hereof, (b) with respect to the Swingline Lender, the aggregate amount, if any, of participations in respect of any outstanding Swingline Loan that shall not have been funded by the Lenders in accordance with Section 2.22(j) hereof and (c) with respect to any Letter of Credit Issuer, the aggregate amount, if any, of participations in respect of any outstanding Letters of Credit that shall not have been funded by the Lenders in accordance with Sections 2.3(f) hereof.

     “United States” means the United States of America.

     “Unrestricted Subsidiary” shall mean (a) any Subsidiary that is not a domestic Subsidiary, and (b) any domestic Subsidiary identified on Schedule 1.1(F) hereto and any additional Subsidiary designated as such by Parent which, together with all other Unrestricted

Loan And Security Agreement — Page 41

Subsidiaries described in this clause (b), constitutes in the aggregate less than 5% of (i) aggregate net trade sales on a trailing twelve months’ basis and (ii) aggregate book value of assets of Borrowers and the Subsidiaries at such date of determination, provided that, at any time an Unrestricted Subsidiary described in this clause (b) causes the aggregate sales and assets test set forth above to no longer be satisfied, the Unrestricted Subsidiary or Unrestricted Subsidiaries described in this clause (b), as applicable, that has either the highest sales or the largest book value of assets of all such Unrestricted Subsidiaries at such time shall automatically cease to constitute an Unrestricted Subsidiary and Borrowers shall promptly cause the appropriate guaranties and Security Documents to be executed and delivered to the Collateral Agent (such that, following such conversion of the Unrestricted Subsidiary to a Subsidiary, the remaining Unrestricted Subsidiaries shall satisfy the definition hereof); provided that at no time shall a Subsidiary that cannot satisfy the conditions in clause (b) be permitted to become an Unrestricted Subsidiary.

     “Unused Letter of Credit Subfacility” means an amount equal to $100,000,000, minus the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit, plus (b) the aggregate unpaid reimbursement obligations with respect to all Letters of Credit.

     “Unused Line Fee” has the meaning specified in Section 3.4.

     “USA PATRIOT Act” shall mean The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. No. 107-56 (signed into law October 26, 2001)).

     “Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products obtained by multiplying (x) the amount of each then remaining installment or other required scheduled payments of principal, including payment at final maturity, in respect thereof, by (y) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by (ii) the then outstanding principal amount of such Indebtedness.

     “Wholly-Owned Subsidiary” when used to determine the relationship of a Subsidiary to a Person, means a Subsidiary all of the issued and outstanding Capital Stock (other than directors’ qualifying shares) of which shall at the time be owned by such Person or one or more of such Person’s Wholly-Owned Subsidiaries or by such Person and one or more of such Person’s Wholly-Owned Subsidiaries.

          Section 1.2 Accounting Terms. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP as in effect from time to time; provided that, if Parent notifies the Administrative Agent that Parent wishes to amend any provision hereof, including, without limitation, any covenant in Article IX, to eliminate the effect of any change in generally accepted accounting principles adopted after the Closing Date on the operation of such provision (or if the Administrative Agent notifies Parent that the Required Lenders wish to amend any such provision for such purpose), then Parent’s compliance with such provision shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became

Loan And Security Agreement — Page 42

effective, until either such notice is withdrawn or such provision is amended in a manner satisfactory to Parent and the Majority Lenders.

     Section 1.3 Interpretive Provisions.

     (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. Terms used herein that are defined in the UCC and are not otherwise defined herein, shall have the meaning specified therefor in the UCC.

     (b) The words “hereof,” “herein,” “hereunder,” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement. Section, Schedule, and Exhibit references are to this Agreement unless otherwise specified. The term “documents” includes any and all instruments, documents, agreements, certificates, indentures, notices, and other writings, however evidenced. The term “including” is not limiting and means “including, without limitation.” In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including,” the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including.”

     (c) Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing, or interpreting the statute or regulation.

     (d) The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

     (e) This Agreement and the other Loan Documents may use several different limitations, tests, or measurements to regulate the same or similar matters. All such limitations, tests, and measurements are cumulative and shall each be performed in accordance with their terms.

     (f) This Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Agents, the Lenders, and the Borrowers and are the products of all parties. Accordingly, they shall not be construed against the Agents, the Lenders, or the Borrowers merely because of the Agents’, the Lenders’, or the Borrowers’ involvement in their preparation.

ARTICLE 2

LOANS AND LETTERS OF CREDIT

          Section 2.1 Total Facility. Subject to all of the terms and conditions of this Agreement, the Lenders severally agree to make available a total credit facility of $450,000,000 (the “Total Facility”) for use by any one or more of the Borrowers from time to time during the

Loan And Security Agreement — Page 43

term of this Agreement. The Total Facility shall be composed of a revolving line of credit consisting of Revolving Loans and Letters of Credit, as described in Section 2.2 and Section 2.3.

     Section 2.2 Revolving Loans.

     (a) Amounts. Subject to the satisfaction of the conditions precedent set forth in Article 10, each Lender severally, but not jointly, agrees, upon a Borrower’s request from time to time on any Business Day during the period from the Closing Date to the Termination Date, to make revolving loans (the “Revolving Loans”) to the Borrowers in amounts not to exceed (except for the Swingline Lender with respect to Swingline Loans and except for the Administrative Agent with respect to Agent Advances) such Lender’s Pro Rata Share of the Borrowing Base. The Lenders, however, in their unanimous discretion, may elect to make Revolving Loans or issue or arrange to have issued Letters of Credit in excess of the Availability on one or more occasions, but if they do so, neither the Agents nor the Lenders shall be deemed thereby to have changed the limits of the Borrowing Base or to be obligated to exceed such limits on any other occasion. If the Aggregate Revolver Outstandings exceed the Borrowing Base, the Lenders may refuse to make or otherwise restrict the making of Revolving Loans and the issuance of Letters of Credit as the Lenders determine until such excess has been eliminated, subject to the Administrative Agent’s authority, in its sole discretion, to make Agent Advances pursuant to the terms of Section 2.2(i).

     (b) Procedure for Borrowing.

     (i) Each Borrowing shall be made upon a Borrower’s irrevocable written notice delivered to the Administrative Agent in the form of a notice of borrowing in the form attached hereto as Exhibit C (a “Notice of Borrowing”), which must be received by the Administrative Agent prior to 12:00 noon (New York, New York time) (y) three (3) Business Days prior to the requested Funding Date in the case of a LIBOR Rate Revolving Loan and (z) on the requested Funding Date in the case of a Base Rate Revolving Loan, specifying:

     (A) the amount of the Borrowing, which, if a LIBOR Rate Revolving Loan, shall be in an amount that is not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and if a Base Rate Revolving Loan, shall be in an amount that is not less than $100,000 or an integral multiple of $100,000 in excess thereof;

     (B) the requested Funding Date, which shall be a Business Day;

     (C) whether the Revolving Loan requested is to be a Tranche A Revolving Loan or a Tranche A-1 Revolving Loan, and whether it is to be a Base Rate Revolving Loan or a LIBOR Rate Revolving Loan; provided that if such Borrower fails to specify whether any Revolving Loan is to be a Tranche A Revolving Loan or a Tranche A-1 Revolving Loan, then such Revolving Loan shall be a Tranche A-1 Revolving Loan to the extent of the Tranche A-1 Commitments, and if such Borrower fails to specify

Loan And Security Agreement — Page 44

whether any Revolving Loan is to be Base Rate Revolving Loan or a LIBOR Rate Revolving Loan, such request shall be deemed a request for a Base Rate Revolving Loan;

     (D) the duration of the Interest Period if the requested Revolving Loan is to be a LIBOR Rate Revolving Loan; provided that if the Borrower fails to select the duration of the Interest Period with respect to any requested LIBOR Rate Revolving Loan, the Borrower shall be deemed to have requested such Revolving Loan be made as a LIBOR Rate Revolving Loan with an Interest Period of one month in duration; and

     (E) the account (as acceptable to the Administrative Agent pursuant to Section 2.2(c)) to which the proceeds of such Borrowing are to be deposited, or wire transfer instructions satisfactory to the Administrative Agent with respect to any Borrowing which is permitted to be funded directly to any Person other than a Borrower.

With respect to any Borrowing to be made on the Closing Date, unless otherwise agreed by the Administrative Agent and the Lenders, such Borrowing will consist of Base Rate Revolving Loans.

     (ii) With respect to any request for Base Rate Revolving Loans, in lieu of delivering the above-described Notice of Borrowing, a Borrower may give the Administrative Agent telephonic notice of such request by the required time, with such telephonic notice to be confirmed in writing no later than the Business Day following the giving of such telephonic notice but the Administrative Agent at all times shall be entitled to rely on such telephonic notice in making such Revolving Loans, regardless of whether any such confirmation is received by the Administrative Agent.

     (c) Disbursement; Reliance upon Authority. The Borrowers shall deliver to the Administrative Agent, prior to the Closing Date, a writing setting forth the deposit account to which the Administrative Agent is authorized by the Borrowers to transfer the proceeds of the Revolving Loans requested pursuant to this Section 2.2, which deposit account shall be reasonably acceptable to the Administrative Agent. The Administrative Agent shall be entitled to rely conclusively on any individual’s request for Revolving Loans on behalf of a Borrower, the proceeds of which are to be transferred to the deposit account specified by the Borrowers pursuant to the immediately preceding sentence, until the Administrative Agent receives written notice from the Borrowers that the proceeds of the Revolving Loans are to be sent to a different deposit account. The Administrative Agent shall have no duty to verify the identity of any individual representing himself or herself as a person authorized by any Borrower to make such requests on its behalf.

     (d) No Liability. The Administrative Agent shall not incur any liability to the Borrowers as a result of acting upon any notice referred to in Section 2.2(b) and Section 2.2(c), which notice the Administrative Agent believes in good faith to have been given by an officer or other person duly authorized by a Borrower to request Revolving

Loan And Security Agreement — Page 45

Loans on its behalf or for otherwise acting in good faith under this Section 2.2, and the crediting of Revolving Loans to a Borrower’s deposit account, or wire transfer to such Person as a Borrower shall direct, shall conclusively establish the obligation of the Borrowers to repay such Revolving Loans as provided herein.

     (e) Notice Irrevocable. Any Notice of Borrowing (or telephonic notice in lieu thereof) made pursuant to Section 2.2(b) shall be irrevocable and such Borrower shall be bound to borrow the funds requested therein in accordance therewith.

     (f) The Administrative Agent’s Election. Promptly after receipt of a Notice of Borrowing (or telephonic notice in lieu thereof) pursuant to Section 2.2(b), the Administrative Agent shall elect, in its discretion, (i) to have the terms of Section 2.2(g) apply to such requested Borrowing, or (ii) if the requested Revolving Loan is a Base Rate Revolving Loan to request the Swingline Lender to make a Swingline Loan pursuant to the terms of Section 2.2(h) in the amount of the requested Borrowing; provided, however, that if the Swingline Lender declines in its sole discretion to make a Swingline Loan pursuant to Section 2.2(h), the Administrative Agent shall elect to have the terms of Section 2.2(g) apply to such requested Borrowing.

     (g) Making of Revolving Loans.

     (i) In the event that the Administrative Agent shall elect to have the terms of this Section 2.2(g) apply to a requested Borrowing as described in Section 2.2(f) or otherwise, then promptly after receipt of a Notice of Borrowing or telephonic notice pursuant to Section 2.2(b), the Administrative Agent shall notify the Lenders by telecopy, telephone, or other similar form of transmission, of the requested Borrowing. Each Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available in immediately available funds, to such account as the Administrative Agent may designate, not later than 1:00 p.m. (New York, New York time) on the Funding Date applicable thereto. After the receipt of the proceeds of such requested Borrowing, such proceeds will be made available to the applicable Borrower on the applicable Funding Date by transferring same day funds equal to the proceeds to the deposit account designated pursuant to Section 2.2(c) or disbursing such funds in such other manner as the Borrower requesting such Borrowing may direct to the Administrative Agent.

     (ii) Notwithstanding anything to the contrary herein contained, all Revolving Loans to the Borrowers shall be Tranche A-1 Revolving Loans until the outstanding principal amount of such Revolving Loans equals the lesser of the Incremental Availability or the Maximum Tranche A-1 Revolver Amount. If any Tranche A-1 Revolving Loan is prepaid in part pursuant to Section 4.1, any Revolving Loans thereafter requested shall be Tranche A-1 Revolving Loans until the maximum principal amount of Tranche A-1 Revolving Loans outstanding equals the lesser of the Incremental Availability or the Maximum Tranche A-1 Revolver Amount and thereafter shall be Tranche A Revolving Loans. Further, subject to the provisions of Section 2.2(a), (A) the Aggregate Revolver

Loan And Security Agreement — Page 46

Outstandings in respect of the Tranche A Commitments shall not exceed the Borrowing Base (without regard to the Incremental Availability) at any time and (B) the aggregate outstanding amount of Tranche A-1 Revolving Loans shall not exceed the Incremental Availability at any time.

     (iii) Unless the Administrative Agent receives notice from a Lender on or prior to the Closing Date or, with respect to any Borrowing after the Closing Date, at least one Business Day prior to the date of such Borrowing, that such Lender will not make available as and when required hereunder to the Administrative Agent for the account of the Borrowers the amount of that Lender’s Pro Rata Share of such Borrowing, the Administrative Agent may assume that each Lender has made such amount available to the Administrative Agent in immediately available funds on the Funding Date and the Administrative Agent may (but shall not be so required), in reliance upon such assumption, make available to the Borrowers on such date a corresponding amount. If and to the extent any Lender shall not have made its full amount available to the Administrative Agent in immediately available funds and the Administrative Agent in such circumstances has made available to the applicable Borrower such amount, that Lender shall on the Business Day following such Funding Date make such amount available to the Administrative Agent, together with interest at the Federal Funds Rate for each day during such period. A notice by the Administrative Agent submitted to any Lender with respect to amounts owing under this clause (iii) shall be conclusive, absent manifest error. If such amount is so made available, such payment to the Administrative Agent shall constitute such Lender’s Revolving Loan for all purposes of this Agreement. If such amount is not made available to the Administrative Agent on the Business Day following the Funding Date, the Administrative Agent will notify the Borrowers of such failure to fund and, upon demand by the Administrative Agent, the Borrowers shall pay such amount to the Administrative Agent for the Administrative Agent’s account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the Interest Rate applicable at the time to the Revolving Loans comprising such Borrowing and such payment to the Administrative Agent shall constitute a repayment of such Borrowing. The failure of any Lender to make any Revolving Loan on any Funding Date (any such Lender, prior to the cure of such failure, being hereinafter referred to as a “Defaulting Lender”) shall not relieve any other Lender of any obligation hereunder to make a Revolving Loan on any Funding Date, but no Lender shall be responsible for the failure of any other Lender to make the Revolving Loan to be made by such other Lender on any Funding Date.

     (iv) The Administrative Agent shall not be obligated to transfer to a Defaulting Lender any payments made by any Borrower to the Administrative Agent for the Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder. Amounts payable to a Defaulting Lender shall instead be paid to or retained by the Administrative Agent. The Administrative Agent may hold and, in its discretion, re-lend to any Borrower the amount of all such payments received or retained by it for the

Loan And Security Agreement — Page 47

account of such Defaulting Lender. Any amounts so re-lent to a Borrower shall bear interest at the rate applicable to Base Rate Revolving Loans and for all other purposes of this Agreement shall be treated as if they were Revolving Loans, provided, however, that for purposes of voting or consenting to matters with respect to the Loan Documents and determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a “Lender”. Until a Defaulting Lender cures its failure to fund its Pro Rata Share of any Borrowing (A) such Defaulting Lender shall not be entitled to any portion of the Unused Line Fee and (B) the Unused Line Fee shall accrue in favor of the Lenders which have funded their respective Pro Rata Shares of such requested Borrowing and shall be allocated among such performing Lenders ratably based upon their relative Commitments. This Section shall remain effective with respect to such Lender until such time as the Defaulting Lender shall no longer be in default of any of its obligations under this Agreement. The terms of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, or relieve or excuse the performance by any Borrower of its duties and obligations hereunder.

     (v) At the Borrowers’ request, any Eligible Assignee reasonably acceptable to the Administrative Agent and the Borrowers shall have the right (but not the obligation) to purchase from any Defaulting Lender, and each Defaulting Lender shall, upon such request, sell and assign to such Eligible Assignee, all of the Defaulting Lender’s outstanding Commitments hereunder. Such sale shall be consummated promptly after the Administrative Agent has arranged for a purchase by an Eligible Assignee pursuant to an Assignment and Acceptance, and at a price equal to the outstanding principal balance of the Defaulting Lender’s Revolving Loans, plus accrued interest and fees, without premium or discount.

(h) Making of Swingline Loans.

     (i) In order to reduce the frequency of transfers of funds from Lenders to the Administrative Agent for making Revolving Loans and subject to the terms and conditions herein set forth, the Swingline Lender shall make a Tranche A Revolving Loan upon the request by any Borrower (any such Tranche A Revolving Loan made solely by the Swingline Lender pursuant to this Section 2.2(h) being referred to as a “Swingline Loan” and such Tranche A Revolving Loans being referred to collectively as “Swingline Loans”) available to the Borrowers on the Funding Date applicable thereto by transferring same day funds to the deposit account of the Borrowers, designated pursuant to Section 2.2(c). Each Swingline Loan shall be subject to all the terms and conditions applicable to other Tranche A Revolving Loans except that all payments thereon shall be payable to the Swingline Lender solely for its own account (and for the account of the holder of any participation interest with respect to such Tranche A Revolving Loan). The Administrative Agent shall not request the Swingline Lender to make any Swingline Loan if (A) the Administrative Agent shall have received written notice from any Lender that one or more of the applicable conditions precedent set forth in Article 10 will not be

Loan And Security Agreement — Page 48

satisfied on the requested Funding Date for the applicable Borrowing, or (B) the Administrative Agent has received notice that a Default exists under Section 9.26. The Administrative Agent shall not otherwise be required to determine whether the applicable conditions precedent set forth in Article 10 have been satisfied prior to making, in its sole discretion, any Swingline Loan. The aggregate principal amount of Swingline Loans outstanding at any time shall not exceed $15,000,000.

     (ii) The Swingline Loans shall be secured by the Collateral Agent’s Liens in and to the Collateral, shall constitute Tranche A Revolving Loans and Obligations hereunder, and shall bear interest at the rate applicable to the Base Rate Tranche A Revolving Loans from time to time.

(i) Agent Advances.

     (i) Subject to the limitations set forth in the provisos contained in this Section 2.2(i), the Administrative Agent is hereby authorized by the Borrowers and the Lenders, from time to time in the Administrative Agent’s sole discretion, (A) after the occurrence of a Default or an Event of Default, or (B) at any time that any of the other applicable conditions precedent set forth in Article 10 have not been satisfied, to make Base Rate Tranche A Revolving Loans to any Borrower on behalf of the Lenders which the Administrative Agent, in its reasonable business judgment, deems necessary or desirable (1) to preserve or protect the Collateral, or any portion thereof, (2) to enhance the likelihood of, or maximize the amount of, repayment of the Revolving Loans and other Obligations, or (3) to pay any other amount chargeable to the Borrowers pursuant to the terms of this Agreement, including costs, fees, and expenses as described in Section 15.7 (any of the advances described in this Section 2.2(i) being hereinafter referred to as “Agent Advances”); provided that (x) the Aggregate Revolver Outstandings in respect of the Tranche A Commitments after giving effect to any Agent Advance shall not exceed the Maximum Tranche A Revolver Amount and (y) Agent Advances outstanding and unpaid at no time will exceed $20,000,000 in the aggregate, and provided further that the Required Lenders may at any time revoke the Administrative Agent’s authorization contained in this Section 2.2(i) to make Agent Advances, any such revocation to be in writing and to become effective prospectively upon the Administrative Agent’s receipt thereof;

     (ii) The Agent Advances shall be repayable on demand and secured by the Collateral Agent’s Liens in and to the Collateral, shall constitute Tranche A Revolving Loans and Obligations hereunder, and shall bear interest at the rate applicable to Base Rate Tranche A Revolving Loans from time to time. The Administrative Agent shall notify each Lender in writing of each Agent Advance; provided that any delay or failure of the Administrative Agent in providing any such notice to any Lender shall not result in any liability or constitute the breach of any duty or obligation of the Administrative Agent hereunder.

Loan And Security Agreement — Page 49

     (j) Settlement. Except as may be specifically provided otherwise by this Section 2.2, it is agreed that each Lender’s funded portion of the Revolving Loans is intended by the Lenders to be equal at all times to such Lender’s applicable Pro Rata Share of the outstanding Revolving Loans of such Class. Notwithstanding such agreement, the Agents, the Swingline Lender, and the Lenders agree (which agreement shall not be for the benefit of or enforceable by the Borrowers) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among them as to the Revolving Loans, including the Swingline Loans and the Agent Advances, shall take place on a periodic basis in accordance with the following provisions:

     (i) The Administrative Agent shall request settlement (a “Settlement”) with the Lenders on at least a weekly basis, or on a more frequent basis if so determined by the Administrative Agent, (A) on behalf of the Swingline Lender, with respect to each outstanding Swingline Loan, (B) for itself, with respect to each Agent Advance, and (C) with respect to collections received, in each case, by notifying the Lenders of such requested Settlement by telecopy, telephone, or other similar form of transmission, of such requested Settlement, no later than 12:00 noon (New York, New York time) on the date of such requested Settlement (the “Settlement Date”). Each Tranche A Lender (other than the Swingline Lender, in the case of Swingline Loans, and the Administrative Agent, in the case of Agent Advances) shall make the amount of such Tranche A Lender’s Pro Rata Share of the outstanding principal amount of the Swingline Loans and Agent Advances with respect to which Settlement is requested available to the Administrative Agent, to such account of the Administrative Agent as the Administrative Agent may designate, not later than 3:00 p.m. (New York, New York time), on the Settlement Date applicable thereto, which may occur before or after the occurrence or during the continuation of a Default or an Event of Default and whether or not the applicable conditions precedent set forth in Article 10 have then been satisfied. Such amounts made available to the Administrative Agent shall be applied against the amounts of the applicable Swingline Loan or Agent Advance and, together with the portion of such Swingline Loan or Agent Advance representing the Swingline Lender’s Pro Rata Share thereof, shall constitute Tranche A Revolving Loans of the Tranche A Lenders, respectively. If any such amount is not made available to the Administrative Agent by any Tranche A Lender on the Settlement Date applicable thereto, the Administrative Agent shall, on behalf of the Swingline Lender with respect to each outstanding Swingline Loan and for itself with respect to each Agent Advance, be entitled to recover such amount on demand from such Tranche A Lender together with interest thereon at the Federal Funds Rate for the first three (3) days from and after the Settlement Date and thereafter at the Interest Rate then applicable to Base Rate Tranche A Revolving Loans.

     (ii) Notwithstanding the foregoing, not more than one (1) Business Day after demand is made by the Administrative Agent (whether before or after the occurrence of a Default or an Event of Default and regardless of whether the Administrative Agent has requested a Settlement with respect to a Swingline Loan or Agent Advance), each Tranche A Lender (A) shall irrevocably and

Loan And Security Agreement — Page 50

unconditionally purchase and receive from the Swingline Lender or the Administrative Agent, as applicable, without recourse or warranty, an undivided interest and participation in such Swingline Loan or Agent Advance equal to such Tranche A Lender’s Pro Rata Share of such Swingline Loan or Agent Advance and (B) if Settlement has not previously occurred with respect to such Swingline Loans or Agent Advances, upon demand by the Swingline Lender or the Administrative Agent, as applicable, shall pay to the Swingline Lender or the Administrative Agent, as applicable, as the purchase price of such participation an amount equal to one-hundred percent (100%) of such Tranche A Lender’s Pro Rata Share of such Swingline Loans or Agent Advances. If such amount is not in fact made available to the Administrative Agent by any Lender, the Administrative Agent shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Federal Funds Rate for the first three (3) days from and after such demand and thereafter at the Interest Rate then applicable to Base Rate Tranche A Revolving Loans.

     (iii) From and after the date, if any, on which any Lender purchases an undivided interest and participation in any Swingline Loan or Agent Advance pursuant to clause (ii) preceding, the Administrative Agent shall promptly distribute to such Tranche A Lender such Tranche A Lender’s Pro Rata Share of all payments of principal and interest and all proceeds of Collateral received by the Administrative Agent in respect of such Swingline Loan or Agent Advance.

     (iv) Between Settlement Dates, to the extent no Agent Advances are outstanding, the Administrative Agent may pay over to the Swingline Lender any payments received by the Administrative Agent, which in accordance with the terms of this Agreement would be applied to the reduction of the Tranche A Revolving Loans, for application to the Swingline Lender’s Tranche A Revolving Loans including Swingline Loans. If, as of any Settlement Date, collections received since the then immediately preceding Settlement Date have been applied to the Swingline Lender’s Tranche A Revolving Loans (other than to Swingline Loans or Agent Advances in which a Lender has not yet funded its purchase of a participation pursuant to Section 2.2(j)(ii), as provided for in the previous sentence), the Swingline Lender shall pay to the Administrative Agent for the accounts of the Lenders, to be applied to the outstanding Tranche A Revolving Loans of such Lenders, an amount such that each Lender shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the Tranche A Revolving Loans. During the period between Settlement Dates, the Swingline Lender with respect to Swingline Loans, the Administrative Agent with respect to Agent Advances, and each Tranche A Lender with respect to the Tranche A Revolving Loans other than Swingline Loans and Agent Advances, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the actual average daily amount of funds employed by the Swingline Lender, the Administrative Agent, and the Tranche A Lenders.

     (v) Unless the Administrative Agent has received written notice from a Lender to the contrary, the Administrative Agent may assume that the

Loan And Security Agreement — Page 51

applicable conditions precedent set forth in Article 10 have been satisfied and the requested Borrowing will not exceed Availability on any Funding Date for a Revolving Loan or Swingline Loan.

     (k) Notation. The Administrative Agent shall record on its books the principal amount of the Revolving Loans owing to each Lender, including the Swingline Loans owing to the Swingline Lender and the Agent Advances owing to the Administrative Agent, from time to time. In addition, each Lender is authorized, at such Lender’s option, to note the date and amount of each payment or prepayment of principal of such Lender’s Revolving Loans in its books and records, including computer records, such books and records constituting presumptive evidence, absent manifest error, of the accuracy of the information contained therein.

     (l) Lenders’ Failure to Perform. All Revolving Loans of a Class (other than Swingline Loans and Agent Advances) shall be made by the Lenders simultaneously and in accordance with their Pro Rata Shares of the applicable Class. It is understood that (i) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any Revolving Loans hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligation to make any Revolving Loans hereunder, (ii) no failure by any Lender to perform its obligation to make any Revolving Loans hereunder shall excuse any other Lender from its obligation to make any Revolving Loans hereunder, and (iii) the obligations of each Lender hereunder shall be several, not joint and several.

     (m) Revolving Notes. If requested by any Lender, the Borrowers shall execute and deliver to such Lender a Revolving Note to evidence such Lender’s Revolving Loans, in the principal amount equal to the amount of such Lender’s Commitment with respect to the Revolving Loans.

     Section 2.3 Letters of Credit.

     (a) Agreement to Issue or Cause To Issue. Subject to the terms and conditions of this Agreement, and in reliance upon the representations and warranties of the Borrowers herein set forth, each Letter of Credit Issuer agrees to issue for the account of any of the Borrowers (whether one or more) one or more commercial/documentary and standby letters of credit (each a “Letter of Credit” and collectively, the “Letters of Credit”) in accordance with this Section 2.3 from time to time during the term of this Agreement. Except as otherwise provided in Section 2.3(f), all Letters of Credit shall be issued under the Tranche A Commitments.

     (b) Amounts; Outside Expiration Date. The Borrowers shall not have the right to request any Letter of Credit at any time if: (i) the maximum face amount of the requested Letter of Credit is greater than the Unused Letter of Credit Subfacility at such time or, with respect to any IDRB Letter of Credit, issuance thereof would cause the aggregate undrawn amount of all outstanding IDRB Letters of Credit to exceed $20,000,000; (ii) after taking into account the maximum undrawn amount of the requested Letter of Credit (provided that the requesting Borrower shall, to the

Loan And Security Agreement — Page 52

Administrative Agent’s satisfaction, have made provision for all commissions, fees, and charges due from such Borrower in connection with the opening of the requested Letter of Credit), such amount would exceed the Availability at such time; or (iii) such Letter of Credit has an expiration date later than five (5) Business Days prior to the Stated Termination Date or more than twelve (12) calendar months from the date of issuance for standby letters of credit and six (6) calendar months from the date of issuance for commercial or documentary letters of credit.

     (c) Other Conditions. In addition to being subject to the satisfaction of the applicable conditions precedent contained in Article 10, the issuance of any Letter of Credit is subject to the following conditions precedent having been satisfied in a manner satisfactory to the Administrative Agent:

     (i) The Borrowers shall have delivered to the Letter of Credit Issuer, at such times and in such manner as the Letter of Credit Issuer may prescribe, an application in form and substance satisfactory to the Letter of Credit Issuer and satisfactory to the Administrative Agent for the issuance of the Letter of Credit and such other documents as may be required pursuant to the terms thereof, and the form and terms of the proposed Letter of Credit shall be satisfactory to the Administrative Agent and the Letter of Credit Issuer (provided that in the event any term of such application or any other document is inconsistent with the terms of this Agreement and the Letter of Credit Issuer and the Administrative Agent are the same Person, then the terms of this Agreement shall be controlling); and

     (ii) As of the date of issuance, no order of any court, arbitrator, or Governmental Authority shall purport by its terms to enjoin or restrain banks generally from issuing letters of credit of the type and in the amount of the proposed Letter of Credit, and no law, rule, or regulation applicable to banks generally and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over banks generally shall prohibit, or request that the Letter of Credit Issuer refrain from, the issuance of letters of credit generally or the issuance of such proposed Letter of Credit.

(d) Issuance of Letters of Credit.

     (i) Request for Issuance. Any Borrower that wishes to cause the issuance of a Letter of Credit shall give the Administrative Agent at least three (3) Business Days prior written notice of the proposed date of issuance of such Letter of Credit. Such notice shall be irrevocable and shall specify the original amount of the Letter of Credit requested, the effective date (which date shall be a Business Day) of issuance of such requested Letter of Credit, whether such Letter of Credit may be drawn in a single or in partial draws, the date on which such requested Letter of Credit is to expire (which date shall be a Business Day), the purpose for which such Letter of Credit is to be issued, and the beneficiary of the requested Letter of Credit, and in addition shall include as an attachment the proposed form of any requested Letter of Credit.

Loan And Security Agreement — Page 53

     (ii) Responsibilities of the Administrative Agent; Issuance. The Administrative Agent shall determine, as of the Business Day immediately preceding the requested effective date of issuance of the Letter of Credit set forth in the notice from a Borrower pursuant to Section 2.3(d)(i), (A) the amount of the Unused Letter of Credit Subfacility and (B) the Availability as of such date. If the amount of the requested Letter of Credit is not greater than the Unused Letter of Credit Subfacility, so long as the other conditions required by this Agreement are met, the Letter of Credit Issuer shall issue the requested Letter of Credit on such requested effective date of issuance.

     (iii) Notice of Issuance. On each Settlement Date, the Administrative Agent shall give notice to each Lender of the issuance of all Letters of Credit issued since the last Settlement Date.

     (iv) Extensions and Amendments. No Letter of Credit shall be extended or amended unless the requirements of this Section 2.3 are met as though a new Letter of Credit were being requested and issued. With respect to any Letter of Credit which contains any “evergreen” or automatic renewal provision, each Lender shall be deemed to have consented to any such extension or renewal unless any such Lender shall have provided to the Administrative Agent, not less than thirty (30) days prior to the last date on which the Letter of Credit Issuer can in accordance with the terms of the applicable Letter of Credit decline to extend or renew such Letter of Credit, written notice that it declines to consent to any such extension or renewal; provided, that if all of the requirements of this Section 2.3 are met and no Default or Event of Default exists, no Lender shall decline to consent to any such extension or renewal.

(e) Payments Pursuant to Letters of Credit.

     (i) Payment of Letter of Credit Obligations. The Borrower for whose account any Letter of Credit is issued agrees to reimburse the Letter of Credit Issuer for any draw under any such Letter of Credit, and to pay the Letter of Credit Issuer the amount of all other obligations and other amounts payable to the Letter of Credit Issuer under or in connection with any Letter of Credit when due, irrespective of any claim, set-off, defense, or other right which such Borrower may have at any time against the Letter of Credit Issuer or any other Person. If any IDRB Letter of Credit is fully drawn, to the extent the Letter of Credit Issuer is not subrogated to the rights of the trustee of the industrial development revenue bonds with respect thereto, upon the request of the Agents the applicable Borrowers (within thirty (30) days following such request after such drawing occurs to make any IDRB Letter of Credit fully drawn and the trustee has released its liens in such property) will grant to the Collateral Agent, as additional security for the Obligations, a Lien on all of the real and personal property which secure the industrial development revenue bond for which such IDRB Letter of Credit was issued.

Loan And Security Agreement — Page 54

     (ii) Revolving Loans to Satisfy Reimbursement Obligations. Each drawing under any Letter of Credit shall constitute a request by the applicable Borrower to the Administrative Agent for a Borrowing of a Base Rate Revolving Loan in the amount of such drawing. The Funding Date with respect to such Borrowing shall be the date of such drawing. In the event that the Letter of Credit Issuer of any Letter of Credit honors a draw under such Letter of Credit and the Borrower for whose account such Letter of Credit was issued shall not have repaid such amount to the Letter of Credit Issuer of such Letter of Credit pursuant to Section 2.3(e)(i), the Administrative Agent shall, upon receiving notice of such failure, notify each Tranche A Lender of such failure, and each Tranche A Lender shall unconditionally pay to the Administrative Agent, for the account of the Letter of Credit Issuer or the Administrative Agent, as applicable, as and when provided herein below, an amount equal to such Tranche A Lender’s Pro Rata Share of the amount of such payment in Dollars and in same day funds. If the Administrative Agent so notifies the Tranche A Lenders prior to 11:00 a.m. (New York, New York time) on any Business Day, each Tranche A Lender shall make available to the Administrative Agent the amount of such payment, as provided in the immediately preceding sentence, on such Business Day. Such amounts paid by the Tranche A Lenders to the Administrative Agent shall constitute Tranche A Revolving Loans which shall be deemed to have been requested by such Borrower pursuant to Section 2.2 and made as provided by Section 4.5.

(f) Participations.

     (i) Purchase of Participations. Immediately upon issuance of any Letter of Credit in accordance with Section 2.3(d), each Tranche A Lender shall be deemed to have irrevocably and unconditionally purchased and received without recourse or warranty, an undivided interest and participation equal to such Tranche A Lender’s Pro Rata Share of the face amount of such Letter of Credit (including all obligations of the Borrower for whose account such Letter of Credit was issued and any security therefor or guaranty pertaining thereto). Notwithstanding the foregoing, if any Letters of Credit are outstanding upon the termination of the Commitments, to the extent the Maximum Tranche A-1 Revolver Amount exceeds (immediately prior to such termination) the Tranche A-1 Revolving Loans (the “Excess Amount”), upon such termination, the Tranche A Lenders shall be deemed to have sold to each Tranche A-1 Lender, and each Tranche A-1 Lender shall be deemed unconditionally and irrevocably to have so purchased from the Tranche A Lenders, without recourse or warranty, an undivided interest and participation in each outstanding Letter of Credit, to the extent of such Tranche A-1 Lender’s Tranche A-1 Pro Rata Share in such Excess Amount.

     (ii) Sharing of Reimbursement Obligation Payments. Whenever the Administrative Agent receives a payment from a Borrower on account of reimbursement obligations in respect of a Letter of Credit as to which the Administrative Agent has previously received for the account of the Letter of

Loan And Security Agreement — Page 55

Credit Issuer thereof payment from a Lender pursuant to Section 2.3(e)(ii), the Administrative Agent shall promptly pay to such Lender such Lender’s Pro Rata Share of such payment from such Borrower in Dollars. Each such payment shall be made by the Administrative Agent on the Business Day on which the Administrative Agent receives immediately available funds paid to such Person pursuant to the immediately preceding sentence, if received prior to 3:00 p.m. (New York, New York time) on such Business Day and otherwise on the next succeeding Business Day.

     (iii) Documentation. Upon the request of any Lender, the Administrative Agent shall furnish to such Lender copies of any Letter of Credit, reimbursement agreement executed in connection therewith, application for any Letter of Credit, and such other documentation as may reasonably be requested by such Lender.

     (iv) Obligations Irrevocable. The obligation of each Lender to make payments to the Administrative Agent, for the account of the Lenders, with respect to any Letter of Credit and the obligation of the Borrowers to make payments to the Administrative Agent, for the account of the Lenders, with respect to any Letter of Credit shall be irrevocable, not subject to any qualification or exception whatsoever, including any of the following circumstances:

     (A) any lack of validity or enforceability of this Agreement or any of the other Loan Documents;

     (B) the existence of any claim, set-off, defense, or other right which such Borrower may have at any time against a beneficiary named in a Letter of Credit or any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), any Lender, the Administrative Agent, the Letter of Credit Issuer, or any other Person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein, or any unrelated transactions (including any underlying transactions between such Borrower or any other Person and the beneficiary named in any Letter of Credit);

     (C) any draft, certificate, or any other document presented under any 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;

     (D) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Loan Documents; or

     (E) the occurrence of any Default or Event of Default.

     (g) Recovery or Avoidance of Payments. In the event any payment by or on behalf of any Borrower received by the Administrative Agent with respect to any Letter

Loan And Security Agreement — Page 56

of Credit and distributed by the Administrative Agent to the Lenders on account of their respective participations therein is thereafter set aside, avoided, or recovered from the Administrative Agent in connection with any receivership, liquidation, or bankruptcy proceeding, the Lenders shall, upon demand by the Administrative Agent, pay to the Administrative Agent their respective Pro Rata Shares of such amount set aside, avoided, or recovered, together with interest at the rate required to be paid by the Administrative Agent upon the amount required to be repaid by it.

     (h) Exoneration; Power of Attorney.

     (i) Assumption of Risk by the Borrowers. As among the Borrowers, the Lenders, and the Administrative Agent, the Borrowers assume all risks of the acts and omissions of, or misuse of any of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, the Lenders and the Administrative Agent acting in good faith shall not be responsible for: (A) the form, validity, sufficiency, accuracy, genuineness, or legal effect of any document submitted by any Person that appears on its face to be in order in connection with the application for and issuance of and presentation of drafts with respect to any of the Letters of Credit, even if it should prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent, or forged; (B) the validity or sufficiency of any instrument that appears on its face to be in order transferring or assigning or purporting to transfer or assign any 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; (C) the failure of the beneficiary of any Letter of Credit to comply duly with conditions required in order to draw upon such Letter of Credit; (D) errors, omissions, interruptions, or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, or otherwise, whether or not they be in cipher; (E) errors in interpretation of technical terms; (F) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit or of the proceeds thereof; (G) the misapplication by the beneficiary of any Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (H) any consequences arising from causes beyond the control of the Lenders or the Administrative Agent, including any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Authority; provided that, subject to any application for a Letter of Credit between the applicable Borrower and the Letter of Credit Issuer, the applicable Borrower shall retain any claim it may have, if any, against the Letter of Credit Issuer with respect to any actual damages, but excluding any consequential damages, suffered by such Borrower which were directly caused by the Letter of Credit Issuer’s willful misconduct or gross negligence. None of the foregoing shall affect, impair, or prevent the vesting of any rights or powers of the Administrative Agent or any Lender under this Section 2.3(h).

     (ii) Exoneration. In furtherance and extension, and not in limitation, of the specific provisions set forth above, any action taken or omitted by the Administrative Agent or any Lender under or in connection with any of the

Loan And Security Agreement — Page 57

Letters of Credit or any related certificates, in the absence of gross negligence or willful misconduct, shall not put the Administrative Agent or any Lender under any resulting liability to any Borrower or relieve any Borrower of any of its obligations hereunder to any such Person.

     (iii) Indemnification by Lenders. The Tranche A Lenders (and, to the extent of their participations, if any, pursuant to Section 2.3(f), the Tranche A-1 Lenders) agree to indemnify the Letter of Credit Issuer (to the extent not reimbursed by the Borrowers and without limiting the obligations of the Borrowers hereunder) ratably in accordance with their respective Pro Rata Shares, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including Attorney Costs), or disbursements of any kind and nature whatsoever that may be imposed on, incurred by, or asserted against the Letter of Credit Issuer in any way relating to or arising out of any Letter of Credit or the transactions contemplated thereby or any action taken or omitted by the Letter of Credit Issuer under any Letter of Credit or any Loan Document in connection therewith; provided that no Lender shall be liable for any of the foregoing to the extent it arises from the gross negligence or willful misconduct of the Person to be indemnified. Without limitation of the foregoing, each Tranche A Lender (and, to the extent aforesaid, each Tranche A-1 Lender) agrees to reimburse the Letter of Credit Issuer promptly upon demand for its Pro Rata Share of any costs or expenses payable by any Borrower to the Letter of Credit Issuer, to the extent that the Letter of Credit Issuer is not promptly reimbursed for such costs and expenses by a Borrower. The agreement contained in this Section shall survive payment in full of all Obligations.

     (iv) Account Party. Each Borrower hereby authorizes and directs the Letter of Credit Issuer to name any Borrower as the “Account Party” in each Letter of Credit issued pursuant to this Agreement and to deliver to the Collateral Agent all instruments, documents, and other writings and property received by the Letter of Credit Issuer pursuant to each such Letter of Credit, and to accept and rely upon the Collateral Agent’s instructions and agreements with respect to all matters arising in connection with each such Letter of Credit or the application therefor.

     (i) Supporting Letter of Credit; Cash Collateral. If, notwithstanding the provisions of Section 2.3(b) and Article XII any Letter of Credit is outstanding upon the termination of this Agreement or after an Event of Default shall occur and be continuing, then (i) upon such termination or (ii) upon the request of the Agents after an Event of Default, the Borrower for whose account such Letter of Credit was issued shall deposit with the Collateral Agent, for the ratable benefit of the Letter of Credit Issuer and the Lenders, with respect to each such Letter of Credit then outstanding, as the Majority Lenders in their discretion shall specify, either (x) a standby letter of credit (a “Supporting Letter of Credit”) in form and substance satisfactory to the Agents, issued by an issuer satisfactory to the Agents in an amount equal to the greatest amount for which such Letter of Credit may be drawn plus any fees and expenses associated with such Letter of Credit, under which Supporting Letter of Credit the Collateral Agent is entitled

Loan And Security Agreement — Page 58

to draw amounts necessary to reimburse the Letter of Credit Issuer and the Lenders for payments to be made by the Letter of Credit Issuer and the Lenders under such Letter of Credit and any fees and expenses associated with such Letter of Credit, or (y) cash in amounts necessary to reimburse the Letter of Credit Issuer and the Lenders for payments made by the Letter of Credit Issuer or the Lenders under such Letter of Credit and any fees and expenses associated with such Letter of Credit. Such Supporting Letter of Credit or deposit of cash shall be held by the Collateral Agent, for the ratable benefit of the Letter of Credit Issuer and the Lenders, as security for, and to provide for the payment of, the aggregate undrawn amount of such Letters of Credit remaining outstanding.

     (j) Resignation or Removal of the Letter of Credit Issuer. A Letter of Credit Issuer may resign at any time by giving 30 days’ prior written notice to the Agents, the Lenders and the Borrowers, and may be removed at any time by the Borrowers by notice to such Letter of Credit Issuer, the Agents and the Lenders. Upon the acceptance of any appointment as such Letter of Credit Issuer hereunder by a Lender that shall agree to serve as a successor Letter of Credit Issuer, such successor shall succeed to and become vested with all the interests, rights and obligations of the retiring Letter of Credit Issuer. At the time such removal or resignation shall become effective, the Borrowers shall pay all accrued and unpaid fees owing to the retiring Letter of Credit Issuer in its capacity as such. The acceptance of any appointment as a Letter of Credit Issuer hereunder by a successor Lender shall be evidenced by an agreement entered into by such successor, in a form satisfactory to the Borrowers and the Agents, and, from and after the effective date of such agreement, (i) such successor Lender shall have all the rights and obligations of the previous Letter of Credit Issuer under this Agreement and the other Loan Documents and (ii) references herein and in the other Loan Documents to the term “Letter of Credit Issuer” shall be deemed to refer to such successor or to any applicable previous Letter of Credit Issuer, or to such successor and all applicable previous Letter of Credit Issuers, as the context shall require. After the resignation or removal of a Letter of Credit Issuer hereunder, the retiring Letter of Credit Issuer shall remain a party hereto and shall continue to have all the rights and obligations of an Letter of Credit Issuer under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such resignation or removal, but shall not be required to issue additional Letters of Credit.

     (k) Additional Letter of Credit Issuers. The Borrowers may, at any time and from time to time with the consent of the Administrative Agent (which consent shall not be unreasonably withheld or delayed) and such Lender, designate one or more additional Lenders to act as an issuer of Letters of Credit under the terms of this Agreement. Any Lender designated as an issuer of Letters of Credit pursuant to this paragraph (k) shall be deemed to be a “Letter of Credit Issuer” (in addition to being a Lender) in respect of Letters of Credit issued or to be issued by such Lender, and, with respect to such Letters of Credit, such term shall thereafter apply to the other Letter of Credit Issuer and such Lender.

          Section 2.4 Bank Products. Any Borrower may request and either Bank or any other Lender requested by the Borrower, or any of their respective Affiliates, may, in their sole and absolute discretion, arrange for such Borrower to obtain from the Banks or, such Lender, or

Loan And Security Agreement — Page 59

their respective Affiliates, Bank Products, although no Borrower is required to do so. To the extent Bank Products are provided by an Affiliate of a Bank, or such Lender, each Borrower agrees to indemnify and hold such Bank, and the Lenders harmless from any and all costs and obligations now or hereafter incurred by such Bank, or any of the Lenders which arise from the indemnity given by such Bank to its Affiliates related to such Bank Products. The agreement contained in this Section shall survive termination of this Agreement. Each Borrower acknowledges and agrees that the obtaining of Bank Products from a Bank, a Lender or their Affiliates (a) is in the sole and absolute discretion of such Bank, such Lender and their respective Affiliates and (b) is subject to all rules and regulations of such Bank, such Lender, and their respective Affiliates.

ARTICLE 3

INTEREST AND FEES

     Section 3.1 Interest.

     (a) Interest Rates. All outstanding Obligations shall bear interest on the unpaid principal amount thereof (including, to the extent permitted by law, on accrued interest thereon not paid when due) from the date made until paid in full in cash at a rate determined by reference to the Base Rate or the LIBOR Rate, as applicable, and this Section 3.1(a), but not to exceed the Maximum Rate. Any of the Revolving Loans may be converted into, or continued as, Base Rate Revolving Loans or LIBOR Rate Revolving Loans, subject to, and in the manner provided in, Section 3.2. If at any time Revolving Loans are outstanding with respect to which notice has not been delivered to the Administrative Agent in accordance with the terms of this Agreement specifying the basis for determining the interest rate applicable thereto, then those Revolving Loans shall be Base Rate Revolving Loans and shall bear interest at a rate determined by reference to the Base Rate until notice to the contrary has been given to the Administrative Agent in accordance with this Agreement and such notice has become effective. Except as otherwise provided herein, the outstanding Obligations shall bear interest as follows:

     (i) for all Base Rate Revolving Loans and other Obligations (other than LIBOR Rate Revolving Loans) at a fluctuating per annum rate equal to the lesser of (A) the Base Rate plus the Applicable Margin or (B) the Maximum Rate; and

     (ii) for all LIBOR Rate Revolving Loans at a per annum rate equal to the lesser of (A) the LIBOR Rate plus the Applicable Margin or (B) the Maximum Rate.

Each change in the Base Rate shall be reflected in the interest rate described in clause (i) preceding as of the effective date of such change. Subject to Section 3.3, all interest charges shall be computed on the basis of a year of 360 days and actual days elapsed (which results in more interest being paid than if computed on the basis of a 365-day year), except that interest computed at the Base Rate (when the Base Rate is determined

Loan And Security Agreement — Page 60

by reference to the Prime Rate) shall be computed on the basis of a year of 365 or 366 days, as applicable.

     (b) Default Rate. During the existence of any Default or Event of Default if the Administrative Agent or the Majority Lenders in their discretion so elect, then, while such Default or Event of Default exists, any past due Obligations shall bear interest at a rate per annum equal to the lesser of (i) the Default Rate applicable thereto or (ii) the Maximum Rate.

     (c) Interest Periods. After giving effect to any Borrowing, conversion, or continuation of any LIBOR Rate Revolving Loan, there may not be more than twelve (12) different Interest Periods in effect hereunder; provided that in its discretion the Administrative Agent may agree to permit the Borrowers to maintain more than twelve (12) different Interest Periods in effect hereunder.

Section 3.2 Conversion and Continuation Elections.

     (a) A Borrower may, upon irrevocable written notice to the Administrative Agent in accordance with Section 3.2(b):

     (i) elect, as of any Business Day, in the case of Base Rate Revolving Loans to convert any such Revolving Loans (or any part thereof in an amount not less than $5,000,000, or that is in an integral multiple of $1,000,000 in excess thereof) into LIBOR Rate Revolving Loans; or

     (ii) elect, as of the last day of the applicable Interest Period, to convert any LIBOR Rate Revolving Loans having Interest Periods expiring on such day to Base Rate Revolving Loans or to continue any LIBOR Rate Revolving Loans having Interest Periods expiring on such day (or any part thereof in an amount not less than $5,000,000, or that is in an integral multiple of $1,000,000 in excess thereof) as LIBOR Rate Revolving Loans;

provided that if at any time the aggregate amount of LIBOR Rate Revolving Loans in respect of any Borrowing is reduced, by payment, prepayment, or conversion of part thereof to be less than $5,000,000, such LIBOR Rate Revolving Loans shall, effective as of the expiration date of the applicable Interest Period, automatically convert into Base Rate Revolving Loans.

     (b) The Borrowers shall deliver a notice of conversion/continuation in the form of Exhibit D (a “Notice of Conversion/Continuation”) to be received by the Administrative Agent not later than 12:00 noon (New York, New York time) at least three (3) Business Days in advance of the Conversion/Continuation Date, if the Revolving Loans are to be converted into or continued as LIBOR Rate Revolving Loans and specifying:

     (i) the proposed Conversion/Continuation Date;

Loan And Security Agreement — Page 61

     (ii) the Revolving Loans and the aggregate amount of such Revolving Loans to be converted or renewed;

     (iii) the type of Revolving Loans resulting from the proposed conversion or continuation; and

     (iv) the duration of the requested Interest Period.

     (c) If upon the expiration of any Interest Period applicable to LIBOR Rate Revolving Loans, the Borrowers have failed to timely select a new Interest Period to be applicable to such LIBOR Rate Revolving Loans or if any Default or Event of Default then exists, the Borrowers shall be deemed to have elected to convert such LIBOR Rate Revolving Loans into Base Rate Revolving Loans effective as of the expiration date of such Interest Period.

     (d) The Administrative Agent will promptly notify each Lender of its receipt of a Notice of Conversion/Continuation. All conversions and continuations shall be made ratably according to the respective outstanding principal amounts of the Revolving Loans with respect to which the Notice of Conversion/Continuation was given held by each Lender.

     (e) During the existence of a Default or Event of Default, the Borrowers may not elect to have a Revolving Loan converted into or continued as a LIBOR Rate Revolving Loan.

          Section 3.3 Maximum Interest Rate. If the Interest Rate, absent the limitation set forth in this Section 3.3, would have exceeded the Maximum Rate, then the Interest Rate shall be the Maximum Rate, and, if in the future, the Interest Rate would otherwise be less than the Maximum Rate, then the Interest Rate shall remain at the Maximum Rate until such time as the amount of interest paid hereunder equals the amount of interest which would have been paid if the same had not been limited by the Maximum Rate. In the event that, upon payment in full of the Obligations, the total amount of interest paid or accrued under the terms of this Agreement is less than the total amount of interest which would, but for this Section 3.3, have been paid or accrued if the Interest Rate otherwise set forth in this Agreement had at all times been in effect, then the Borrowers shall, to the extent permitted by applicable law, pay the Administrative Agent, for the account of the Lenders, an amount equal to the excess of (a) the lesser of (i) the amount of interest which would have been paid or accrued if the Maximum Rate had, at all times, been in effect or (ii) the amount of interest which would have been paid or accrued had the interest rate otherwise set forth in this Agreement, at all times, been in effect over (b) the amount of interest actually paid or accrued under this Agreement. Each Agent, each Lender, and each Borrower acknowledges, agrees, and declares that it is its intention to expressly comply with all Requirements of Law in respect of limitations on the amount or rate of interest that can legally be contracted for, charged, or received under or in connection with the Loan Documents. Notwithstanding anything to the contrary contained in any Loan Document (even if any such provision expressly declares that it controls all other provisions of the Loan Documents), in no contingency or event whatsoever shall the amount of interest (including the aggregate of all charges, fees, benefits, or other compensation which constitutes interest under any Requirement

Loan And Security Agreement — Page 62

of Law) under the Loan Documents paid by any Borrower, received by the Administrative Agent, the Letter of Credit Issuer, or any Lender, agreed to be paid by any Borrower, or requested or demanded to be paid by the Administrative Agent, the Letter of Credit Issuer, or any Lender, exceed the Maximum Rate, and all provisions of the Loan Documents in respect of the contracting for, charging, or receiving compensation for the use, forbearance, or detention of money shall be limited as provided by this Section 3.3. In the event any such interest is paid to the Administrative Agent, the Letter of Credit Issuer, or any Lender by the Borrowers, or any of them, in an amount or at a rate which would exceed the Maximum Rate, the Administrative Agent, the Letter of Credit Issuer, or such Lender, as the case may be, shall automatically apply such excess to any unpaid amount of the Obligations other than interest, in inverse order of maturity, or if the amount of such excess exceeds said unpaid amount, such excess shall be paid to the paying Borrowers or Borrower, as applicable. All interest paid, or agreed to be paid, by any Borrower, or taken, reserved, or received by the Administrative Agent, the Letter of Credit Issuer, or any Lender, shall be amortized, prorated, spread, and allocated in respect of the Obligations throughout the full term of this Agreement. Notwithstanding any provision contained in any of the Loan Documents, or in any other related documents executed pursuant hereto, neither the Administrative Agent, the Letter of Credit Issuer, nor any Lender shall ever be entitled to charge, receive, take, reserve, collect, or apply as interest any amount which, together with all other interest under the Loan Documents would result in a rate of interest under the Loan Documents in excess of the Maximum Rate and, in the event the Administrative Agent, the Letter of Credit Issuer, or any Lender ever charges, receives, takes, reserves, collects, or applies any amount in respect of the Borrowers, or any of them, that otherwise would, together with all other interest under the Loan Documents, 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 applicable Borrowers or Borrower. The Borrowers, the Agents, the Letter of Credit Issuer, and the Lenders shall, to the maximum extent permitted under any Requirement of Law, (A) characterize any non-principal payment as a standby fee, commitment fee, prepayment charge, delinquency charge, expense, or reimbursement for a third-party expense rather than as interest and (B) exclude prepayments, acceleration, and the effects thereof. Nothing in any Loan Document shall be construed or so operate as to require or obligate the Borrowers, or any of them, to pay any interest, fees, costs, or charges greater than is permitted by any Requirement of Law. Subject to the foregoing, the Borrowers hereby agree that the actual effective rate of interest from time to time existing under the Loan Documents, including all amounts agreed to by the Borrowers or charged or received by the Administrative Agent, the Letter of Credit Issuer, or the Lenders pursuant to and in accordance with the Loan Documents, which may be deemed to be interest under any Requirement of Law, shall be deemed to be a rate which is agreed to and stipulated by the Borrowers and the Lenders in accordance with Requirements of Law.

          Section 3.4 Unused Line Fee. Until the Revolving Loans have been paid in full and this Agreement terminated, the Borrowers agree to pay, on the last Business Day of each Fiscal Quarter and on the Termination Date, to the Administrative Agent, for the account of the Lenders of each Class, in accordance with their respective Pro Rata Shares, an unused line fee (the “Unused Line Fee”) equal to one-quarter of one percent (0.25%) multiplied by (i) as to the Tranche A Lenders, the amount by which the Maximum Tranche A Revolver Amount exceeded the sum of the average daily outstanding amount of the Tranche A Revolving Loans and the average daily undrawn face amount of all outstanding Letters of Credit during such Fiscal

Loan And Security Agreement — Page 63

Quarter or shorter period if calculated on the Termination Date or on the first such date following the Closing Date, and (ii) as to the Tranche A-1 Lenders, the amount by which the Maximum Tranche A-1 Revolver Amount exceeded the average daily outstanding amount of the Tranche A-1 Revolving Loans during such Fiscal Quarter or shorter period if calculated on the Termination Date or on the first such date following the Closing Date. Subject to Section 3.3, the Unused Line Fee shall be computed on the basis of a 360-day year for the actual number of days elapsed. For purposes of calculating the Unused Line Fee pursuant to this Section 3.4, (i) any payment received by the Administrative Agent (if received prior to 3:00 p.m. New York, New York time) shall be deemed to be credited to the Borrowers’ Loan Account on the date such payment is received by the Administrative Agent and (ii) outstanding Swingline Loans shall be deemed not to constitute Revolving Loans.

          Section 3.5 Letter of Credit Fee. The Borrowers agree to pay to the Administrative Agent, for the account of the Tranche A Lenders (and, to the extent then participating in Letters of Credit pursuant to Section 2.3(f), the Tranche A-1 Lenders), in accordance with their respective Pro Rata Shares, for each Letter of Credit, a fee (the “Letter of Credit Fee”) equal to the Letter of Credit Fee Percentage, or during the existence of any Default or Event of Default the Default Rate with respect to Letters of Credit, multiplied by the undrawn face amount of each Letter of Credit plus all out-of-pocket costs, fees, and expenses incurred by the Agents and the Letter of Credit Issuer in connection with the application for, processing of, issuance of, or amendment to any Letter of Credit. The Borrowers further agree to pay to each Letter of Credit Issuer, with respect to each Letter of Credit issued by such Letter of Credit Issuer, a “fronting fee” equal to one-eighth of one percent (0.125%) per annum of the daily aggregate amount of such Letter of Credit outstanding during the preceding Fiscal Quarter. The Letter of Credit Fee and the fronting fee shall be payable in arrears on the last day of each Fiscal Quarter and on the Termination Date. Subject to Section 3.3, the Letter of Credit Fee and the fronting fee shall be computed on the basis of a 360-day year for the actual number of days elapsed.

          Section 3.6 Other Fees. Holdings and the Borrowers agree to pay timely when due all other fees and expenses of the Agents as provided for in this Agreement, including, without limitation, the annual administration fee and the collateral agent fee, as set forth in the Fee Letter, at the times and in the amount, specified therein.

ARTICLE 4

PAYMENTS AND PREPAYMENTS

          Section 4.1 Revolving Loans. The Borrowers shall repay the outstanding principal balance of the Revolving Loans together with all other Obligations (other than contingent indemnification and expense reimbursement obligations for which no claim has been made), including all accrued but unpaid interest thereon, on the Termination Date. The Borrowers may prepay the Revolving Loans at any time, and reborrow subject to the terms of this Agreement; provided, however, that with respect to any LIBOR Rate Revolving Loans prepaid prior to the expiration date of the Interest Period applicable thereto, the Borrowers shall pay to the Administrative Agent, for the account of the Lenders, the amounts described in Section 5.4; provided further that only after all Tranche A Revolving Loans have been repaid in

Loan And Security Agreement — Page 64

full may the Borrowers voluntarily prepay Tranche A-1 Revolving Loans (other than in connection with a reduction in or termination of the Tranche A-1 Commitments pursuant to Section 4.2). In addition, and without limiting the generality of the foregoing, upon demand the Borrowers shall pay to the Administrative Agent, for the account of the Lenders, (a) the amount, if any and without duplication, by which the Aggregate Revolver Outstandings in respect of the Tranche A Commitments (less the aggregate amount of Pending Revolving Loans in respect of the Tranche A Commitments) exceeds the lesser of the Maximum Tranche A Revolver Amount and the Borrowing Base (without regard to the Incremental Availability), and/or (b) the amount, if any and without duplication, by which the aggregate outstanding amount of Tranche A-1 Revolving Loans exceeds the lesser of the Maximum Tranche A-1 Revolver Amount and the Incremental Availability, in each case, after giving effect to any reduction or increase, as applicable, to the applicable Commitments and the repayment, or conversion, of Tranche A-1 Revolving Loans pursuant to Section 4.2. Accrued interest on the Revolving Loans shall be due and payable in arrears (a) in the case of Base Rate Revolving Loans, on the last Business Day of each Fiscal Quarter and on the Termination Date and (b) in the case of LIBOR Rate Revolving Loans and with respect to each such Revolving Loan (i) on each LIBOR Interest Payment Date with respect thereto and (ii) on the Termination Date.

          Section 4.2 Reduction of Commitments; Termination of Facility.

     (a) The Borrowers may reduce either the Maximum Tranche A Revolver Amount or the Maximum Tranche A-1 Revolver Amount (and the corresponding Commitments) to an amount as may be designated by the Borrowers at any time effective upon five (5) Business Days prior written notice thereof to the Administrative Agent and the Lenders, provided that (i) any such reduction that is a partial reduction shall be permanent and shall be in an amount of at least $5,000,000 or any integral multiple of $1,000,000 in excess thereof, shall not cause (A) the Maximum Tranche A Revolver Amount or the Borrowing Base (without regard to the Incremental Availability) to be less than the Aggregate Revolver Outstandings in respect of the Tranche A Commitments or (B) the Maximum Tranche A-1 Revolver Amount to be less than the aggregate outstanding amount of Tranche A-1 Revolving Loans, in each case at the time such reduction is to be effective, and after giving effect to any reduction or increase, as applicable, to the applicable Commitments and repayment, or conversion, of Tranche A-1 Revolving Loans pursuant to Section 4.2(b), and (ii) the Borrowers may not voluntarily reduce the Maximum Tranche A-1 Revolver Amount if after giving effect thereto Availability (without regard to the Incremental Availability) would be less than $50,000,000. Notwithstanding the foregoing, on the date that is six months after the Closing Date, the Maximum Tranche A-1 Revolver Amount (unless previously terminated or reduced below $25,000,000) shall be permanently reduced to $25,000,000, and (unless such loans are to remain outstanding as Tranche A Revolving Loans pursuant to Section 4.2(b)) the Borrowers shall prepay all then outstanding Tranche A-1 Revolving Loans (together with accrued and unpaid interest) to the extent in excess of the Maximum Tranche A-1 Revolver Amount as so reduced.

     (b) Upon any reduction or termination of the Maximum Tranche A-1 Revolver Amount pursuant to this Section 4.2, unless all the Commitments are being terminated, then, immediately upon such reduction or termination, (1) the aggregate

Loan And Security Agreement — Page 65

Maximum Tranche A Revolver Amount (and the corresponding Commitments) shall automatically be increased by the amount of the reduction to (or, in the case of a termination, by the amount of (immediately prior to such termination)) the Maximum Tranche A-1 Revolver Amount, with the amount of such increase being allocated to each Tranche A-1 Lender in accordance with its Tranche A-1 Pro Rata Share (prior to such reduction or termination) and (2) the outstanding Tranche A-1 Revolving Loans shall automatically be converted to Tranche A Revolving Loans. Upon any such reduction and corresponding increase, the Administrative Agent may take such action as it reasonably deems necessary to ensure that the outstanding Revolving Loans are held by the Lenders in accordance with their new Pro Rata Shares, including requiring that outstanding LIBOR Rate Revolving Loans be converted to or prepaid with the proceeds of Base Rate Revolving Loans, all subject to Section 5.4 but otherwise without premium or penalty.

     (c) The Borrowers may terminate this Agreement upon at least five (5) days prior written notice thereof to the Administrative Agent and the Lenders (which notice shall be irrevocable; provided that if a notice is conditioned upon the effectiveness of other credit facilities or any other incurrence or issuance of debt or equity, a sale of assets by the Borrowers or a Change of Control transaction, such notice may be revoked by the Borrowers (by notice to the Administrative Agent) if such credit facilities do not become effective or such other transaction does not close), upon (i) the payment in full of all outstanding Revolving Loans, together with accrued and unpaid interest thereon, and the cancellation and return of all outstanding Letters of Credit (or, alternatively, with respect to each such Letter of Credit, the furnishing to the Collateral Agent, for the benefit of the Lenders, of a Supporting Letter of Credit or cash deposit, in each case in amounts and in the manner required by Section 2.3(i)), (ii) with respect to any LIBOR Rate Revolving Loans prepaid in connection with such termination prior to the expiration date of the Interest Period applicable thereto, the payment of the amounts described in Section 5.4, and (iii) the payment in full in cash of all other Obligations (other than contingent indemnification and expense reimbursement obligations for which no claim has been made) together with accrued and unpaid interest thereon.

     Section 4.3 [Reserved]

     Section 4.4 Payments by the Borrowers.

     (a) All payments to be made by the Borrowers shall be made without set-off, recoupment, or counterclaim. Except as otherwise expressly provided herein, all payments by the Borrowers shall be made to the Administrative Agent for the account of the Lenders at the Administrative Agent’s address set forth in Section 15.8, and shall be made in Dollars and in immediately available funds, no later than 3:00 p.m. (New York time) on the date specified herein. Any payment received by the Administrative Agent later than 3:00 p.m. (New York, New York time) may be deemed, in the Administrative Agent’s sole discretion, to have been received on the following Business Day and any applicable interest or fee shall continue to accrue.

     (b) Subject to the provisions set forth in the definition of Interest Period, whenever any payment is due on a day other than a Business Day, such payment shall be

Loan And Security Agreement — Page 66

due on the following Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be.

     (c) Unless the Administrative Agent receives notice from the Borrowers prior to the date on which any payment is due to the Lenders that the Borrowers will not make such payment in full as and when required, the Administrative Agent may assume that the Borrowers have made such payment in full to the Administrative Agent on such date in immediately available funds and the Administrative Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrowers have not made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent on demand such amount distributed to such Lender, together with interest thereon at the Federal Funds Rate for each day from the date such amount is distributed to such Lender until the date repaid.

          Section 4.5 Payments as Revolving Loans.

     (a) All payments of principal, interest, reimbursement obligations in connection with Letters of Credit, fees, premiums, and other sums payable hereunder, including, without limitation, all reimbursement for expenses pursuant to Section 15.7, may, at the option of the Administrative Agent, in its sole discretion, subject only to the terms of this Section 4.5, be paid from the proceeds of Revolving Loans made hereunder, whether made following a request by the Borrowers, or any of them, pursuant to Section 2.2 or a deemed request as provided in this Section 4.5. Upon the occurrence and during the continuance of an Event of Default, the Borrowers hereby irrevocably authorize the Administrative Agent to charge the Loan Account for the purpose of paying principal, interest, reimbursement obligations in connection with Letters of Credit, fees, premiums, and other sums payable hereunder, including, without limitation, reimbursing expenses pursuant to Section 15.7, and agree that all such amounts charged shall constitute Revolving Loans (including Swingline Loans and Agent Advances) and that all such Revolving Loans so made shall be deemed to have been requested pursuant to Section 2.2 (except Borrowers shall not be deemed to make any representation or warranty pursuant to Section 10.2(a) with respect to such Revolving Loans).

     (b) Notwithstanding the provisions of paragraph (a) above, only after all Tranche A Revolving Loans have been repaid in full may the Borrowers voluntarily prepay Tranche A-1 Revolving Loans; provided, however, that any such prepayment shall not reduce or terminate the Maximum Tranche A-1 Revolver Amount. In addition, the Borrowers may also repay the Tranche A-1 Revolving Loans in connection with any reduction or termination of the Maximum Tranche A-1 Revolver Amount in accordance with the provisions of Section 4.2 hereof.

          Section 4.6 Apportionment, Application, and Reversal of Payments. Except as otherwise expressly provided by this Agreement and the Intercreditor Agreement, aggregate principal and interest payments shall be apportioned ratably among the Lenders of each Class (according to the unpaid principal balance of the Revolving Loans to which such payments relate held by each Lender) and payments of the fees shall, as applicable, be apportioned ratably among

Loan And Security Agreement — Page 67

the Lenders. All payments shall be remitted to the Administrative Agent and all such payments not relating to principal or interest of specific Revolving Loans, or not constituting payment of specific fees, and all proceeds of any Borrower’s Accounts or any other Collateral received by the Administrative Agent, shall be applied, ratably, subject to the provisions of this Agreement and the Intercreditor Agreement, first, to pay any fees, indemnities, or expense reimbursements, then due to the Agents from the Borrowers (other than in respect of Bank Products); second, to pay any fees or expense reimbursements then due to the Tranche A Lenders from the Borrowers (other than in respect of Bank Products); third, to pay interest due in respect of the Tranche A Revolving Loans; fourth, to pay or prepay principal of the Swingline Loans and the Agent Advances; fifth, to the payment in full of Unfunded Advances/Participations; sixth, to pay or prepay principal of the Tranche A Revolving Loans (other than Unfunded Advances/Participations, the Swingline Loans and the Agent Advances), and unpaid reimbursement obligations in respect of Letters of Credit (other than Unfunded Advances/Participations and other than those in which the Tranche A-1 Lenders participate); seventh, to pay any fees or expense reimbursements then due to the Tranche A-1 Lenders from the Borrowers; eighth, to pay interest due in respect of the Tranche A-1 Revolving Loans; ninth, to pay or prepay principal of the Tranche A-1 Revolving Loans, and unpaid reimbursement obligations in respect of Letters of Credit in which the Tranche A-1 Lenders participate (other than Unfunded Advances/Participations); and tenth, to the payment of any other Obligation due to an Agent or any Lender by the Borrowers (including in respect of Bank Products). Notwithstanding anything to the contrary contained in this Agreement, unless so directed by a Borrower, or unless an Event of Default is in existence, neither the Administrative Agent nor any Lender shall apply any payment which it receives to any LIBOR Rate Revolving Loan except (a) on the expiration date of the Interest Period applicable to any such LIBOR Rate Revolving Loan, or (b) in the event, and only to the extent, that there are no outstanding Base Rate Revolving Loans. The Administrative Agent shall promptly distribute to each Lender, pursuant to the applicable wire transfer instructions received from each Lender in writing, such funds as it may be entitled to receive, subject to a Settlement delay as provided for in Section 2.2(j). The Administrative Agent and the Lenders shall have the continuing and exclusive right to apply and reverse and reapply any and all such proceeds and payments to any portion of the Obligations.

          Section 4.7 Indemnity for Returned Payments. If after receipt of any payment which is applied to the payment of all or any part of the Obligations, an Agent or any Lender is for any reason compelled to surrender such payment or proceeds to any Person because such payment or application of proceeds is invalidated, declared fraudulent, set aside, determined to be void or voidable as a preference, impermissible set-off, or a diversion of trust funds, or for any other reason, then the Obligations or part thereof intended to be satisfied shall be revived and continued and this Agreement shall continue in full force as if such payment or proceeds had not been received by such Agent or such Lender and the Borrowers shall be liable to pay to such Agent and the Lenders, and each Borrower hereby indemnifies each Agent and the Lenders and holds the Agents and the Lenders harmless for the amount of such payment or proceeds surrendered. The provisions of this Section 4.7 shall be and remain effective notwithstanding any contrary action which may have been taken by an Agent or any Lender in reliance upon such payment or application of proceeds, and any such contrary action so taken shall be without prejudice to the Agents’ and the Lenders’ rights under this Agreement and shall be deemed to have been conditioned upon such payment or application of proceeds having become final and irrevocable. The provisions of this Section 4.7 shall survive the termination of this Agreement.

Loan And Security Agreement — Page 68

          Section 4.8 The Agents’ and the Lenders’ Books and Records; Monthly Statements. The Borrowers agree that, each Agent’s and each Lender’s books and records showing the Obligations and the transactions pursuant to this Agreement and the other Loan Documents shall be admissible in any action or proceeding arising therefrom, and shall constitute presumptive proof thereof, irrespective of whether any Obligation is also evidenced by a promissory note or other instrument. The Administrative Agent will provide to the Borrowers a monthly statement of Revolving Loans, payments, and other transactions pursuant to this Agreement. Such statement shall be deemed correct, accurate, and binding on the Borrowers and an account stated (except for reversals and reapplications of payments made as provided in Section 4.6 and corrections of errors discovered by the Administrative Agent), unless a Borrower notifies the Administrative Agent in writing to the contrary within thirty (30) days after such statement is rendered. In the event a timely written notice of objections is given by a Borrower, only the items to which exception is expressly made will be considered to be disputed.

ARTICLE 5

TAXES, YIELD PROTECTION, AND ILLEGALITY

          Section 5.1 Taxes.

     (a) Any and all payments by or on behalf of the Borrowers, or any of them, to an Agent or any Lender under this Agreement and any other Loan Document shall be made free and clear of, and without deduction or withholding for, any Taxes, except as required by law. In addition, the Borrowers shall pay all Other Taxes.

     (b) The Borrowers agree to indemnify and hold harmless each Agent and each Lender for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section) paid by an Agent or any Lender and any liability (including penalties, interest, additions to tax, and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Payment under this Section 5.1 shall be made within thirty (30) days after the date an Agent or any Lender makes written demand therefor.

     (c) If the Borrowers shall be required by law to deduct or withhold any Taxes or Other Taxes from or in respect of any sum payable hereunder to an Agent or any Lender, then:

     (i) the sum payable shall be increased as necessary so that after making all required deductions and withholdings (including, without limitation, deductions and withholdings applicable to additional sums payable under this Section) such Agent or such Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions or withholdings been made;

     (ii) the Borrowers shall make such deductions and withholdings; and

Loan And Security Agreement — Page 69

     (iii) the Borrowers shall pay the full amount deducted or withheld to the relevant taxing authority or other authority in accordance with any Requirement of Law.

     (d) Within thirty (30) days after the date of any payment by the Borrowers of Taxes or Other Taxes, the Borrowers shall deliver to the Administrative Agent the original or a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to the Administrative Agent.

     (e) If the Borrowers are required to pay additional amounts to an Agent or any Lender pursuant to Section 5.1(c), then the applicable Lender shall use reasonable efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its lending office so as to eliminate any such additional payment by the Borrowers which may thereafter accrue, if such change in the judgment of such Lender is not otherwise disadvantageous to such Lender.

     (f) For avoidance of doubt, any obligation of Borrower to deduct and withhold Excluded Taxes from or in respect of any sum payable hereunder to an Agent or any Lender shall not be subject to this Section 5.1.

     (g) If a Lender or an Agent during the term of this Agreement shall become aware that it is entitled to claim a refund from a taxing authority in respect of Taxes or Other Taxes as to which it has been indemnified by any of the Borrowers or with respect to which any of the Borrowers have paid additional amounts pursuant to this Section 5.1, it promptly shall notify the Borrowers of the availability of such refund claim and shall make a timely claim to the appropriate taxing authority for such refund at the Borrower’s expense. If during the term of this Agreement a Lender or an Agent receives a refund (including pursuant to a claim for refund made pursuant to the preceding sentence) in respect of any Taxes or Other Taxes as to which it has been indemnified by any of the Borrowers or with respect to which any of the Borrowers has paid additional amounts pursuant to this Section 5.1, it shall within thirty (30) days from the date of such receipt pay over the amount of such refund to the Borrowers, net of all reasonable out-of-pocket expenses of such Lender or Agent; provided, however, that the Borrowers, upon the request of such Lender or Agent, agree to repay the amount paid over to the Borrowers to such Lender or Agent in the event such Lender or Agent is required to repay such refund to such taxing authority. This Section 5.1 shall not be construed to require an Agent or any Lender to make available its Tax Returns (or any other information relating to its taxes which it deems confidential) to the Borrowers or any other Person.

          Section 5.2 Illegality.

     (a) If any Lender determines that the introduction after the Closing Date of any Requirement of Law, or any change after the Closing Date in any Requirement of Law, or after the Closing Date any change in the interpretation or administration of any Requirement of Law, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for such Lender or its applicable lending office to make LIBOR Rate Revolving Loans, then, on notice thereof by such

Loan And Security Agreement — Page 70

     Lender to the Borrowers through the Administrative Agent, any obligation of such Lender to make LIBOR Rate Revolving Loans or to convert a Base Rate Revolving Loan to a LIBOR Rate Revolving Loan or to continue a LIBOR Rate Revolving Loan for an additional Interest Period shall be suspended until such Lender notifies the Administrative Agent and the Borrowers that the circumstances giving rise to such determination no longer exist.

     (b) If a Lender determines that it is unlawful to maintain any LIBOR Rate Revolving Loan, the Borrowers shall, upon receipt of notice of such fact and demand from such Lender (with a copy to the Administrative Agent), prepay in full such LIBOR Rate Revolving Loans of such Lender then outstanding, together with accrued and unpaid interest thereon and amounts required under Section 5.4, either on the last day of the Interest Period thereof, if such Lender may lawfully continue to maintain such LIBOR Rate Revolving Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such LIBOR Rate Revolving Loans. If the Borrowers are required to so prepay any LIBOR Rate Revolving Loans, then concurrently with such prepayment, the Borrowers shall borrow from the affected Lender, in the amount of such prepayment, a Base Rate Revolving Loan.

          Section 5.3 Increased Costs and Reduction of Return.

     (a) If any Lender determines that due to either (i) the introduction after the Closing Date of or any change after the Closing Date in the interpretation of any law or regulation or (ii) the compliance by that Lender with any new guideline or request after the Closing Date from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost (other than with respect to Taxes and Other Taxes already covered by Section 5.1(c) and Excluded Taxes) to such Lender of agreeing to make or making, funding, or maintaining any LIBOR Rate Revolving Loans, then the Borrowers shall be liable for, and shall from time to time, upon demand (with a copy of such demand to be sent to the Administrative Agent), pay to the Administrative Agent, for the account of such Lender, additional amounts as are sufficient to compensate such Lender for such increased costs.

     (b) If any Lender shall have determined that (i) the introduction after the Closing Date of any Capital Adequacy Regulation, (ii) any change after the Closing Date in any Capital Adequacy Regulation, (iii) any change after the Closing Date in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof, or (iv) compliance by such Lender or any corporation or other entity controlling such Lender with any new Capital Adequacy Regulation after the Closing Date, affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation or other entity controlling such Lender and (taking into consideration such Lender’s or such corporation’s or other entity’s policies with respect to capital adequacy and such Lender’s desired return on capital) determines that the amount of such capital is increased as a consequence of its Commitments, loans, credits, or obligations under this Agreement, then, upon demand of such Lender to the Borrowers through the Administrative Agent, the Borrowers shall pay to such Lender, from time to time as

Loan And Security Agreement — Page 71

specified by such Lender, additional amounts sufficient to compensate such Lender for such increase.

          Section 5.4 Funding Losses. The Borrowers shall reimburse each Lender and hold each Lender harmless from any loss or expense which such Lender may sustain or incur as a consequence of:

     (a) the failure of the Borrowers to make on a timely basis any payment of principal of any LIBOR Rate Revolving Loan;

     (b) the failure of the Borrowers to borrow, continue, or convert a Revolving Loan after any Borrower has given (or is deemed to have given) a Notice of Borrowing or a Notice of Conversion/Continuation (except as permitted by Section 5.5);

     (c) the prepayment or other payment (including after acceleration thereof) of any LIBOR Rate Revolving Loan on a day that is not the last day of the relevant Interest Period;

including any such loss of anticipated profit and any loss or expense arising from the liquidation or reemployment of funds obtained by such Lender to maintain its LIBOR Rate Revolving Loans or from fees payable to terminate the deposits from which such funds were obtained. The Borrowers shall also pay any customary administrative fees charged by any Lender in connection with the foregoing.

          Section 5.5 Inability to Determine Rates. If the Administrative Agent determines that for any reason adequate and reasonable means do not exist for determining the LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR Rate Revolving Loan, or that the LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR Rate Revolving Loan does not adequately and fairly reflect the cost to the Lenders of funding such Revolving Loan, the Administrative Agent will promptly so notify the Borrowers and each Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Rate Revolving Loans hereunder shall be suspended until the Administrative Agent revokes such notice in writing. Upon receipt of a notice pursuant to the first sentence of this Section, the Borrowers may revoke any Notice of Borrowing or Notice of Conversion/Continuation then submitted by any of them. If the Borrowers do not revoke any such Notice of Borrowing or Notice of Conversion/Continuation, the Lenders shall make, convert, or continue the Revolving Loans, as proposed by the Borrowers, in the amount specified in the applicable Notice of Borrowing or Notice of Conversion/Continuation submitted by the Borrowers, but such Revolving Loans shall be made, converted, or continued as Base Rate Revolving Loans instead of LIBOR Rate Revolving Loans.

          Section 5.6 Certificates of Lenders. Any Lender claiming reimbursement or compensation under this Article 5 shall deliver to the Borrowers (with a copy to the Administrative Agent) a certificate setting forth in reasonable detail the amount payable to such Lender hereunder and such certificate shall be conclusive and binding on the Borrowers in the absence of manifest error.

Loan And Security Agreement — Page 72

          Section 5.7 Survival. The agreements and obligations of the Borrowers in this Article 5 shall survive the payment of all other Obligations.

          Section 5.8 Claims Under Section 5.1 and Section 5.3. Each Lender shall notify the Borrowers and the Administrative Agent of any event of which it has knowledge, occurring after the date hereof, which will entitle such Lender to payment of any amount under Section 5.1 or Section 5.3 and will designate a different lending office or file any certificate or document reasonably requested by any Borrower or assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if the making of such designation, filing or assignment would avoid the need for, or reduce the amount of, any such additional cost or reduced amount and would not, in the judgment of such Lender be otherwise disadvantageous to it.

          Section 5.9 Replacement of Affected Lender. Within thirty (30) days after receipt by the Borrowers of written notice and demand from any Lender for any payment under the terms of Section 5.1 or Section 5.3 then, subject to this Section 5.9, the Borrowers may, at their option, notify the Administrative Agent and such Lender (the “Affected Lender”) of their intention to obtain, at the Borrowers’ sole expense, a replacement Lender (“Replacement Lender”) to purchase the Affected Lender’s Loans and its obligations under the Loan Documents. Subject to this Section 5.9, the Borrowers may, within thirty (30) days following the delivery of such notice from the Borrowers, cause the Replacement Lender to purchase (and the Affected Lender hereby agrees to sell and convey, and shall be deemed to sell and convey without further action by such Affected Lender, to such Replacement Lender) the Loans and other obligations of the Affected Lender and assume the Affected Lender’s Commitment and obligations hereunder in accordance with the terms of an Assignment and Acceptance for cash in an aggregate amount equal to the aggregate unpaid principal of the Loans held by such Affected Lender, all unpaid interest and fees accrued thereon or with respect thereto, and, except as provided in the immediately following sentence, all other Obligations (other than contingent indemnification and expense reimbursement obligations for which no claim has been made) owed to such Affected Lender, including amounts owed under Section 5.1 or Section 5.3. Notwithstanding the foregoing, (a) the Borrowers shall continue to be obligated to pay to the Affected Lender in full all amounts then demanded and due under Section 5.1 or Section 5.3 in accordance with the terms of this Agreement, (b) neither the Administrative Agent nor any Lender shall have any obligation to find a Replacement Lender, (c) the Replacement Lender must be acceptable to the Administrative Agent in its reasonable discretion, and (d) neither Bank may be replaced under this Section 5.9 without its consent.

ARTICLE 6

COLLATERAL

     Section 6.1 Grant of Security Interest.

     (a) As security for the Obligations, subject to the proviso in Section 6.1(b) below, each Loan Party hereby grants to the Collateral Agent, for the benefit of the Secured Parties, a continuing security interest in and lien on, all of the following property

Loan And Security Agreement — Page 73

     and assets of such Loan Party, whether now owned or existing or hereafter acquired or arising, regardless of where located:

     (i) all Accounts (including any credit enhancement therefor) and Intercompany Obligations;

     (ii) all Chattel Paper;

     (iii) all Commercial Tort Claims;

     (iv) all contract rights, leases, letters of credit, letter-of-credit rights, instruments, promissory notes, documents, and documents of title, in each case, other than any Excluded Assets;

     (v) all Financial Assets;

     (vi) all Equipment other than Excluded Assets;

     (vii) all General Intangibles;

     (viii) all Investment Property;

     (ix) all Inventory;

     (x) all money, cash, cash equivalents, securities, and other property of any kind of such Loan Party, in each case, other than any Excluded Assets;

     (xi) all of such Loan Party’s deposit accounts, credits, and balances with and other claims against an Agent, any Lender, or any Affiliate of the foregoing, or any other financial institution with which such Loan Party maintains deposits, including any Payment Accounts, in each case, other than (i) any such amounts held as security for any IDRB Letter of Credit by any financial institution, and (ii) any Excluded Assets comprised of identifiable cash proceeds of any other Excluded Asset as a balance in any deposit account(s);

     (xii) all of such Loan Party’s books, records, and other property related to or referring to any of the foregoing, including books, records, account ledgers, data processing records, computer software and other property, and General Intangibles at any time evidencing or relating to any of the foregoing, in each case, other than any Excluded Assets;

     (xiii) all supporting obligations in respect of any Collateral; and

     (xiv) all accessions to, substitutions for, and replacements, products, and proceeds of any of the foregoing, including, but not limited to, proceeds of any insurance policies, claims against third parties, and condemnation or requisition payments with respect to all or any of the foregoing, in each case, other than any Excluded Assets.

Loan And Security Agreement — Page 74

All of the foregoing, and all other property of the Loan Parties’ in which Secured Party may at any time be granted a Lien to secure the Obligations, is herein collectively referred to as the “Collateral.” Notwithstanding the foregoing, Collateral shall not include, and the lien granted under this Section 6.1 shall not extend to, Excluded Assets.

     (b) The Obligations shall be secured by all of the Collateral; provided that, notwithstanding the foregoing or anything in this Agreement to the contrary, IDRB Letters of Credit shall not be secured by any General Intangibles or Investment Property in the form of Subsidiary stock or other securities, and the Collateral Agent and the Lenders shall have no right hereunder to foreclose upon any such General Intangibles or Investment Property or otherwise exercise any remedies with respect thereto with respect to any Obligations arising from or in connection with IDRB Letters of Credit. Each Loan Party acknowledges and expressly agrees with the Collateral Agent and each Lender that the grant by such Loan Party of the Collateral Agent’s Lien in the Collateral of such Loan Party as security for the Obligations of the other Loan Parties is required solely as a condition to, and is given solely as inducement for and in consideration of, credit or accommodations extended or to be extended under the Loan Documents to any or all of the other Loan Parties and is not required or given as a condition of extensions of credit to such Loan Party.

          Section 6.2 Perfection and Protection of Security Interest.

     (a) Each Loan Party shall, at its expense, perform all steps reasonably requested by the Collateral Agent at any time to perfect, maintain, protect, and enforce the Collateral Agent’s Liens, subject to the terms of the Intercreditor Agreement, including: (i) executing, delivering, and/or filing and recording of the Copyright, Patent, and Trademark Agreements, and executing and filing financing or continuation statements, and amendments thereof, in form and substance satisfactory to the Collateral Agent; (ii) to the extent constituting Revolving Facility First Lien Collateral, delivering to the Collateral Agent the originals of all instruments, documents, and Chattel Paper (in each case in excess of $250,000), and all other Collateral of which the Collateral Agent reasonably determines it should have physical possession in order to perfect and protect the Collateral Agent’s security interest therein, duly pledged, endorsed, or assigned to the Collateral Agent as provided herein; (iii) upon the occurrence and during the continuation of an Event of Default, delivering to the Collateral Agent upon request (A) warehouse receipts covering any portion of the Collateral located in warehouses and for which warehouse receipts are issued and (B) if requested by the Collateral Agent, certificates of title reflecting the Collateral Agent’s Liens covering any portion of the Collateral for which certificates of title have been issued; (iv) when an Event of Default exists, transferring Inventory to warehouses or other locations designated by the Collateral Agent; (v) upon the occurrence and during the continuance of an Event of Default, delivering to the Collateral Agent all letters of credit constituting Collateral on which such Loan Party is named beneficiary; and (vi) taking such other steps as are reasonably deemed necessary or desirable by the Collateral Agent to maintain and protect the Collateral Agent’s Liens. To the extent permitted by any Requirement of Law and the Intercreditor Agreement, the Collateral Agent may file, without any Loan Party’s signature, one or more financing statements disclosing the Collateral Agent’s Liens.

Loan And Security Agreement — Page 75

     (b) If any Collateral constituting Inventory with a Fair Market Value in excess of $250,000 is at any time in the possession or control of any warehouseman, bailee, or any of such Loan Party’s agents or processors (other than (1) any Persons that have previously executed a bailee letter or landlord waiver for the benefit of the Collateral Agent or (2) the Noteholder Collateral Agent), then such Loan Party shall notify the Collateral Agent thereof (including by delivery of the Perfection Certificate on the date hereof) and shall, at the request of the Collateral Agent, notify such Person of the Collateral Agent’s security interest in such Collateral and instruct such Person to hold all such Collateral for the Collateral Agent’s account subject to the Collateral Agent’s instructions and subject to the Intercreditor Agreement. If at any time any Collateral with a Fair Market Value in excess of $250,000 is located at any operating facility of a Loan Party which is not owned by such Loan Party, such Loan Party, at the request of the Collateral Agent, shall use commercially reasonable efforts to obtain written landlord lien waivers or subordinations, in form and substance reasonably satisfactory to the Agents, of all present and future Liens to which the owner or lessor of such premises may be entitled to assert against the Collateral; provided that in the event any Loan Party is unable to obtain any such written waiver or subordination, the Agents may, in the exercise of Reasonable Credit Judgment, establish a Reserve with respect to any such Collateral that is Eligible Inventory in an amount not to exceed the amount permitted under clause (b) or (i) of the definition of Eligible Inventory.

     (c) From time to time, subject to the Intercreditor Agreement, each Loan Party shall, upon the Collateral Agent’s request, execute and deliver confirmatory written instruments pledging to the Collateral Agent, for the benefit of the Secured Parties, the Collateral with respect to such Loan Party, but the failure to do so shall not affect or limit any security interest or any other rights of the Secured Parties in and to the Collateral with respect to such Loan Party. So long as this Agreement is in effect and until all Obligations (other than contingent indemnification and expense reimbursement obligations for which no claim has been made) have been fully satisfied, the Collateral Agent’s Liens shall continue in full force and effect in all Collateral (whether or not deemed eligible for the purpose of calculating the Availability or as the basis for any advance, loan, extension of credit, or other financial accommodation).

     (d) To the extent any Loan Party is the owner of any Investment Property that is Collateral (each such Person which issues any such Investment Property being referred to herein as an “Issuer”) with a Fair Market Value in excess of $250,000, each Loan Party which is the owner of any such Investment Property agrees that, at the request of the Agents, subject to the Intercreditor Agreement, it will use its commercially reasonable efforts to cause the Issuer thereof to agree, as follows with respect to such Investment Property:

     (i) All such Investment Property issued by such Issuer, all warrants, and all non-cash dividends and other non-cash distributions in respect thereof at any time registered in the name of, or otherwise deliverable to, any Loan Party, shall be delivered directly to the Collateral Agent (or to the Noteholder Collateral Agent under the Intercreditor Agreement), for the account of such Loan Party.

Loan And Security Agreement — Page 76

     (ii) If such Investment Property shall constitute Revolving Facility First Lien Collateral, then during the existence of any Event of Default, upon notice by the Agents, all cash dividends, cash distributions, and other cash or cash equivalents in respect of such Investment Property at any time payable or deliverable to any Loan Party shall be delivered directly to the Collateral Agent, for the account of the Secured Parties, at the Collateral Agent’s address for notices set forth in Section 15.8.

     (iii) If such Investment Property shall constitute Revolving Facility First Lien Collateral, then with respect to any of such Investment Property at any time constituting an uncertificated security as defined by the UCC, such Issuer will comply with instructions originated by the Collateral Agent without further consent by the registered owner thereof.

          Section 6.3 Location of Collateral. Each Loan Party represents and warrants to the Secured Parties that as of the Closing Date: (a) Schedule 6.3 is a correct and complete list of such Loan Party’s jurisdiction of organization, the location of its books and records, the locations of the Collateral (other than Inventory being toll processed or that is in transit, rolling stock, and Collateral in the Collateral Agent’s possession or the possession of the Noteholder Collateral Agent), and the locations of all of its other places of business; and (b) Schedule 6.3 correctly identifies any of such facilities and locations that are not owned by such Loan Party and sets forth the names of the owners and lessors or sublessors of such facilities and locations. Each Loan Party covenants and agrees that it will not (x) maintain any Collateral with a Fair Market Value in excess of $2,500,000 (other than Inventory being toll processed, in transit or consigned as permitted hereunder, rolling stock, equipment at other locations for purposes of maintenance or repair and Collateral in the Collateral Agent’s possession or the possession of the Noteholder Collateral Agent) at any location other than those locations listed on Schedule 6.3, (y) otherwise change or add to any of such locations, or (z) change the location of its jurisdiction of organization from the location identified in Schedule 6.3, unless in each case it gives the Collateral Agent prompt written notice thereof and executes any and all financing statements and other documents that the Collateral Agent reasonably requests in connection therewith. In the event any Loan Party changes or adds any location of Collateral, the Loan Party shall prepare and deliver to the Collateral Agent a revised Schedule 6.3 which shall automatically be adopted as Schedule 6.3 for all purposes. Without limiting the foregoing, each Loan Party represents that all Inventory (other than Inventory being toll processed, in transit or consigned as permitted hereunder) is, and covenants that all of such Inventory will be, located either (A) on premises owned by such Loan Party, or (B) on premises leased by such Loan Party and included on Schedule 6.3.

          Section 6.4 Title to, Liens on, and Sale and Use of Collateral. Each Loan Party represents and warrants to the Secured Parties and agrees with the Secured Parties that: (a) all of its Collateral is and will continue to be owned by such Loan Party free and clear of all Liens whatsoever, except for Permitted Liens and except for sales or other dispositions thereof permitted by this Agreement; (b) the Collateral Agent’s Liens in the Collateral will not be subject to any prior Lien except to the extent expressly provided for in the Intercreditor Agreement and for Permitted Liens; and (c) such Loan Party will use, store, and maintain the

Loan And Security Agreement — Page 77

Collateral with all reasonable care and will use such Collateral in compliance with Section 9.3(a).

          Section 6.5 Appraisals. Whenever an Event of Default exists, and at such other times not more frequently than once per year, the Loan Parties shall, at their expense and upon the Agents’ request, provide the Collateral Agent with appraisals or updates thereof of any or all of the Collateral from one or more Acceptable Appraisers (as selected by Parent), and prepared in a form and on a basis reasonably satisfactory to the Agents, such appraisals and updates to include, without limitation, information required by Requirements of Law and by the internal policies of the Lenders. In addition, the Loan Parties shall have the right (but not the obligation), at their expense, at any time and from time to time (but not more than once per year) to provide the Agents with additional appraisals or updates thereof of any or all of the Collateral from one or more Acceptable Appraisers (as selected by Parent), and prepared in a form and on a basis reasonably satisfactory to the Agents, in which case such appraisals or updates shall be used in connection with the determination of the Orderly Liquidation Value and the calculation of the Borrowing Base hereunder. In connection with any appraisal requested by the Agents pursuant to this Section 6.5, the Loan Parties shall be given twenty (20) days following such request by the Agents to choose and engage the Acceptable Appraiser prior to the commencement of such appraisal. With respect to each appraisal made pursuant to this Section 6.5 after the Closing Date, (i) the Agents and the Loan Parties shall each be given a reasonable amount of time to review and comment on a draft form of the appraisal prior to its finalization and (ii) any adjustments to the Orderly Liquidation Value or the Borrowing Base hereunder as a result of such appraisal shall become effective twenty (20) days following the finalization of such appraisal.

          Section 6.6 Access and Examination; Confidentiality.

     (a) The Collateral Agent, accompanied by any Lender which so elects, may upon reasonable advance notice and at reasonable times during regular business hours, and at any time when an Event of Default exists, have access to, examine, audit, make extracts from or copies of, and inspect any or all of the Loan Parties’ records, files, and books of account and the Collateral, and discuss the Loan Parties’ affairs with the Loan Parties’ officers and senior management. The Loan Parties will deliver to the Collateral Agent any instrument necessary for the Collateral Agent to obtain records from any service bureau maintaining records for the Loan Parties. The Collateral Agent may, and at the direction of the Majority Lenders shall, at any time when an Event of Default exists, and at the Loan Parties’ expense, make copies of all of the Loan Parties’ books and records, or require the Loan Parties to deliver such copies to the Collateral Agent. Upon reasonable request to senior management of the Parent, the Collateral Agent may, without expense to the Collateral Agent, use such of the Loan Parties’ respective personnel, supplies, and premises as may be reasonably necessary for maintaining or enforcing the Collateral Agent’s Liens. The Collateral Agent shall have the right, at any time, in the Collateral Agent’s name or in the name of a nominee of the Collateral Agent, to verify the validity, amount, or any other matter relating to the Accounts, Inventory, or other Collateral, by mail, telephone, or otherwise; provided, however, in the absence of an Event of Default, the Collateral Agent agrees that it will not attempt to verify more than ten (10) Accounts each month.

Loan And Security Agreement — Page 78

     (b) Subject to succeeding clause (c), each of the Loan Parties hereby consents that the Agents may issue and disseminate to the public general information describing the credit accommodation entered into pursuant to this Agreement, including the names and addresses of the Loan Parties and a general description of the Loan Parties’ business and may use the Loan Parties’ names in advertising and other promotional material.

     (c) Each Agent and Lender severally agrees to take normal and reasonable precautions and exercise due care to maintain the confidentiality of all information provided to an Agent or such Lender by or on behalf of Holdings or such Loan Party, under this Agreement or any other Loan Document, except to the extent that such information (i) was or becomes generally available to the public other than as a result of disclosure by an Agent or such Lender, or (ii) was or becomes available on a non-confidential basis from a source other than Holdings or the Loan Parties; provided that such source is not bound by a confidentiality obligation with Holdings or the Loan Parties known to such Agent or such Lender. Notwithstanding the foregoing, an Agent and any Lender may disclose any such information (1) at the request or pursuant to any requirement of any Governmental Authority to which such Agent, Lender or any Affiliates of the foregoing is subject or in connection with an examination of such Agent, Lender or Affiliate by any such Governmental Authority, (2) pursuant to subpoena or other court process, (3) when required to do so in accordance with the provisions of any applicable Requirement of Law; (4) to the extent reasonably required in connection with any litigation or proceeding (including, but not limited to, any bankruptcy proceeding) to which an Agent, any Lender, or their respective Affiliates may be party, (5) to the extent required in connection with the exercise of any remedy or enforcement of any rights hereunder or under any other Loan Document, (6) to such Agent’s or such Lender’s independent auditors, accountants, attorneys, and other professional advisors who shall be advised of their obligation to keep such information confidential, (7) to any prospective Participant or Assignee, actual or potential, provided that such prospective Participant or Assignee agrees with such Loan Party to keep such information confidential to the same extent required of the Agents and the Lenders hereunder, (8) as expressly permitted under the terms of any other document or agreement regarding confidentiality to which Holdings or any Loan Party is a party or is deemed a party with an Agent or such Lender, and (9) to its Affiliates to be used in connection with this Agreement and the transactions contemplated hereby and such Affiliate agrees with such Loan Party to keep such information confidential to the same extent required by the Agents and the Lenders hereunder.

          Section 6.7 Collateral Reporting. Parent shall provide, or cause to be provided, to the Agents, a Borrowing Base Certificate on or before the twentieth (20th) day of each Fiscal Period, or, during the continuance of an Availability Triggering Event, more frequently if requested by the Agents, for the preceding Fiscal Period end (or such shorter period during an Availability Triggering Event), in form reasonably satisfactory to the Agents and containing the information identified in Schedule 6.7. If any of the Loan Parties’ records or reports of the Collateral required to be delivered pursuant to this Agreement are prepared by an accounting service or other agent, each Loan Party hereby authorizes such service or agent to deliver such records or reports to the Agents, for distribution to the Lenders.

Loan And Security Agreement — Page 79

          Section 6.8 Accounts.

     (a) Each Loan Party represents and warrants that, with respect to such Loan Party’s Accounts included in any Borrowing Base Certificate as Eligible Accounts: (i) each existing Account represents, and each future Account will represent, a bona fide sale or lease and delivery of goods by such Loan Party, or rendition of services by such Loan Party, in the ordinary course of such Loan Party’s business; (ii) each existing Account is, and each future Account will be, for a liquidated amount payable by the Account Debtor thereon on the terms then in effect or in the schedule thereof delivered to the Collateral Agent, without any offset, deduction, defense, or counterclaim except those known to such Loan Party (unless otherwise reflected in the Borrowing Base Certificate); (iii) no payment will be received with respect to any Account, and no credit, discount, or extension, or agreement therefor will be granted on any Account except in the ordinary course of business consistent with past practice; (iv) each copy of any invoice with respect to such Account delivered to the Collateral Agent by such Loan Party will be a genuine copy of the original invoice sent to the Account Debtor named therein; and (v) all goods described in any such invoice representing a sale of goods will have been delivered to the Account Debtor and all services of such Loan Party described in each invoice will have been performed.

     (b) Such Loan Party shall not re-date any invoice or sale or make sales on extended dating or extend or modify any Account outside the ordinary course of business. If such Loan Party becomes aware of any matter adversely affecting the collectibility of any Account or the Account Debtor therefor involving an amount greater than $1,000,000, including information regarding the Account Debtor’s creditworthiness, such Loan Party will promptly so advise the Collateral Agent.

     (c) Such Loan Party shall not, without the Collateral Agent’s prior written consent, accept any note or other instrument (except a check or other instrument for the immediate payment of money) with respect to any Account other than Accounts which (i) do not exceed $1,000,000 individually and (ii) at the time of accepting such note or other instrument are not less than ninety (90) days past due from the date of the original invoice therefor or in settlement of a bankrupt or disputed account. If the Collateral Agent consents to the acceptance of any such instrument, it shall be considered as evidence of the Account and not payment thereof and such Loan Party will promptly deliver such instrument to the Collateral Agent, endorsed by such Loan Party to the Collateral Agent in a manner satisfactory in form and substance to the Collateral Agent. Regardless of the form of presentment, demand, or notice of protest with respect thereto, such Loan Party shall remain liable thereon until such instrument is paid in full.

     (d) Such Loan Party shall notify the Collateral Agent promptly of all offsets, deductions, defenses, or counterclaims in excess of $1,000,000 with any Account Debtor, and agrees to settle, contest, or adjust such dispute or claim at no expense to the Secured Parties. No discount, credit, or allowance shall be granted to any such Account Debtor without the Collateral Agent’s prior written consent, except for discounts, credits, and allowances made or given in the ordinary course of such Loan Party’s business (unless an Event of Default has occurred and is continuing and the Collateral Agent has notified

Loan And Security Agreement — Page 80

Parent that such exception is withdrawn). The Loan Party shall promptly send the Collateral Agent a copy of each credit memorandum in excess of $1,000,000. The Collateral Agent may at all times when an Event of Default exists, settle or adjust disputes and claims directly with Account Debtors of any Loan Party for amounts and upon terms which the Collateral Agent or the Majority Lenders, as applicable, shall consider advisable and, in all cases, the Collateral Agent will credit the Loan Account with the net amounts received by the Collateral Agent in payment of any Accounts.

     (e) If an Account Debtor returns any Inventory to a Loan Party then, unless an Event of Default exists and the Collateral Agent has given notice to Parent not to do so, such Loan Party shall promptly determine the reason for such return and shall issue a credit memorandum to the Account Debtor in the appropriate amount. The Loan Parties shall promptly report to the Collateral Agent any return involving an amount in excess of $1,000,000. Each such report shall indicate the reasons for the returns and the locations and condition of the returned Inventory. In the event any Account Debtor returns Inventory to a Loan Party when an Event of Default exists, such Loan Party, upon the request of the Collateral Agent, shall: (i) hold the returned Inventory in trust for the Collateral Agent; (ii) segregate all returned Inventory from all of its other property; (iii) dispose of the returned Inventory solely according to the Collateral Agent’s written instructions; and (iv) not issue any credits or allowances with respect thereto without the Collateral Agent’s prior written consent. All returned Inventory of any Loan Party shall be subject to the Collateral Agent’s Liens thereon. Whenever any Inventory is returned, the related Account shall be deemed ineligible (without duplication of any other exclusion) to the extent of the amount owing by the Account Debtor with respect to such returned Inventory.

          Section 6.9 Collection of Accounts; Payments.

     (a) Effective on the Closing Date the Loan Parties shall establish a Payment Account (the “Primary Payment Account”) with the Collateral Agent into which all Account collections will be deposited, and the Loan Parties hereby agree that, during an Availability Triggering Event, the Collateral Agent will have exclusive control over the Primary Payment Account; provided, however, that, in the absence of an Availability Triggering Event, the Loan Parties will have exclusive control over the Primary Payment Account. During an Availability Triggering Event, the Agents shall have the right to apply collections received into the Primary Payment Account to the outstanding Revolving Loans and the Borrowers shall have the right, subject to the terms and conditions of this Agreement, to request Borrowings hereunder and direct the disposition of Revolving Loan proceeds. During an Availability Triggering Event, the Loan Parties shall not be entitled to present items drawn on or otherwise to withdraw or direct the dispositions of funds from the Primary Payment Account nor shall they be entitled to close the Primary Payment Account until all obligations under this Agreement are paid and performed in full. Notwithstanding any other agreements the Loan Parties may have with any Secured Party, the Collateral Agent shall be entitled, during an Event of Default, for purposes of this Agreement to give instructions as to the withdrawal or disposition of funds from time to time credited to any deposit account with the Collateral Agent, any Payment Account, or the Primary Payment Account, or as to any other matters relating to

Loan And Security Agreement — Page 81

any of the forgoing without further consent of the Loan Parties. The Collateral Agent’s power under this Agreement to give instructions as to the withdrawal or disposition of any funds from time to time credited to the Primary Payment Account, any other Payment Account or deposit account with the Collateral Agent or as to any other matters relating to the foregoing includes, without limitation, during an Event of Default, the power to give stop payment orders for any items being presented to such accounts for payment.

     (b) No later than ninety (90) days from the Closing Date or such later time as the Collateral Agent shall agree, the Loan Parties shall establish a lock-box service for collections of Accounts at Clearing Banks acceptable to the Collateral Agent and, with respect to bank accounts with Clearing Banks other than the Collateral Agent, if requested by the Collateral Agent, subject to Blocked Account Agreements and other documentation reasonably acceptable to the Collateral Agent. The Loan Parties shall instruct all Account Debtors with respect to Accounts to make all payments directly to the address established for each such lock-box service or electronically into such lock-box accounts. If, notwithstanding such instructions, any Loan Party receives any proceeds of Accounts, it shall deliver such payments to the Collateral Agent or deposit them into a Payment Account. During an Availability Triggering Event, all collections received in any lock-box or Payment Account or directly by any Borrower or the Collateral Agent, and all funds in any Payment Account or other account to which such collections are deposited shall be subject to the Collateral Agent’s sole control and withdrawals by any Borrower shall not be permitted; provided, however, that, in the absence of an Availability Triggering Event, all collections received in any lock-box or Payment Account, and all funds in any Payment Account or other account to which such collections are deposited shall be subject to the Borrower’s sole control. The Collateral Agent or its designee may, at any time after the occurrence and during the continuation of an Event of Default, upon notice to Parent, notify Account Debtors that the Accounts have been assigned to the Collateral Agent and of the Collateral Agent’s security interest therein, and may collect them directly and charge the collection costs and expenses to the Loan Account as a Revolving Loan. So long as an Event of Default exists, the Borrowers, at the Collateral Agent’s request, shall execute and deliver to the Collateral Agent such documents as the Collateral Agent shall reasonably request to grant the Collateral Agent access to any post office box in which collections of Accounts are received.

     (c) If sales of Inventory are made or services are rendered by any Loan Party for cash, such Loan Party shall promptly deposit such cash into a Payment Account.

     (d) Except as otherwise provided in this Section 6.9, all payments received by the Collateral Agent in a bank account, an account separate from the Primary Payment Account, a Payment Account or a lock-box account, designated by the Loan Parties and the Collateral Agent will be credited to the Loan Account (conditional upon final collection) on the same day received (if received prior to 3:00 p.m. (New York, New York time)); provided that the Loan Parties shall compensate the Collateral Agent for the cost of collection and clearance of remittances applied to the Loan Account,

Loan And Security Agreement — Page 82

including interest for one (1) day, on all uncollected funds credited to the Loan Account as provided by this Section 6.9(d).

     (e) In the event all of the Obligations (other than contingent indemnification and expense reimbursement obligations for which no claim has been made) are repaid upon the termination of this Agreement or upon acceleration of the Obligations, other than through the Collateral Agent’s receipt of payments on account of the Accounts or proceeds of the other Collateral, such payment will be credited (conditional upon final collection) to the Loan Account (i) on the date of the Collateral Agent’s receipt of such funds if such funds are collected funds or other immediately available funds if received by 3:00 p.m. (New York, New York time) or (ii) one (1) Business Day after the Collateral Agent’s receipt of such funds if such funds are uncollected funds or collected or immediately available funds received after such time.

          Section 6.10 Inventory; Perpetual Inventory.

     (a) Each Loan Party will keep its Inventory (other than returned or obsolete Inventory) in good and marketable condition, except for damaged or defective goods arising in the ordinary course of such Loan Party’s business. No Loan Party will, without the prior written consent of the Collateral Agent, acquire or maintain any Inventory in excess of $1,000,000 at any time on consignment or approval unless such Inventory is disclosed to the Collateral Agent pursuant to Section 6.7 and the applicable Loan Party takes appropriate steps to insure that all of such Inventory meets the criteria of Eligible Inventory, including delivery of appropriate subordination agreements, if necessary. Each Loan Party will conduct a physical count of its Inventory at least once per Fiscal Year, and during the existence of an Event of Default, at such other times as the Collateral Agent may reasonably request. Each Loan Party will maintain a perpetual Inventory reporting system at all times. Without the Collateral Agent’s written consent, no Loan Party will sell, through a single transaction or a series of related transactions, Inventory on a bill-and-hold, guaranteed sale, sale and return, sale on approval, consignment, or other repurchase or return basis in excess of $1,000,000.

     (b) In connection with all Inventory financed by letters of credit, the Loan Parties will, at the Collateral Agent’s request, instruct all suppliers, carriers, forwarders, customs brokers, warehouses or other Persons receiving or holding cash, checks, Inventory, documents or instruments in which the Collateral Agent holds a security interest to deliver them to the Collateral Agent and/or subject to the Collateral Agent’s order, and if they shall come into such Loan Party’s possession, to deliver them, upon request, to the Collateral Agent in their original form. The Loan Parties shall also, at the Collateral Agent’s request, designate the Collateral Agent as the consignee on all bills of lading and other negotiable and non-negotiable documents.

          Section 6.11 Documents, Instruments, and Chattel Paper. Each Loan Party represents and warrants to the Secured Parties that (a) all documents, instruments, and Chattel Paper of such Loan Party describing, evidencing, or constituting Collateral, and all signatures and endorsements thereon, are and will be complete, valid, and genuine, and (b) all goods evidenced by such documents, instruments, and Chattel Paper are and will be owned by such

Loan And Security Agreement — Page 83

Loan Party free and clear of all Liens other than Permitted Liens. If any Loan Party retains possession of any Chattel Paper or instruments, at Collateral Agent’s request upon an Event of Default, instruments shall be marked with the following legend: “This writing and the obligations evidenced or served hereby are subject to the security interest of Bank of America, N.A., as Collateral Agent, for the benefit of Collateral Agent and certain Secured Parties.”

          Section 6.12 Right to Cure. The Collateral Agent may, in its reasonable discretion, and shall, at the direction of the Majority Lenders, subject to the Intercreditor Agreement, pay any reasonable amount or do any reasonable act required of any Loan Party hereunder or under any other Loan Document in order to preserve, protect, maintain, or enforce the Obligations, the Collateral or the Collateral Agent’s Liens therein, and which any Loan Party fails to timely pay or do, including payment of any judgment against any Loan Party, any insurance premium, any warehouse charge, any finishing or processing charge, any landlord’s or bailee’s claim, and any other Lien upon or with respect to the Collateral. All payments that the Collateral Agent makes under this Section 6.12 and all out-of-pocket costs and expenses that the Collateral Agent pays or incurs in connection with any action taken by it hereunder shall be charged to the Loan Account as a Revolving Loan. Any payment made or other action taken by the Collateral Agent under this Section 6.12 shall be without prejudice to any right to assert an Event of Default hereunder and to proceed thereafter as herein provided.

          Section 6.13 Power of Attorney. Each Loan Party, as to itself, hereby appoints the Collateral Agent and the Collateral Agent’s designee as such Loan Party’s attorney, with power: (a) to endorse such Loan Party’s name on any checks, notes, acceptances, money orders, or other forms of payment or security that come into the Collateral Agent’s or any Secured Parties’ possession; (b) to sign such Loan Party’s name on any invoice, bill of lading, warehouse receipt, or other document of title relating to any Collateral, on drafts against customers, on assignments of Accounts, on notices of assignment, financing statements, and other public records and to file any such financing statements by electronic means with or without a signature as authorized or required by applicable law or filing procedure; (c) so long as any Event of Default exists, to notify the post office authorities to change the address for delivery of such Loan Party’s mail to an address designated by the Collateral Agent and to receive, open, and dispose of all mail addressed to such Loan Party; (d) to send requests for verification of Accounts to customers or Account Debtors; provided, however, in the absence of an Event of Default, the Collateral Agent agrees that it will not attempt to verify more than ten (10) Accounts each month; (e) to clear Inventory through customs in such Loan Party’s name, the Collateral Agent’s name, or the name of the Collateral Agent’s designee, and to sign and deliver to customs officials powers of attorney in such Loan Party’s name for such purpose; and (f) to do all things the Collateral Agent determines are necessary to carry out this Agreement. Each Loan Party ratifies and approves all acts of such attorney. None of the Lenders, the Collateral Agent, nor their attorneys will be liable for any acts or omissions or for any error of judgment or mistake of fact or law other than any such liability arising from any such Person’s gross negligence or willful misconduct. This power, being coupled with an interest, is irrevocable until this Agreement has been terminated and all outstanding Obligations have been fully satisfied.

          Section 6.14 The Collateral Agent’s and the Lenders’ Rights, Duties, and Liabilities.

Loan And Security Agreement — Page 84

     (a) The Loan Parties assume all responsibility and liability arising from or relating to the use, sale, or other disposition of the Collateral. The Obligations shall not be affected by any failure of the Collateral Agent or any Lender to take any steps to perfect the Collateral Agent’s Liens or to collect or realize upon the Collateral, nor shall loss of or damage to the Collateral release any Loan Party from any of the Obligations. Following the occurrence and during the continuation of an Event of Default, the Collateral Agent may (but shall not be required to), and at the direction of the Majority Lenders shall, subject to the Intercreditor Agreement, without notice to or consent from any Loan Party sue upon or otherwise collect, extend the time for payment of, modify or amend the terms of, compromise or settle for cash, credit, or otherwise upon any terms, grant other indulgences, extensions, renewals, compositions, or releases, and take or omit to take any other action with respect to the Collateral, any security therefor, any agreement relating thereto, any insurance applicable thereto, or any Person liable directly or indirectly in connection with any of the foregoing, without discharging or otherwise affecting the liability of any Loan Party for the Obligations or under this Agreement or any other agreement now or hereafter existing between the Collateral Agent and/or any Lender and any Loan Party.

     (b) It is expressly agreed by the Loan Parties that, anything herein to the contrary notwithstanding, each of the Loan Parties shall remain liable under each of its contracts and each of its licenses to observe and perform all the conditions and obligations to be observed and performed by it thereunder. Neither the Collateral Agent nor any Lender shall have any obligation or liability under any contract or license by reason of or arising out of this Agreement or the granting herein of a Lien thereon or the receipt by the Collateral Agent or any Lender of any payment relating to any contract or license pursuant hereto that is applied as required herein. Neither the Collateral Agent nor any Lender shall be required or obligated in any manner to perform or fulfill any of the obligations of any Loan Party under or pursuant to any contract or license, or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any contract or license, or to present or file any claims, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

          Section 6.15 Guaranties; Third Party Joinder. Subject to the provisions of and pursuant to Section 15.20, promptly upon creation or acquisition of any Subsidiary of a Loan Party, such Loan Party shall, to the extent required pursuant to Section 9.20, cause such new Subsidiary to become a Loan Party by executing and delivering to the Collateral Agent a Guaranty Agreement and other instruments, certificates, and agreements as the Collateral Agent may reasonably request. Upon execution and delivery of such Guaranty Agreement and other instruments, certificates, and agreements, such newly created or acquired Subsidiary shall automatically become a Loan Party and thereupon shall have all of the rights, benefits, duties, and obligations of a Loan Party under the Loan Documents.

          Section 6.16 Voting Rights, Distributions, Etc. in Respect of Investment Property.

Loan And Security Agreement — Page 85

     (a) Unless an Event of Default exists and the Collateral Agent has delivered a notice as contemplated by Section 6.16(b), and subject to the Intercreditor Agreement, (i) each Loan Party shall be entitled to exercise any and all voting and other consensual rights (including, without limitation, the right to give consents, waivers, and notifications in respect of any securities) pertaining to its Investment Property or any part thereof; provided, however, that without the prior written consent of the Collateral Agent and the Majority Lenders, no vote shall be cast or consent, waiver, or ratification given or action taken which would (A) be inconsistent with or violate any provision of this Agreement or any other Loan Document or (B) amend, modify, or waive any material term, provision, or condition of the certificate of incorporation, bylaws, certificate of formation, or other charter document or other agreement relating to, evidencing, providing for the issuance of, or securing any such Investment Property, in any manner that would impair such Investment Property, the transferability thereof, or the Collateral Agent’s Liens therein, and (ii) each Borrower shall be entitled to receive and retain any and all dividends, interest paid and other cash distributions in respect of any of such Investment Property (unless otherwise required by this Agreement).

     (b) During the existence of an Event of Default, subject to the Intercreditor Agreement, (i) the Collateral Agent may, after delivery of notice to the applicable Loan Party, exercise all voting and corporate rights at any meeting of any corporation, partnership, or other business entity issuing any of the Collateral consisting of Investment Property, the proceeds thereof (in cash or otherwise) (as used in this Section 6.16 collectively, the “Pledged Collateral”) held by the Collateral Agent hereunder, and any and all rights of conversion, exchange, subscription, or any other rights, privileges, or options pertaining to any of the Pledged Collateral as if it were the absolute owner thereof, including, without limitation, the right to exchange at its discretion any and all of the Pledged Collateral upon the merger, consolidation, reorganization, recapitalization, or other readjustment of any corporation, partnership, or other business entity issuing any of such Pledged Collateral or upon the exercise by any such issuer or the Collateral Agent of any right, privilege, or option pertaining to any of the Pledged Collateral, and in connection therewith, to deposit and deliver any and all of the Pledged Collateral with any committee, depositary, transfer agent, registrar, or other designated agency upon such terms and conditions as it may determine, all without liability except to account for property actually received by it, but the Collateral Agent shall have no duty to exercise any of the aforesaid rights, privileges, or options, and the Collateral Agent shall not be responsible for any failure to do so or delay in so doing, (ii) after the Collateral Agent’s giving of the notice specified in clause (i) of this Section 6.16(b), all rights of any Loan Party to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to clause (i) of Section 6.16(a) and to receive the dividends, interest, and other distributions which it would otherwise be authorized to receive and retain thereunder shall be suspended until such Event of Default shall no longer exist or as the Collateral Agent shall otherwise specify, and all such rights shall, until such Event of Default shall no longer exist or as the Collateral Agent shall otherwise specify, thereupon become vested in the Collateral Agent which shall thereupon have the sole right to exercise such voting and other consensual rights and to receive and hold as Pledged Collateral such dividends, interest, and other distributions, (iii) all dividends, interest, and other distributions which are received by any Loan Party contrary to the

Loan And Security Agreement — Page 86

provisions of this Section 6.16(b) shall be received in trust for the benefit of the Collateral Agent, shall be segregated from other funds of such Loan Party and shall be forthwith paid over to the Collateral Agent as Collateral in the same form as so received (with any necessary endorsement), and (iv) each Loan Party shall execute and deliver (or cause to be executed and delivered) to the Collateral Agent all such proxies and other instruments as the Collateral Agent may reasonably request for the purpose of enabling the Collateral Agent to exercise the voting and other rights which it is entitled to exercise pursuant to this Section 6.16(b) and to receive the dividends, interest, and other distributions which it is entitled to receive and retain pursuant to this Section 6.16(b). The foregoing shall not in any way limit the Collateral Agent’s power and authority granted pursuant to Section 6.13. After all Events of Default have been cured or waived and the applicable Loan Party shall have delivered to the Collateral Agent certificates to that effect, the Collateral Agent shall, promptly after all such Events of Default have been cured or waived, repay to each Loan Party (without interest) all dividends or other distributions that such Loan Party would otherwise be permitted to retain pursuant to the terms of Section 6.16(a) above and that remain in such account.

          Section 6.17 Personal Property. The Secured Parties and the Loan Parties hereby agree as follows:

     (a) Perfection by Filing. The Collateral Agent may, and the Loan Parties hereby authorize the Collateral Agent to, at any time and from time to time, file financing statements, continuation statements, and amendments thereto that describe the Collateral as “all assets” or words of similar import and which contain any other information required pursuant to Article 9 of the UCC for the sufficiency of filing office acceptance of any financing statement, continuation statement, or amendment, and each Loan Party agrees to furnish any such information to the Collateral Agent promptly upon request. The Collateral Agent shall inform the applicable Loan Parties of any such filing either prior to, or reasonably promptly after, such filing. The Loan Parties acknowledge that they are not authorized to file any financing statement covering the Collateral or amendment or termination statement with respect to any financing statement covering the Collateral without the prior written consent of Collateral Agent (or the Noteholder Collateral Agent, with respect to Collateral other than Revolving Facility First Lien Collateral) and agree that they will not do so without the prior written consent of Collateral Agent, subject to (i) the Loan Parties’ rights under Section 9-509(d)(2) of Article 9 of the UCC and (ii) financing statements that may be filed, in accordance with the Intercreditor Agreement, to perfect the Noteholder Liens in the Collateral.

     (b) Other Perfection, etc. Each Loan Party shall, at any time and from time to time, take such steps as the Collateral Agent may reasonably request for the Collateral Agent (i) to obtain an acknowledgment, in form and substance reasonably satisfactory to the Collateral Agent, of any bailee having possession of any of the Collateral in excess of $1,000,000 and not having otherwise entered into a subordination agreement for the benefit of the Collateral Agent, stating that the bailee holds such Collateral for the Collateral Agent, (ii) to obtain “control” of any Investment Property, deposit accounts, letter-of-credit rights, or Electronic Chattel Paper constituting Revolving Facility First Lien Collateral (as such terms are defined by Article 9 of the UCC with corresponding

Loan And Security Agreement — Page 87

provisions thereof defining what constitutes “control” for such items of Collateral) in excess of $1,000,000, with any agreements establishing control to be in form and substance reasonably satisfactory to the Collateral Agent, and (iii) otherwise to insure the continued perfection and priority of the Collateral Agent’s security interest in any of the Collateral (to the extent required hereunder) and of the preservation of its rights therein. If any Loan Party shall at any time, acquire a Commercial Tort Claim with an expected value of at least $1,000,000, such Loan Party shall promptly notify the Collateral Agent thereof in a writing, therein providing a reasonable description and summary thereof, and upon delivery thereof to the Collateral Agent, such Loan Party shall be deemed to thereby grant to the Collateral Agent (and such Loan Party hereby grants to the Collateral Agent) a security interest and Lien in and to such Commercial Tort Claim and all proceeds thereof, all upon the terms of and governed by this Agreement.

     (c) Savings Clause. Nothing contained in this Section 6.17 shall be construed to narrow the scope of the Collateral Agent’s Liens or the perfection or priority thereof or to impair or otherwise limit any of the rights, powers, privileges, or remedies of the Secured Parties under the Loan Documents.

          Section 6.18 Intercreditor Agreement Governs. (a) NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE LIEN AND SECURITY INTEREST GRANTED TO THE COLLATERAL AGENT, FOR THE BENEFIT OF THE SECURED PARTIES, PURSUANT TO THIS AGREEMENT AND THE OTHER SECURITY DOCUMENTS AND THE EXERCISE OF ANY RIGHT OR REMEDY BY THE COLLATERAL AGENT AND THE OTHER PARTIES HEREUNDER ARE SUBJECT TO THE PROVISIONS OF THE INTERCREDITOR AGREEMENT. IN THE EVENT OF ANY CONFLICT OR INCONSISTENCY BETWEEN THE PROVISIONS OF THE INTERCREDITOR AGREEMENT AND THIS AGREEMENT, THE PROVISIONS OF THE INTERCREDITOR AGREEMENT SHALL CONTROL

     (b) The Agents and Lenders acknowledge and agree, on behalf of themselves and any Secured Party, that, any provision of this Agreement or any other Loan Document to the contrary notwithstanding, until the termination of the Senior Notes Security Documents and the release of the Noteholder Collateral Agent’s Lien in such Collateral, the Loan Parties shall not be required to act or refrain from acting pursuant to this Agreement or any other Loan Document or with respect to any Collateral on which the Noteholder Collateral Agent has a Lien superior in priority to the Collateral Agent’s Lien thereon in any manner that would result in a default under the terms and provisions of the Senior Notes Collateral Agreement or any document governing the Senior Secured Notes.

     (c) Reference is made to the Intercreditor Agreement. Each Lender hereunder (a) consents to the subordination of Liens provided for in the Intercreditor Agreement, (b) agrees that it will be bound by and will take no actions contrary to the provisions of the Intercreditor Agreement and (c) authorizes and instructs the Collateral Agent to enter into the Intercreditor Agreement as Collateral Agent and on behalf of such Lender. The foregoing provisions are intended as an inducement to the Lenders to extend credit and

Loan And Security Agreement — Page 88

such Lenders are intended third party beneficiaries of such provisions and the provisions of the Intercreditor Agreement.

ARTICLE 7

BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES

          Section 7.1 Books and Records. Each of Holdings and the Borrowers shall, and shall cause each Subsidiary to, maintain, at all times, correct and complete books, records, and accounts in which complete, correct, and timely entries are made of all dealings and transactions in relation to its business and activities in conformity with GAAP and all Requirements or Law. Each of Holdings and the Borrowers shall, and shall cause each Subsidiary to, maintain at all times books and records pertaining to the Collateral in such detail, form, and scope as the Administrative Agent shall reasonably require, including, but not limited to, records of (a) all payments received and all credits and extensions granted with respect to the Accounts, (b) the return, rejection, repossession, stoppage in transit, loss, damage, or destruction of any Inventory, and (c) all other dealings affecting the Collateral.

          Section 7.2 Financial Information. The Borrowers will furnish, or cause to be furnished, to the Administrative Agent (which will promptly furnish such information to the Lenders) the following in such detail as the Administrative Agent shall reasonably request:

     (a) The Borrowers will furnish, or cause to be furnished, as soon as available, but in any event not later than ninety (90) days after the close of each Fiscal Year (or, if applicable, such longer period permitted under Rule 12b 25 under the Exchange Act), consolidated audited, and consolidating (with respect to each business product group of Parent) unaudited, balance sheets, statements of income, cash flow, and stockholders’ equity for Parent and its Subsidiaries for such Fiscal Year, the accompanying notes thereto, and setting forth in comparative form figures for the previous Fiscal Year, all in reasonable detail, fairly presenting in all material respects the financial position and the results of operations of Parent and its Subsidiaries as at the date thereof and for the Fiscal Year then ended, and prepared in accordance with GAAP or, in the case of consolidating financial statements, the Borrowers’ standard internal practices. Such Financial Statements shall be examined in accordance with generally accepted auditing standards by and, in the case of such Financial Statements performed on a consolidated basis, accompanied by a report thereon (without a “going concern” or like material qualification or exception) of independent certified public accountants of national standing selected by Parent (it being understood that the delivery by Parent of Annual Reports on Form 10-K of Parent shall satisfy the requirements of this Section 7.2(a) to the extent such Annual Reports include all the information specified herein).

     (b) The Borrowers will furnish, or cause to be furnished, as soon as available, but in any event not later than thirty (30) days after the end of each Fiscal Period (or, if applicable, such longer period permitted under Rule 12b 25 under the Exchange Act), other than any Fiscal Period which is a Fiscal Quarter end and with respect to any such Fiscal Quarter end within forty-five (45) days after the end of such Fiscal Quarter, a Compliance Certificate, consolidated and consolidating (with respect to each business

Loan And Security Agreement — Page 89

product group of Parent) unaudited balance sheets of Parent and its Subsidiaries as at the end of such Fiscal Period or Fiscal Quarter, as applicable, and consolidated and consolidating (with respect to each business product group of Parent) unaudited statements of income and cash flow for Parent and its Subsidiaries for such Fiscal Period or Fiscal Quarter, as applicable, and for the period from the beginning of the Fiscal Year to the end of such Fiscal Period or Fiscal Quarter, as applicable, all in reasonable detail, fairly presenting in all material respects the financial position and results of operations of Parent and its Subsidiaries as at the date thereof and for such periods, and prepared in accordance with GAAP (other than presentation of footnotes and subject to normal year-end adjustments) applied consistently with the audited Financial Statements required to be delivered pursuant to Section 7.2(a) or, in the case of consolidating Financial Statements, the Borrowers’ standard internal practices, provided, however, in the event that the Borrowers cannot provide such Financial Statements within thirty (30) days after any Fiscal Period ending on a Fiscal Quarter end or Fiscal Year end, the Borrowers shall provide the Administrative Agent with an Applicable Margin Calculation within thirty (30) days after the end of such Fiscal Quarter or Fiscal Year. Notwithstanding anything to the contrary contained herein, should the Borrowers elect to provide the Applicable Margin Calculation in lieu of Financial Statements within thirty (30) days after such Fiscal Quarter end or Fiscal Year end, the Borrowers shall also furnish Financial Statements in accordance with the terms hereof. Parent shall certify by a certificate signed by its chief financial officer or chief accounting officer or a Responsible Officer that all such Financial Statements have been prepared in accordance with GAAP and present fairly in all material respects, subject to normal year-end adjustments and the absence of footnotes, the financial position of Parent and its Subsidiaries as at the dates thereof and its results of operations for the periods then ended (it being understood that the delivery by Parent of Quarterly Reports on Form 10-Q of Parent shall satisfy the requirements of this Section 7.2(b) to the extent such Quarterly Reports include the information specified herein).

     (c) The Borrowers will furnish, or cause to be furnished, within forty-five days (45) of the last day of each Fiscal Quarter, a certificate of the chief financial officer or chief accounting officer or Responsible Officer of Parent in the form of Exhibit F (a “Compliance Certificate”) (i) (if applicable) setting forth in reasonable detail the calculations required to establish compliance with Section 9.24 during the period covered by such Financial Statements and as at the end thereof, and (ii) stating that, except as explained in reasonable detail in such certificate, (A) all of the representations and warranties of the Borrowers contained in this Agreement and the other Loan Documents are true and correct in all material respects as at the date of such certificate as if made at such time, except for those that speak as of a particular date, and (B) no Default or Event of Default then exists. If such certificate discloses that a representation or warranty is not true or correct, or that a covenant has not been complied with, or that a Default or Event of Default exists, such certificate shall set forth what action the Borrowers have taken or propose to take with respect thereto.

     (d) The Borrowers will furnish, or cause to be furnished, no sooner than sixty (60) days prior to and not less than thirty (30) days after the beginning of each Fiscal Year, an annual budget with respect to such Fiscal Year prepared by Parent during such

Loan And Security Agreement — Page 90

time period (to include forecasted consolidated and consolidating (with respect to each business product group of Parent) balance sheets and statements of income and cash flow) for Parent and its Subsidiaries as at the end of and for each Fiscal Period of such Fiscal Year.

     (e) [Reserved]

     (f) The Borrowers will furnish, or cause to be furnished, promptly upon the filing thereof, copies of all reports, if any, to or other documents filed by Holdings, any Borrower or any Subsidiary with the Securities and Exchange Commission under the Exchange Act, and all material notices sent or received by any Borrower to or from the holders of any Indebtedness (excluding industrial development revenue bonds and mortgages) of any Borrower registered under the Securities Act of 1933 or to or from the trustee under any indenture under which the same is issued.

     (g) The Borrowers will furnish, or cause to be furnished, as soon as available, but in any event not later than fifteen (15) days after the receipt by the Board of Directors of each of Holdings, any Borrower or any Subsidiary of a copy of all reports submitted to such Board of Directors in connection with any material interim or special audit and a copy of any final “management letter” prepared by any independent certified public accountants of the Holdings, any Borrower or any Subsidiary.

     (h) The Borrowers will furnish promptly after the request by an Agent or any (through the Administrative Agent) Lender all documentation and other information that such Lender reasonably requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT ACT.

     (i) The Borrowers will furnish to the Agents each year at the time of delivery of the annual financial statements with respect to the preceding Fiscal Year pursuant to paragraph (a) above a certificate of a Responsible Officer setting forth the information required pursuant to Section 2 of the Perfection Certificate or confirming that there has been no change in such information since the Closing Date or the date of the most recent certificate delivered pursuant to this paragraph (i).

     (j) The Borrowers will furnish, or cause to be furnished, such additional information as an Agent and/or any Lender (through the Administrative Agent) may from time to time reasonably request regarding the financial and business affairs of any Borrower.

          Section 7.3 Notices to the Lenders. The Borrowers shall notify the Administrative Agent and the Lenders in writing of the following matters at the following times:

     (a) promptly after becoming aware of any Default or Event of Default;

     (b) promptly after becoming aware of any event or circumstance which has resulted in, or could reasonably be expected to result in, a Material Adverse Effect;

Loan And Security Agreement — Page 91

     (c) promptly after becoming aware of any pending or threatened (in writing) action, suit, proceeding, or counterclaim by any Person, or any pending or threatened investigation by a Governmental Authority, as to which an adverse determination is reasonably probable and which, if adversely determined, could reasonably be expected to have a Material Adverse Effect;

     (d) promptly after becoming aware of any pending or threatened (in writing) strike, work stoppage, unfair labor practice claim, or other labor dispute affecting any Loan Party, in each case, that could reasonably be expected to have a Material Adverse Effect;

     (e) any change in any Loan Party’s name, state of organization, or form of organization, in each case at least fifteen (15) days prior thereto;

     (f) upon request, copies of any annual report to be filed pursuant to ERISA in connection with each Plan and copies of any pension reports obtained by any Loan Party;

     (g) promptly and in any event within ten (10) Business Days after any Borrower knows that a Reportable Event has occurred, a statement generally describing the Reportable Event and the action, if any, that such Borrower or (if known by such Borrower) any ERISA Affiliate has taken or proposes to take with respect thereto;

     (h) promptly any records, documents or other information must be furnished to the Pension Benefit Guaranty Corporation by any Loan Party with respect to any Plan pursuant to Section 4010 of ERISA, a copy of such records, documents or information;

     (i) promptly and in any event within ten (10) Business Days after receipt by any Borrower or any ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of each notice concerning such Multiemployer Plan, the imposition of withdrawal liability, its reorganization or termination (each within the meaning of Title IV of ERISA) or the amount of liability incurred or that may be incurred by such entity in connection with such event; and

     (j) promptly after commencement of any Commercial Tort Claim for which notice is required to be delivered pursuant to Article 6, such notice to include the details thereof.

Each notice given under this Section (other than under subsections (f), (h) and (i)) shall describe the subject matter thereof in reasonable detail, and shall set forth the action that any Loan Party has taken or proposes to take with respect thereto.

ARTICLE 8

GENERAL WARRANTIES AND REPRESENTATIONS

     Holdings and each Borrower warrants and represents to the Agents, the Letter of Credit Issuer and the Lenders that:

Loan And Security Agreement — Page 92

          Section 8.1 Authorization, Validity, and Enforceability of this Agreement and the Loan Documents; No Conflicts. Each such Person has the power and authority to execute, deliver, and perform this Agreement and the other Loan Documents to which it is a party, to incur the Obligations, and to grant to the Collateral Agent Liens upon the Collateral. Each such Person has taken all necessary action (including obtaining approval of its stockholders, partners, general partner(s), members, or other applicable equity owners, if necessary) to authorize its execution, delivery, and performance of this Agreement and the other Loan Documents to which it is a party. This Agreement and the other Loan Documents have been duly executed and delivered by each such Person, and constitute the legal, valid, and binding obligations of each such Person, enforceable against it in accordance with their respective terms without defense, set-off, or counterclaim, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws at the time in effect affecting the rights of creditors generally and to the effect of general principles of equity whether applied by a court of law or equity. The Transactions do not and will not conflict with, or constitute a violation or breach of, or constitute (alone or with notice or lapse of time or both) a default under, or give rise to any right to accelerate or to require the prepayment, repurchase or redemption of any obligation under, or result in or require the creation or imposition of any Lien upon the property of Holdings or any Borrower by reason of the terms of (a) any contract, mortgage, Lien, lease, agreement, indenture, document, or instrument to which Holdings or any Borrower is a party or which is binding upon it the effect of which could reasonably be expected to have a Material Adverse Effect, (b) any Requirement of Law applicable to Holdings or such Borrower the effect of which could reasonably be expected to have a Material Adverse Effect, or (c) the certificate or articles of incorporation, by-laws, or other organizational or constituent documents, as the case may be, of Holdings or such Borrower.

          Section 8.2 Validity and Priority of Security Interest.

     (a) This Agreement and the applicable Security Documents are effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the Collateral and the proceeds thereof and (i) when the Pledged Collateral is delivered to the Collateral Agent (subject to the terms of the Senior Notes Collateral Agreement and the Intercreditor Agreement), the Lien created under this Agreement and the applicable Security Documents shall constitute a fully perfected second-priority Lien on, and security interest in, all right, title and interest of the Loan Parties in such Pledged Collateral, in each case prior and superior in right to any other Person (other than, pursuant to the terms of the Senior Notes Collateral Agreement and the Intercreditor Agreement, the Senior Liens), and (ii) when financing statements in appropriate form are filed in the offices specified on Schedule 8.2, the Lien created under this Agreement and the applicable Security Documents will constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral, in each case prior and superior in right to any other Person, other than with respect to Permitted Liens.

     (b) Upon the recordation of this Agreement and the Copyright, Patent, and Trademark Agreements with the United States Patent and Trademark Office and the United States Copyright Office, together with the financing statements in appropriate form filed in the offices specified on Schedule 8.2, the Lien created shall constitute a

Loan And Security Agreement — Page 93

fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in the domestic Proprietary Rights in which a security interest may be perfected by filing in the United States and its territories and possessions, in each case prior and superior in right to any other Person (other than with respect to Permitted Liens) (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a Lien on registered trademarks and patents, trademark and patent applications and registered copyrights acquired by the Loan Parties after the date hereof).

     (c) The Mortgages are effective to create in favor of the Collateral Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable Lien on all of the Loan Parties’ right, title and interest in and to the Mortgaged Property thereunder and the proceeds thereof, and when the Mortgages are filed in the offices specified on Schedule 8.2(c), the Mortgages shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Mortgaged Property and the proceeds thereof, in each case prior and superior in right to any other Person, other than with respect to the rights of Persons pursuant to Permitted Liens (including pursuant to the terms of the Senior Notes Security Documents and the Intercreditor Agreement, the Noteholder Liens).

          Section 8.3 Organization and Qualification. Each Loan Party (a) is duly formed or organized and validly existing and (as of the Closing Date) in good standing, except as otherwise indicated on Schedule 8.3, under the laws of the jurisdiction of its formation or organization, (b) is qualified to do business as a foreign business entity and is in good standing in the jurisdictions set forth on Schedule 8.3, which as of the Closing Date are the only jurisdictions in which qualification is necessary in order for it to own or lease its property and conduct its business except for any jurisdiction for which the failure to so qualify could not reasonably be expected to have a Material Adverse Effect, and (c) has all requisite power and authority to conduct its business and to own its property as presently conducted or owned.

          Section 8.4 Corporate Name; Prior Transactions. Except as set forth on Schedule 8.4 or as permitted by this Agreement, since the date of its organization or acquisition as a Subsidiary of Parent, whichever time period is shorter, no Loan Party has, as of the Closing Date, been known by or used any other corporate or fictitious name, or been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person (other than in connection with the Transactions).

          Section 8.5 Subsidiaries. Schedule 8.5 is a correct and complete list, as of the Closing Date, of the name and relationship to Parent of each and all of Parent’s Subsidiaries. Schedule 8.5 sets forth, as of the Closing Date, a true and complete listing of each class of authorized Capital Stock, of which all of such issued shares are validly issued, outstanding, fully paid and non-assessable, and beneficially owned (in the case of Borrowers other than Parent) by the Persons identified on Schedule 8.5. As of the Closing Date, all Borrowers (other than Parent) are Wholly-Owned Subsidiaries of Parent and the Borrowers (other than Parent) constitute all of the Subsidiaries of Parent, except as set forth in Schedule 8.5.

          Section 8.6 Financial Statements and Projections.

Loan And Security Agreement — Page 94

     (a) Parent has delivered to the Administrative Agent, which will deliver to each Lender (i) the audited consolidated balance sheet and related statements of income, cash flow, and stockholders’ equity for Parent and its Subsidiaries as of December 31, 2004, and the Fiscal Years then ended, accompanied by the report thereon of Parent’s independent certified public accountants, (ii) the unaudited consolidated balance sheet and related statements of income, cash flow and stockholders’ equity for Parent and its Subsidiaries as of September 30, 2005, and the nine month period then ended, and certified by a Responsible Officer and (iii) the unaudited consolidated balance sheet and related statements of income, cash flow and stockholders’ equity for Parent and its Subsidiaries as of September 30, 2005, and the Fiscal Quarters then ended, and certified by a Responsible Officer. All such financial statements have been prepared in accordance with GAAP and fairly present in all material respects the financial position of Parent and its Subsidiaries as at the dates thereof and their results of operations for the periods then ended (except with respect to the financial statements described in clauses (ii) and (iii) above, for the absence of applicable footnotes and subject to normal year-end adjustments).

     (b) The pro forma financial information contained in the Confidential Information Memorandum is based on assumptions which are believed by Parent on the date hereof to be reasonable, reflect all material adjustments required to be made to give effect to the Transactions and present fairly in all material respects on a pro forma basis the estimated consolidated financial position of Parent and its consolidated Subsidiaries as of such date and for such period, assuming that the Transactions had actually occurred at such date or at the beginning of such period, as the case may be.

     (c) The Projections have been prepared in good faith based upon assumptions Parent believes to be reasonable as of the Closing Date; it being recognized by the Lenders that such Projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such Projections may differ significantly from the projected results.

          Section 8.7 Solvency. Immediately after the consummation of the Transactions to occur on the Closing Date and immediately following the making of each Revolving Loan and after giving effect to the application of the proceeds thereof and the issuance of the Letters of Credit, the Borrowers, considered as one business enterprise, are Solvent.

          Section 8.8 [Reserved].

          Section 8.9 Transaction Documents. Holdings and Parent have delivered to the Administrative Agent a complete and correct copy of the Merger Agreement (including all schedules, exhibits, amendments, supplements and modifications thereto). The Merger Agreement complies in all material respects with all applicable laws.

          Section 8.10 Title to Property. As of the Closing Date, each Loan Party has good and indefeasible title in fee simple to the Real Estate identified on Schedule 8.11 as owned by such Loan Party. Each Loan Party has good, indefeasible, and merchantable title to all of its

Loan And Security Agreement — Page 95

other property, free of all Liens except Permitted Liens, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.

          Section 8.11 Real Estate; Leases. Schedule 8.11 sets forth, as of the Closing Date, a correct and complete list of all Real Estate owned by each Borrower, all leases and subleases of real or personal property by each Borrower as lessee or sublessee (other than leases of personal property as to which it is lessee or sublessee for which the value of such personal property is less than $500,000), and all leases and subleases of real or personal property by each Borrower as lessor or sublessor. As of the Closing Date, each of such leases and subleases is valid and enforceable in accordance with its terms (except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws and to the effect of general principles of equity whether applied by a court of law or equity) and is in full force and effect, and, to the Borrowers’ knowledge, no default by any party to any such lease or sublease exists.

          Section 8.12 Proprietary Rights. Schedule 8.12 sets forth a correct and complete list of all of each Borrower’s registered patents and trademarks material to its business as of the Closing Date. As of the Closing Date, none of the patents and trademarks listed in Schedule 8.12 is subject to any licensing agreement or similar arrangement except as set forth on Schedule 8.12. The patents and trademarks described on Schedule 8.12 constitute all of the property of such type necessary to the current and anticipated future conduct of the Borrowers’ business as of the Closing Date. To the best of each Borrower’s knowledge, no slogan or other advertising device, product, process, method, substance, part, or other material now employed, or now contemplated to be employed, by any Borrower infringes any rights held by any other Person which infringement could reasonably be expected to have a Material Adverse Effect. No claim or litigation regarding any of the foregoing is pending or threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard, or code is pending or, to the knowledge of any Borrower, proposed, which, in either case, could reasonably be expected to have a Material Adverse Effect.

          Section 8.13 Trade Names. All trade names or styles under which, as of the Closing Date, any Borrower sells Inventory or creates Accounts, or to which instruments in payment of Accounts are made payable, are listed on Schedule 8.13.

          Section 8.14 Litigation. Except as set forth on Schedule 8.14, there is no pending, or to any Borrower’s knowledge threatened, action, suit, proceeding, or counterclaim by any Person, or, to any Borrower’s knowledge, any investigation by any Governmental Authority, (i) that, as of the Closing Date, involves any Loan Documents or the Transactions or (ii) as to which an adverse determination could reasonably be expected and which, if adversely determined, could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

          Section 8.15 [Reserved].

          Section 8.16 Labor Matters. Except as set forth on Schedule 8.16, as of the Closing Date (a) there is no collective bargaining agreement or other labor contract covering employees of any Borrower, (b) no such collective bargaining agreement or other labor contract

Loan And Security Agreement — Page 96

is scheduled to expire during the term of this Agreement, (c) to the knowledge of the Borrowers no union or other labor organization is seeking to organize, or to be recognized as, a collective bargaining unit of employees of any Borrower or for any similar purpose, and (d) there is no pending or to the knowledge of the Borrowers threatened, strike, work stoppage, material unfair labor practice claim, or other material labor dispute against or affecting any Borrower or its employees except as has not or could not reasonably be expected to have a Material Adverse Effect.

          Section 8.17 Environmental Matters. Except for matters that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect:

     (a) Holdings and each of its Subsidiaries has complied with all Environmental Laws and no Borrower nor any of its presently owned Real Estate or presently conducted operations, nor its previously owned Real Estate or prior operations, is subject to any enforcement order from or liability agreement with any Governmental Authority or private Person respecting (i) compliance with any Environmental Law or (ii) any potential liabilities and costs or remedial action arising from the Release or threatened Release of a Contaminant.

     (b) Holdings and each of its Subsidiaries has obtained all permits necessary for its current operations under Environmental Laws, and all such permits are in good standing and each such Person is in compliance with all material terms and conditions of such permits.

     (c) Neither Holdings nor any of its Subsidiaries, nor to the knowledge of Holdings or any Borrower, any of such Person’s predecessors in interest, has in violation of any Environmental Law stored, treated, or disposed of any hazardous waste (as defined pursuant to 40 CFR Part 261 or any equivalent Environmental Law).

     (d) Neither Holdings nor any of its Subsidiaries has received any summons, complaint, order, or similar written notice indicating that it is not currently in compliance with, or that any Governmental Authority is investigating its compliance with, any Environmental Laws or that it is or may be liable to any other Person as a result of a Release or threatened Release of a Contaminant.

     (e) None of the present or past operations of Holdings or any of its Subsidiaries, to the knowledge of Holdings or any Borrower, is the subject of any investigation by any Governmental Authority evaluating whether any remedial action is needed to respond to a Release or threatened Release of a Contaminant.

     (f) There is not now, nor to the knowledge of Holdings or any Borrower, has there ever been on or in the Real Estate of any Borrower or any of its Subsidiaries in violation of Environmental Laws:

     (i) any underground storage tanks or surface impoundments,

     (ii) any asbestos-containing material, or

Loan And Security Agreement — Page 97

     (iii) any polychlorinated biphenyls (PCBs) used in hydraulic oils, electrical transformers, or other equipment.

     (g) Since December 31, 2004 or as otherwise disclosed to the Administrative Agent pursuant to Section 7.3, none of Holdings nor any of its Subsidiaries has filed any notice under any requirement of Environmental Law reporting a spill or accidental and unpermitted Release or discharge of a Contaminant into the environment.

     (h) None of Holdings or any of its Subsidiaries has entered into any negotiations or settlement agreements with any Person (including the prior owner of its property) imposing obligations or liabilities on any such Person with respect to any remedial action in response to the Release of a Contaminant or environmentally related claim.

     (i) None of the products manufactured, distributed, or sold by Holdings or any of its Subsidiaries contains asbestos containing material.

     (j) No Environmental Lien has attached to the Real Estate of Holdings or any of its Subsidiaries.

          Section 8.18 No Violation of Law. None of Holdings or any of its Subsidiaries is in violation of any law, statute, regulation, ordinance, judgment, order, or decree applicable to it, which violation could reasonably be expected to have a Material Adverse Effect.

          Section 8.19 [Reserved]

          Section 8.20 Pension Plans. Except as set forth on Schedule 8.20, as of the Closing Date no Borrower maintains or contributes to any Plan. Each Borrower and each ERISA Affiliate is in compliance with the requirements of ERISA and the regulations promulgated thereunder with respect to each Plan, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 8.20, no fact or situation that could reasonably be expected to result in a Material Adverse Effect exists in connection with any Plan. No Borrower or ERISA Affiliate has incurred any withdrawal liability under Title IV of ERISA in connection with a Multiemployer Plan which remains unsatisfied and which could reasonably be expected to have a Material Adverse Effect.

          Section 8.21 Taxes. Each Borrower has filed or caused to be filed all federal and other material Tax Returns and reports required to be filed (or appropriate extensions have been timely filed), and has paid all federal and material other taxes, assessments, fees, and other governmental charges levied or imposed upon them or their properties, income, or assets otherwise due and payable except taxes, assessments, fees and charges that are being contested in good faith by appropriate proceedings and for which such Borrower has set aside on its books adequate reserves.

          Section 8.22 Regulated Entities. No Loan Party is an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940. No Loan Party is a “holding company” or a “subsidiary company” of a

Loan And Security Agreement — Page 98

“holding company” or an “affiliate” of a “holding company” or a “public utility” within the meaning of the Public Utility Holding Company Act of 1935.

          Section 8.23 Use of Proceeds; Margin Regulations. The proceeds of the Revolving Loans are to be used solely for the purposes specified in Section 9.26. No Borrower is engaged in the business of buying or selling Margin Stock or extending credit for the purpose of buying or carrying Margin Stock.

          Section 8.24 No Material Adverse Change. Since December 31, 2004, no event, change, circumstance, effect or state of facts has occurred that, individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect.

          Section 8.25 Full Disclosure. None of the representations or warranties made by any Loan Party in the Loan Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in any exhibit, report, statement, or certificate furnished by or on behalf of any Loan Party in connection with the Loan Documents including the Confidential Information Memorandum, contain any untrue statement of a material fact or omit any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered; provided, that with respect to projected financial information, Borrowers represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time such projected financial information was prepared and at the time such projected financial information was provided to the Agents (it being understood by the Agents and the Lenders that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period or periods covered by such financial information may differ from the projected results set forth therein).

          Section 8.26 [Reserved]

          Section 8.27 Bank Accounts. As of the Closing Date, Schedule 8.27 contains a complete and accurate list of all bank accounts maintained by each Borrower with any bank or other financial institution.

          Section 8.28 Governmental Authorization. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or other Person is necessary or required in connection with the Transactions occurring on the Closing Date except (i) for those which have been duly obtained by the Borrowers, (ii) for the filing of financing statements and mortgages and filings with the United Stated Patent and Trademark Office and United States Copyright Office, (iii) as may be required under the Securities Act, the Exchange Act or the regulations thereunder, state securities or “Blue Sky” laws, (iv) for the qualification of the Senior Notes Indenture under the Trust Indenture Act of 1939, as amended, (v) as required for consummation of the Merger, which consent, approval, authorization or order will be obtained prior to consummation thereof and (vi) those that, if not obtained, taken or made, could not reasonably be expected to have a Material Adverse Effect.

          Section 8.29 Investment Property.

Loan And Security Agreement — Page 99

     (a) Schedule 8.29 sets forth a correct and complete list of all Investment Property owned by each Loan Party as of the Closing Date. As of the Closing Date, each Loan Party is the legal and beneficial owner of such Investment Property, as so reflected, free and clear of any Lien (other than Permitted Liens), and has not sold, granted any option with respect to, assigned or transferred, or otherwise disposed of any of its rights or interest therein.

     (b) To the extent any Loan Party is an Issuer (as defined in Section 6.2(d)) as of the Closing Date: (i) the Issuer’s shareholders that are Loan Parties and the ownership interest of each such shareholder are as set forth on Schedule 8.5, and each such shareholder is the registered owner thereof on the books of the Issuer; (ii) the Issuer acknowledges the Collateral Agent’s Lien; (iii) to the extent required to perfect the Collateral Agent’s Liens, such security interest, collateral assignment, lien, and pledge in favor of the Collateral Agent has been registered on the books of the Issuer for such purpose as of the date hereof; and (iv) as of the Closing Date the Issuer is not aware of any liens, restrictions, or adverse claims which exist on any such Investment Property other than the continuing security interest, collateral assignment, lien, and pledge in favor of (1) the Collateral Agent granted pursuant to the terms of Section 6.1 and (2) the Noteholder Collateral Agent.

          Section 8.30 Common Enterprise. The successful operation and condition of each of the Loan Parties is dependent on the continued successful performance of the functions of the group of Loan Parties as a whole. Each of the Loan Parties expects to derive benefit (and its board of directors or other governing body has determined that it may reasonably be expected to derive benefit), directly and indirectly, from successful operations of Parent and each of the other Loan Parties. Each Loan Party expects to derive benefit (and the boards of directors or other governing body of each such Loan Party have determined that it may reasonably be expected to derive benefit), directly and indirectly, from the credit extended by the Lenders to the Loan Parties hereunder, both in their separate capacities and as members of the group of companies. Each Loan Party has determined that execution, delivery, and performance of this Agreement and any other Loan Documents to be executed by such Loan Party are within its corporate purpose, will be of direct and indirect benefit to such Loan Party, and are in its best interest.

ARTICLE 9

AFFIRMATIVE AND NEGATIVE COVENANTS

     Holdings and each Borrower covenants to the Agents, the Letter of Credit Issuer and each Lender that so long as any of the Obligations remain outstanding (other than contingent indemnity and expense reimbursement obligations for which no claim has been made) or this Agreement is in effect unless waived pursuant to Section 13.2, Holdings and each Borrower will keep and perform each of the following covenants:

          Section 9.1 Taxes and Other Obligations. Except as otherwise permitted by the terms of this Agreement, Holdings and each Borrower shall, and shall cause each Subsidiary to, (a) file when due all material Tax Returns and other reports which it is required to file and

Loan And Security Agreement — Page 100

(b) pay, or provide for the payment, when due, of all material taxes, fees, assessments, and other governmental charges against it or upon its property, income, and franchises, make all required withholding and other material tax deposits, and establish adequate reserves for the payment of all such items, and provide to the Administrative Agent and the Lenders, upon request, satisfactory evidence of its timely compliance with the foregoing; provided, however, Holdings or such Borrower need not pay any tax, fee, assessment, or governmental charge, that (x) it is contesting in good faith by appropriate proceedings diligently pursued and for which such Borrower has established proper reserves as provided in accordance with GAAP and (y) no Lien (other than a Permitted Lien) results from such non-payment and, in the case of Mortgaged Property, there is no risk of forfeiture of such property.

          Section 9.2 Existence and Good Standing. Except as expressly permitted by Section 9.9, Holdings and each Borrower shall, and shall cause each Subsidiary to, maintain its existence and its qualification and good standing in all jurisdictions in which the failure to maintain such existence and qualification or good standing could reasonably be expected to have a Material Adverse Effect.

          Section 9.3 Compliance with Law and Agreements; Maintenance of Licenses. Holdings and each Borrower shall, and shall cause each Subsidiary to, (i) comply with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act and all Environmental Laws) except for any noncompliance which could not reasonably be expected to have a Material Adverse Effect, (ii) obtain and maintain all licenses, permits, franchises, and governmental authorizations necessary to own its property and, except as could not reasonably be expected to have a Material Adverse Effect, to conduct its business as conducted on the Closing Date and (iii) refrain from modifying, amending, or altering its certificate or articles of incorporation (or other similar constituent documents) other than in a manner which does not adversely affect the rights of the Lenders or the Agents.

          Section 9.4 Maintenance of Property. Except as otherwise expressly permitted hereunder, each Borrower shall, and shall cause each Subsidiary to, maintain all of its property necessary and useful in the conduct of its business, in reasonable operating condition and repair, ordinary wear and tear excepted.

          Section 9.5 Insurance.

     (a) Holdings and each Borrower shall, and shall cause each Subsidiary to, maintain with financially sound and reputable insurers insurance that is reasonably consistent with prudent industry practice or otherwise acceptable to the Agents in their reasonable discretion.

     (b) For each of the insurance policies issued as required by this Section 9.5 with respect to Collateral, Holdings and each Borrower shall cause the Collateral Agent, for the benefit of the Secured Parties, to be named as secured party or mortgagee and loss payee or additional insured, as applicable, in a manner reasonably acceptable to the Collateral Agent. Each policy of insurance shall contain a clause or endorsement requiring the insurer to give not less than thirty (30) days prior written notice to the

Loan And Security Agreement — Page 101

Collateral Agent in the event of cancellation of such policy for any reason whatsoever (other than for non-payment of premium, in which case ten (10) days notice shall be given). All premiums for such insurance shall be paid by the Borrowers when due, and certificates of insurance of the policies shall be delivered to the Collateral Agent.

     (c) Parent shall promptly notify the Agents of any loss, damage, or destruction to the Collateral in excess of (A) $5,000,000 if covered by insurance or (B) $1,000,000 if not covered by insurance. During the existence of an Event of Default subject to the Intercreditor Agreement, the Collateral Agent is hereby authorized to directly collect all insurance proceeds in respect of Collateral and to remit such proceeds to the Administrative Agent to be applied to the reduction of the Obligations in the manner provided for in Section 4.6.

          Section 9.6 Condemnation. Each Borrower shall, promptly upon learning of the institution of any proceeding for the condemnation or other taking of any of its property with a Fair Market Value in excess of $1,000,000, notify the Agents of the pendency of such proceeding.

          Section 9.7 Environmental Laws.

     (a) Holdings and each Borrower shall, and shall cause each Subsidiary to, conduct its business in compliance with all Environmental Laws applicable to it, including those relating to the generation, handling, use, storage, and disposal of any Contaminant other than such noncompliance which could not reasonably be expected to have a Material Adverse Effect.

     (b) For any environmental matters that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, and without limiting the generality of the foregoing, (i) Holdings and the Borrowers shall, upon the Administrative Agent’s request, submit to the Administrative Agent and the Lenders an update of the status of each environmental compliance or liability issue concerning Holdings or any Borrower or any of their respective properties or operations (whether past or present); and (ii) the Administrative Agent or any Lender may request copies of technical reports prepared by Holdings or any Borrower and its communications with any Governmental Authority to determine whether Holdings or such Borrower is proceeding reasonably to correct, cure, or contest in good faith any alleged non-compliance or environmental liability.

          Section 9.8 [Reserved].

          Section 9.9 Mergers, Consolidations, Sales, Acquisitions. Neither Holdings nor any Borrower shall, nor shall they permit any Subsidiary to, merge, amalgamate or consolidate, or transfer, sell, assign, lease (as lessor), or otherwise dispose of all or any part of its property, or wind up, liquidate or dissolve, except for sales or other dispositions of Excluded Assets; provided that, notwithstanding the foregoing or any other provision of this Agreement:

     (a) a Borrower or a Subsidiary, other than Parent, may wind-up, dissolve, or liquidate or sell or otherwise dispose of any of its Property if (i) its property is transferred

Loan And Security Agreement — Page 102

to Parent, another Borrower or another Subsidiary (provided that if the transferor was a Loan Party, the transferee must also be a Loan Party) and (ii) the Person acquiring such property complies with its obligations under Section 6.2 and Section 9.27 simultaneously with such acquisition;

     (b) a Borrower or a Subsidiary, other than Parent, may merge or consolidate with Parent, another Borrower or another Subsidiary (provided Parent is the survivor of any such merger or consolidation to which it is a party and a Borrower is the survivor of any such merger or consolidation to which a Borrower is party);

     (c) as long as no Default or Event of Default exists or would result therefrom, a Borrower or a Subsidiary may make Permitted Acquisitions (and mergers or consolidations in connection therewith);

     (d) a Borrower or a Subsidiary may enter into sales or other dispositions of its property consisting of:

     (i) Inventory sold or disposed of in the ordinary course of business;

     (ii) as long as no Default or Event of Default exists or would result therefrom, sales or other dispositions permitted under Section 9.19;

     (iii) investments permitted by clauses (b) through (g) of the definition of Restricted Investments sold or disposed of in the ordinary course of business;

     (iv) as long as no Default or Event of Default exists or would result therefrom, sales of accounts receivable in an aggregate amount not to exceed $4,000,000 in any calendar year; and

     (v) as long as no Default or Event of Default exists or would result therefrom, sales or other dispositions of Collateral in an aggregate amount not to exceed $7,500,000 in any calendar year, with the amount not used in any calendar year carried over into subsequent calendar years;

     (e) Holdings or any Borrower may make any Distribution or effect any other transaction, in each case permitted by Section 9.10;

     (f) a Loan Party may sell or dispose of assets to any other Loan Party;

     (g) a Borrower or a Subsidiary may swap assets in exchange for other assets of comparable or greater value or usefulness to the business of Parent and the Subsidiaries as a whole; provided that (i) at least 90% of the consideration received by the transferor consists of assets (other than cash) that will be used in a business or business activity permitted hereunder, (ii) the aggregate Fair Market Value of the assets being transferred by the Borrower or such Subsidiary is not greater than the aggregate Fair Market Value of the assets received by Parent or such Subsidiary in such exchange and (iii) such Fair Market Value of the property or assets being transferred or received by Parent or such Subsidiary shall be determined in good faith by the management of Parent;

Loan And Security Agreement — Page 103

provided that in the event of a swap with a Fair Market Value in excess of $5,000,000, the Administrative Agent shall have received a certificate from a Responsible Officer of Parent as to such Fair Market Value;

     (h) a Borrower or a Subsidiary may sell or otherwise dispose of assets which, in the reasonable opinion of such Person, are surplus, worn-out, obsolete, uneconomic or no longer useful in the conduct of such Person’s business; and

     (i) a Borrower or a Subsidiary may dispose of any other assets provided that the proceeds thereof are used (1) to acquire, maintain, develop, construct, improve, upgrade or repair or replace assets useful in the business of any Borrower or (2) to repay outstanding Revolving Loans; provided that the aggregate gross proceeds (including non-cash proceeds) of any assets sold in reliance on this paragraph (i) in any Fiscal Year shall not exceed 5% of Total Assets as of the last day of the preceding Fiscal Year.

The inclusion of proceeds in the definition of Collateral shall not be deemed to constitute an Agent’s or any Lender’s consent to any sale or other disposition of the Collateral except as expressly permitted herein.

          Section 9.10 Distributions; Capital Change; Restricted Investments. Neither Holdings nor any Borrower shall, nor shall they permit any Subsidiary to,

     (a) directly or indirectly declare or make any Distribution, except,

     (i) Distributions by a Loan Party to another Loan Party;

     (ii) provided that both before and after giving effect to the proposed Distribution the Fixed Coverage Charge Ratio is at least 1.0 to 1.0, and the Availability is greater than or equal to $50,000,000, Distributions by Parent or Holdings to any direct or indirect parent of Parent to permit such Person to make Distributions (A) in an aggregate amount not to exceed $25,000,000, (B) in an additional aggregate amount not to exceed the sum of (1) $5,000,000 for each full Fiscal Quarter during the term of this Agreement (with any amount not used in any Fiscal Quarter being permitted to be used in succeeding Fiscal Quarters) plus (2) an amount equal to 50% of Parent’s cumulative Consolidated Net Income (or, if Consolidated Net Income is negative, minus 100% thereof), taken as one accounting period, since the Closing Date, (C) in an additional aggregate amount not to exceed 100% of the aggregate net cash proceeds received by Parent after the Closing Date from the issue or sale of Capital Stock of Parent (excluding Disqualified Stock and Permitted Cure Securities), or upon exercise of warrants or options (other than an issuance or sale to a Subsidiary of Parent or an employee stock ownership plan or trust established by Parent or any of its Subsidiaries), and (D) in an additional aggregate amount not to exceed an amount equal to 100% of the aggregate amount of cash contributions to the capital of Parent received after the Closing Date (other than Disqualified Stock and Permitted Cure Securities); and provided that before and after giving effect to any of the foregoing Distributions, no Default or Event of Default exists or will occur;

Loan And Security Agreement — Page 104

     (iii) so long as no Default or Event of Default shall then exist or result therefrom, the repurchase, retirement or other acquisition for value of Capital Stock of Parent or any direct or indirect parent of Parent held by any future, present or former employee, director or consultant of Parent, or any direct or indirect parent of Parent or any Subsidiary of Parent pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or other agreement or arrangement; provided, however, that the aggregate amounts paid under this clause (iii) do not exceed $10,000,000 in any calendar year (with unused amounts in any calendar year being permitted to be carried over for the next succeeding calendar year); provided further, however, that such amount in any calendar year may be increased by an amount not to exceed: (A) the cash proceeds received by Parent or any Subsidiary from the sale of Capital Stock of Parent or any direct or indirect parent of Parent (to the extent contributed to Parent) to members of management, directors or consultants of Parent and its Subsidiaries or any direct or indirect parent of Parent that occurs after the Closing Date (provided, however, that the amount of such cash proceeds utilized for any such repurchase, retirement or other acquisition will not increase the amount available for Distributions under clause (a)(ii) above); plus (B) the cash proceeds of key man life insurance policies received by Parent or any direct or indirect parent of Parent (to the extent contributed to Parent) or its Subsidiaries after the Closing Date (provided, however, that Parent may elect to apply all or any portion of the aggregate increase contemplated by clauses (A) and (B) above in any calendar year and, to the extent any payment described under this clause (iii) is made by delivery of Indebtedness and not in cash, such payment shall be deemed to occur only when, and to the extent, the obligor on such Indebtedness makes payments with respect to such Indebtedness);

     (iv) repurchases of Capital Stock deemed to occur upon exercise of stock options or warrants if such Capital Stock represents a portion of the exercise price of such options or warrants;

     (v) any Subsidiary of Parent that is not a Wholly-Owned Subsidiary may pay cash Distributions to its shareholders or partners generally, so long as Parent or its respective Subsidiary which owns the Capital Stock in the Subsidiary paying such Distributions receives at least its proportionate share thereof (based upon its relative holdings of Capital Stock in the Subsidiary paying such Distributions and taking into account the relative preferences, if any, of the various classes of Capital Stock in such Subsidiary or the terms of any agreements applicable thereto);

     (vi) Holdings or Parent may pay Distributions with respect to its common stock or ordinary shares payable solely in additional common stock or ordinary shares;

     (vii) Distributions by Parent or Holdings in amounts equal to the amounts required for any direct or indirect parent of Parent to pay fees and expenses (including franchise or similar taxes) required to maintain its existence,

Loan And Security Agreement — Page 105

customary salary, bonus and other benefits payable to, and indemnity provided on behalf of, officers and employees of any direct or indirect parent of Parent, and general corporate overhead expenses of any direct or indirect parent of Parent, in each case to the extent such fees, expenses, salaries, bonuses, benefits and indemnities are attributable to the ownership or operation of Parent and its Subsidiaries; provided however, that any such Distributions or other amounts shall not exceed $1,000,000 per year and shall be treated as operating expenses of Parent for purposes of determining Consolidated Net Income of Parent to the extent that the amounts payable by such direct or indirect parent would be treated as operating expenses if incurred by Parent;

     (viii) Distributions made on the Closing Date to effect the Transactions;

     (ix) Distribution of shares of Capital Stock of, or Indebtedness owed to Parent or a Subsidiary by, Unrestricted Subsidiaries;

     (x) Distributions to any direct or indirect parent company of Parent that files a consolidated U.S. federal tax return that includes Parent and its Subsidiaries in an amount not to exceed the amount that Parent and its Subsidiaries would have been required to pay in respect of federal, state or local taxes (as the case may be) in respect of such year if Parent and its Subsidiaries paid such taxes directly as a stand-alone taxpayer (or stand-alone group); and

     (xi) payments or Distributions by Holdings, Parent or any Subsidiary to allow such entity to make payments of cash, in lieu of the issuance of fractional shares upon the exercise of warrants or upon the conversion or exchange of Capital Stock of any such Person or of any direct or indirect parent of Parent; provided that the aggregate amount of such Distributions does not exceed $2,500,000.

Any Distribution permitted by this clause (a) may be made directly by Parent or Holdings for the purposes identified therein or may be made by Parent to any direct or indirect Parent of Parent in order to permit such Person to make the payments identified therein.

     (b) make any Restricted Investment.

          Section 9.11 [Reserved]

          Section 9.12 [Reserved]

          Section 9.13 Indebtedness. Neither Holdings nor any Borrower shall, nor shall they permit any Subsidiary to, incur or maintain any Indebtedness, other than:

     (a) the Obligations;

     (b) other Indebtedness existing on the Closing Date and reflected in the Financial Statements described in Section 8.6 and set forth on Schedule 9.13;

Loan And Security Agreement — Page 106

     (c) Indebtedness constituting purchase money Indebtedness (including, without limitation, obligations under Capital Leases), incurred after the Closing Date in an aggregate amount at any time outstanding not to exceed $50,000,000;

     (d) Indebtedness incurred under sale and leaseback transactions permitted under Section 9.19;

     (e) Indebtedness (i) secured by Real Estate and Equipment and/or proceeds thereof or (ii) consisting of Senior Secured Notes or Other Pari Passu Lien Obligations (as defined in the Senior Secured Indenture) in an aggregate amount not to exceed $50,000,000;

     (f) Permitted Subordinated Debt;

     (g) Indebtedness in respect of the Senior Secured Notes in an aggregate principal amount not to exceed $300,000,000;

     (h) [Reserved];

     (i) Indebtedness of Holdings, Parent or any Subsidiary of Parent to Holdings, Parent or any other Subsidiary of Parent;

     (j) Indebtedness in respect of performance, bid, appeal and surety bonds, completion Guaranties and similar obligations provided by Parent or any Subsidiary of Parent, including those to secure health, safety and environmental obligations in the ordinary course of business;

     (k) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds or other cash management services in the ordinary course of business; provided, that such Indebtedness is extinguished within five business days of its incurrence;

     (l) Any Guaranty by any Loan Party of Indebtedness of Parent or any other Loan Party so long as the incurrence of such Indebtedness is permitted under the terms of this Agreement;

     (m) Obligations in respect of Hedge Agreements permitted under clause (g) of the definition of “Restricted Investments”;

     (n) Indebtedness owed to (including obligations in respect of letters of credit or bank Guaranties or similar instruments for the benefit of) any person providing workers’ compensation, health, disability or other employee benefits or property, casualty or liability insurance to Holdings or any Subsidiary pursuant to reimbursement or indemnification obligations to such person; provided that upon the incurrence of Indebtedness with respect to reimbursement obligations regarding workers’ compensation claims, such obligations are reimbursed not later than 30 days following such incurrence;

Loan And Security Agreement — Page 107

     (o) Indebtedness consisting of (x) the financing of insurance premiums or (y) take-or-pay obligation contained in supply agreements, in each case, in the ordinary course of business;

     (p) Indebtedness arising from agreements of Holdings or any Subsidiary providing for an indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a Subsidiary, other than Guarantees of Indebtedness incurred by an Person acquiring all any portion of such business, assets or Subsidiary for the purpose of financing such acquisition;

     (q) Indebtedness incurred by Subsidiaries of Parent that are not Loan Parties in an aggregate amount not to exceed $25,000,000 at any time outstanding;

     (r) In addition to the foregoing, unsecured Indebtedness in the aggregate principal amount not to exceed $60,000,000 at any time outstanding; and

     (s) Permitted Refinancing Indebtedness in respect of any of the foregoing.

          Section 9.14 Prepayment of Indebtedness and Agreements.

     (a) Neither Holdings nor any Borrower shall, nor shall they permit any Subsidiary to, make any distribution, whether in cash, property, securities or a combination thereof, other than regular scheduled payments of principal and interest as and when due (to the extent not prohibited by applicable subordination provisions), in respect of, or pay, or commit to pay, or directly or indirectly redeem, repurchase, retire or otherwise acquire for consideration, or set apart any sum for the aforesaid purposes, any Senior Secured Notes or Permitted Subordinated Debt or pay in cash any amount in respect of any such Indebtedness that may at the obligor’s option be paid in kind or in other securities, provided that the provisions of this clause (a) shall not apply (x) for so long as no Default is in existence or would result therefrom, and so long as before and after giving effect to such prepayment, the Availability is greater than or equal to $50,000,000 and the Fixed Charge Coverage Ratio is greater than or equal to 1.0 to 1.0, (y) to any prepayment of such Indebtedness with the proceeds of Permitted Refinancing Indebtedness or the proceeds of the issuance of Capital Stock, or of a contribution to capital, of Parent or (z) to the extent such a prepayment is required under the Senior Secured Indenture with the proceeds of an asset sale otherwise permitted hereunder.

     (b) Neither Holdings nor any Borrower shall permit any amendment or modification of any provision of any Permitted Subordinated Debt in excess of $20,000,000 or any Permitted Refinancing Indebtedness thereof in a manner that could reasonably be expected to be materially adverse to the interests of the Lenders.

          Section 9.15 Transactions with Affiliates. Except as set forth below, none of Holdings or the Borrowers shall, nor shall they permit any Subsidiary to, sell, transfer, distribute, or pay any money or property, including, but not limited to, any fees or expenses of any nature (including, but not limited to, any fees or expenses for management services), to any Affiliate that is not a Loan Party, or lend or advance money or property to any Affiliate that is not a Loan

Loan And Security Agreement — Page 108

Party, or invest in (by capital contribution or otherwise) or purchase or repurchase any stock or indebtedness, or any property, of any Affiliate that is not a Loan Party, or become liable on any Guaranty of the indebtedness, dividends, or other obligations of any Affiliate that is not a Loan Party, in each case on terms and conditions materially less favorable to Holdings, such Borrower or such Subsidiary than would reasonably be expected to be obtainable by Holdings, such Borrower or such Subsidiary in a comparable arms-length transaction with a Person not an Affiliate of such Loan Party; provided that the following transactions shall in any event be permitted:

     (a) the Transactions;

     (b) other transactions expressly permitted hereunder;

     (c) the payment, on a quarterly basis, of management and consulting fees to the Equity Investors in an aggregate amount not to exceed in any Fiscal Year the greater of (A) $3,000,000 and (B) 3.0% of Adjusted EBITDA for the immediately preceding Fiscal Year (plus unpaid amounts deferred from a prior Fiscal Year); provided, however no payment may be made under this clause (c) unless at the time thereof and after giving effect thereto, (i) no Default or Event of Default has occurred and is continuing, (ii) Availability would exceed $25,000,000 and (iii) to the extent the aggregate payments made under this clause (c) would exceed $3,000,000 in any Fiscal Year (including payments made in respect of a prior Fiscal Year’s management or consulting fee), Availability would exceed $40,000,000;

     (d) the payment of reasonable and customary fees to, and indemnity provided on behalf of, officers, directors, employees or consultants of Holdings and its Subsidiaries in the ordinary course of business;

     (e) Holdings and its Subsidiaries may enter into employment arrangements and other compensation arrangements with respect to the procurement of services with their respective officers and employees in the ordinary course of business;

     (f) the reimbursement of the Equity Investors for their reasonable out-of-pocket expenses incurred in connection with performing management services to Holdings and its Subsidiaries;

     (g) the payment to the Equity Investors of merger advisory fees for each Permitted Acquisition or asset sale so long as (A) such payment is approved by a majority of the Board of Directors of Holdings or the applicable Borrower in good faith and (B) such payment does not exceed, in connection with any such transactions 2.0% of the aggregate value of such transaction;

     (h) any purchase by the Equity Investors or any Affiliate of the Equity Investors of Capital Stock of Holdings or Parent or any contribution by Holdings to or purchase of the Capital Stock of Parent;

Loan And Security Agreement — Page 109

     (i) payments or loans (or cancellation of loans) to employees or consultants that are (A) approved by the Board of Directors of Holdings or Parent, (B) made in compliance with applicable law and (C) otherwise permitted under this Agreement;

     (j) transactions with Subsidiaries or joint ventures for the purchase or sale of goods, products, parts and services entered into in the ordinary course of business;

     (k) the payment of all fees and expenses related to the Transactions, including fees to the Equity Investors;

     (l) the issuance, sale or transfer of Capital Stock of Parent and capital contributions to Parent;

     (m) any transaction in respect of which Holdings or Parent delivers to the Administrative Agent (for delivery to the Lenders) a letter addressed to the Board of Directors of Holdings or Parent from an accounting, appraisal or investment banking firm reasonably satisfactory to the Administrative Agent, which letter states that such transaction is on terms that are no less favorable to Holdings, Parent or such Subsidiary, as applicable, than would be obtainable in a comparable arm’s length transaction with a Person that is not an Affiliate;

     (n) the existence of, or the performance under the terms of, any agreement or instrument in existence on the Closing Date and listed on Schedule 9.15, and any amendment thereto that is not materially adverse to the Lenders; and

     (o) the entering into of any tax sharing agreement or arrangement and any payments permitted by Section 9.10.

          Section 9.16 Restrictive Agreements. Neither Holdings nor any Borrower shall, and they shall not permit any Subsidiary to, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any material condition upon the ability of any Borrower or Subsidiary to pay dividends or other distributions with respect to any of its Capital Stock or to make or repay loans or advances to the Borrower or any other Subsidiary or to guarantee Indebtedness of the Borrower or any other Subsidiary; provided that the foregoing shall not apply to

     (a) restrictions and conditions imposed by law, regulation or order or by any Loan Document;

     (b) customary restrictions and conditions contained in agreements relating to the sale of a Borrower or a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder;

     (c) the restrictions existing on the date hereof including in respect of Indebtedness existing on the date hereof (including the Senior Secured Notes) or contained in any agreements related to any Permitted Refinancing Indebtedness incurred

Loan And Security Agreement — Page 110

to Refinance any Indebtedness existing on the Closing Date that does not expand the scope of any such encumbrance or restriction;

     (d) customary restrictions and conditions contained in the documents relating to any Lien, so long as such Lien is permitted under Section 9.18 and such restrictions or conditions relate only to the specific asset subject to such Lien and are not created for purposes of avoiding the restrictions imposed by this Section 9.16;

     (e) restrictions applicable to any Subsidiary existing at the time such Person becomes a Subsidiary (so long as such agreement was not entered into in contemplation of such Person becoming a Subsidiary)

     (f) restrictions on the transfer of any asset pending the close of the sale of such asset, so long as such sale is permitted under this Agreement

     (g) any restriction in connection with the creation or incurrence of any secured Indebtedness permitted under this Agreement (provided, that such restriction shall apply only to the property or assets subject to the Lien securing such Indebtedness);

     (h) customary provisions in joint venture agreements and other similar agreements applicable to joint ventures;

     (i) customary provisions (1) contained in leases or licenses of intellectual property and other similar agreements entered into in the ordinary course of business, (2) restricting subletting or assigning of any lease governing a leasehold interest and (3) restricting assignment of any agreement entered into in the ordinary course of business;

     (j) customary restriction on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

     (k) any restriction or encumbrance with respect to a Subsidiary imposed pursuant to an agreement which has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Subsidiary, so long as such sale or disposition is permitted under this Agreement; and

     (l) restrictions pursuant to purchase money obligations for property acquired or Capital Leases that impose restrictions on the property so acquired (provided, that such restriction shall apply only to the property so acquired).

          Section 9.17 Business Conducted. Holdings shall not engage in any business activities or have any assets or liabilities other than (i) its ownership of the Capital Stock of Parent and liabilities incidental thereto, (ii) performance of its obligations under and in connection with the Loan Documents and the Senior Secured Notes, (iii) actions incidental to the consummation of the Transactions, (iv) actions in connection with the incurrence of Indebtedness and Guarantees expressly permitted hereunder, (v) actions required to maintain its existence and other activities, liabilities and agreements typical of a holding company that does not itself have any business or operations and (vi) the issuance of Capital Stock other than Disqualified Stock (unless expressly permitted hereunder). The Borrowers shall not engage

Loan And Security Agreement — Page 111

directly or indirectly, in any line of business other than the businesses in which the Borrowers are engaged on the Closing Date and any business activities that are substantially similar thereto, related, or incidental thereto or a reasonable extension, development or expansion thereto.

          Section 9.18 Liens. Neither Holdings nor any Borrower shall, nor shall they permit any Subsidiary to, create, incur, assume, or permit to exist any Lien on any property other than Excluded Assets now owned or hereafter acquired by it, except Permitted Liens.

          Section 9.19 Sale and Leaseback Transactions. Neither Holdings nor any Borrower shall, nor shall they permit any Subsidiary to, directly or indirectly, enter into any arrangement with any Person (other than any Loan Party) providing for it to lease or rent property that it has sold or will sell or otherwise transfer to such other Person; provided that, any Borrower or any Subsidiary may at any time enter into any such arrangement (i) consummated within 180 days following the acquisition of such property or (ii) in all other cases, so long as the aggregate net book value of all property sold by such Person in connection with all such other arrangements does not exceed $30,000,000.

          Section 9.20 New Subsidiaries. Any Borrower which creates or acquires a Person will designate such Person as an Unrestricted Subsidiary or a Subsidiary pursuant to the terms of this Agreement, and will give written notice to the Administrative Agent at least ten (10) days after any designation of a Subsidiary. Promptly upon creation or acquisition of any domestic Subsidiary of a Borrower (including any Subsidiary acquired pursuant to Section 9.9), such Borrower shall cause such Subsidiary to become a Guarantor hereunder.

          Section 9.21 Fiscal Year. Parent shall not change the last day of its Fiscal Year without prior notice to the Administrative Agent given concurrently with any required notice to the Securities and Exchange Commission.

          Section 9.22 [Reserved].

          Section 9.23 [Reserved].

          Section 9.24 Minimum Availability. If at the close of business on any day Availability is less than $45,000,000, Parent must maintain a Fixed Charge Coverage Ratio of not less than 1.0 to 1.0 until such time as the Availability is equal to or greater than $45,000,000 for 10 consecutive days. For purposes of this testing, (i) the Fixed Charge Coverage Ratio will be computed based upon the information available as of the last day of the Fiscal Period ending immediately prior to the Fiscal Period in which Availability becomes less than $45,000,000, and (ii) the Availability measurement will be continually tested as of the close of business each day so that the Fixed Charge Coverage Ratio may apply (or not apply) multiple times within any particular Fiscal Period. Additionally, for purposes of this Section 9.24, when calculating the Availability, Availability for a non-Business Day shall be Availability as of the immediately preceding Business Day.

          Section 9.25 Margin Stock. The Borrowers shall not use any portion of Revolving Loan proceeds, directly or indirectly, (i) to buy or carry any Margin Stock, (ii) to repay or otherwise refinance indebtedness of the Borrowers or others incurred to buy or carry any Margin Stock, (iii) to extend credit for the purpose of buying or carrying any Margin Stock,

Loan And Security Agreement — Page 112

or (iv) to acquire any security in any transaction that is subject to Section 13 or 14 of the Exchange Act.

          Section 9.26 Use of Proceeds. The Borrowers shall use the proceeds of the Revolving Loans (a) on the Closing Date, together with the proceeds of the Senior Secured Notes and the Equity Contribution, (i) to repay all amounts due or outstanding under the Existing Credit Facility, (ii) to pay the Merger Consideration and (iii) to pay fees and expenses incurred in connection with the Transactions (with the proceeds of the Revolving Loans being used to refinance the Existing Debt Facility and to pay related fees and expenses before being used for any other purpose), and (b) after the Closing Date, for general corporate purposes, including Permitted Acquisitions. The Borrowers shall request the issuance of Letters of Credit solely to support payment obligations incurred in the ordinary course of business by the Borrowers.

          Section 9.27 Further Assurances. Holdings and the Borrowers shall execute and deliver, or cause to be executed and delivered, to the Agents and/or the Lenders such documents and agreements, and shall take or cause to be taken such actions, as an Agent and/or the Majority Lenders may, from time to time, reasonably request to carry out the terms and conditions of this Agreement and the other Loan Documents. In addition, from time to time, the Borrowers will, at their cost and expense, promptly secure the Obligations by pledging or creating, or causing to be pledged or created, perfected security interests with respect to such of its assets and properties as an Agent or the Majority Lenders shall designate (other than Excluded Assets). Subject to the Intercreditor Agreement, such security interests and Liens will be created under security agreements, mortgages, deeds of trust and other instruments and documents in form and substance reasonably satisfactory to the Collateral Agent, and the Borrowers shall deliver or cause to be delivered to the Lenders all such instruments and documents (including legal opinions, title insurance policies and lien searches) as the Collateral Agent shall reasonably request to evidence compliance with this Section 9.27.

          Section 9.28 Bank as Depository. Each Borrower shall maintain its master collection and operating accounts with a Bank, and shall utilize a Bank as its principal depository bank, including for the maintenance of administrative, cash management, collection activity, and other deposit accounts for the conduct of its business and the business of the other Loan Parties (it being understood and agreed, however, that (i) each of the bank accounts included on Schedule 8.27 and the uses of such accounts shall be permitted hereunder and (ii) the Borrowers may maintain other bank accounts not with a Bank with aggregate balances of not more than $250,000 outstanding at any time).

ARTICLE 10

CONDITIONS OF LENDING

          Section 10.1 Conditions Precedent to Making of Revolving Loans on the Closing Date. The obligation of the Lenders to make the initial Revolving Loans on the Closing Date, and the obligation of the Letter of Credit Issuer to issue any Letter of Credit on the Closing Date, are subject to the following conditions precedent having been satisfied:

Loan And Security Agreement — Page 113

     (a) The Agents shall have received each of the following documents, all of which shall be reasonably satisfactory in form and substance to the Agents and the Lenders:

     (i) certified copies of the certificate of incorporation, certificate of limited partnership, or comparable organizational document of each of Holdings and the Borrowers, with all amendments, if any, certified by the appropriate Governmental Authority, and the bylaws, regulations, operating agreement, or similar governing document of Holdings and each Borrower, in each case certified by the corporate secretary, general partner, or comparable authorized representative of Holdings or such Borrower, as being true and correct and in effect on the Closing Date;

     (ii) certificates of incumbency and specimen signatures with respect to each Person authorized to execute and deliver this Agreement and the other Loan Documents on behalf of Holdings and each Borrower and each other Person executing any document, certificate, or instrument to be delivered in connection with this Agreement and the other Loan Documents and, in the case of each Borrower, to request Borrowings and the issuance of Letters of Credit;

     (iii) a certificate evidencing the existence of and good standing of each Loan Party in the jurisdiction of its organization;

     (iv) a certificate from a financial officer of Parent or from an independent investment bank or valuation firm acceptable to the Administrative Agent in form and substance reasonably satisfactory to Agents, certifying that Holdings and its Subsidiaries, on a consolidated basis after giving effect to the consummation of the Transactions occurring on the Closing Date, are Solvent;

     (v) certified copies of all action taken by each Loan Party to authorize the execution, delivery, and performance of this Agreement, the other Loan Documents, and the Borrowings and the issuance of Letters of Credit;

     (vi) a certificate of each Borrower signed by a Responsible Officer:

     (A) stating that all of the representations and warranties made or deemed to be made under this Agreement are true and correct in all material respects as of the Closing Date (or if made with respect to another date, as of such other date), after giving effect to the Revolving Loans to be made at such time and the application of the proceeds thereof and the issuance of any Letter(s) of Credit at such time,

     (B) stating that no Default or Event of Default exists,

     (C) specifying the account of the Borrowers to which the Administrative Agent is authorized to transfer the proceeds of the Revolving Loans, as required by Section 2.2(c); and

Loan And Security Agreement — Page 114

     (vii) with respect to any Letter of Credit to be issued on the Closing Date, all documentation required by Section 2.3, duly executed;

     (viii) a Borrowing Base Certificate effective as of the Business Day preceding the day such initial Revolving Loans are to be funded or any such Letter of Credit is to be issued;

     (ix) to the extent requested by the Agents and to the extent Holdings or the Borrowers are able, using commercially reasonable efforts, to obtain such agreements and waivers, a landlord’s or mortgagee’s waiver and consent agreement, in form and substance reasonably acceptable to the Collateral Agent, duly executed on behalf of each landlord or mortgagee, as the case may be, of Real Estate on which any Collateral is located (provided, that Holdings or the Borrowers may defer delivery of any such agreements for a period not to exceed ninety (90) days from the Closing Date; provided, further, that thereafter the Agents may exercise Reasonable Credit Judgment to establish a Reserve with respect to any Collateral located on any Real Estate for which the Collateral Agent has not received an acceptable waiver and consent agreement in an amount not to exceed the amount permitted under clause (b) or (i) of the definition of Eligible Inventory);

     (x) signed opinions of counsel for Holdings and the Borrowers addressed to the Agents and the Lenders and dated the Closing Date, opining as to such matters in connection with this Agreement, the other Loan Documents and the Transactions as the Agents may reasonably request, each such opinion to be in a form, scope, and substance reasonably satisfactory to the Agents and their respective counsel;

     (xi) the Agents shall have received evidence, in form, scope and substance reasonably satisfactory to the Agents, of all insurance coverage as required by this Agreement;

     (xii) such other documents and instruments as the Agents or any Lender (through the Administrative Agent) may reasonably request.

     (b) The Collateral Agent shall have received a Perfection Certificate with respect to Holdings and the Borrowers dated the Closing Date and duly executed by a Responsible Officer of Parent, and shall have received the results of a search of the Uniform Commercial Code filings (or equivalent filings) made with respect to the Loan Parties in the states (or other jurisdictions) of formation of such Persons, in each case as indicated on such Perfection Certificate, together with copies of the financing statements (or similar documents) disclosed by such search, and accompanied by evidence reasonably satisfactory to the Collateral Agent that the Liens indicated in any such financing statement (or similar document) would be permitted under Section 9.18 or have been or will be contemporaneously released or terminated.

Loan And Security Agreement — Page 115

     (c) The Security Documents shall have been duly executed by each Loan Party that is to be a party thereto and shall be in full force and effect on the Closing Date. The Collateral Agent on behalf of the Secured Parties shall, upon the filing of the applicable documentation, have a security interest in the Collateral of the type and priority described in each Security Document.

     (d) (i) Each of the Security Documents, in form and substance satisfactory to the Lenders, relating to each of the Mortgaged Properties shall have been duly executed by the parties thereto and delivered to the Collateral Agent and shall be in full force and effect, (ii) none of such Mortgaged Properties shall be subject to any Lien other than Permitted Liens, (iii) each of such Security Documents shall be in a proper form to be filed and recorded in the recording office as specified on Schedule 8.2(c) and (iv) the Collateral Agent shall have received such other documents, including a commitment or commitments for a policy or policies of title insurance issued by a nationally recognized title insurance company, together with such endorsements, coinsurance and reinsurance as may be requested by the Collateral Agent and the Lenders, insuring the Mortgages as valid second liens on the Mortgaged Properties, free of Liens other than Permitted Liens, together with such surveys, abstracts, appraisals and legal opinions required to be furnished pursuant to the terms of the Mortgages or as reasonably requested by the Collateral Agent or the Lenders (with such policy or policies to be delivered upon filing of the applicable Security Documents).

     (e) The Collateral Agent shall have received, in form and substance satisfactory to it, duly executed Blocked Account Agreements or similar agreements required by this Agreement.

     (f) The Lenders shall have received the financial statements and report referred to in Section 8.6.

     (g) The Merger shall have been (or shall simultaneously be) consummated in accordance with the Merger Agreement and applicable law, without giving effect to any material change to the terms of the Merger Agreement or any waiver of any material conditions of the Merger Agreement, in either case that that is material and adverse to the Lenders, not approved by the Agents. The Administrative Agent shall have received copies of the Merger Agreement and all material certificates, opinions and other material documents delivered thereunder, certified by a Responsible Officer of the Borrower as being complete and correct. The Equity Contribution shall have been made.

     (h) All principal, premium, if any, interest, fees and other amounts due or outstanding under the Existing Credit Agreement shall have been (or shall simultaneously be) paid in full, the commitments thereunder terminated and all Guaranties and security in support thereof discharged and released, and the Lenders shall have received reasonably satisfactory evidence thereof.

     (i) Upon making the initial Revolving Loans (including such Revolving Loans made to finance the fees, costs, and expenses then payable under this Agreement)

Loan And Security Agreement — Page 116

and issuing any Letters of Credit on the date of making the initial Revolving Loans, the Borrowers shall have remaining Availability in an amount not less than $80,000,000.

     (j) All representations and warranties made hereunder and in the other Loan Documents shall be true and correct in all material respects on the Closing Date (or if made with respect to another date, as of such other date).

     (k) No Default or Event of Default shall exist on the Closing Date, or would exist after giving effect to the Revolving Loans to be made and the Letters of Credit to be issued on such date.

     (l) Parent shall have received gross proceeds of $275,000,000 from the issuance of the Senior Secured Notes, on terms and conditions reasonably satisfactory in all respects to the Agents.

     (m) The Borrowers shall have paid all fees and expenses of the Agents and the Attorney Costs incurred in connection with any of the Loan Documents and the transactions contemplated thereby in each case to the extent invoiced.

     (n) The Agents and the Lenders shall have received the results of borrowing base audits and asset appraisals conducted by the Collateral Agent of the Borrowers’ respective assets in order to validate the Borrowing Base.

     (o) All requisite Governmental Authorities and third parties shall have approved or consented to the Transactions and the other transactions contemplated hereby to the extent required and material, all applicable appeal periods shall have expired and there shall be no pending litigation, governmental, administrative or judicial action that would reasonably be expected to restrain, prevent or impose burdensome conditions on the Transactions or the other transactions contemplated hereby.

     (p) The Lenders shall have received all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act.

The acceptance by the Borrowers of any Revolving Loans made or Letters of Credit issued on the Closing Date shall be deemed to be a representation and warranty made by the Borrowers to the effect that all of the conditions precedent to the making of such Revolving Loans or the issuance of such Letters of Credit have been satisfied (other than such conditions that are subject to the satisfaction of the Lenders or Agents), with the same effect as delivery to the Agents and the Lenders of a certificate signed by a Responsible Officer of the Borrowers, dated the Closing Date, to such effect. Execution and delivery to the Administrative Agent by a Lender of a counterpart of this Agreement shall be deemed confirmation by such Lender that (i) all conditions precedent in this Section 10.1 have been fulfilled to the satisfaction of such Lender, (ii) the decision of such Lender to execute and deliver to the Administrative Agent an executed counterpart of this Agreement was made by such Lender independently and without reliance on an Agent or any other Lender as to the satisfaction of any condition precedent set forth in this Section 10.1, and (iii) all documents sent to such Lender for approval, consent, or satisfaction were acceptable to such Lender.

Loan And Security Agreement — Page 117

          Section 10.2 Conditions Precedent to Each Revolving Loan. The obligation of the Lenders to make each Revolving Loan, including the initial Revolving Loans on the Closing Date, and the obligation of the Letter of Credit Issuer to issue, amend, renew or extend any Letter of Credit shall be subject to the further conditions precedent that on and as of the date of any such extension, amending, renewing or extending of credit:

     (a) the following statements shall be true, and the acceptance by the Borrowers of any extension of credit shall be deemed to be a statement to the effect set forth in clause (i) and clause (ii) following with the same effect as the delivery to the Agents and the Lenders of a certificate signed by a Responsible Officer of each Borrower, dated the date of such extension of credit, stating that:

     (i) The representations and warranties contained in this Agreement and the other Loan Documents are correct in all material respects, in each case on and as of the date of such extension of credit as though made on and as of such date, other than any such representation or warranty which relates to a specified prior date and except to the extent the Agents and the Lenders have been notified by the Borrowers that any representation or warranty is not correct and the Majority Lenders have explicitly waived in writing compliance with such representation or warranty; and

     (ii) No event has occurred and is continuing, or would result from such extension of credit, which constitutes a Default or an Event of Default.

     (b) Since the Closing Date and as of the date of funding such Revolving Loan or issuing such Letter of Credit, there shall not have occurred or exist any event or condition which constitutes a Material Adverse Effect.

The foregoing conditions precedent are not conditions to each Lender participating in or reimbursing the Swingline Lender or the Administrative Agent for such Lenders’ Pro Rata Share of any Swingline Loan or Agent Advance made in accordance with the provisions of Section 2.2(h) and Section 2.2(i).

ARTICLE 11

DEFAULT REMEDIES

          Section 11.1 Events of Default. It shall constitute an event of default (“Event of Default”) if any one or more of the following shall occur for any reason:

     (a) any failure by the Borrowers to pay the principal of or interest on any of the Obligations or any fee or other amount owing hereunder when due or, in the case of any such interest or fees, within three (3) Business Days after the same becomes due, whether upon demand or otherwise;

     (b) any representation or warranty made or deemed made by Holdings or the Borrowers in this Agreement or in any of the other Loan Documents, any Financial Statement, or any certificate, report or other instrument furnished by Holdings or the

Loan And Security Agreement — Page 118

Borrowers at any time to an Agent or any Lender in connection with any Loan Document or the transactions contemplated thereby shall prove to be untrue in any material respect as of the date on which made, deemed made, or furnished;

     (c) any default shall occur in

     (i) the observance or performance of any of the covenants and agreements contained in Section 9.2 (insofar as it requires the preservation of the existence of Holdings and the Borrowers) or Section 9.9 through Section 9.28 (other than Section 9.27), or

     (ii) the observance or performance of any of the covenants and agreements contained in Article 6 or Article 7, and such default shall continue for a period of five (5) Business Days after written notice thereof has been given to Parent by the Administrative Agent,

     (iii) the observance or performance of any of the covenants and agreements contained in this Agreement, other than as referenced in Section 11.1(a), Section 11.1(b), Section 11.1(c)(i), and Section 11.1(c)(ii) or any other Loan Documents, and such default shall continue for a period of thirty (30) days after written notice thereof has been given to Parent by the Administrative Agent, or if any such agreement or document shall become void or unenforceable, without the written consent of the Majority Lenders;

     (d) default shall occur with respect to any Indebtedness (other than the Obligations) of Holdings or any of its Subsidiaries in an outstanding principal amount which exceeds $20,000,000, or under any agreement or instrument under or pursuant to which any such Indebtedness may have been issued, created, assumed, or guaranteed by any such Person, and such default shall continue for more than the period of grace, if any, therein specified, if the effect thereof (with or without the giving of notice or further lapse of time or both) is to accelerate, or to permit the holders of any such Indebtedness to accelerate, the maturity of any such Indebtedness, or any such Indebtedness shall be declared due and payable or be required to be prepaid (other than by a regularly scheduled required prepayment) prior to the stated maturity thereof;

     (e) Holdings, Parent or any Subsidiary shall (i) file a voluntary petition in bankruptcy or file a voluntary petition or an answer or otherwise commence any action or proceeding seeking reorganization, arrangement, or readjustment of its debts or for any other relief under the Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or law, state or federal, now or hereafter existing, or consent to, approve of, or acquiesce in, any such petition, action, or proceeding; (ii) apply for or acquiesce in the appointment of a receiver, assignee, liquidator, sequestrator, custodian, monitor, trustee, or similar officer for it or for all or any part of its property; (iii) make an assignment for the benefit of creditors; or (iv) be unable generally to pay its debts as they become due;

Loan And Security Agreement — Page 119

     (f) an involuntary petition or proposal shall be filed or an action or proceeding otherwise commenced (other than as referenced in Section 11.1(e)) seeking reorganization, arrangement, consolidation, or readjustment of the debts of Holdings or any of its Subsidiaries or for any other relief under the Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or law, state or federal, now or hereafter existing and either (i) such petition, proposal, action, or proceeding shall not have been dismissed within a period of sixty (60) days after its commencement or (ii) an order for relief against any such Person shall have been entered in such proceeding;

     (g) a receiver, assignee, liquidator, sequestrator, custodian, monitor, trustee, or similar officer for Holdings or any of its Subsidiaries or for all or any material portion of its property shall be appointed or a warrant of attachment, execution, or similar process shall be issued against any material portion of the property of any such Person;

     (h) Holdings or any of its Subsidiaries shall file a certificate of dissolution under applicable state law or shall be liquidated, dissolved, or wound-up (except in a transaction allowed under Section 9.9) or shall commence or have commenced against it (and not dismissed within sixty (60) days after such commencement against it) any action or proceeding for dissolution, winding-up, or liquidation, or shall take any corporate action in furtherance thereof;

     (i) [Reserved]

     (j) any Guaranty of the Obligations shall be terminated, revoked, or declared void or invalid (except as otherwise expressly permitted herein);

     (k) one or more judgments, orders, decrees, or arbitration awards is entered against Holdings, Parent or any Subsidiary involving liability in the aggregate (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) as to any single or related or unrelated series of transactions, incidents or conditions, of $10,000,000 or more, and the same shall remain unsatisfied, unvacated, and unstayed pending appeal for a period of sixty (60) days after the entry thereof;

     (l) any loss, theft, damage, or destruction of any item or items of Collateral or other property of Holdings, Parent or any Subsidiary occurs which reasonably could be expected to cause a Material Adverse Effect and is not adequately covered by insurance;

     (m) for any reason other than the failure of the Collateral Agent or the Noteholder Collateral Agent to take any action available to it to maintain perfection of the Collateral Agent’s Liens, pursuant to the Loan Documents, any Lien with respect to any material portion of the Collateral intended to be secured by the Loan Documents ceases to be, or is not, valid, perfected, and prior to all other Liens (other than Permitted Liens which are expressly permitted to have priority over the Collateral Agent’s Liens) or is terminated, revoked, or declared void;

     (n) (i) a Reportable Event shall occur which reasonably constitutes grounds for the termination by the Pension Benefit Guaranty Corporation of any Plan or for the appointment by the appropriate United States district court of a trustee for any Plan;

Loan And Security Agreement — Page 120

     (ii) any Plan shall be terminated or any such trustee shall be requested or appointed; (iii) any Borrower, Holdings, Parent or any Subsidiary is in “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan resulting from any such entity’s complete or partial withdrawal from such Plan, or (iv) any such entity engages in a Prohibited Transaction, in each case of clause (i), (ii), (iii) or (iv), if any such event could reasonably be expected to have a Material Adverse Effect; or

     (o) there occurs a Change of Control.

Notwithstanding the foregoing, it is expressly agreed that the occurrence of a Material Adverse Effect does not in and of itself constitute an Event of Default. Notwithstanding the foregoing, solely for the purposes of determining whether an Event of Default has occurred under clause (e), (f), (g) or (h) of this Section 11.1, any reference in any such clause to any Subsidiary shall be deemed not to include any Subsidiary affected by any event or circumstance referred to in any such clause that did not, as of the last day of the Fiscal Period of Parent most recently ended, have assets with a value in excess of 3.0% of the Total Assets or 3.0% of total revenues of Holdings and the Subsidiaries for the period of twelve (12) Fiscal Periods then ended; provided that if it is necessary to exclude more than one Subsidiary from clause (e), (f), (g) or (h) of this Section 11.1 pursuant to this paragraph in order to avoid an Event of Default hereunder, all excluded Subsidiaries shall be considered to be a single consolidated Subsidiary for purposes of determining whether the condition specified above is satisfied.

          Section 11.2 Right to Cure.

     (a) Notwithstanding anything to the contrary contained in Section 11.1, in the event that the Borrowers fail to comply with the requirements of the covenant set forth in Section 9.24, until the expiration of the 10th day subsequent to the date the certificate calculating the covenant set forth in Section 9.24 is required to be delivered pursuant to Section 7.2(c), Holdings and/or Parent shall have the right to issue Permitted Cure Securities for cash or otherwise receive cash contributions to its capital, and, in each case with respect to Holdings, to contribute any such cash to the capital of Parent (collectively, the “Cure Right”), and upon the receipt by the Parent of such cash (the “Cure Amount”) pursuant to the exercise by Holdings or Parent of such Cure Right the covenant set forth in Section 9.24 shall be recalculated giving effect to the following pro forma adjustments:

     (i) Adjusted EBITDA shall be increased, solely for the purpose of measuring the covenant set forth in Section 9.24 and not for any other purpose under this Agreement, by an amount equal to the Cure Amount; and

     (ii) If, after giving effect to the foregoing recalculations, Parent shall then be in compliance with the requirements of the covenant set forth in Section 9.24, Parent shall be deemed to have satisfied the requirements of the covenant set forth in Section 9.24 as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of the covenant set forth in Section 9.24 that had occurred shall be deemed cured for the purposes of this Agreement.

Loan And Security Agreement — Page 121

     (b) Notwithstanding anything herein to the contrary, (i) in each four-fiscal-quarter period there shall be at least one fiscal quarter in which the Cure Right is not exercised, (ii) in each eight-fiscal-quarter period, there shall be a period of at least four consecutive fiscal quarters during which the Cure Right is not exercised, (iii) for purposes of this Section 11.2, the Cure Amount shall be no greater than the amount required for purposes of complying with the covenant set forth in Section 9.24 and (iv) the aggregate amount of all Cure Amounts shall not exceed $50,000,000.

          Section 11.3 Remedies.

     (a) If a Default or an Event of Default exists, the Administrative Agent may, in its discretion, and shall, at the direction of the Majority Lenders, do one or more of the following at any time or times and in any order, without notice to or demand on any Borrower: (i) restrict the amount of or refuse to make Revolving Loans; or (ii) restrict or refuse to provide Letters of Credit. If an Event of Default exists, the Administrative Agent shall, at the direction of the Majority Lenders, do one or more of the following, in addition to the actions described in the preceding sentence, at any time or times and in any order, without notice to or demand on any Borrower: (A) terminate the Commitments and this Agreement; (B) declare any or all Obligations to be immediately due and payable; provided, however, that upon the occurrence of any Event of Default described in Section 11.1(e), Section 11.1(f), Section 11.1(g), or Section 11.1(h), the Commitments shall automatically and immediately expire and all Obligations shall automatically become immediately due and payable without notice or demand of any kind; and (C) pursue its other rights and remedies under the Loan Documents and applicable law.

     (b) If an Event of Default has occurred and is continuing: (i) the Collateral Agent shall have for the benefit of the Secured Parties, in addition to all other rights of the Collateral Agent and the Lenders, the rights and remedies of a secured party under the UCC; (ii) the Collateral Agent may, at any time, take possession of the Collateral and keep it on any Borrower’s premises, at no cost to the Collateral Agent or any Lender, or remove any part of it to such other place or places as the Collateral Agent may desire, or any Borrower shall, upon the Collateral Agent’s demand, at such Borrower’s cost, assemble the Collateral and make it available to the Collateral Agent at a place reasonably convenient to the Collateral Agent; and (iii) the Collateral Agent may sell and deliver any Collateral at public or private sales, for cash, upon credit, or otherwise, at such prices and upon such terms as the Collateral Agent deems advisable, in its sole discretion, and may, if the Collateral Agent deems it reasonable, postpone or adjourn any sale of the Collateral by an announcement at the time and place of sale or of such postponed or adjourned sale without giving a new notice of sale. Without in any way requiring notice to be given in the following manner, each Borrower agrees that any notice by the Collateral Agent of sale, disposition, or other intended action hereunder or in connection herewith, whether required by the UCC or otherwise, shall constitute reasonable notice to the Borrowers if such notice is mailed by registered or certified mail, return receipt requested, postage prepaid, or is delivered personally against receipt, at least five (5) Business Days prior to such action to the Borrowers’ address specified in or pursuant to Section 15.8. If any Collateral is sold on terms other than payment in full at the time of sale, no credit shall be given against the Obligations until the Collateral Agent

Loan And Security Agreement — Page 122

or the Lenders receive payment, and if the buyer defaults in payment, the Collateral Agent may resell the Collateral without further notice to any Borrower. In the event the Collateral Agent seeks to take possession of all or any portion of the Collateral by judicial process, each Borrower irrevocably waives: (A) the posting of any bond, surety, or security with respect thereto which might otherwise be required; (B) any demand for possession prior to the commencement of any suit or action to recover the Collateral; and (C) any requirement that the Collateral Agent retain possession and not dispose of any Collateral until after trial or final judgment. Each Borrower agrees that the Collateral Agent has no obligation to preserve rights to the Collateral or marshal any Collateral for the benefit of any Person. The Collateral Agent is hereby granted a non-exclusive license or other right to use, without charge, each Borrower’s labels, patents, copyrights, name, trade secrets, trade names, trademarks, and advertising matter, or any similar property, to the extent constituting Collateral in completing production of, advertising or selling any Collateral, and, subject to the rights of any licensor or franchisor under such agreements, each Borrower’s rights under all licenses and all franchise agreements shall inure to the Collateral Agent’s benefit for such purpose. The proceeds of sale shall be applied first to all expenses of sale, including Attorneys’ Costs, and then to the Obligations. The Collateral Agent will return any excess to the Borrowers, and the Borrowers shall remain liable for any deficiency.

     (c) If an Event of Default occurs and is continuing, each Borrower hereby waives all rights to notice and hearing prior to the exercise by the Collateral Agent of the Collateral Agent’s rights to repossess the Collateral without judicial process or to replevy, attach, or levy upon the Collateral without notice or hearing.

     (d) Each Borrower recognizes that the Collateral Agent may be unable to effect a public sale of any or all of the Collateral or other property to be sold by reason of certain prohibitions contained in the laws of any jurisdiction outside the United States or in applicable federal or state securities laws but may be compelled to resort to one or more private sales thereof to a restricted group of purchasers who will be obliged to agree, among other things, to acquire such Collateral or other property to be sold for their own account for investment and not with a view to the distribution or resale thereof. Each Borrower acknowledges and agrees that any such private sale may result in prices and other terms less favorable to the seller than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall, to the extent permitted by law, be deemed to have been made in a commercially reasonable manner. Unless required by a Requirement of Law, the Collateral Agent shall not be under any obligation to delay a sale of any of the Collateral or other property to be sold for the period of time necessary to permit the issuer of such securities to register such securities under the laws of any jurisdiction outside the United States under any applicable federal or state securities laws, even if such issuer would agree to do so. Each Borrower further agrees to do or cause to be done, to the extent that such Borrower may do so under Requirements of Law, all such other acts and things as may be necessary to make such sales or resales of any portion or all of the Collateral or other property to be sold valid and binding and in compliance with any and all Requirements of Law at the Borrowers’ expense. Each Borrower further agrees that a breach of any of the covenants contained in this Section 11.3(d) will cause irreparable injury to the Collateral Agent and the Lenders

Loan And Security Agreement — Page 123

for which there is no adequate remedy at law and, as a consequence, agrees that each covenant contained in this Section 11.3(d) shall be specifically enforceable against such Borrower and such Borrower hereby waives and agrees, to the fullest extent permitted by law, not to assert as a defense against an action for specific performance of such covenants that (i) such Borrower’s failure to perform such covenants will not cause irreparable injury to the Collateral Agent and the Lenders or (ii) the Collateral Agent or the Lenders have an adequate remedy at law in respect of such breach. Each Borrower further acknowledges the impossibility of ascertaining the amount of damages which would be suffered by the Collateral Agent and the Lenders by reason of a breach of any of the covenants contained in this Section 11.3(d) and, consequently, agrees that, if such Borrower shall breach any of such covenants and the Collateral Agent or the Lenders shall sue for damages for such breach, such Borrower shall pay to the Collateral Agent, for the benefit of the Collateral Agent and the Lenders, as liquidated damages and not as a penalty, an aggregate amount equal to the value of the Collateral or other property to be sold on the date the Collateral Agent shall demand compliance with this Section 11.3(d).

ARTICLE 12

TERM AND TERMINATION

     Term and Termination. The Borrowers may terminate this Agreement at any time if they: (a) give the Agents and the Lenders five (5) Business Days prior written notice of termination; and (b) pay and perform all Obligations (other than contingent indemnity and expense reimbursement obligations for which no claim has been made), including, without limitation, all fees (if any) required by Section 4.2 and any other fees payable under the Loan Documents on or prior to the effective date of termination. Upon the effective date of termination of this Agreement for any reason whatsoever, all Obligations (including all unpaid principal, accrued and unpaid interest, and any early termination or prepayment fees but excluding contingent indemnification and expense reimbursement obligations to the extent no claim with respect thereto has been asserted and remains unsatisfied) shall become immediately due and payable and the Borrowers shall immediately arrange for the cancellation and return of all Letters of Credit then outstanding (or replacement by Supporting Letter of Credit or cash collateralization). Notwithstanding the termination of this Agreement, until all Obligations (other than such indemnification and expense reimbursement obligations relating to unasserted claims) are paid and performed in full in cash, the Borrowers shall remain bound by the terms of this Agreement and shall not be relieved of any of their Obligations hereunder or under any other Loan Document, and the Agents and the Lenders shall retain all their rights and remedies hereunder (including, without limitation, the Collateral Agent’s Liens in and all rights and remedies with respect to all then existing and after-arising Collateral).

ARTICLE 13

AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS

          Section 13.1 No Waivers; Cumulative Remedies. No failure by an Agent or any Lender to exercise any right, remedy, or option under this Agreement or any present or future supplement hereto, or in any other agreement between or among Holdings, any Borrower and an

Loan And Security Agreement — Page 124

Agent and/or any Lender, or delay by an Agent or any Lender in exercising the same, will operate as a waiver thereof. Subject to Section 13.2, no waiver by an Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by an Agent or the Lenders on any occasion shall affect or diminish each Agent’s and each Lender’s rights thereafter to require strict performance by Holdings and the Borrowers of any provision of this Agreement. Each Agent’s and each Lender’s rights under this Agreement will be cumulative and not exclusive of any other right or remedy which an Agent or any Lender may have.

          Section 13.2 Amendments and Waivers. (a) No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by any Borrower therefrom, shall be effective unless the same shall be in writing and signed by the Majority Lenders (or by the Administrative Agent at the written request of the Majority Lenders), Holdings and the Borrowers and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by all the Lenders (or, in the case of clause (i), (ii) or (iii) below, each such applicable Lender), Holdings and the Borrowers and acknowledged by the Administrative Agent, do any of the following:

     (i) increase or extend the Commitment of such Lender (it being understood that waivers or modifications of conditions precedent, covenants, Defaults or Events of Default or of a mandatory reduction in the aggregate Commitments shall not constitute an increase of the Commitments of any Lender);

     (ii) postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due to such Lender hereunder or under any other Loan Document;

     (iii) reduce the principal of, or the rate of interest specified herein on any Revolving Loan of such Lender, or any fees or other amounts payable hereunder or under any other Loan Document to such Lender;

     (iv) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Revolving Loans which is required for the Lenders or any of them to take any action hereunder or change the definition of “Majority Lenders” or “Required Lenders” (it being understood that, with the consent of Majority Lenders (subject to clause (viii) below), additional extensions of credit pursuant to this Agreement may be included in the determination of the Majority Lenders or the Required Lenders on substantially the same basis as the Revolving Loans and Commitments are included on the Closing Date);

     (v) increase any of the percentages set forth in the definition of the Borrowing Base;

Loan And Security Agreement — Page 125

     (vi) amend this Section or any provision of the Agreement providing for consent or other action by all Lenders;

     (vii) release any guaranties of the Obligations or release all or substantially all of the Collateral other than as permitted by Section 14.11; or

     (viii) increase the Maximum Revolver Amount to an amount in excess of $550,000,000;

provided, however, that no amendment, waiver, or consent shall, unless in writing and signed by the Administrative Agent, affect the rights or duties of the Administrative Agent, the Collateral Agent, the Letter of Credit Issuer or the Swingline Lender under this Agreement or any other Loan Document, without the prior written consent of the Administrative Agent, the Collateral Agent, the Letter of Credit Issuer or the Swingline Lender, respectively. Notwithstanding the foregoing, no Loan Document may be changed in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Revolving Loans of one Class differently from the rights of Lenders holding Revolving Loans of any other Class without the prior written consent of the Lenders holding a majority in interest of the outstanding Revolving Loans and unused Commitments of each adversely affected Class.

     (b) If any fees are paid to the Lenders as consideration for amendments, waivers or consents with respect to this Agreement, at Administrative Agent’s election, such fees may be paid only to those Lenders that agree to such amendments, waivers or consents within the time specified for submission thereof.

     (c) If, in connection with any proposed amendment, waiver or consent (a “Proposed Change”):

     (i) requiring the consent of all Lenders, the consent of the Required Lenders is obtained, but the consent of other Lenders is not obtained (any such Lender whose consent is not obtained as described in this clause (i) and in clause (ii) below being referred to as a “Non-Consenting Lender”), or

     (ii) requiring the consent of the Required Lenders, the consent of the Majority Lenders is obtained,

then, so long as the Administrative Agent is not a Non-Consenting Lender, then, in any such case, any Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to transfer and assign, without recourse (in accordance with and subject to the restrictions contained in Section 13.3), all of its interests, rights and obligations under this Agreement to an assignee that shall assume such assigned obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided, however, that (x) such assignment shall not violate any Requirement of Law, (y) such Borrower shall have received the prior written consent of Administrative Agent and Letter of Credit Issuer, which consent shall not unreasonably be withheld or delayed, and (z) such Borrower or such assignee shall have paid to the applicable Lender in immediately available funds an amount equal to the sum of the principal of and interest accrued to the date of such payment on the outstanding Revolving Loans or participations in Letters of Credit, Swingline

Loan And Security Agreement — Page 126

Loans and Agent Advances (to the extent of such outstanding principal and accrued interest) of such Lender plus all fees and other amounts accrued for the account of such Lender hereunder. Each Lender hereby grants to Agent an irrevocable power of attorney (which power is coupled with an interest) to execute and deliver, on behalf of such Lender as assignor, any Assignment and Acceptance Agreement necessary to effectuate any assignment of such Lender’s interests hereunder in the circumstances contemplated by this Section 13.2(c).

          Section 13.3 Assignments; Participations.

     (a) Any Lender may, with the written consent of Parent, the Administrative Agent, the Swingline Lender and the Letter of Credit Issuer (which consents shall not be unreasonably withheld) assign and delegate to one or more Eligible Assignees (provided that no consent of Parent shall be required in connection with any assignment and delegation by a Lender to another Lender or to an Affiliate of a Lender, during the primary syndication of the Commitments and/or the Revolving Loans to Persons identified by the Administrative Agent to the Borrower on or prior to the Closing Date and reasonably acceptable to the Borrower, or after the occurrence and during the continuance of an Event of Default) (each an “Assignee”) all, or any ratable part of all, of the Revolving Loans, the Commitments, and the other rights and obligations of such Lender hereunder (any such assignment and delegation being referred to herein as an “Assignment”), in a minimum amount of $2,500,000 (provided that, (i) unless an assignor Lender has assigned and delegated all of its Revolving Loans and Commitments, no such assignment and/or delegation shall be permitted unless, after giving effect thereto, such assignor Lender retains a Commitment in a minimum amount of $2,500,000 and (ii) such amount may be aggregated in respect of each Lender and its Affiliates or Related Funds); provided, however, that the Borrowers and the Agents may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, shall have been given to the Borrowers and the Administrative Agent by such Lender and the Assignee; (ii) the parties to such Assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance via an electronic settlement system acceptable to the Administrative Agent (or, if previously agreed with the Administrative Agent, manually), and shall pay to the Administrative Agent a processing and recordation fee of $3,500 (which fee may be waived or reduced in the sole discretion of the Administrative Agent and provided that only one such fee shall be payable in the case of concurrent assignments to persons that, after giving effect to such assignments, will be Related Funds); and (iii) the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire and all applicable tax forms and such assignment shall have been recorded pursuant to paragraph (e) of this Section 13.3. If required, the Borrowers agree to promptly execute and deliver, upon or concurrently with the surrender of the existing Notes, new Notes and replacement Notes as reasonably requested by the Administrative Agent to evidence assignments of the Revolving Loans and Commitments in accordance herewith.

     (b) Upon acceptance and recording pursuant to paragraph (e) of this Section 13.3, from and after the effective date specified in each Assignment and

Loan And Security Agreement — Page 127

Acceptance, (A) the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement and (B) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an 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 Article 5 and Sections 14.7 and 15.11, as well as to any fees accrued for its account and not yet paid).

     (c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties, or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency, or value of this Agreement or any other Loan Document furnished pursuant hereto or the attachment, perfection, or priority of any Lien granted by Holdings or the Borrowers to the Collateral Agent or any Lender in the Collateral; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of Holdings or the Borrowers or the performance or observance by Holdings or any Borrower of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto; (iii) such Assignee confirms that it has received a copy of this Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such Assignee will, independently and without reliance upon an Agent, such assigning Lender, 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 this Agreement; (v) such Assignee appoints and authorizes the Agents to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agents by the terms hereof, together with such powers, including the discretionary rights and incidental power, as are reasonably incidental thereto; and (vi) such Assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

     (d) The Administrative Agent, acting for this purpose as an agent of the Borrowers, shall maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Revolving Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive and the Borrowers, the Agents, the Letter of Credit Issuer 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 the Borrowers, the Letter of Credit Issuer, the Collateral

Loan And Security Agreement — Page 128

Agent and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

     (e) Upon its receipt of, and consent to, a duly completed Assignment and Acceptance executed by an assigning Lender and an Assignee, an Administrative Questionnaire completed in respect of the assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (a) above, if applicable, and the written consent of the Administrative Agent and, if required, Parent, the Swingline Lender and the Letter of Credit Issuer to such Assignment and any applicable tax forms, the Administrative Agent shall (i) accept such Assignment and Acceptance and (ii) record the information contained therein in the Register. No assignment shall be effective unless it has been recorded in the Register as provided in this paragraph (e). The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro tanto.

     (f) Any Lender may at any time, without the consent of the Borrowers, the Swingline Lender, the Letter Credit Issuer or the Administrative Agent, sell to one or more Participants participating interests in any Revolving Loans, the Commitment of that Lender, and the other interests of that Lender (the “originating Lender”) hereunder and under the other Loan Documents; provided, however, that (i) the originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the originating Lender shall remain solely responsible for the performance of such obligations, (iii) the Borrowers and the Agents shall continue to deal solely and directly with the originating Lender in connection with the originating Lender’s rights and obligations under this Agreement and the other Loan Documents, and (iv) no Lender shall transfer or grant any participating interest under which the Participant has rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document except the matters set forth in Section 13.2(a)(i), (ii), (iii) and (vii) with respect to such participation, and (v) subject to paragraph (g) of this Section, all amounts payable by the Borrowers hereunder shall be determined as if such Lender had not sold such participation; except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent and subject to the same limitation as if the amount of its participating interest were owing directly to it as a Lender under this Agreement.

     (g) Pursuant to paragraph (f)(v) of this Section, a Participant shall not be entitled to receive any greater payment under Section 5.1 or 5.3 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 Parent’s prior written consent. A Participant that would be a Non-U.S. Lender if it were a Lender shall not be entitled to the benefits of Section 5.3 unless Parent is notified of the participation sold to such Participant and such Participant agrees to comply with Section 14.10 as though it were a Lender. Any Lender may at any time assign all or any portion of its rights under this Agreement to secure extensions of credit to such Lender or in support of obligations owed by such Lender; provided that no such assignment shall

Loan And Security Agreement — Page 129

release a Lender from any of its obligations hereunder or substitute any such assignee for such Lender as a party hereto; and provided further, that no such assignee shall be entitled to receive any greater amount pursuant to Section 5.1 or 5.3 than that which the assigning Lender would have been entitled to receive had no such assignment occurred.

     (h) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle (an “SPC”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrowers, the option to provide to the Borrowers all or any part of any Revolving Loans that such Granting Lender would otherwise be obligated to make to the Borrowers pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Revolving Loans and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Revolving Loan, the Granting Lender shall be obligated to make such Revolving Loan pursuant to the terms hereof. The making of a Revolving Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Revolving Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 13.3, any SPC may (i) with notice to, but without the prior written consent of, Parent and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Revolving Loans to the Granting Lender or to any financial institutions (consented to by Parent and Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Revolving Loans and (ii) disclose on a confidential basis any non-public information relating to its Revolving Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC.

     (i) In the event that any Lender shall become a Defaulting Lender or S&P, Moody’s and Thompson’s BankWatch (or InsuranceWatch Ratings Service, in the case of Lenders that are insurance companies (or Best’s Insurance Reports, if such insurance company is not rated by Insurance Watch Ratings Service)) shall, after the date that any Lender becomes a Lender, downgrade the long-term certificate deposit ratings of such Lender, and the resulting ratings shall be below BBB-, Baa3 and C (or BB, in the case of a Lender that is an insurance company (or B, in the case of an insurance company not rated by InsuranceWatch Ratings Service)) (or, with respect to any Lender that is not rated by any such ratings service or provider, Parent, the Letter of Credit Issuer or the Swingline Lender shall have reasonably determined that there has occurred a material adverse change in the financial condition of any such Lender, or a material impairment of the ability of any such Lender to perform its obligations hereunder, as compared to such

Loan And Security Agreement — Page 130

condition or ability as of the date that any such Lender became a Lender) then Parent, the Letter of Credit Issuer or the Swingline Lender shall have the right, but not the obligation, at its own expense, upon notice to such Lender and the Administrative Agent, to replace such Lender with an assignee (in accordance with and subject to the restrictions contained in paragraph (a) above), and such Lender hereby agrees to transfer and assign without recourse (in accordance with and subject to the restrictions contained in paragraph (a) above) all its interests, rights and obligations in respect of its Commitment to such Assignee; provided, however, that (i) no such assignment shall violate any law, rule and regulation or order of any Governmental Authority and (ii) Parent, the Letter of Credit Issuer or such Assignee, as the case may be, shall pay to such Lender in immediately available funds on the date of such assignment the principal of and interest accrued to the date of payment on the Revolving Loans made by such Lender hereunder and all other amounts accrued for such Lender’s account or owed to it hereunder.

ARTICLE 14

THE AGENTS

          Section 14.1 Appointment and Authorization. Each Lender hereby designates and appoints each of the Agents as its agent under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes each 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. Each Agent agrees to act as such on the express conditions contained in this Article 14. The provisions of this Article 14 are solely for the benefit of the Agents and the Lenders and the Borrowers shall have no rights as a third party beneficiary of any of the provisions contained herein other than as expressly provided in Section 14.10 and Section 14.11. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Agents shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Agents have or be deemed to have any fiduciary relationship with any Lender, 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 the Agents. Without limiting the generality of the foregoing sentence, the use of the term “agents” in this Agreement with reference to the Agents 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. Except as expressly otherwise provided in this Agreement, each Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions which such Agent is expressly entitled to take or assert under this Agreement and the other Loan Documents, including (a) the determination of the applicability of ineligibility criteria and other determinations with respect to the calculation of the Borrowing Base, (b) the making of Agent Advances pursuant to Section 2.2(i), and (c) the exercise of remedies pursuant to Section 11.3, and any action so taken or not taken shall be deemed consented to by the Lenders.

Loan And Security Agreement — Page 131

          Section 14.2 Delegation of Duties. Each Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees, attorneys-in-fact or through its Related Persons and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Neither Agent shall be responsible for the negligence or misconduct of any agent, employee, attorney-in-fact or Related Person that it selects as long as such selection was made without gross negligence or willful misconduct.

          Section 14.3 Liability of the Agents. None of the Agents or any of their respective Related Persons 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), or (b) be responsible in any manner to any of the Lenders for any recital, statement, representation, or warranty made by any Borrower or Affiliate of any Borrower, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement, or other document referred to or provided for in, or received by an 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 Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. None of the Agents or any of their respective Related Persons shall be under any obligation to any Lender 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 Borrower or any Borrower’s Affiliates.

          Section 14.4 Reliance by the Agents.

     (a) Each Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex, or telephone 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, without limitation, counsel to Holdings and any Borrower), independent accountants and other experts selected by such Agent. Each Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Majority 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. Each 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 Majority Lenders (or all Lenders if so required by Section 13.2) and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders.

     (b) For purposes of determining compliance with the conditions specified in Section 10.1, each Lender that has executed this Agreement shall be deemed to have consented to, approved, or accepted or to be satisfied with, each document or other matter either sent by an Agent to such Lender for consent, approval, acceptance, or satisfaction,

Loan And Security Agreement — Page 132

or required thereunder to be consented to or approved by or acceptable or satisfactory to the Lender.

          Section 14.5 Notice of Default. Neither Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, unless such Agent shall have received written notice from a Lender, Holdings or a Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default.” The Administrative Agent will notify the Lenders of its receipt of any such notice. The Agents shall take such action with respect to such Default or Event of Default as may be requested by the Majority Lenders in accordance with Article 11; provided, however, that unless and until an Agent has received any such request, such Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable.

          Section 14.6 Credit Decision. Each Lender acknowledges that none of the Agents or any of their respective Related Persons has made any representation or warranty to it, and that no act by an Agent hereinafter taken, including any review of the affairs of the Borrowers and their Affiliates, shall be deemed to constitute any representation or warranty by such Agent or Related Persons to any Lender. Each Lender represents to the Agents that it has, independently and without reliance upon any Agent or 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 Borrowers and their Affiliates, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrowers. Each Lender also represents that it will, independently and without reliance upon any Agent or 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 the Borrowers. Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by an Agent, neither Agent shall 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 Borrower which may come into the possession of any of such Agent or its Related Persons.

          Section 14.7 Indemnification. WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED, THE LENDERS SHALL INDEMNIFY UPON DEMAND THE AGENTS AND THEIR RESPECTIVE RELATED PERSONS (TO THE EXTENT NOT REIMBURSED BY OR ON BEHALF OF THE BORROWERS AND WITHOUT LIMITING THE OBLIGATION OF THE BORROWERS TO DO SO), PRO RATA, FROM AND AGAINST ANY AND ALL INDEMNIFIED LIABILITIES AS SUCH TERM IS DEFINED IN SECTION 15.11; PROVIDED, HOWEVER, THAT NO LENDER SHALL BE LIABLE FOR THE PAYMENT TO AN AGENT OR ANY RELATED PERSON OF ANY PORTION OF SUCH INDEMNIFIED LIABILITIES RESULTING SOLELY FROM SUCH PERSON’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. Without limitation of the foregoing, each Lender shall reimburse each Agent upon demand for its

Loan And Security Agreement — Page 133

ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by such 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 such Agent is not reimbursed for such expenses by or on behalf of Holdings or the Borrowers. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of each Agent.

          Section 14.8 The Agents in Individual Capacity. The Banks serving as Administrative Agent or Collateral Agent and their respective 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 any Borrower and its Affiliates as though they were not Agents hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, such Bank or their respective Affiliates may receive information regarding any Borrower or its Affiliates (including information that may be subject to confidentiality obligations in favor of any such Borrower or such Affiliate) and acknowledge that neither such Agent nor such Bank shall be under any obligation to provide such information to the Lenders. With respect to its Revolving Loans, such Banks shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” include such Banks in their individual capacities.

          Section 14.9 Successor Agents. Either Agent may resign at any time upon thirty (30) days prior written notice to the Lenders, the Letter of Credit Issuer and the Borrowers, such resignation to be effective upon the acceptance of a successor agent to its appointment as Agent. If an Agent resigns under this Agreement, the Majority Lenders, subject to the consent of Parent (which shall not be unreasonably withheld and which shall not be required during a continuing Event of Default), shall appoint from among the Lenders a successor agent for the Lenders. If no successor agent is appointed prior to the effective date of the resignation of such Agent, such Agent may appoint, after consulting with the Lenders, subject to the consent of Parent (which shall not be unreasonably withheld and which shall not be required during a continuing Event of Default), a successor agent from among the Lenders. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers, and duties of the retiring Agent, and the term “Administrative Agent”, “Collateral Agent” or “Agents”, as the case may be, shall mean such successor agent, and the retiring Agent’s appointment, powers, and duties as an Agent shall be terminated. After the retiring Agent’s resignation hereunder, the provisions of this Article 14 shall inure to its benefit and such retiring Agent shall not by reason of such resignation be deemed to be released from liability as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.

          Section 14.10 Withholding Tax.

     (a) Any Lender (including any Assignee and Participant) that is not a U.S. person (as defined in Section 7701(a)(30) of the Code) (a “Non-U.S. Lender”) and is entitled to an exemption from or reduction of United States withholding tax shall deliver

Loan And Security Agreement — Page 134

to the Administrative Agent and Parent (and in the case of a Participant, to the Lender from which the related participation was purchased):

     (i) if such Non-U.S. Lender claims an exemption from, or a reduction of, withholding tax under a United States tax treaty, two properly completed and duly executed IRS Forms W-8BEN (or any subsequent versions thereof or successors thereto) on or before the date it becomes a party to this Agreement and before the payment of any interest in each third succeeding calendar year during which interest may be paid under this Agreement;

     (ii) if such Non-U.S. Lender claims that interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United States trade or business of such Non-U.S. Lender, two properly completed and executed copies of IRS Form W-8ECI (or any subsequent versions thereof or successors thereto) on or before the date it becomes a party to this Agreement; and

     (iii) such other form or forms as may be required under the Code or other laws of the United States as a condition to exemption from, or reduction of, United States withholding tax.

Such Non-U.S. Lender agrees to promptly notify the Administrative Agent and Parent of any change in circumstances which would modify or render invalid any claimed exemption or reduction. Each Lender that is not a Non-U.S. Lender shall provide two properly completed and duly executed IRS Forms W-9 (or any subsequent versions thereof or successors thereto) to the Administrative Agent and Parent on or before the date it becomes a party to this Agreement and agrees to promptly notify the Administrative Agent and Parent of any change in circumstances which would modify or render invalid any claimed exemption or reduction. In addition, such Lender shall provide the forms described in Section 14.10(a) promptly upon the obsolescence, expiration or invalidity of any form previously delivered by such Lender.

     (b) If any Lender is entitled to a reduction in the applicable withholding tax, the Administrative Agent or any Borrower may withhold from any interest payment to such Lender an amount equivalent to the applicable withholding tax after taking into account such reduction. If the forms or other documentation required by clause (a) of this Section are not delivered to the Administrative Agent and Parent, then the Administrative Agent or any Borrower may withhold from any interest payment to such Lender not providing such forms or other documentation an amount equivalent to the applicable withholding tax and shall not have the obligation to pay additional amounts pursuant to Section 5.1(c) with respect to such payment.

     (c) If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Administrative Agent or any Borrower did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered, was not properly executed or because such Lender failed to notify the Administrative Agent or any Borrower of a change in circumstances

Loan And Security Agreement — Page 135

which rendered the exemption from, or reduction of, withholding tax ineffective) such Lender shall, within thirty (30) days after the date such Administrative Agent or Borrowers makes written demand therefor, indemnify the Administrative Agent and the Borrowers fully for all amounts paid, directly or indirectly, by the Administrative Agent or any Borrower as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Administrative Agent or such Borrower under this Section 14.10, together with all costs and expenses (including Attorney Costs). The obligation of the Lenders under this Section 14.10(c) shall survive the payment of all Obligations and the resignation or replacement of the Administrative Agent.

          Section 14.11 Collateral Matters.

     (a) The Lenders hereby irrevocably authorize the Collateral Agent, at its option and in its sole discretion, to release any Collateral Agent’s Lien upon any Collateral and to terminate any Guarantee (i) upon the termination of the Commitments and payment and satisfaction in full of all Revolving Loans and reimbursement obligations in respect of Letters of Credit, and the termination of all outstanding Letters of Credit (whether or not any of such obligations are due) and all other Obligations (other than contingent indemnification and expense reimbursement obligations for which no claim has been made); (ii) constituting property being sold or disposed of if the Loan Party disposing of such property certifies to the Collateral Agent that the sale or disposition is made in compliance with Section 9.9 or Section 9.19 (and the Collateral Agent may rely conclusively on any such certificate, without further inquiry); (iii) constituting property in which no Loan Party owned any interest at the time the Lien was granted or at any time thereafter; (iv) constituting property leased to a Loan Party under a lease which has expired or been terminated in a transaction permitted under this Agreement; (v) as required by the Intercreditor Agreement; or (vi) pursuant to Section 14.11(b) below. Except as provided above, the Collateral Agent will not release any of the Collateral Agent’s Liens without the prior written authorization of the Lenders; provided that the Collateral Agent may, in its discretion, release the Collateral Agent’s Liens on Collateral valued in the aggregate not in excess of $5,000,000 during each Fiscal Year without the prior written authorization of any Lender. Upon request by the Collateral Agent or the Borrowers at any time, the Lenders will confirm in writing the Collateral Agent’s authority to release any Collateral Agent’s Liens upon particular types or items of Collateral pursuant to this Section 14.11.

     (b) In the event that any Loan Party conveys, sells, leases, assigns, transfers or otherwise disposes of all or any portion of any of the Capital Stock or assets of a Loan Party to a person that is not (and is not required to become) a Loan Party in a transaction not prohibited by Section 9.9 , the Collateral Agent shall promptly (and the Lenders hereby authorize the Collateral Agent to) take such action and execute any such documents as may be reasonably requested by Parent and at Parent’s expense to release, share or subordinate any Liens created by any Loan Document in respect of such assets or Capital Stock, and, in the case of a disposition of the Capital Stock of any Subsidiary that is a Loan Party in a transaction not prohibited by Section 9.9 and as a result of which such Subsidiary would cease to be a Loan Party, terminate such Subsidiary’s obligations

Loan And Security Agreement — Page 136

under its Guarantee provided, however, that (i) the Collateral Agent shall not be required to execute any such document on terms which, in the Collateral Agent’s reasonable opinion, would expose the Collateral Agent to liability or create any obligation or entail any consequence other than the release of such Liens without recourse or warranty, and (ii) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of the Borrowers in respect of) all interests retained by the Borrowers, including the proceeds of any sale, all of which shall continue to constitute part of the Collateral. In addition, the Collateral Agent agrees to take such actions as are reasonably requested by Parent and at Parent’s expense to terminate the Liens and security interests created by the Loan Documents when (i) all the Obligations (other than in respect of contingent indemnification and expense reimbursement obligations for which no claim has been made) are paid in full and all Letters of Credit and Commitments are terminated and (ii) required under the Intercreditor Agreement. Any representation, warranty or covenant contained in any Loan Document relating to any such Capital Stock, asset or Subsidiary of Holdings shall no longer be deemed to be made once such Capital Stock or asset is so conveyed, sold, leased, assigned, transferred or disposed of. Upon any release or termination in connection with the foregoing, the Collateral Agent shall (and is hereby authorized by the Lenders to) execute such documents as may reasonably requested by Parent to evidence the release of the Collateral Agent’s Liens upon such Collateral (including without limitation UCC-3 termination statements) all without recourse or warranty.

     (c) The Collateral Agent shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by any Loan Party or is cared for, protected, or insured or has been encumbered, or that the Collateral Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure, or fidelity, or to continue exercising, any of the rights, authorities, and powers granted or available to the Collateral Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, the Collateral Agent may act in any manner it may deem appropriate, in its sole discretion given the Collateral Agent’s own interest in the Collateral in its capacity as one of the Lenders and that the Collateral Agent shall have no other duty or liability whatsoever to any Lender as to any of the foregoing.

          Section 14.12 Restrictions on Actions by Lenders; Sharing of Payments.

     (a) Each of the Lenders agrees that it shall not, unless specifically requested to do so by the Administrative Agent, take or cause to be taken any action to enforce its rights under this Agreement or against any Loan Party, including the commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.

     (b) If at any time or times any Lender shall receive (i) by payment, foreclosure, set-off, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations owing to such Lender arising under, or relating to, this

Loan And Security Agreement — Page 137

Agreement or the other Loan Documents, except for any such proceeds or payments received by such Lender from the Collateral Agent pursuant to the terms of this Agreement, or (ii) payments from the Collateral Agent in excess of such Lender’s ratable portion of all such distributions by the Collateral Agent, such Lender shall promptly (A) turn the same over to the Collateral Agent, in kind, and with such endorsements as may be required to negotiate the same to the Collateral Agent, or in same day funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (B) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares; provided, however, that if all or part of such excess payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment.

          Section 14.13 Agency for Perfection. Each Lender hereby appoints each other Lender as agent for the purpose of perfecting the Lenders’ security interest in assets which, in accordance with Article 9 of the UCC can be perfected only by possession. Should any Lender (other than the Collateral Agent) obtain possession of any such Collateral, such Lender shall notify the Collateral Agent thereof, and, promptly upon the Collateral Agent’s request therefor shall deliver such Collateral to the Collateral Agent or otherwise deal with such Collateral in accordance with the Collateral Agent’s instructions.

          Section 14.14 Payments by the Administrative Agent to the Lenders. All payments to be made by the Administrative Agent to the Lenders shall be made by bank wire transfer or internal transfer of immediately available funds to each Lender pursuant to wire transfer instructions delivered in writing to the Administrative Agent on or prior to the Closing Date (or if such Lender is an Assignee, in the applicable Assignment and Acceptance), or pursuant to such other wire transfer instructions as each party may designate for itself by written notice to the Administrative Agent. Concurrently with each such payment, the Administrative Agent shall identify whether such payment (or any portion thereof) represents principal, premium, or interest on the Revolving Loans or otherwise. Unless the Administrative Agent receives notice from the Borrowers prior to the date on which any payment is due to the Lenders that the Borrowers will not make such payment in full as and when required, the Administrative Agent may assume that the Borrowers have made such payment in full to the Administrative Agent on such date in immediately available funds and the Administrative Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrowers have not made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent on demand such amount distributed to such Lender, together with interest thereon at the Federal Funds Rate for each day from the date such amount is distributed to such Lender until the date repaid.

     Section 14.15 Concerning the Collateral and the Related Loan Documents. Each Lender agrees that any action taken by an Agent, the Required Lenders or the Majority Lenders,

Loan And Security Agreement — Page 138

as applicable, in accordance with the terms of this Agreement or the other Loan Documents, and the exercise by an Agent, the Required Lenders or the Majority Lenders, as applicable, of their respective powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders. The Lenders acknowledge that the Revolving Loans, Agent Advances, Swingline Loans, Hedge Agreements, Bank Products and all interest, fees and expenses hereunder constitute one Indebtedness, secured pari passu by all of the Collateral.

          Section 14.16 Field Audit and Examination Reports; Disclaimer by Lenders. By signing this Agreement, each Lender:

     (a) is deemed to have requested that the Collateral Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report (each a “Report” and collectively, “Reports”) prepared by or on behalf of the Collateral Agent;

     (b) expressly agrees and acknowledges that neither the Banks nor the Agents (i) make any representation or warranty as to the accuracy of any Report, or (ii) shall be liable for any information contained in any Report;

     (c) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that the Collateral Agent, a Bank, or other party performing any audit or examination will inspect only specific information regarding the Borrowers and will rely significantly upon the Borrowers’ books and records, as well as on representations of the Borrowers’ personnel;

     (d) agrees to keep all Reports confidential and strictly for its internal use, and not to distribute except to its participants, or use any Report in any other manner; and

     (e) without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold the Agents and any such other Lender preparing a Report harmless from any action the indemnifying Lender may take or conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to the Borrowers, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans of the Borrowers; and (ii) to pay and protect, and indemnify, defend, and hold the Agents and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including Attorney Costs) incurred by the Agents and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.

          Section 14.17 Relation Among Lenders. The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of the Agents) authorized to act for, any other Lender.

Loan And Security Agreement — Page 139

ARTICLE 15

MISCELLANEOUS

          Section 15.1 Cumulative Remedies; No Prior Recourse to Collateral. The enumeration herein of each Agent’s and each Lender’s rights and remedies is not intended to be exclusive, and such rights and remedies are in addition to and not by way of limitation of any other rights or remedies that the Agents and the Lenders may have under the UCC or other applicable law. The Agents and the Lenders shall have the right, in their sole discretion, to determine which rights and remedies are to be exercised and in which order. The exercise of one right or remedy shall not preclude the exercise of any others, all of which shall be cumulative. The Agents and the Lenders may, without limitation, proceed directly against any Person liable therefor to collect the Obligations without any prior recourse to the Collateral. No failure to exercise and no delay in exercising, on the part of an Agent or any Lender, any right, remedy, power, or privilege hereunder, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.

          Section 15.2 Severability. The illegality or unenforceability of any provision of this Agreement, any Loan Document, or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement, any Loan Document, or any instrument or agreement required hereunder.

          Section 15.3 Governing Law; Choice of Forum.

     (a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS MOST RECENTLY PUBLISHED AND IN EFFECT, ON THE DATE SUCH LETTER OF CREDIT WAS ISSUED, BY THE INTERNATIONAL CHAMBER OF COMMERCE (THE “UNIFORM CUSTOMS”) AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.

     (b) EACH OF HOLDINGS AND THE BORROWERS HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE

Loan And Security Agreement — Page 140

PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT, SUBJECT TO ANY STAY PENDING APPEAL, A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT AN AGENT, THE LETTER OF CREDIT ISSUER OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS AGAINST HOLDINGS, THE BORROWERS OR THEIR RESPECTIVE PROPERTIES IN THE COURTS OF ANY JURISDICTION.

     (c) EACH OF HOLDINGS AND THE BORROWERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS IN ANY NEW YORK STATE OR FEDERAL COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

     (d) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 15.8. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

          Section 15.4 Waiver of Jury Trial. EACH OF HOLDINGS, THE BORROWERS, THE LENDERS AND THE AGENTS IRREVOCABLY WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING, OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT, RELATED PERSON, PARTICIPANT, OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH OF HOLDINGS, THE BORROWERS, THE LENDERS AND THE AGENTS AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM, OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE

Loan And Security Agreement — Page 141

VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

          Section 15.5 Survival of Agreement. All covenants, agreements, representations and warranties made by the Borrowers or Holdings herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and the Letter of Credit Issuer and shall survive the making by the Lenders of the Revolving Loans and the issuance of Letters of Credit by the Letter of Credit Issuer, regardless of any investigation made by the Lenders or the Letter of Credit Issuer or on their behalf, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable (other than contingent indemnification and expense reimbursement obligations for which no claim has been made) under this Agreement or any other Loan Document is outstanding and unpaid or any Letter of Credit is outstanding (unless replaced by a Supporting Letter of Credit or cash collateralization) and so long as the Commitments have not been terminated. The provisions of Article 5 and Sections 14.7 and 15.11 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Revolving Loans, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of an Agent, any Lender or the Letter of Credit Issuer.

          Section 15.6 Other Security and Guaranties. The Agents, may, without notice or demand and without affecting the Loan Parties’ obligations hereunder, from time to time: (a) take from any Person and hold collateral (other than the Collateral) for the payment of all or any part of the Obligations and exchange, enforce, or release such collateral or any part thereof; and (b) accept and hold any endorsement or guaranty of payment of all or any part of the Obligations and release or substitute any such endorser or guarantor, or any Person who has given any Lien in any other collateral as security for the payment of all or any part of the Obligations, or any other Person in any way obligated to pay all or any part of the Obligations.

          Section 15.7 Fees and Expenses. Holdings and each Borrower agree, jointly and severally, to pay to each Agent, the Letter of Credit Issuer and the Swingline Lender for its benefit, on demand, all reasonable, out-of-pocket costs and expenses that such Person pays or incurs in connection with the negotiation, preparation, syndication, consummation, administration, enforcement, and termination of this Agreement or any of the other Loan Documents, including: (a) Attorney Costs; (b) costs and expenses (including attorneys’ and paralegals’ fees and disbursements) for any amendment, supplement, waiver, consent, or subsequent closing in connection with the Loan Documents and the transactions contemplated thereby; (c) costs and expenses of lien searches; (d) taxes, fees, and other charges for filing financing statements and continuations, and other actions to perfect, protect, and continue the Collateral Agent’s Liens (including costs and expenses paid or incurred by an Agent in connection with the consummation of this Agreement); (e) sums paid or incurred to pay any amount or take any action required of Holdings or any Borrower under the Loan Documents that Holdings or such Borrower fails to pay or take; (f) costs of appraisals, inspections, and

Loan And Security Agreement — Page 142

verifications of the Collateral, including travel, lodging, and meals for inspections of the Collateral and Holdings’ and the Borrowers’ operations by the Collateral Agent plus the Collateral Agent’s then customary charge for field examinations and audits and the preparation of reports thereof (such charge is currently $850 per day (or portion thereof) for each agent or employee of the Collateral Agent with respect to each field examination or audit); (g) costs and expenses of forwarding loan proceeds, collecting checks, and other items of payment, and establishing and maintaining Payment Accounts and lock boxes; (h) costs and expenses of preserving and protecting the Collateral; and (i) costs and expenses (including Attorney Costs) paid or incurred to obtain payment of the Obligations, enforce the Collateral Agent’s Liens, sell or otherwise realize upon the Collateral, and otherwise enforce the provisions of the Loan Documents. The foregoing shall not be construed to limit any other provisions of the Loan Documents regarding costs and expenses to be paid by the Borrowers. Additionally, Holdings and each Borrower agree, jointly and severally, to pay each Lender all reasonable documented out-of-pocket costs and expenses that such Lender incurs in connection with the enforcement or collection of its rights under this Agreement and any other Loan Document. All of the foregoing costs and expenses may be charged to the Loan Account as Revolving Loans as described in Section 4.5.

          Section 15.8 Notices. Except as otherwise provided herein, all notices, demands, and requests that any party is required or elects to give to any other shall be in writing, or by a telecommunications device capable of creating a written record, and any such notice shall become effective (a) upon personal delivery thereof, including, but not limited to, delivery by overnight mail and courier service, (b) three (3) Business Days after it shall have been mailed by United States mail, first class, certified or registered, with postage prepaid, or (c) in the case of notice by such a telecommunications device, when properly transmitted, in each case addressed to the party to be notified as follows:

     If to the Administrative Agent:

Credit Suisse
Eleven Madison Avenue
New York, New York 10010
Attention: David Fitzgerald
Telecopy No.: (212) 325-8304

     If to the Collateral Agent:

Bank of America, N.A.
335 Madison Avenue
New York, NY 10017
Attention: Robert Scalzetti URGENT
Telecopy No.: (212) 503-7330

Loan And Security Agreement — Page 143

     If to Holdings or the Borrowers:

c/o Metals USA, Inc.
One Riverway, Suite 1100
Houston, Texas 77056
Attention: General Counsel
Telecopy No.: 713-585-6421

with a copy to:

Apollo Management V, L.P.
9 West 57th Street
New York, NY 10019
Attention: Ali Rashid

or to such other address as each party may designate for itself by like notice. Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration, or other communication to the Persons designated above to receive copies shall not adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration, or other communication.

          Section 15.9 Waiver of Notices. Unless otherwise expressly provided herein, Holdings and each Borrower waives presentment, notice of demand or dishonor, and protest as to any instrument, notice of intent to accelerate the Obligations, and notice of acceleration of the Obligations, as well as any and all other notices to which it might otherwise be entitled. No notice to or demand on Holdings or any Borrower which an Agent or any Lender may elect to give shall entitle Holdings or any Borrower to any or further notice or demand in the same, similar, or other circumstances.

          Section 15.10 Binding Effect. The provisions of this Agreement shall be binding upon and inure to the benefit of the respective representatives, successors, and permitted assigns of the parties hereto; provided, however, neither Holdings nor any Borrower shall assign or delegate any of its rights or duties hereunder, except as expressly permitted under Section 9.9, without the prior written consent of the Administrative Agent, the Letter of Credit Issuer and each Lender, and any attempted assignment without such consent shall be null and void. The rights and benefits of the Agents and the Lenders hereunder shall, if such Persons so agree, inure to any party acquiring any interest in the Obligations or any part thereof in accordance with the terms hereof.

          Section 15.11 Indemnity of the Agents and the Lenders by the Borrowers.

     (a) HOLDINGS AND EACH BORROWER AGREES, JOINTLY AND SEVERALLY, TO DEFEND, INDEMNIFY, AND HOLD EACH AGENT, THE LETTER OF CREDIT ISSUER, EACH LENDER AND EACH RELATED PERSON OF THE FOREGOING (EACH, AN “INDEMNIFIED PERSON”) HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, CHARGES, EXPENSES, AND DISBURSEMENTS (INCLUDING ATTORNEY COSTS) OF ANY

Loan And Security Agreement — Page 144

KIND OR NATURE WHATSOEVER WHICH MAY AT ANY TIME (INCLUDING AT ANY TIME FOLLOWING REPAYMENT OF THE REVOLVING LOANS AND THE TERMINATION, RESIGNATION, OR REPLACEMENT OF AN AGENT OR REPLACEMENT OF ANY LENDER) BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST ANY SUCH PERSON IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT CONTEMPLATED BY OR REFERRED TO HEREIN, OR THE TRANSACTIONS CONTEMPLATED HEREBY, OR ANY ACTION TAKEN OR OMITTED BY ANY SUCH PERSON UNDER OR IN CONNECTION WITH ANY OF THE FOREGOING, INCLUDING WITH RESPECT TO ANY INVESTIGATION, LITIGATION, OR PROCEEDING (INCLUDING ANY INSOLVENCY PROCEEDING OR APPELLATE PROCEEDING) RELATED TO OR ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR THE REVOLVING LOANS OR THE USE OF THE PROCEEDS THEREOF, WHETHER OR NOT ANY INDEMNIFIED PERSON IS A PARTY THERETO INCLUDING ANY SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, CHARGES, EXPENSES AND REIMBURSEMENTS RESULTING FROM THE NEGLIGENCE OF SUCH INDEMNIFIED PERSON (ALL THE FOREGOING, COLLECTIVELY, THE “INDEMNIFIED LIABILITIES”); PROVIDED THAT HOLDINGS AND THE BORROWERS SHALL HAVE NO OBLIGATION HEREUNDER TO ANY INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES TO THE EXTENT SUCH INDEMNIFIED LIABILITIES RESULT PRIMARILY FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PERSON OR ITS RESPECTIVE AFFILIATES. THE AGREEMENTS IN THIS SECTION 15.11 SHALL SURVIVE PAYMENT OF ALL OTHER OBLIGATIONS.

     (b) EACH BORROWER AGREES TO INDEMNIFY, DEFEND, AND HOLD HARMLESS EACH AGENT AND THE LENDERS FROM ANY LOSS OR LIABILITY DIRECTLY OR INDIRECTLY ARISING OUT OF THE USE, GENERATION, MANUFACTURE, PRODUCTION, STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL, OR PRESENCE OF A HAZARDOUS SUBSTANCE RELATING TO ANY BORROWER’S OPERATIONS, BUSINESS, OR PROPERTY. THIS INDEMNITY WILL APPLY WHETHER THE HAZARDOUS SUBSTANCE IS ON, UNDER, OR ABOUT ANY BORROWER’S PROPERTY OR OPERATIONS OR PROPERTY LEASED TO ANY BORROWER. THE INDEMNITY INCLUDES BUT IS NOT LIMITED TO ATTORNEY COSTS. THE INDEMNITY EXTENDS TO EACH AGENT AND THE LENDERS, THEIR PARENTS, AFFILIATES, SUBSIDIARIES, AND ALL OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS, ATTORNEYS, AND ASSIGNS. “HAZARDOUS SUBSTANCES” MEANS ANY SUBSTANCE, MATERIAL, OR WASTE THAT IS OR BECOMES DESIGNATED OR REGULATED AS “TOXIC,” “HAZARDOUS,” “POLLUTANT,” OR “CONTAMINANT” OR A SIMILAR DESIGNATION OR REGULATION UNDER ANY FEDERAL, STATE, OR LOCAL LAW (WHETHER UNDER COMMON LAW, STATUTE, REGULATION, OR OTHERWISE) OR JUDICIAL OR ADMINISTRATIVE INTERPRETATION OF

Loan And Security Agreement — Page 145

SUCH, INCLUDING PETROLEUM OR NATURAL GAS. THIS INDEMNITY WILL SURVIVE REPAYMENT OF ALL OTHER OBLIGATIONS.

          Section 15.12 Limitation of Liability. NO CLAIM MAY BE MADE BY HOLDINGS, ANY BORROWER, ANY LENDER, OR OTHER PERSON AGAINST AN AGENT, ANY LENDER, OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION THEREWITH, AND HOLDINGS, EACH BORROWER AND EACH LENDER HEREBY WAIVES, RELEASES, AND AGREES NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.

          Section 15.13 Final Agreement. This Agreement, the Fee Letter and the other Loan Documents are intended by the Borrowers, the Agents, and the Lenders to be the final, complete, and exclusive expression of the agreement between them. This Agreement, the Fee Letter and the other Loan Documents supersede any and all prior oral or written agreements relating to the subject matter hereof and thereof. No modification, rescission, waiver, release, or amendment of any provision of this Agreement or any other Loan Document shall be made, except by a written agreement signed by the Borrowers and a duly authorized officer of each of the Administrative Agent and the requisite Lenders.

THIS WRITTEN LOAN AND SECURITY AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

          Section 15.14 Counterparts. This Agreement and the other Loan Documents may be executed in any number of counterparts, and by each Agent, each Lender, and the Borrowers in separate counterparts, each of which shall be an original, but all of which shall together constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document, and a telecopy of any such executed signature page shall be valid as an original.

          Section 15.15 Captions. The captions contained in this Agreement and the other Loan Documents are for convenience of reference only, are without substantive meaning and should not be construed to modify, enlarge, or restrict any provision.

          Section 15.16 Right of Set-off. In addition to any rights and remedies of the Lenders provided by law, if an Event of Default exists or the Revolving Loans have been accelerated, each Lender is authorized at any time and from time to time, without prior notice to the Borrowers, any such notice being waived by the Borrowers to the fullest extent permitted by

Loan And Security Agreement — Page 146

law, to set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender to or for the credit or the account of any Borrower against any and all Obligations owing to such Lender, now or hereafter existing, irrespective of whether or not the Administrative Agent or such Lender shall have made demand under this Agreement or any Loan Document and although such Obligations may be contingent or unmatured. Each Lender agrees promptly to notify the Borrowers and the Administrative Agent after any such set-off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF, BANKER’S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY BORROWER HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN CONSENT OF THE ADMINISTRATIVE AGENT.

          Section 15.17 Joint and Several Liability. All Revolving Loans, upon funding, shall be deemed to be jointly funded to and received by the Borrowers. Each Borrower jointly and severally agrees to pay, and shall be jointly and severally liable under this Agreement for, all Obligations, regardless of the manner or amount in which proceeds of Revolving Loans are used, allocated, shared, or disbursed by or among the Borrowers themselves, or the manner in which an Agent and/or any Lender accounts for such Revolving Loans or other extensions of credit on its books and records. Each Borrower shall be liable for all amounts due to an Agent and/or any Lender under this Agreement, regardless of which Borrower actually receives Revolving Loans or other extensions of credit hereunder or the amount of such Revolving Loans and extensions of credit received or the manner in which such Agent and/or such Lender accounts for such Revolving Loans or other extensions of credit on its books and records. Each Borrower’s Obligations with respect to Revolving Loans and other extensions of credit made to it, and such Borrower’s Obligations arising as a result of the joint and several liability of such Borrower hereunder, with respect to Loans made to the other Borrowers hereunder, shall be separate and distinct obligations, but all such Obligations shall be primary obligations of such Borrower. The Borrowers acknowledge and expressly agree with the Agents and each Lender that the joint and several liability of each Borrower is required solely as a condition to, and is given solely as inducement for and in consideration of, credit or accommodations extended or to be extended under the Loan Documents to any or all of the other Borrowers and is not required or given as a condition of extensions of credit to such Borrower. Each Borrower’s obligations under this Agreement and as an obligor under a Guaranty Agreement shall be separate and distinct obligations. Each Borrower’s obligations under this Agreement shall, to the fullest extent permitted by law, be unconditional irrespective of (i) the validity or enforceability, avoidance, or subordination of the Obligations of any other Borrower or of any promissory note or other document evidencing all or any part of the Obligations of any other Borrower, (ii) the absence of any attempt to collect the Obligations from any other Borrower, any Guarantor, or any other security therefor, or the absence of any other action to enforce the same, (iii) the waiver, consent, extension, forbearance, or granting of any indulgence by an Agent and/or any Lender with respect to any provision of any instrument evidencing the Obligations of any other Borrower or Guarantor, or any part thereof, or any other agreement now or hereafter executed by any other Borrower or Guarantor and delivered to an Agent and/or any Lender, (iv) the failure by an Agent and/or any Lender to take any steps to perfect and maintain its security interest in, or to preserve its rights to, any security or collateral for the Obligations of any other Borrower or Guarantor,

Loan And Security Agreement — Page 147

(V) an Agent’s and/or any Lender’s election, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a security interest by any other Borrower, as debtor-in-possession under Section 364 of the Bankruptcy Code, (vii) the disallowance of all or any portion of an Agent’s and/or any Lender’s claim(s) for the repayment of the Obligations of any other Borrower under Section 502 of the Bankruptcy Code, or (viii) any other circumstances which might constitute a legal or equitable discharge or defense of a guarantor or of any other Borrower. With respect to any Borrower’s Obligations arising as a result of the joint and several liability of the Borrowers hereunder with respect to Revolving Loans or other extensions of credit made to any of the other Borrowers hereunder, such Borrower waives, until the Obligations shall have been paid in full and this Agreement shall have been terminated, any right to enforce any right of subrogation or any remedy which an Agent and/or any Lender now has or may hereafter have against any other Borrower, any endorser or any guarantor of all or any part of the Obligations, and any benefit of, and any right to participate in, any security or collateral given to an Agent and/or any Lender to secure payment of the Obligations or any other liability of any Borrower to an Agent and/or any Lender. Upon any Event of Default, the Agents may proceed directly and at once, without notice, against any Borrower to collect and recover the full amount, or any portion of the Obligations, without first proceeding against any other Borrower or any other Person, or against any security or collateral for the Obligations. Each Borrower consents and agrees that the Agents shall be under no obligation to marshal any assets in favor of any Borrower or against or in payment of any or all of the Obligations.

          Section 15.18 Contribution and Indemnification among the Borrowers. Each Borrower is obligated to repay the Obligations as joint and several obligor under this Agreement. To the extent that any Borrower shall, under this Agreement as a joint and several obligor, repay any of the Obligations constituting Revolving Loans made to another Borrower hereunder or other Obligations incurred directly and primarily by any other Borrower (an “Accommodation Payment”), then the Borrower making such Accommodation Payment shall be entitled to contribution and indemnification from, and be reimbursed by, each of the other Borrowers in an amount, for each of such other Borrowers, equal to a fraction of such Accommodation Payment, the numerator of which fraction is such other Borrower’s Allocable Amount (as defined below) and the denominator of which is the sum of the Allocable Amounts of all of the Borrowers. As of any date of determination, the “Allocable Amount” of each Borrower shall be equal to the maximum amount of liability for Accommodation Payments which could be asserted against such Borrower hereunder without (a) rendering such Borrower “insolvent” within the meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act (“UFTA”) or Section 2 of the Uniform Fraudulent Conveyance Act (“UFCA”), (b) leaving such Borrower with unreasonably small capital or assets, within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving such Borrower unable to pay its debts as they become due within the meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA. All rights and claims of contribution, indemnification, and reimbursement under this Section shall be subordinate in right of payment to the prior payment in full of the Obligations. The provisions of this Section shall, to the extent expressly inconsistent with any provision in any Loan Document, supersede such inconsistent provision.

Loan And Security Agreement — Page 148

          Section 15.19 Agency of Parent for Each Other Borrower. Each of the other Borrowers irrevocably appoints Parent as its agent for all purposes relevant to this Agreement, including the giving and receipt of notices and execution and delivery of all documents, instruments, and certificates contemplated herein (including, without limitation, execution and delivery to the Agents of Borrowing Base Certificates, Notices of Borrowing, and Notices of Conversion/Continuation) and all modifications hereto. Any acknowledgment, consent, direction, certification, or other action which might otherwise be valid or effective only if given or taken by all or any of the Borrowers or acting singly, shall be valid and effective if given or taken only by Parent, whether or not any of the other Borrowers joins therein, and the Agents and the Lenders shall have no duty or obligation to make further inquiry with respect to the authority of Parent under this Section 15.19, provided that nothing in this Section 15.19 shall limit the effectiveness of, or the right of the Agents and the Lenders to rely upon, any notice (including without limitation a Notice of Borrowing or a Notice of Conversion/Continuation), document, instrument, certificate, acknowledgment, consent, direction, certification, or other action delivered by any Borrower pursuant to this Agreement.

          Section 15.20 Additional Borrowers. Addition of any Person as a Borrower under this Agreement is subject to approval of the Administrative Agent and the Majority Lenders, and may be conditioned upon such requirements as they may determine in their discretion, including, without limitation, (a) the furnishing of such financial and other information as the Administrative Agent or any such Lender may request; (b) approval by all appropriate approval authorities of the Administrative Agent and each such Lender; (c) execution and delivery by the Borrowers, such Person, the Administrative Agent, and the Majority Lenders of such agreements and other documentation (including, without limitation, an amendment to this Agreement or any other Loan Document), and the furnishing by such Person or any of the Borrowers of such certificates, opinions, and other documentation, as the Administrative Agent and any such Lender may request. Neither the Administrative Agent nor any Lender shall have any obligation to approve any such Person for addition as a Borrower under this Agreement.

          Section 15.21 Express Waivers By Borrowers In Respect of Cross Guaranties and Cross Collateralization. Each Borrower agrees as follows:

     (a) Each Borrower hereby waives: (i) notice of acceptance of this Agreement; (ii) notice of the making of any Revolving Loans, the issuance of any Letter of Credit or any other financial accommodations made or extended under the Loan Documents or the creation or existence of any Obligations; (iii) notice of the amount of the Obligations, subject, however, to such Borrower’s right to make inquiry of the Administrative Agent to ascertain the amount of the Obligations at any reasonable time; (iv) notice of any adverse change in the financial condition of any other Borrower or of any other fact that might increase such Borrower’s risk with respect to such other Borrower under the Loan Documents; (v) notice of presentment for payment, demand, protest, and notice thereof as to any promissory notes or other instruments among the Loan Documents; and (vii) all other notices (except if such notice is specifically required to be given to such Borrower hereunder or under any of the other Loan Documents to which such Borrower is a party) and demands to which such Borrower might otherwise be entitled;

Loan And Security Agreement — Page 149

     (b) Each Borrower hereby waives the right by statute or otherwise to require an Agent or any Lender to institute suit against any other Borrower or to exhaust any rights and remedies which an Agent or any Lender has or may have against any other Borrower. Each Borrower further waives any defense arising by reason of any disability or other defense of any other Borrower (other than the defense that the Obligations shall have been fully and finally performed and paid) or by reason of the cessation from any cause whatsoever of the liability of any such Borrower in respect thereof.

     (c) Each Borrower hereby waives and agrees not to assert against an Agent, any Lender, or the Letter of Credit Issuer: (i) any defense (legal or equitable), set-off, counterclaim, or claim which such Borrower may now or at any time hereafter have against any other Borrower or any other party liable under the Loan Documents; (ii) any defense, set-off, counterclaim, or claim of any kind or nature available to any other Borrower against an Agent, any Lender, or the Letter of Credit Issuer, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Obligations or any security therefor; (iii) any right or defense arising by reason of any claim or defense based upon an election of remedies by an Agent, any Lender, or the Letter of Credit Issuer under any applicable law; (iv) the benefit of any statute of limitations affecting any other Borrower’s liability hereunder;

     (d) Each Borrower consents and agrees that, without notice to or by such Borrower and without affecting or impairing the obligations of such Borrower hereunder, the Agents may (subject to any requirement for consent of any of the Lenders to the extent required by this Agreement), by action or inaction: (i) compromise, settle, extend the duration or the time for the payment of, or discharge the performance of, or may refuse to or otherwise not enforce the Loan Documents; (ii) release all or any one or more parties to any one or more of the Loan Documents or grant other indulgences to any other Borrower in respect thereof; (iii) amend or modify in any manner and at any time (or from time to time) any of the Loan Documents; or (iv) release or substitute any Person liable for payment of the Obligations, or enforce, exchange, release, or waive any security for the Obligations or any Guaranty of the Obligations;

Each Borrower represents and warrants to the Agents and the Lenders that such Borrower is currently informed of the financial condition of all other Borrowers and all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each Borrower further represents and warrants that such Borrower has read and understands the terms and conditions of the Loan Documents. Each Borrower agrees that neither the Agents, any Lender, nor the Letter of Credit Issuer has any responsibility to inform any Borrower of the financial condition of any other Borrower or of any other circumstances which bear upon the risk of nonpayment or nonperformance of the Obligations.

          Section 15.22 USA PATRIOT Act Notice. Each Lender and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies Holdings and the Borrowers that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies Holdings and the Borrowers, which information includes the name and address of Holdings and the Borrowers and other information that will allow such

Loan And Security Agreement — Page 150

Lender or the Administrative Agent, as applicable, to identify Holdings and the Borrowers in accordance with the USA PATRIOT Act.

[Remainder of page intentionally left blank]

Loan And Security Agreement — Page 151

     IN WITNESS WHEREOF, the parties have entered into this Agreement on the date first above written.

FLAG INTERMEDIATE HOLDINGS CORPORATION,
by	/s/ M. ALI RASHID
	Name: M. Ali Rashid
	Title: President
FLAG ACQUISITION CORPORATION,
by	/s/ M. ALI RASHID
	Name: M. Ali Rashid
	Title: President
METALS USA, INC.,
by	/S/ LAURENCO GONCALVES
	Name: Laurenco Goncalves
	Title: President and CEO

(Signature Page to Loan and Security Agreement)

ALLMET GP, INC.

ALLMET LP, INC.

INTERSTATE STEEL SUPPLY CO. OF MARYLAND, INC.

INTSEL GP, INC.

INTSEL LP, INC.

i-SOLUTIONS DIRECT, INC.

JEFFREYS REAL ESTATE CORPORATION

LEVINSON STEEL GP, INC.

LEVINSON STEEL LP, INC.

METALS RECEIVABLES CORPORATION

METALS USA BUILDING PRODUCTS, L.P.

By: Allmet GP, Inc., its General Partner

METALS USA CARBON FLAT ROLLED, INC.

METALS USA FINANCE CORP.

METALS USA FLAT ROLLED CENTRAL, INC.

METALS USA MANAGEMENT CO., L.P.

By: MUSA GP, Inc., its General Partner

METALS USA PLATES AND SHAPES, NORTHEAST, L.P.

By: Levinson Steel GP, Inc., its General Partner

METALS USA PLATES AND SHAPES SOUTHCENTRAL, INC.

METALS USA PLATES AND SHAPES SOUTHEAST, INC.

METALS USA PLATES AND SHAPES

SOUTHWEST, LIMITED PARTNERSHIP

By: Intsel GP, Inc., its General Partner

METALS USA REALTY COMPANY

METALS USA SPECIALTY METALS NORTHCENTRAL, INC.

MUSA GP, INC.

MUSA LP, INC.

QUEENSBORO, L.L.C.

By: Metals USA Plates and Shapes Southeast,

Inc., its sole Member

by	/s/ KEITH KOCI
	Name: Keith Koci
	Title: Treasurer

JEFFREYS STEEL HOLDINGS, L.L.C.

by	/s/ JOHN A. HAGEMAN
	Name: John A. Hageman
	Title: Manager

(Signature Page to Loan and Security Agreement)

CREDIT SUISSE, CAYMAN ISLANDS BRANCH, individually and as Administrative Agent, Letter of Credit Issuer and Swingline Lender,
By	/s/ ROBERT HETV
	Name: Robert Hetv
	Title: Director
By	/s/ CASSANDRA DROOGAN
	Name: Cassandra Droogan
	Title: Associate
BANK OF AMERICA, N.A., individually and as Collateral Agent and Letter of Credit Issuer
By	/s/ RICHARD LEVENSON
	Name: Richard Levenson
	Title: Senior Vice President

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $35,000,000.00   

Tranche A-1 Commitment:    $5,000,000.00   

NAME OF LENDER:  CREDIT SUISSE, CAYMAN ISLANDS BRANCH
By:	/s/ JUDY SMITH
	Name:  Judy Smith
	Title:    Director
By:	/s/ CASSANDRA DROOGAN
	Name:  Cassandra Droogan
	Title:    Associate

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $35,000,000.00   

Tranche A-1 Commitment:    $5,000,000.00   

NAME OF LENDER:  BANK OF AMERICA, N.A.
By:	/s/ ROBERT SCALZITTI
	Name:  Robert Scalzitti
	Title:    Vice President

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $40,000,000.00   

Tranche A-1 Commitment:    $0   

NAME OF LENDER:  GENERAL ELECTRIC CAPITAL CORPORATION
By:	/s/ TOM D. CHAPMAN
	Name:  Tom D. Chapman
	Title:    ONLY AUTHORIZED SIGNATORY

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $30,000,000.00   

Tranche A-1 Commitment:    $5,000,000.00   

NAME OF LENDER:  GMAC COMMERCIAL FINANCE, LLC
By:	/s/ JOSEPH SKAFEROWSKY
	Name:  Joseph Skaferowsky
	Title:    Director

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $30,000,000.00   

Tranche A-1 Commitment:    $2,500,000.00   

NAME OF LENDER:  WACHOVIA BANK, NATIONAL ASSOCIATION
By:	/s/ GILL ELMORE
	Name:  Gill Elmore
	Title:    Vice President

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $30,000,000.00   

Tranche A-1 Commitment:    $5,500,000.00   

NAME OF LENDER:  THE CIT GROUP / BUSINESS CREDIT, INC.
By:	/s/ CARL GIORDANO
	Name:  Carl Giordano
	Title:    Assistant Vice President

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $30,000,000.00   

Tranche A-1 Commitment:    $2,000,000.00   

NAME OF LENDER:  WELLS FARGO FOOTHILL, LLC
By:	/s/ DENNIS KING
	Name:  Dennis King
	Title:    Vice President

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $27,500,000.00   

Tranche A-1 Commitment:    $4,000,000.00   

NAME OF LENDER:  NATIONAL CITY BUSINESS CREDIT, INC.
By:	/s/ ANTHONY ALEXANDER
	Name:  Anthony Alexander
	Title:    Vice President

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $27,500,000.00   

Tranche A-1 Commitment:     ————    

NAME OF LENDER:  LESALLE BUSINESS CREDIT, LLC
By:	/s/ THOMAS J. BRENNAN
	Name:  Thomas J. Brennan
	Title:    First Vice President

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $25,000,000.00   

Tranche A-1 Commitment:     0    

NAME OF LENDER:  MERRILL LYNCH CAPITAL, A DVISION OF MERRILL LYNCH BUSINESS FINANCIAL SERVICE INC.
By:	/s/ RICHARD HOLSTON
	Name:  Richard Holston
	Title:    Vice President

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $17,500,000.00   

Tranche A-1 Commitment:    $3,000,000.00   

NAME OF LENDER:  PNC BANK, NATIONAL ASSOCIATION
By:	/s/ JEANETTE VANDENBERGH
	Name:  Jeanette Vandenbergh
	Title:    Vice President

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $12,500,000.00   

Tranche A-1 Commitment:    $3,000,000.00   

NAME OF LENDER:  HSBC BUSINESS CREDIT (USA) INC.
By:	/s/ JIMMY SCHWARTZ
	Name:  Jimmy Schwartz
	Title:    Vice President

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $15,000,000.00   

Tranche A-1 Commitment:     0    

NAME OF LENDER:  CITIZENS BUSINESS CREDIT, a division of Citizens Leasing Corporation
By:	/s/ TIMOTHY J. LOHN
	Name:  Timothy J. Lohn
	Title:    Senior Vice President

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $5,000,000.00   

Tranche A-1 Commitment:      0     

NAME OF LENDER:  UBS LOAN FINANCE LLC
By:	/s/ RICHARD L. TAVROW
	Name:  Richard L. Tavrow
	Title:    Director
	Banking Products Services, US
By:	/s/ JOSELIN FERNANDES
	Name:  Joselin Fernandes
	Title:    Associate Director
	Banking Products Services, US

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $15,000,000.00   

Tranche A-1 Commitment:        $0       

NAME OF LENDER:  JPMORGAN CHASE BANK, N.A.
By:	/s/ TIMOTHY J. WHITEFOOT
	Name:  Timothy J. Whitefoot
	Title:    Vice President

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $15,000,000.00   

Tranche A-1 Commitment:       $0      

NAME OF LENDER:  UPS CAPITAL CORPORATION
By:	/s/ JOHN P. HOLLOWAY
	Name:  John P. Holloway
	Title:    Director of Portfolio Management

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $7,500,000.00   

Tranche A-1 Commitment:       $0      

NAME OF LENDER:  RZB FINANCE LLC
By:	/s/ ERIC SALAT
	Name:  Eric Salat
	Title:    Group Vice President
By:	/s/ HERMINE KIROLOS
	Name:  Hermine Kirolos
	Title:    Group Vice President

(Signature Page to Loan and Security Agreement)

LENDERS:

Tranche A Commitment:    $7,500,000.00   

Tranche A-1 Commitment:    $0   

NAME OF LENDER:  WEBSTER BUSINESS CREDIT CORPORATION
By:	/s/ GORDON MASSAVE
	Name:  Gordon Massave
	Title:    AVP

(Signature Page to Loan and Security Agreement)

EX-4.6

Exhibit 4.6

EXECUTION COPY

FLAG ACQUISITION CORPORATION
(to be merged with and into Metals USA, Inc.),

as Issuer

the GUARANTORS named herein

11¹/₈% SENIOR SECURED NOTES DUE 2015

INDENTURE

Dated as of November 30, 2005

WELLS FARGO BANK, N.A.,

as Trustee and Notes Collateral Agent

TABLE OF CONTENTS

		Page
	ARTICLE 1
	DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01.	Definitions		1
Section 1.02.	Other Definitions		35
Section 1.03.	Incorporation by Reference of Trust Indenture Act		36
Section 1.04.	Rules of Construction		36
	ARTICLE 2
	THE NOTES
Section 2.01.	Amount of Notes; Issuable in Series		37
Section 2.02.	Form and Dating		38
Section 2.03.	Execution and Authentication		38
Section 2.04.	Registrar and Paying Agent		39
Section 2.05.	Paying Agent to Hold Money in Trust		39
Section 2.06.	Holder Lists		40
Section 2.07.	Transfer and Exchange		40
Section 2.08.	Replacement Notes		41
Section 2.09.	Outstanding Notes		41
Section 2.10.	Temporary Notes		42
Section 2.11.	Cancellation		42
Section 2.12.	Defaulted Interest		42
Section 2.13.	CUSIP Numbers, ISINs, etc		42
Section 2.14.	Calculation of Principal Amount of Notes		42
	ARTICLE 3
	REDEMPTION
Section 3.01.	Redemption		43
Section 3.02.	Applicability of Article		43
Section 3.03.	Notices to Trustee		43
Section 3.04.	Selection of Notes to Be Redeemed		43
Section 3.05.	Notice of Optional Redemption		43
Section 3.06.	Effect of Notice of Redemption		44
Section 3.07.	Deposit of Redemption Price		45
Section 3.08.	Notes Redeemed in Part		45

-i-

		Page
	ARTICLE 4
	COVENANTS
Section 4.01.	Payment of Notes		45
Section 4.02.	Reports and Other Information		45
Section 4.03.	Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock		46
Section 4.04.	Limitation on Restricted Payments		52
Section 4.05.	Dividend and Other Payment Restrictions Affecting Subsidiaries		60
Section 4.06.	Asset Sales		62
Section 4.07.	Transactions with Affiliates		66
Section 4.08.	Change of Control		69
Section 4.09.	Compliance Certificate		70
Section 4.10.	Further Instruments and Acts		71
Section 4.11.	Future Guarantors		71
Section 4.12.	Liens		71
Section 4.13.	Maintenance of Office or Agency		72
Section 4.14.	Impairment of Security Interest		72
Section 4.15.	After-Acquired Property		72
	ARTICLE 5
	MERGER, CONSOLIDATION OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS
Section 5.01.	Merger, Consolidation or Sale of All or Substantially All Assets		73
	ARTICLE 6
	DEFAULTS AND REMEDIES
Section 6.01.	Events of Default		76
Section 6.02.	Acceleration		78
Section 6.03.	Other Remedies		78
Section 6.04.	Waiver of Past Defaults		79
Section 6.05.	Control by Majority		79
Section 6.06.	Limitation on Suits		79
Section 6.07.	Rights of the Holders to Receive Payment		79
Section 6.08.	Collection Suit by Trustee		80
Section 6.09.	Trustee May File Proofs of Claim		80
Section 6.10.	Priorities		80
Section 6.11.	Undertaking for Costs		80
Section 6.12.	Waiver of Stay or Extension Laws		81

-ii-

		Page
	ARTICLE 7
	TRUSTEE
Section 7.01.	Duties of Trustee		81
Section 7.02.	Rights of Trustee		82
Section 7.03.	Individual Rights of Trustee		83
Section 7.04.	Trustee’s Disclaimer		83
Section 7.05.	Notice of Defaults		84
Section 7.06.	Reports by Trustee to the Holders		84
Section 7.07.	Compensation and Indemnity		84
Section 7.08.	Replacement of Trustee		85
Section 7.09.	Successor Trustee by Merger		86
Section 7.10.	Eligibility; Disqualification		86
Section 7.11.	Preferential Collection of Claims Against the Company		86
	ARTICLE 8
	DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.01.	Discharge of Liability on Notes; Defeasance		87
Section 8.02.	Conditions to Defeasance		88
Section 8.03.	Application of Trust Money		89
Section 8.04.	Repayment to the Company		89
Section 8.05.	Indemnity for Government Obligations		90
Section 8.06.	Reinstatement		90
	ARTICLE 9
	AMENDMENTS AND WAIVERS
Section 9.01.	Without Consent of the Holders		90
Section 9.02.	With Consent of the Holders		91
Section 9.03.	Compliance with Trust Indenture Act		92
Section 9.04.	Revocation and Effect of Consents and Waivers		92
Section 9.05.	Notation on or Exchange of Notes		93
Section 9.06.	Trustee to Sign Amendments		93
Section 9.07.	Payment for Consent		93
Section 9.08.	Additional Voting Terms; Calculation of Principal Amount		93
	ARTICLE 10
	GUARANTEES
Section 10.01.	Guarantees		94
Section 10.02.	Limitation on Liability		96
Section 10.03.	Successors and Assigns		97

-iii-

		Page
Section 10.04.	No Waiver		97
Section 10.05.	Modification		97
Section 10.06.	Execution of Supplemental Indenture for Future Guarantors		97
	ARTICLE 11
	SECURITY DOCUMENTS
Section 11.01.	Collateral and Security Documents		98
Section 11.02.	Recordings and Opinions		99
Section 11.03.	Release of Collateral		100
Section 11.04.	Permitted Releases Not To Impair Lien; Trust Indenture Act Requirements		101
Section 11.05.	Certificates of the Trustee		101
Section 11.06.	Suits To Protect the Collateral		102
Section 11.07.	Authorization of Receipt of Funds by the Trustee Under the Security Documents		102
Section 11.08.	Purchaser Protected		102
Section 11.09.	Powers Exercisable by Receiver or Trustee		102
Section 11.10.	Release Upon Termination of the Company’s Obligations		103
Section 11.11.	Notes Collateral Agent		103
Section 11.12.	Designations		107
	ARTICLE 12
	[INTENTIONALLY LEFT BLANK]
	ARTICLE 13
	MISCELLANEOUS
Section 13.01.	Trust Indenture Act Controls		107
Section 13.02.	Notices		108
Section 13.03.	Communication by the Holders with Other Holders		108
Section 13.04.	Certificate and Opinion as to Conditions Precedent		108
Section 13.05.	Statements Required in Certificate or Opinion		109
Section 13.06.	When Notes Disregarded		109
Section 13.07.	Rules by Trustee, Paying Agent and Registrar		109
Section 13.08.	Legal Holidays		109
Section 13.09.	GOVERNING LAW		109
Section 13.10.	No Recourse Against Others		109
Section 13.11.	Successors		110
Section 13.12.	Multiple Originals		110
Section 13.13.	Table of Contents; Headings		110
Section 13.14.	Indenture Controls		110
Section 13.15.	Intercreditor Agreement Governs		108

-iv-

		Page
Section 13.16.	Severability		110
Section 13.17.	Currency of Account; Conversion of Currency; Foreign Exchange Restrictions		110
Appendix A – Rule 144A/Regulation S/IAI Appendix

	Exhibit 1 – Form of Initial Note
	Exhibit A – Form of Exchange Note or Private Exchange Note
	Exhibit 2 – Form of Letter of Representation
Appendix B – Form of Supplemental Indenture for Future Guarantors

-v-

CROSS-REFERENCE TABLE

TIA		Indenture
Section		Section
310	(a)(1)	7.10
	(a)(2)	7.10
	(a)(3)	N.A.
	(a)(4)	N.A.
	(b)	7.08; 7.10
	(c)	N.A.
311	(a)	7.11
	(b)	7.11
	(c)	N.A.
312	(a)	2.06
	(b)	13.03
	(c)	13.03
313	(a)	7.06
	(b)(1)	N.A.
	(b)(2)	7.06
	(c)	7.06
	(d)	7.06
314	(a)	4.02; 4.09
	(b)	N.A.
	(c)(1)	13.04
	(c)(2)	13.04
	(c)(3)	N.A.
	(d)	11.04
	(e)	N.A.
	(f)	4.10
315	(a)	7.01
	(b)	7.05
	(c)	7.01
	(d)	7.01
	(e)	6.11
316	(a) (last sentence)	13.06
	(a)(1)(A)	6.05
	(a)(1)(B)	6.04
	(a)(2)	N.A.
	(b)	6.07
317	(a)(1)	6.08
	(a)(2)	6.09
	(b)	2.05
318	(a)	13.01

N.A. Means Not Applicable.

Note: This Cross-Reference Table shall not, for any purposes, be deemed to be part of this Indenture

-vi-

     INDENTURE dated as of November 30, 2005 among Flag Acquisition Corporation, a Delaware corporation (“Flag Acquisition”), Flag Intermediate Holdings Corporation, a Delaware corporation, the Subsidiary Guarantors (as defined herein) and Wells Fargo Bank, N.A., as trustee, and the Notes Collateral Agent (as defined herein).

          Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of Notes issued under this Indenture.

ARTICLE 1

          DEFINITIONS AND INCORPORATION BY REFERENCE

          SECTION 1.01. Definitions.

          “ABL Collateral” means any and all of the following assets and properties now owned or at any time hereafter acquired by the Company or any Guarantor: (a) all Accounts; (b) all Inventory; (c) to the extent evidencing, governing, securing or otherwise related to the items referred to in the preceding clauses (a) and (b), all (i) General Intangibles, (ii) Chattel Paper, (iii) Instruments and (iv) Documents; (d) all Payment Intangibles (including corporate tax refunds), other than any Payment Intangibles that represent tax refunds in respect of or otherwise relate to real property, Fixtures or Equipment; (e) all Indebtedness of Holdings or any of its subsidiaries that arises from cash advances made after the date hereof to enable the obligor or obligors thereon to acquire Inventory; (f) all collection accounts, deposit accounts and commodity accounts and any cash or other assets in any such accounts (other than identifiable cash proceeds in respect of real estate, Fixtures or Equipment); (g) all books and records related to the foregoing; and (h) all Products and Proceeds of any and all of the foregoing in whatever form received, including proceeds of insurance policies related to Inventory of the Company or any Guarantor and business interruption insurance. All capitalized terms used in this definition and not defined elsewhere herein have the meanings assigned to them in the Uniform Commercial Code.

          “ABL Facility” means the credit agreement among Holdings, the Company, certain Subsidiaries of the Company, the financial institutions named therein, Credit Suisse, as Administrative Agent, and Bank of America, N.A., as Collateral Agent, dated as of the Issue Date, as amended, extended, renewed, restated, supplemented, waived, replaced (whether or not upon termination, and whether with the original agents, lenders or otherwise), restructured, repaid, refunded, refinanced or otherwise modified from time to time, including any agreement or indenture or multiple agreements and indentures extending the maturity thereof, refinancing, replacing or otherwise restructuring all or any portion of the Indebtedness under such agreement or agreements or indenture or indentures or any successor or replacement agreement or agreements or indenture or indentures or increasing the amount loaned or issued thereunder or altering the maturity thereof and adding Restricted Subsidiaries as additional borrowers, issuers or guarantors thereunder.

          “Acquired Indebtedness” means, with respect to any specified Person:

     (1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, and

     (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person, in each case, other than Indebtedness Incurred as consideration in, in contemplation of, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was otherwise acquired by such Person, or such asset was acquired by such Person, as applicable.

          “Additional Notes” means the 11¹/₈% Senior Secured Notes Due 2015 issued under the terms of this Indenture subsequent to the Issue Date.

          “Adjusted EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication, to the extent the same was deducted in calculating Consolidated Net Income:

     (1) Consolidated Taxes; plus

     (2) Consolidated Interest Expense; provided, however, such amount will be included in Adjusted EBITDA notwithstanding that such amount was not deducted in calculating Consolidated Net Income; plus

     (3) Consolidated Non-cash Charges; plus

     (4) the amount of management, monitoring, consulting and advisory fees and related expenses paid to the Sponsor or its predecessor (or any accruals relating to such fees and related expenses) during such period; provided, however, that such amount shall not exceed in any four-quarter period commencing after September 30, 2005 the amount determined in accordance with Section 4.07(b)(iii); plus

     (5) facility closure and severance costs and charges; plus

     (6) impairment charges, including the write-down of Investments; plus

     (7) non-operating expenses; plus

     (8) restructuring expenses and charges;

less, without duplication,

     (9) non-cash items increasing Consolidated Net Income for such period (excluding any items which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period, including the amortization of employee benefit plan prior service costs); minus

     (10) non-operating income.

-2-

          “Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

          “After-Acquired Property” means (i) equipment or fixtures acquired by the Company or any Guarantor after the Issue Date which constitute accretions, additions or technological upgrades to the equipment or fixtures that form part of the Notes Collateral, (ii) any equipment, fixtures and real estate of the Company or any Guarantor acquired after the Issue Date and which is not subject to a Permitted Lien pursuant to clause (6) or (10) of the definition thereof, (iii) any assets acquired by the Company or any Restricted Subsidiary in compliance with Section 4.06(a)(iii) or pursuant to an Asset Sale Investment contemplated by Section 4.06(b)(i), (iv) all Capital Stock of the Company issued after the Issue Date, (v) all of the Capital Stock acquired after the Issue Date (subject to the limits described in Section 11.01(b)) and held by the Company, Holdings or any Subsidiary Guarantor (which, in the case of any first-tier Foreign Subsidiary, will be limited to 100% of the non-voting stock (if any) and 65% of the voting stock of such first-tier Foreign Subsidiary) and (vi) substantially all of the other tangible and intangible assets of the Company, Holdings and each Subsidiary Guarantor acquired after the Issue Date; provided, however, that in no event shall After-Acquired Property include any Excluded Assets.

          “Applicable Premium” means,

          (1) with respect to any Note on any applicable redemption date, the greater of:

     (a) 1.0% of the then outstanding principal amount of such Note; and

     (b) the excess of:

     (A) the present value at such redemption date of the sum of (i) the redemption price of such Note at December 1, 2010 (such redemption price being set forth in Paragraph 5 of such Note) plus (ii) all required interest payments due on such Note through December 1, 2010 (excluding accrued but unpaid interest), such present value to be computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over

     (B) the then outstanding principal amount of such Note.

     “Asset Sale” means:

     (1) the sale, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) of assets (including by way of a Sale/Leaseback Transaction) of the Company or any Restricted Subsidiary of the Company other than in the ordinary course of business (each referred to in this definition as a “disposition”) or

-3-

     (2) the issuance or sale of Equity Interests of any Restricted Subsidiary (other than to the Company or another Restricted Subsidiary of the Company other than directors’ or other legally required qualifying shares) (whether in a single transaction or a series of related transactions),

in each case other than:

     (a) a disposition of Cash Equivalents or Investment Grade Securities;

     (b) disposition of obsolete, damaged or worn out equipment or other property or other disposals of equipment or other property in connection with reinvestment in or replacement of equipment or other property, in each case, in the ordinary course of business;

     (c) the disposition of all or substantially all of the assets of the Company in a manner permitted pursuant to Section 5.01(a) or any disposition that constitutes a Change of Control;

     (d) any Restricted Payment or Permitted Investment that is permitted to be made, and is made, under Section 4.04;

     (e) any disposition of assets of the Company or any Restricted Subsidiary or issuance or sale of Equity Interests of any Restricted Subsidiary, which assets or Equity Interests so disposed or issued have an aggregate Fair Market Value of less than $4.5 million; provided, however, that the aggregate Fair Market Value of all dispositions made pursuant to this clause (e) shall not exceed $16 million;

     (f) any disposition of assets of the Company or any Restricted Subsidiary having an aggregate Fair Market Value of less than $750,000;

     (g) any disposition of assets to the Company or any Restricted Subsidiary of the Company, including by way of merger;

     (h) any exchange of assets for assets related to a Similar Business to the extent of comparable or better market value, as determined in good faith by the Company, which in the event of an exchange of assets with a Fair Market Value in excess of (1) $3.5 million shall be evidenced by an Officers’ Certificate, and (2) $10.0 million shall be set forth in a resolution approved in good faith by at least a majority of the Board of Directors of the Company;

     (i) any disposition of assets received by the Company or any of its Restricted Subsidiaries upon the foreclosure on a Lien;

     (j) any disposition of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;

     (k) any disposition of ABL Collateral;

-4-

     (l) the lease, assignment or sublease of any real or personal property in the ordinary course of business;

     (m) any disposition of accounts receivable and related assets of the type specified in the definition of “Receivables Financing” to a Receivables Subsidiary in a Qualified Receivables Financing or in factoring or similar transactions;

     (n) a transfer of accounts receivable and related assets of the type specified in the definition of “Receivables Financing” (or a fractional undivided interest therein) by a Receivables Subsidiary in a Qualified Receivables Financing;

     (o) any agreement or arrangement involving, relating to or otherwise facilitating, (i) requirements contracts, (ii) tolling arrangements or (iii) the reservation or presale of production capacity of the Company or any of its Restricted Subsidiaries by one or more third parties;

     (p) sales or grants of licenses or sublicenses to use the Company’s or any of its Restricted Subsidiaries trademarks, patents, trade secrets, know-how or other intellectual property and technology to the extent that such sale, license or sublicense does not prohibit the licensor from using such trademark, patent, trade secret, know-how, technology or other intellectual property;

     (q) any Sale/Leaseback Transaction pursuant to which the Company or any Restricted Subsidiaries receives with respect to such transaction aggregate consideration of less than $10.0 million; and

     (r) any other disposition of property or assets owned by the Company or any of its Restricted Subsidiaries; provided, however, that the aggregate Fair Market Value of all property and assets disposed of pursuant to this clause (r) shall be less than $16.5 million.

          For purposes of this definition of “Asset Sale,” a transaction that would otherwise be an Asset Sale need not be excluded pursuant solely to one clause above and may be divided among the clauses above as well as excluded in part pursuant to one or more of such clauses and treated in part as an Asset Sale under Section 4.06.

          “Asset Sale Cash Equivalents” means, in connection with an Asset Sale by the Company or any of its Restricted Subsidiaries:

     (a) any liabilities (as shown on the Company’s or such Restricted Subsidiary’s most recent balance sheet or in the footnotes thereto) of the Company or any Restricted Subsidiary of the Company (other than liabilities that are by their terms subordinated to the Notes or the Guarantees of the Notes, as the case may be) that are assumed by the transferee of any assets pursuant to an Asset Sale;

     (b) any notes or other obligations or other securities or assets received by the Company or such Restricted Subsidiary from such transferee that are

-5-

converted by the Company or such Restricted Subsidiary into cash within 180 days of the receipt thereof (to the extent of the cash received); and

     (c) except in the case of an Asset Sale of any Notes Collateral, any Designated Non-cash Consideration received by the Company or any of its Restricted Subsidiaries in such Asset Sale having an aggregate Fair Market Value, taken together with all other Designated Non-cash Consideration received pursuant to this clause (c) that is at that time outstanding, not to exceed the greater of 3.0% of Total Assets and $20.0 million at the time of the receipt of such Designated Non-cash Consideration (with the Fair Market Value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value).

          “Asset Sale Investment” means an investment in any one or more businesses, assets or capital expenditures, in each case used or useful in a Similar Business; provided, however, that if such investment is in the form of the acquisition of Capital Stock of a Person, such acquisition results in such Person becoming a Restricted Subsidiary of the Company or, if such Person is a Restricted Subsidiary of the Company, in an increase in the percentage ownership of such Person by the Company or any Restricted Subsidiary of the Company.

          “Bank Collateral Agent” means Bank of America, N.A. and any successor under the ABL Facility, or if there is no ABL Facility, the “Bank Collateral Agent” designated pursuant to the terms of the Lenders Debt.

          “Bank Lenders” means the lenders or holders of Indebtedness issued under the ABL Facility.

          “Bank Representative” means any trustee, agent or representative with respect to Indebtedness issued under the ABL Facility.

          “Board of Directors” means, as to any Person, the board of directors or managers, as applicable, of such Person (or, if such Person is a partnership, the board of directors or other governing body of the general partner of such Person) or any duly authorized committee thereof.

          “Business Day” means each day which is not a Legal Holiday.

          “Capital Stock” means:

     (1) in the case of a corporation, corporate stock;

     (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

     (3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

     (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

-6-

          “Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP.

          “Cash Contribution Amount” means the aggregate amount of cash contributions made to the capital of the Company described in the definition of “Contribution Indebtedness.”

     “Cash Equivalents” means:

     (1) U.S. dollars, pounds sterling, euros, or, in the case of any Foreign Subsidiary that is a Restricted Subsidiary, such local currencies held by it from time to time in the ordinary course of business;

     (2) securities issued or directly and fully guaranteed or insured by the government of, or any agency or instrumentality thereof, the United States of America, Australia, Great Britain, Canada, the Netherlands or any other member state of the European Union, in each case with maturities not exceeding two years after the date of acquisition;

     (3) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances, in each case with maturities not exceeding one year and overnight bank deposits and demand deposits (in their respective local currencies), in each case with any commercial bank having capital and surplus in excess of $500.0 million or the foreign currency equivalent thereof and whose long-term debt is rated “A” or the equivalent thereof by Moody’s or S&P (or, in the case of an obligor domiciled outside of the United States, reasonably equivalent ratings of another internationally recognized credit rating agency);

     (4) repurchase obligations for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;

     (5) commercial paper issued by a corporation (other than an Affiliate of the Company) rated at least “A-1” or the equivalent thereof by Moody’s or S&P (or, in the case of an obligor domiciled outside of the United States, reasonably equivalent ratings of another internationally recognized credit rating agency) and in each case maturing within one year after the date of acquisition;

     (6) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody’s or S&P in each case with maturities not exceeding two years from the date of acquisition;

     (7) Indebtedness issued by Persons (other than the Sponsor or any of their Affiliates) with a rating of “A” or higher from S&P or “A-2” or higher from Moody’s (or, in the case of an obligor domiciled outside of the United States, reasonably equivalent ratings of another internationally recognized credit rating agency) in each case with maturities not exceeding two years from the date of acquisition; and

-7-

     (8) investment funds investing at least 95% of their assets in securities of the types described in clauses (1) through (7) above.

     “Change of Control” means the occurrence of any of the following events:

     (i) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all the assets of the Company and its Subsidiaries, taken as a whole, to a Person other than any of the Permitted Holders; or

     (ii) the Company becomes aware (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) of the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than any of the Permitted Holders, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision), of more than 50% of the total voting power of the Voting Stock of the Company; or

     (iii) individuals who on the Issue Date constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors of the Company or whose nomination for election by the shareholders of the Company was approved by (a) a vote of a majority of the directors of the Company then still in office who were either directors on the Issue Date or whose election or nomination for election was previously approved as described in this clause (iii) or (b) the Permitted Holders) cease for any reason to constitute a majority of the Board of Directors of the Company then in office.

          Notwithstanding the foregoing, the Transactions (and any related change to the Board of Directors of the Company) shall not constitute a Change of Control.

          “Code” means the Internal Revenue Code of 1986, as amended.

          “Collateral” means all the assets and properties subject to the Liens created by the Security Documents.

          “Company” means, prior to the Merger, Flag Acquisition and immediately upon consummation of the Merger, Metals USA, and any successor in interest thereto, including any successor thereto pursuant to Section 5.01(a).

          “consolidated” means, with respect to any Person, such Person consolidated with its Restricted Subsidiaries, and shall not include any Unrestricted Subsidiary, but the interest of such Person in an Unrestricted Subsidiary shall be accounted for as an Investment.

-8-

          “Consolidated Interest Expense” means, with respect to any Person (the “Specified Person”) for any period, the sum, without duplication, of:

     (1) consolidated interest expense of the Specified Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted in computing Consolidated Net Income (including amortization of original issue discount, the interest component of Capitalized Lease Obligations, and net payments and receipts (if any) pursuant to interest rate Hedging Obligations and excluding amortization of deferred financing fees and expensing of any bridge or other financing fees);

     (2) consolidated capitalized interest of the Specified Person and its Restricted Subsidiaries for such period, whether paid or accrued;

     (3) commissions, discounts, yield and other fees and charges Incurred for such period in connection with any Receivables Financing of the Specified Person or any of its Restricted Subsidiaries which are payable to Persons other than the Company and its Restricted Subsidiaries;

     (4) dividends accrued for such period in respect of all Disqualified Stock of the Specified Person and any of its Restricted Subsidiaries and all Preferred Stock (including Designated Preferred Stock) of any such Restricted Subsidiaries, in each case held by Persons other than the Company or a Wholly Owned Subsidiary (in each such case other than (x) dividends payable solely in Capital Stock (other than Disqualified Stock) of the Company and (y) dividends that are payable only at such time as there are no Notes outstanding); and

     (5) interest accruing for such period on any Indebtedness of any other Person to the extent such Indebtedness is guaranteed by (or secured by the assets of) the Specified Person or any of its Restricted Subsidiaries;

     less

     (6) interest income of the Specified Person and its Restricted Subsidiaries for such period.

          “Consolidated Net Income” means, with respect to any Person for any period, the aggregate Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis; provided, however, that:

     (1) any net after-tax extraordinary or nonrecurring gains, losses, income, expenses or charges, including any severance expenses and fees, expenses or charges related to any offering of Equity Interests, Permitted Investment, acquisition or Indebtedness permitted to be Incurred by this Indenture (in each case, whether or not successful), including any such fees, expenses, charges or change in control payments related to the Transactions, in each case, shall be excluded; provided, however, that with respect to each nonrecurring item, the Company shall have delivered to the Trustee an Officers’ Certificate specifying and quantifying such item and stating that such item is a nonrecurring item;

-9-

     (2) any increase in amortization or depreciation or any one-time non-cash charges (such as purchased in-process research and development or capitalized manufacturing profit in inventory) resulting from purchase accounting in connection with the Transactions or any acquisition that is consummated after the Issue Date shall be excluded;

     (3) the Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period;

     (4) any net after-tax income or loss from discontinued operations and any net after-tax gains or losses on disposal of discontinued operations shall be excluded;

     (5) any net after-tax gains or losses or any subsequent charges or expenses, attributable to business dispositions or asset dispositions having occurred at any time other than in the ordinary course of business (as determined in good faith by the Board of Directors of the Company) shall be excluded;

     (6) any net after-tax gains or losses attributable to the early extinguishment of Indebtedness shall be excluded;

     (7) the Net Income for such period of any Person that is not a Subsidiary of such Person, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be included only to the extent of the amount of dividends or distributions or other payments paid in cash (or to the extent converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period;

     (8) solely for the purpose of determining the amount available for Restricted Payments under Section 4.04(a)(3)(A), the Net Income for such period of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of its Net Income is not at the date of determination permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restrictions with respect to the payment of dividends or similar distributions have been legally waived; provided, however, that the net loss of any such Restricted Subsidiary for such period shall be included;

     (9) an amount equal to the amount of Tax Distributions actually made by such Person to the holders of Capital Stock of such Person or any parent company of such Person in respect of such period in accordance with Section 4.04(b)(xii) shall be included, to the extent not otherwise deducted, as though such amounts had been paid as income taxes directly by such Person for such period;

     (10) any non-cash impairment charges or asset write-off or write-down resulting from the application of Statement of Financial Accounting Standards No. 142 or Statement of Financial Accounting Standards No. 144, and the amortization of

-10-

intangibles arising pursuant to Statement of Financial Accounting Standards No. 141, shall be excluded;

     (11) any non-cash expense realized or resulting from any employee benefit plans or post-employment benefit plans or any deferred stock compensation plan or grants of stock appreciation or similar rights, stock options, restricted stock or other rights to officers, directors and employees of such Person or any of its Restricted Subsidiaries shall be excluded;

     (12) solely for purposes of calculating Adjusted EBITDA, (a) the Net Income of any Person and its Restricted Subsidiaries shall be calculated without deducting the income attributable to, or adding the losses attributable to, the minority equity interests of third parties in any non-wholly owned Restricted Subsidiary except to the extent of dividends declared or paid in respect of such period or any prior period on the shares of Capital Stock of such Restricted Subsidiary held by such third parties and (b) any ordinary course dividend, distribution or other payment paid in cash and received from any Person in excess of amounts included in clause (7) above shall be included;

     (13) non-cash gains, losses, income and expenses resulting from fair value accounting required by Statement of Financial Accounting Standards No. 133 shall be excluded;

     (14) accruals and reserves that are established within twelve months after the Issue Date and that are so required to be established in accordance with GAAP shall be excluded; and

     (15) non-cash charges for deferred tax asset valuation allowances shall be excluded.

          Notwithstanding the foregoing, for the purpose of Section 4.04 only, there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances or other transfers of assets from Unrestricted Subsidiaries of the Company or a Restricted Subsidiary of the Company to the extent such dividends, repayments or transfers increase the amount of Restricted Payments permitted under Sections 4.04(a)(3)(D) and (E).

          “Consolidated Non-cash Charges” means, with respect to any Person for any period, the aggregate depreciation, amortization and other non-cash expenses or other non-cash items of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person for such period on a consolidated basis and otherwise determined in accordance with GAAP, but excluding any such charge which consists of or requires an accrual of, or cash reserve for, anticipated cash charges for any future period.

          “Consolidated Secured Debt Ratio” means, as of any date of determination, the ratio of (a) Consolidated Total Indebtedness of the Company and its Restricted Subsidiaries on the date of determination that constitutes the Notes, any Other Pari Passu Lien Obligations or any Lenders Debt to (b) the aggregate amount of Adjusted EBITDA for the then most recent four fiscal quarters for which internal financial statements of the Company and its Restricted Subsidiaries are available in each case with such pro forma adjustments to Consolidated Total

-11-

Indebtedness and Adjusted EBITDA as are consistent with the pro forma adjustment provisions set forth in the definition of Fixed Charge Coverage Ratio.

          “Consolidated Taxes” means provision for taxes based on income, profits or capital, including state, franchise and similar taxes and any Tax Distributions taken into account in calculating Consolidated Net Income.

          “Consolidated Total Debt Ratio” means, as of any date of determination, the ratio of (a) the Consolidated Total Indebtedness of the Company and its Restricted Subsidiaries on the date of determination to (b) the aggregate amount of Adjusted EBITDA for the then most recent four fiscal quarters for which internal financial statements of the Company and its Restricted Subsidiaries are available in each case with such pro forma adjustments to Consolidated Total Indebtedness and Adjusted EBITDA as are consistent with the pro forma adjustment provisions set forth in the definition of Fixed Charge Coverage Ratio.

          “Consolidated Total Indebtedness” means, as of any date of determination, an amount equal to the sum of (1) the aggregate principal amount of all outstanding Indebtedness of the Company and its Restricted Subsidiaries (excluding Hedging Obligations and any undrawn letters of credit issued in the ordinary course of business) and (2) the aggregate amount of all outstanding Disqualified Stock of the Company and its Restricted Subsidiaries and all Preferred Stock of Restricted Subsidiaries of the Company, with the amount of such Disqualified Stock and Preferred Stock equal to the greater of their respective voluntary or involuntary liquidation preferences, in each case determined on a consolidated basis in accordance with GAAP.

          “Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent:

     (1) to purchase any such primary obligation or any property constituting direct or indirect security therefor,

     (2) to advance or supply funds:

     (a) for the purchase or payment of any such primary obligation; or

     (b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or

     (3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.

          “Contribution Indebtedness” means Indebtedness of the Company or any of its Restricted Subsidiaries that is a Guarantor in an aggregate principal amount not greater than twice the aggregate amount of cash contributions (other than Excluded Contributions) made to the capital of the Company (including by the purchase of Equity Interests to the extent such

-12-

proceeds of the purchase of Equity Interests are excluded from the calculation under Section 4.04(a)(3)) by any stockholder of the Company (other than a Restricted Subsidiary) after the Issue Date; provided, however, that:

     (1) if the aggregate principal amount of such Contribution Indebtedness is greater than one times such cash contributions to the capital of the Company, the amount in excess shall be Indebtedness (other than Secured Indebtedness) with a Stated Maturity later than the Stated Maturity of any Note then outstanding;

     (2) such Contribution Indebtedness (a) is Incurred within 180 days after the making of such cash contributions and (b) is so designated as Contribution Indebtedness pursuant to an Officers’ Certificate on the Incurrence date thereof; and

     (3) such cash contribution is not and has not been included in the calculation of permitted Restricted Payments under Section 4.04.

          “Credit Agreement” means (i) the ABL Facility or (ii) whether or not the ABL Facility is outstanding, if designated by the Company to be included in the definition of “Credit Agreement,” one or more (A) debt facilities or commercial paper facilities, providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrow from lenders against such receivables) or letters of credit, (B) debt securities, indentures or other forms of debt financing (including convertible or exchangeable debt instruments) or (C) instruments or agreements evidencing any other Indebtedness in each case, as amended, supplemented, modified, extended, restructured, renewed, refinanced, restated, replaced or refunded in whole or in part from time to time.

          “Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.

          “Designated Non-cash Consideration” means the non-cash consideration received by the Company or one of its Restricted Subsidiaries in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an Officers’ Certificate.

          “Designated Preferred Stock” means Preferred Stock of the Company or any direct or indirect parent company of the Company, as applicable (other than Disqualified Stock), that is issued for cash (other than to the Company or any of its Subsidiaries or an employee stock ownership plan or trust established by the Company or any of its Subsidiaries) and is so designated as Designated Preferred Stock, pursuant to an Officers’ Certificate, on the issuance date thereof, the cash proceeds of which are excluded from the calculation set forth in Section 4.04(a)(3).

          “Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which, by its terms (or by the terms of any security into which it is convertible or for which it is redeemable or exchangeable), or upon the happening of any event:

     (1) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than as a result of a change of control or asset sale; provided, however,

-13-

that the relevant asset sale or change of control provisions, taken as a whole, are no more favorable in any material respect to holders of such Capital Stock than the asset sale and change of control provisions applicable to the Notes and any purchase requirement triggered thereby may not become operative until compliance with the asset sale and change of control provisions applicable to the Notes (including the purchase of any Notes tendered pursuant thereto)),

     (2) is convertible or exchangeable for Indebtedness or Disqualified Stock of such Person, or

     (3) is redeemable at the option of the holder thereof, in whole or in part,

in each case prior to 91 days after the last maturity date of the Notes; provided, however, that only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; provided further, however, that if such Capital Stock is issued to any employee or to any plan for the benefit of employees of the Company or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Company in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability; provided further, however, that any class of Capital Stock of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of Capital Stock that is not Disqualified Stock shall not be deemed to be Disqualified Stock.

          “Domestic Subsidiary” means a Restricted Subsidiary that is not a Foreign Subsidiary.

          “Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

          “Equity Offering” means an underwritten primary public offering of common stock of the Company or any direct or indirect parent company of the Company, as applicable, in each case pursuant to an effective registration statement under the Securities Act.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

          “Excluded Assets” means the collective reference to (i) all interests in real property other than fee interests, (ii) any fee interest in real property if the greater of the cost and the book value of such fee interest is less than $750,000; (iii) any property or asset to the extent that the grant of a security interest in such property or asset is prohibited by any applicable law or requires a consent not obtained of any governmental authority pursuant to applicable law; (iv) any vehicle or other item of personal property with a fair market value less than $150,000, a lien in which cannot be obtained by filing a financing statement under Article 9 of the Uniform Commercial Code; (v) those assets that would constitute ABL Collateral but as to which the Bank Collateral Agent shall not have required a lien or security interest; (vi) any right, title or

-14-

interest in any permit, lease, license, contract or agreement held by any Grantor or to which any Grantor is a party or any of its right, title or interest thereunder to the extent, but only to the extent, that such a grant would, under the terms of such permit, lease, license, contract or agreement, result in a breach of the terms of, or constitute a default under, any permit, lease, license, contract or agreement held by such Grantor or to which such Grantor is a party (other than to the extent that any such term would be rendered ineffective pursuant to Section 9-406, 9-408 or 9-409 of the Uniform Commercial Code or any other applicable law (including any Bankruptcy Law) or principles of equity); provided, that immediately upon the ineffectiveness, lapse or termination of any such provision, such right, title or interest in such permit, lease, license, contract or agreement shall cease to be an “Excluded Asset”; and (vii) Capital Stock of a Person that constitutes a Subsidiary (other than a Wholly Owned Subsidiary) the pledge of which would violate a contractual obligation to the owners of the other Capital Stock of such Person (other than any such owners that are Affiliates of the Sponsor) that is binding on or relating to such Capital Stock; provided, however, that Excluded Assets will not include any proceeds, substitutions or replacements of any Excluded Assets referred to in clause (iii) (unless such proceeds, substitutions or replacements would constitute Excluded Assets referred to in clause (iii)).

          “Excluded Contributions” means the net cash proceeds received by the Company after the Issue Date from:

     (1) contributions to its common equity capital, and

     (2) the sale (other than to a Subsidiary of the Company or pursuant to any Company or Subsidiary management equity plan or stock option plan or any other management or employee benefit plan or agreement) of Capital Stock (other than Disqualified Stock and Designated Preferred Stock) of the Company,

in each case designated as Excluded Contributions pursuant to an Officers’ Certificate, the cash proceeds of which are excluded from the calculation set forth in Section 4.04(a)(3).

          “Fair Market Value” means, with respect to any asset or property, the price which could be negotiated in an arm’s-length, free market transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Except as expressly provided to the contrary, the Fair Market Value of assets or property other than cash shall be determined in good faith by the Company and (1) in the event of any asset or property with a Fair Market Value in excess of $4.0 million, shall be set forth in an Officers’ Certificate or (2) in the event of any asset or property with a Fair Market Value in excess of $12.0 million, shall be set forth in a resolution approved by at least a majority of the Board of Directors of the Company.

          “Fixed Charge Coverage Ratio” means, with respect to any Person for any period, the ratio of Adjusted EBITDA of such Person for such period to the Consolidated Interest Expense of such Person for such period. In the event that the Company or any of its Restricted Subsidiaries Incurs or redeems any Indebtedness (other than in the case of revolving credit borrowings or revolving advances under any Qualified Receivables Financing, in which case interest expense shall be computed based upon the average daily balance of such Indebtedness

-15-

during the applicable period) or issues or redeems Preferred Stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such Incurrence or redemption of Indebtedness, or such issuance or redemption of Preferred Stock, as if the same had occurred at the beginning of the applicable four-quarter period.

          For purposes of making the computation referred to above, Investments, acquisitions or dispositions of operating units of a business, mergers, consolidations, discontinued operations (as determined in accordance with GAAP), and business realignment projects and initiatives, restructurings and reorganizations (each a “pro forma event”) that the Company or any of its Restricted Subsidiaries has both determined to make and made after the Issue Date and during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Calculation Date shall be calculated on a pro forma basis assuming that all such Investments, acquisitions or dispositions of an operating unit of a business, mergers, consolidations, discontinued operations and business realignment projects and initiatives, restructurings and reorganizations (and the change of any associated fixed charge obligations, consolidated interest expense and the change in Adjusted EBITDA resulting therefrom) had occurred on the first day of the four-quarter reference period. If, since the beginning of such period any Person that subsequently became a Restricted Subsidiary of the Company or was merged with or into the Company or any Restricted Subsidiary of the Company since the beginning of such period shall have made any Investment, acquisition or disposition of an operating unit of a business, merger, consolidation, discontinued operation or business realignment project or initiative, restructuring or reorganization, that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, discontinued operation, merger, consolidation, business realignment project or initiative, restructuring, or reorganization had occurred at the beginning of the applicable four-quarter period.

          For purposes of this definition, whenever pro forma effect is to be given to any pro forma event, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness if such Hedging Obligation has a remaining term in excess of 12 months). Any such pro forma calculation may include adjustments appropriate, in the reasonable good faith determination of the Company as set forth in an Officers’ Certificate, to reflect (i) operating expense reductions, other operating improvements or synergies reasonably expected to result from the applicable pro forma event (including, to the extent applicable, from the Transactions) and (ii) all adjustments used in connection with the calculation of “Adjusted EBITDA” to the extent such adjustments, without duplication, continue to be applicable to such four quarter period.

-16-

          “Flow Through Entity” means an entity that is treated as a partnership not taxable as a corporation, an S-corporation or a disregarded entity for U.S. federal income tax purposes or subject to treatment on a comparable basis for purposes of state, local or foreign tax law.

          “Foreign Subsidiary” means a Restricted Subsidiary not organized or existing under the laws of the United States of America or any state or territory thereof or the District of Columbia.

          “GAAP” means generally accepted accounting principles set forth in (i) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (ii) statements and pronouncements of the Financial Accounting Standards Board and (iii) in such other statements by such other entity as have been approved by a significant segment of the accounting profession, in each case which are in effect on the Issue Date.

          “Government Obligations” means securities that are:

     (1) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged, or

     (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America,

which, in each case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any such U.S. Government Obligations or a specific payment of principal of or interest on any such U.S. Government Obligations held by such custodian for the account of the holder of such depository receipt; provided, however, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations evidenced by such depository receipt.

          “Grantors” means the Company, Holdings and each Subsidiary Guarantor.

          “guarantee” means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations.

          “Guarantee” means any guarantee of the obligations of the Company under this Indenture and the Notes by any Person in accordance with the provisions of this Indenture.

          “Guarantor” means any Person that Incurs a Guarantee with respect to the Notes; provided, however, that upon the release or discharge of such Person from its Guarantee in accordance with this Indenture, such Person ceases to be a Guarantor.

-17-

          “Hedging Obligations” means, with respect to any Person, the obligations of such Person under:

     (1) currency exchange, interest rate or commodity swap agreements, currency exchange, interest rate or commodity cap agreements and currency exchange, interest rate or commodity collar agreements; and

     (2) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange rates, interest rates or commodity prices.

          “holder”, “Holder”, “noteholder” or “Noteholder” means the Person in whose name a Note is registered on the Registrar’s books.

          “Holdings” means Flag Intermediate Holdings Corporation, a Delaware corporation, and any successor in interest thereto, including any successor thereto pursuant to Section 5.01(c).

          “Incur” means issue, assume, guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Subsidiary.

          “Indebtedness” means, with respect to any Person:

     (1) the principal and premium (if any) of any indebtedness of such Person, whether or not contingent, (a) in respect of borrowed money, (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without duplication, reimbursement agreements in respect thereof), (c) representing the deferred and unpaid purchase price of any property, except any such balance that constitutes a trade payable or similar obligation to a trade creditor due within six months from the date on which it is Incurred (provided that in each case such trade payable or similar Obligation to a trade creditor is Incurred in the ordinary course of business), which purchase price is due more than six months after the date of placing the property in service or taking delivery and title thereto, (d) in respect of Capitalized Lease Obligations, or (e) representing any Hedging Obligations, if and to the extent that any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability on a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP;

     (2) to the extent not otherwise included, any obligation of such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business);

     (3) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person); provided, however, that the amount of such Indebtedness will

-18-

be the lesser of: (a) the Fair Market Value of such asset at such date of determination, and (b) the amount of such Indebtedness of such other Person; and

     (4) to the extent not otherwise included, with respect to the Company and its Restricted Subsidiaries, the amount then outstanding (including amounts advanced, and received by, and available for use by, the Company or any of its Restricted Subsidiaries) under any Receivables Financing (as set forth in the books and records of the Company or any Restricted Subsidiary and confirmed by the agent, trustee or other representative of the institution or group providing such Receivables Financing);

provided, however, that Contingent Obligations incurred in the ordinary course of business shall be deemed not to constitute Indebtedness.

          “Indenture” means this Indenture, as amended or supplemented from time to time, in accordance with the terms hereof.

          “Independent Financial Advisor” means an accounting, appraisal or investment banking firm or consultant to Persons engaged in a Similar Business, in each case of nationally recognized standing that is, in the good faith determination of the Company, qualified to perform the task for which it has been engaged.

          “Industrial Revenue Bonds” means the Company’s obligations in connection with certain outstanding Industrial Revenue Bonds payable on May 1, 2016.

          “Intercreditor Agreement” means the Lien Subordination and Intercreditor Agreement dated as of the Issue Date among the Bank Collateral Agent, the Trustee, the Notes Collateral Agent, the Company and each Guarantor, as it may be amended from time to time in accordance with this Indenture.

          “Investment Grade Securities” means:

     (1) securities issued or directly and fully guaranteed or insured by the U.S. government or any agency or instrumentality thereof (other than Cash Equivalents) and in each case with maturities not exceeding two years from the date of acquisition,

     (2) investments in any fund that invests exclusively in investments of the type described in clause (1) which fund may also hold immaterial amounts of cash pending investment or distribution, and

     (3) corresponding instruments in countries other than the United States customarily utilized for high quality investments and in each case with maturities not exceeding two years from the date of acquisition.

          “Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding accounts receivable, trade credit and advances to customers and commission, travel and similar advances to officers, employees and consultants made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness,

-19-

Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet of the Company in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property. For purposes of the definition of “Unrestricted Subsidiary” and Section 4.04:

     (1) “Investments” shall include the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of a Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary equal to an amount (if positive) equal to:

     (a) the Company’s “Investment” in such Subsidiary at the time of such redesignation less

     (b) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time of such redesignation; and

     (2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Company.

          “Issue Date” means November 30, 2005, the date on which the Initial Notes are issued.

          “Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York.

          “Lenders Debt” means any (i) Indebtedness outstanding from time to time under the ABL Facility, (ii) any Indebtedness which has a priority security interest relative to the Notes in the ABL Collateral, (iii) all Obligations with respect to such Indebtedness and any Hedging Obligations directly related to any Lenders Debt and (iv) all cash management Obligations incurred with any Bank Lender (or their affiliates).

          “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any other agreement to give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction); provided, however, that in no event shall an operating lease or an agreement to sell other than as described above be deemed to constitute a Lien.

          “Management Group” means all of the individuals consisting of the directors, executive officers and other management personnel of the Company or any direct or indirect parent company of the Company, as the case may be, on the Issue Date together with (1) any new directors whose election by such boards of directors or whose nomination for election by the

-20-

shareholders of the Company or any direct or indirect parent company of the Company, as the case may be, as applicable, was approved by (x) a vote of a majority of the directors of the Company or any direct or indirect parent of the Company as applicable, then still in office who were either directors on the Issue Date or whose election or nomination was previously approved as described in this definition or (y) the Permitted Holders and (2) executive officers and other management personnel of the Company or any direct or indirect parent company of the Company, as the case may be, as applicable, hired at a time when the directors on the Issue Date together with the directors so approved constituted a majority of the directors of the Company or any direct or indirect parent company of the Company, as the case may be, as applicable.

          “Merger” means the merger, effected pursuant to the Merger Agreement, pursuant to which Flag Acquisition merged with and into Metals USA.

          “Merger Agreement” means the Agreement and Plan of Merger, dated as of May 18, 2005, among Flag Holdings Corporation, Flag Acquisition and Metals USA, as amended up to and including the Issue Date.

          “Metals USA” means Metals USA, Inc., a Delaware corporation, and any successor in interest thereto.

          “Moody’s” means Moody’s Investors Service, Inc. or any successor to the rating agency business thereof.

          “Net Income” means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of Preferred Stock dividends.

          “Net Proceeds” means the aggregate cash proceeds received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including any cash received in respect of or upon the sale or other disposition of any Designated Non-cash Consideration received in any Asset Sale and any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding the assumption by the acquiring Person of Indebtedness relating to the disposed assets or other consideration received in any other non-cash form), net of the direct costs relating to such Asset Sale and the sale or disposition of such Designated Non-cash Consideration (including legal, accounting and investment banking fees, and brokerage and sales commissions), and any relocation expenses Incurred as a result thereof, taxes paid or payable as a result thereof, amounts required to be applied to the repayment of principal, premium (if any) and interest on Indebtedness required (other than pursuant to Section 4.06(c)) to be paid as a result of such transaction (including to obtain any required consent therefor), and any deduction of appropriate amounts to be provided by the Company as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by the Company after such sale or other disposition thereof, including, without limitation, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction. In the case of any Asset Sale that involves the sale of any Capital Stock of any Restricted Subsidiary that owns assets that constitute ABL Collateral, the Net Proceeds of such Asset Sale attributable to such

-21-

Capital Stock shall also be net of the Fair Market Value of the assets of such Restricted Subsidiary constituting ABL Collateral.

          “Notes” means the Initial Notes, the Exchange Notes and the Private Exchange Notes, treated as a single class.

          “Notes Collateral” means the portion of the Collateral as to which the Notes have a priority security interest relative to Lenders Debt.

          “Notes Collateral Agent” means Wells Fargo Bank, N.A., in its capacity as “Collateral Agent” hereunder and under the Security Documents, and any successor thereto in such capacity.

          “Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements (including, without limitation, reimbursement obligations with respect to letters of credit and bankers’ acceptances), damages and other liabilities payable under the documentation governing any Indebtedness; provided, however, that Obligations with respect to the Notes shall not include fees or indemnifications in favor of the Trustee and other third parties other than the Holders of the Notes.

          “Off-Balance Sheet Financing Amount” means, at any date, with respect to any Qualified Receivables Financing, the face or notional amount of any interest in assets of the type described in the definition of the term Qualified Receivables Financing transferred to a Receivables Subsidiary in connection with such Qualified Receivables Financing by or on behalf of the Company or any of its Subsidiaries.

          “Offering Circular” means the Offering Circular dated November 21, 2005, with respect to the Notes.

          “Officer” means the Chairman of the Board, Chief Executive Officer, President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the Company.

          “Officers’ Certificate” means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements set forth in this Indenture.

          “Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee.

          “Other Pari Passu Lien Obligations” means any Additional Notes and any other Indebtedness having substantially identical terms as the Notes (other than issue price, interest rate, yield and redemption terms) and issued under an indenture substantially identical to this Indenture and any Indebtedness that refinances or refunds (or successive refinancings and refundings) any Notes or Additional Notes and all Obligations with respect to such Indebtedness; provided, that such Indebtedness may (a) have a stated maturity date that is equal to or longer

-22-

than the Notes, (b) contain terms and covenants that are, in the reasonable opinion of the Company, less restrictive than the terms and covenants under the Notes and (c) contain terms and covenants that are more restrictive than the terms and covenants under the Notes so long as prior to or substantially simultaneously with the issuance of any such Indebtedness, the Notes and this Indenture are amended to contain any such more restrictive terms and covenants.

          “Pari Passu Indebtedness” means:

     (1) with respect to the Company, the Notes and any Indebtedness which ranks pari passu in right of payment to the Notes; and

     (2) with respect to any Guarantor, its Guarantee and any Indebtedness which ranks pari passu in right of payment to such Guarantor’s Guarantee.

          “Permitted Collateral Liens” means:

     (1) Liens securing the Notes outstanding on the Issue Date, the Exchange Notes issued in exchange for such Notes, Refinancing Indebtedness with respect to such Notes or Exchange Notes, the Guarantees relating thereto and any Obligations with respect to such Notes, Exchange Notes, Refinancing Indebtedness and Guarantees;

     (2) Liens securing any Other Pari Passu Lien Obligations in an aggregate principal amount not to exceed $40.0 million at any one time outstanding;

     (3) Liens securing any Other Pari Passu Lien Obligations in an aggregate principal amount not to exceed $30.0 million at any one time outstanding; provided that after giving effect to the Incurrence of such Other Pari Passu Lien Obligations, the Company would be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.03(a);

     (4) Liens securing any Other Pari Passu Lien Obligations, which Liens are not permitted pursuant to clause (2) or (3) of this definition; provided, however, that at the time of Incurrence of such Other Pari Passu Lien Obligations and after giving pro forma effect thereto, the Consolidated Secured Debt Ratio would be no greater than 3.75 to 1.0;

     (5) Liens existing on the Issue Date (other than Liens specified in clause (1) above);

     (6) Liens described in clauses (2), (3), (5), (9), (10), (12) (but only with respect to obligations secured by Liens described in clauses (1), (2), (3) or (4) above), (14), (15), (17), (19) (but only with respect to clauses (9) and (10) referred to therein), (20), (21) and (22) of the definition of Permitted Liens; and

     (7) Liens on the Notes Collateral in favor of any collateral agent relating to such collateral agent’s administrative expenses with respect to the Notes Collateral.

          For purposes of determining compliance with this definition, (A) Other Pari Passu Lien Obligations need not be Incurred solely by reference to one category of permitted Other

-23-

Pari Passu Lien Obligations described in clauses (1) through (7) of this definition but are permitted to be Incurred in part under any combination thereof and (B) in the event that an item of Other Pari Passu Lien Obligations (or any portion thereof) meets the criteria of one or more of the categories of permitted Other Pari Passu Lien Obligations described in clauses (1) through (7) above, the Company shall, in its sole discretion, classify (but not reclassify) such item of Other Pari Passu Lien Obligations (or any portion thereof) in any manner that complies with this definition and will only be required to include the amount and type of such item of Other Pari Passu Lien Obligations in one of the above clauses and such item of Other Pari Passu Lien Obligations will be treated as having been Incurred pursuant to only one of such clauses.

          “Permitted Holders” means, at any time, each of (i) the Sponsor and (ii) the Management Group. Any person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer is made in accordance with the requirements of this Indenture will thereafter, together with its Affiliates, constitute an additional Permitted Holder.

     “Permitted Investment” means:

     (1) any Investment in the Company or any Restricted Subsidiary of the Company;

     (2) any Investment in Cash Equivalents or Investment Grade Securities;

     (3) any Investment by the Company or any Restricted Subsidiary of the Company in a Person that is primarily engaged, directly or indirectly, in a Similar Business if as a result of such Investment (a) such Person becomes a Restricted Subsidiary of the Company, or (b) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys all or substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company;

     (4) any Investment in securities or other assets not constituting Cash Equivalents and received in connection with an Asset Sale made pursuant to the provisions of Section 4.06 or any other disposition of assets not constituting an Asset Sale;

     (5) any Investment existing on the Issue Date;

     (6) advances to employees not in excess of $10.0 million outstanding at any one time in the aggregate;

     (7) any Investment acquired by the Company or any of its Restricted Subsidiaries (a) in exchange for any other Investment or accounts receivable or claims held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable, or (b) as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

     (8) Hedging Obligations permitted under Section 4.03(b)(x);

-24-

     (9) any Investment by the Company or any of its Restricted Subsidiaries in a Similar Business (other than an Investment in an Unrestricted Subsidiary) having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (9), not to exceed $45.0 million (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value); provided, however, that if any Investment pursuant to this clause (9) is made in any Person that is not a Restricted Subsidiary of the Company at the date of the making of such Investment and such Person becomes a Restricted Subsidiary of the Company after such date, such Investment shall thereafter be deemed to have been made pursuant to clause (1) above and shall cease to have been made pursuant to this clause (9) for so long as such Person continues to be a Restricted Subsidiary;

     (10) additional Investments by the Company or any of its Restricted Subsidiaries having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (10), not to exceed the greater of (a) $55.0 million and (b) 7.5% of Total Assets at the time of such Investment (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value);

     (11) loans and advances to officers, directors and employees for business-related travel expenses, moving expenses and other similar expenses, in each case Incurred in the ordinary course of business;

     (12) Investments the payment for which consists of Equity Interests (other than Disqualified Stock) of the Company or any direct or indirect parent company of the Company, as applicable; provided, however, that such Equity Interests will not increase the amount available for Restricted Payments under Section 4.04(a)(3);

     (13) any transaction to the extent it constitutes an Investment that is permitted by and made in accordance with the provisions of Section 4.07(b) (except transactions described in clauses (ii), (vi), (vii) and (xi) of such Section);

     (14) Investments consisting of the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons;

     (15) guarantees issued in accordance with Sections 4.03 and 4.11;

     (16) any Investment by Restricted Subsidiaries of the Company in other Restricted Subsidiaries of the Company and Investments by Subsidiaries that are not Restricted Subsidiaries in other Subsidiaries that are not Restricted Subsidiaries of the Company;

     (17) Investments consisting of purchases and acquisitions of real estate, inventory, supplies, materials and equipment or purchases of contract rights or licenses or leases of intellectual property, in each case in the ordinary course of business;

     (18) any Investment in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables

-25-

Financing, including Investments of funds held in accounts permitted or required by the arrangements governing such Qualified Receivables Financing or any related Indebtedness; provided, however, that any Investment in a Receivables Subsidiary is in the form of a Purchase Money Note, contribution of additional receivables or an equity interest; and

     (19) Investments resulting from the receipt of non-cash consideration in an Asset Sale received in compliance with Section 4.06.

     “Permitted Liens” means, with respect to any Person:

     (1) pledges or deposits by such Person under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or U.S. government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business;

     (2) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review;

     (3) Liens for taxes, assessments or other governmental charges not yet due or payable or subject to penalties for nonpayment or which are being contested in good faith by appropriate proceedings;

     (4) Liens in favor of issuers of performance and surety bonds or bid bonds or with respect to other regulatory requirements or letters of credit (or deposits to secure letters of credit or surety bonds for the same purpose) issued pursuant to the request of and for the account of such Person in the ordinary course of its business;

     (5) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not Incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

     (6) Liens securing Indebtedness (including Capitalized Lease Obligations) Incurred to finance the purchase, lease or improvement of property (real or personal) or equipment (whether through the direct purchase of assets or Capital Stock of any Person owning such assets, where such Person has no other material assets) of such Person; provided, however, that the Lien may not extend to any other property owned by such Person or any of its Restricted Subsidiaries at the time the Lien is Incurred (other than

-26-

assets and property affixed or appurtenant thereto and except for customary cross collateral arrangements with respect to property or equipment financed by the same financing source pursuant to the same financing scheme), and the Indebtedness (other than any interest thereon) secured by the Lien may not be Incurred more than 180 days after the latest of the (i) acquisition of the property subject to the Lien, (ii) completion of construction, repair, improvement or addition of the property subject to the Lien and (iii) commencement of full operation of the property subject to the Lien;

     (7) Liens securing Indebtedness of a Foreign Subsidiary Incurred pursuant to Section 4.03(a), or clause (i), (xii), (xx) (or (xiii) to the extent it guarantees any such Indebtedness) of Section 4.03(b); provided, however, that such Liens do not extend to the property or assets of the Company or any Domestic Subsidiary (other than a Domestic Subsidiary, that is wholly owned by one or more Foreign Subsidiaries, created to enhance the worldwide tax efficiency of the Company and its Subsidiaries);

     (8) Liens existing on the Issue Date;

     (9) Liens on property or shares of stock of a Person at the time such Person becomes a Subsidiary; provided, however, such Liens are not created or Incurred in connection with, or in contemplation of, such other Person becoming such a Subsidiary; provided further, however, that such Liens may not extend to any other property owned by the Company or any Restricted Subsidiary of the Company;

     (10) Liens on property at the time the Company or a Restricted Subsidiary of the Company acquired the property, including any acquisition by means of a merger or consolidation with or into the Company or any Restricted Subsidiary of the Company; provided, however, that such Liens are not created or Incurred in connection with, or in contemplation of, such acquisition; provided further, however, that the Liens may not extend to any other property owned by the Company or any Restricted Subsidiary of the Company;

     (11) Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Company or a Restricted Subsidiary of the Company permitted to be Incurred in accordance with Section 4.03;

     (12) Liens securing Hedging Obligations so long as the related Indebtedness is, and is permitted to be under this Indenture, secured by a Lien on the same property securing such Hedging Obligations;

     (13) Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

     (14) licenses, sublicenses, leases and subleases which do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;

-27-

     (15) Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course of business;

     (16) Liens in favor of the Company or any Guarantor or Liens on assets of a Restricted Subsidiary of the Company that is not a guarantor in favor solely of another Restricted Subsidiary of the Company that is not a Guarantor;

     (17) Liens on equipment of the Company or any Restricted Subsidiary granted in the ordinary course of business to the Company’s or such Restricted Subsidiary’s client at which such equipment is located;

     (18) Liens on accounts receivable and related assets of the type specified in the definition of “Receivables Financing” Incurred in connection with a Qualified Receivables Financing;

     (19) Liens to secure any refinancing, refunding, extension or renewal (or successive refinancings, refundings, extensions or renewals) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (6), (7), (8), (9), and (10); provided, however, that (x) such new Lien shall be limited to all or part of the same property (including any after acquired property to the extent it would have been subject to the original Lien) that was subject to the original Lien (plus improvements on such property), and (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (6), (7), (8), (9), and (10) at the time the original Lien became a Permitted Lien under this Indenture, and (B) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, refunding, extension or renewal;

     (20) judgment Liens not giving rise to an Event of Default, so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired;

     (21) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with importation of goods;

     (22) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business;

     (23) Liens securing insurance premium financing arrangements; provided, however, that such Lien is limited to the applicable insurance carriers;

     (24) Liens incurred to secure cash management services in the ordinary course of business; and

-28-

     (25) other Liens securing obligations incurred in the ordinary course of business which obligations do not exceed $10.0 million at any one time outstanding.

          “Person” means any individual, sole proprietorship, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

          “Preferred Stock” means any Equity Interest with preferential right of payment of dividends or upon liquidation, dissolution or winding up.

          “Presumed Tax Rate” means the highest effective marginal statutory combined U.S. federal, state and local income tax rate prescribed for an individual residing in New York City (taking into account (i) the deductibility of state and local income taxes for U.S. federal income tax purposes, assuming the limitation of Section 68(a)(2) of the Code applies and taking into account any impact of Section 68(f) of the Code, and (ii) the character (long-term or short-term capital gain, dividend income or other ordinary income) of the applicable income), or, as applicable, for a corporation.

          “Purchase Money Note” means a promissory note of a Receivables Subsidiary evidencing a line of credit, which may be irrevocable, from the Company or any Subsidiary of the Company to a Receivables Subsidiary in connection with a Qualified Receivables Financing, which note is intended to finance that portion of the purchase price that is not paid by cash or a contribution of equity.

          “Qualified Receivables Financing” means any Receivables Financing of a Receivables Subsidiary that meets the following conditions:

     (1) the Board of Directors of the Company shall have determined in good faith that such Qualified Receivables Financing (including financing terms, covenants, termination events and other provisions) is in the aggregate economically fair and reasonable to the Company and the Receivables Subsidiary,

     (2) all sales of accounts receivable and related assets to the Receivables Subsidiary are made at Fair Market Value (as determined in good faith by the Company), and

     (3) the financing terms, covenants, termination events and other provisions thereof shall be market terms (as determined in good faith by the Company) and may include Standard Securitization Undertakings.

          The grant of a security interest in any accounts receivable of the Company or any of its Restricted Subsidiaries (other than a Receivables Subsidiary) to secure Lenders Debt shall not be deemed a Qualified Receivables Financing.

          “Receivables Financing” means any transaction or series of transactions that may be entered into by the Company or any of its Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell, convey or otherwise transfer to (a) a Receivables Subsidiary (in the case of a transfer by the Company or any of its Subsidiaries), and (b) any other Person (in the

-29-

case of a transfer by a Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the future) of the Company or any of its Subsidiaries, and any assets related thereto including all collateral securing such accounts receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts receivable and other assets which are customarily transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions involving accounts receivable and any Hedging Obligations entered into by the Company or any such Subsidiary in connection with such accounts receivable.

          “Receivables Repurchase Obligation” means any obligation of a seller of receivables in a Qualified Receivables Financing to repurchase receivables arising as a result of a breach of a representation, warranty or covenant or otherwise, including as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, off-set or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.

          “Receivables Subsidiary” means a Wholly Owned Restricted Subsidiary of the Company (or another Person formed for the purposes of engaging in a Qualified Receivables Financing with the Company in which the Company or any Subsidiary of the Company makes an Investment and to which the Company or any Subsidiary of the Company transfers accounts receivable and related assets) which engages in no activities other than in connection with the financing of accounts receivable of the Company and its Subsidiaries, all proceeds thereof and all rights (contractual or other), collateral and other assets relating thereto, and any business or activities incidental or related to such business, and which is designated by the Board of Directors of the Company (as provided below) as a Receivables Subsidiary and:

     (a) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Company or any other Subsidiary of the Company (excluding guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings), (ii) is recourse to or obligates the Company or any other Subsidiary of the Company in any way other than pursuant to Standard Securitization Undertakings, or (iii) subjects any property or asset of the Company or any other Subsidiary of the Company, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings,

     (b) with which neither the Company nor any other Subsidiary of the Company has any material contract, agreement, arrangement or understanding other than on terms which the Company reasonably believes to be no less favorable to the Company or such Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of the Company, and

     (c) to which neither the Company nor any other Subsidiary of the Company has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results.

-30-

          Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a certified copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing conditions.

          “Registration Rights Agreement” means (a) with respect to the Initial Notes issued on the Issue Date, the Registration Rights Agreement dated the Issue Date, among the Company, the Guarantors and the Initial Purchasers and (b) with respect to each issuance of Additional Notes issued in a transaction exempt from the registration requirements of the Securities Act, the registration rights agreement, if any, among the Company, the Guarantors and the Persons purchasing such Additional Notes under the related Purchase Agreement.

          “Related Person” means, with respect to any specified Person, such Person’s Affiliates, and the respective officers, directors, employees, agents, advisors and attorneys-in-fact of such Person and its Affiliates.

          “Restricted Investment” means an Investment other than a Permitted Investment.

          “Restricted Subsidiary” means, with respect to any Person, any Subsidiary of such Person other than an Unrestricted Subsidiary of such Person. Unless otherwise indicated in this Indenture, all references to Restricted Subsidiaries shall mean Restricted Subsidiaries of the Company.

          “Sale/Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or such Restricted Subsidiary leases it from such Person, other than leases between the Company and a Restricted Subsidiary of the Company or between Restricted Subsidiaries of the Company.

          “S&P” means Standard & Poor’s Ratings Group or any successor to the rating agency business thereof.

          “SEC” means the Securities and Exchange Commission.

          “Secured Indebtedness” means any Indebtedness secured by a Lien.

          “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

          “Security Documents” means the security agreements, pledge agreements, mortgages, collateral assignments and related agreements, as amended, supplemented, restated, renewed, refunded, replaced, restructured, repaid, refinanced or otherwise modified from time to time, creating the security interests in the Collateral as contemplated by this Indenture.

          “Senior Credit Documents” means the collective reference to any Credit Agreement, the notes issued pursuant thereto and the guarantees thereof, and the collateral documents relating thereto, as amended, supplemented, restated, renewed, refunded, replaced, restructured, repaid, refinanced or otherwise modified from time to time.

-31-

          “Significant Subsidiary” means any Restricted Subsidiary that would be a “Significant Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

          “Similar Business” means a business, the majority of whose revenues are derived from activities of the Company and its Subsidiaries as of the Issue Date or any business or activity that is reasonably similar thereto or a reasonable extension, development or expansion thereof or ancillary thereto.

          “Sponsor” means Apollo Management V, L.P., one or more investment funds controlled by Apollo Management V, L.P. and any of their respective Affiliates.

          “Standard Securitization Undertakings” means representations, warranties, covenants, indemnities and guarantees of performance entered into by the Company or any Subsidiary of the Company which the Company has determined in good faith to be customary in a Receivables Financing including those relating to the servicing of the assets of a Receivables Subsidiary, it being understood that any Receivables Repurchase Obligation shall be deemed to be a Standard Securitization Undertaking.

          “Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred).

          “Subordinated Indebtedness” means (a) with respect to the Company, any Indebtedness which is by its terms subordinated in right of payment to the Notes, and (b) with respect to any Guarantor, any Indebtedness of such Guarantor which is by its terms subordinated in right of payment to its Guarantee.

          “Subsidiary” means, with respect to any Person (1) any corporation, association or other business entity (other than a partnership, joint venture or limited liability company) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, and (2) any partnership, joint venture or limited liability company of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (y) such Person or any Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity.

          “Subsidiary Guarantor” means any Restricted Subsidiary that Incurs a Guarantee; provided, however, that upon the release or discharge of such Restricted Subsidiary from its

-32-

Guarantee in accordance with this Indenture, such Restricted Subsidiary will cease to be a Subsidiary Guarantor.

          “Tax Distributions” means any dividend and distributions described in Section 4.04(b)(xii).

          “TIA” means the Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect on the date of this Indenture.

          “Total Assets” means the total consolidated assets of the Company and its Restricted Subsidiaries, as shown on the most recent balance sheet of the Company.

          “Transactions” means the “Transactions” as defined under the caption “Offering Circular Summary — The Transactions” in the Offering Circular.

          “Treasury Rate” means, with respect to the Notes, as of the applicable redemption date, the yield to maturity as of such redemption date of constant maturity United States Treasury securities (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two business days prior to such redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from such redemption date to December 1, 2010; provided, however, that if no published maturity exactly corresponds with such date, then the Treasury Rate shall be interpolated or extrapolated on a straight-line basis from the arithmetic mean of the yields for the next shortest and next longest published maturities; provided further, however, that if the period from such redemption date to December 1, 2010 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

          “Trust Officer” means:

     (1) any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject, and

          (2) who shall have direct responsibility for the administration of this Indenture.

          “Trustee” means the respective party named as such in this Indenture until a successor replaces it and, thereafter, means the successor.

          “Uniform Commercial Code” means the New York Uniform Commercial Code as in effect from time to time.

-33-

     “Unrestricted Subsidiary” means:

     (1) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Company in the manner provided below; and

     (2) any Subsidiary of an Unrestricted Subsidiary.

          The Board of Directors of the Company may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided, however, that the Subsidiary to be so designated and its Subsidiaries do not at the time of designation have and do not thereafter Incur any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries; provided further, however, that either:

     (a) the Subsidiary to be so designated has total consolidated assets of $1,000 or less; or

     (b) if such Subsidiary has consolidated assets greater than $1,000, then such designation would be permitted under Section 4.04.

     The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that immediately after giving effect to such designation:

     (x) (1) the Company could Incur $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.03(a) or (2) the Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries would be greater than such ratio for the Company and its Restricted Subsidiaries immediately prior to such designation, in each case on a pro forma basis taking into account such designation, and

     (y) no Event of Default shall have occurred and be continuing.

          Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing provisions.

          “Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

          “Weighted Average Life to Maturity” means, when applied to any Indebtedness or Disqualified Stock, as the case may be, at any date, the quotient obtained by dividing (1) the sum of the products of the number of years from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or redemption or similar payment

-34-

with respect to such Disqualified Stock multiplied by the amount of such payment, by (2) the sum of all such payments.

          “Wholly Owned Restricted Subsidiary” is any Wholly Owned Subsidiary that is a Restricted Subsidiary.

          “Wholly Owned Subsidiary” of any Person means a Subsidiary of such Person 100% of the outstanding Capital Stock or other ownership interests of which (other than directors’ or other qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Subsidiaries of such Person and one or more Wholly Owned Subsidiaries of such Person.

     SECTION 1.02. Other Definitions.

	Defined in
Term	Section
“Affiliate Transaction”	4.07
“Asset Sale Offer”	4.06(d)
“Bankruptcy Law”	6.01
“Base Currency”	13.16
“covenant defeasance option”	8.01(b)
“Custodian”	6.01
“Definitive Note”	Appendix A
“Depository”	Appendix A
“Event of Default”	6.01
“Excess Proceeds”	4.06(d)
“Exchange Notes”	Appendix A
“Global Note”	Appendix A
“Guaranteed Obligations”	10.01(a)
“IAI”	Appendix A
“incorporated provision”	13.01
“Initial Lien”	4.12
“Initial Notes”	Appendix A
“Initial Purchasers”	Appendix A
“Judgment Currency”	13.16
“legal defeasance option”	8.01(b)
“Notes Custodian”	Appendix A
“Notice of Default”	6.01
“Offer Period”	4.06(f)
“Paying Agent”	2.04
“protected purchaser”	2.08
“Purchase Agreement”	Appendix A
“Private Exchange”	Appendix A
“Private Exchange Note”	Appendix A
“QIB”	Appendix A
“Refinancing Indebtedness”	4.03(b)

-35-

	Defined in
Term	Section
“Refunding Capital Stock”	4.04(b)
“Registered Exchange Offer”	Appendix A
“Registrar”	2.04
“Regulation S”	Appendix A
“Regulation S Global Note”	Appendix A
“Restricted Payment”	4.04(a)
“Retired Capital Stock”	4.04(b)
“Rule 144A”	Appendix A
“Rule 144A Global Note”	Appendix A
“Shelf Registration Statement”	Appendix A
“Successor Company”	5.01(a)
“Successor Guarantor”	5.01(b)
“Transfer Restricted Notes”	Appendix A

          SECTION 1.03. Incorporation by Reference of Trust Indenture Act. This Indenture incorporates by reference certain provisions of the TIA. The following TIA terms have the following meanings:

          “Commission” means the SEC.

          “indenture securities” means the Notes and the Guarantees.

          “indenture security holder” means a Holder.

          “indenture to be qualified” means this Indenture.

          “indenture trustee” or “institutional trustee” means the Trustee.

          “obligor” on the indenture securities means the Company, the Guarantors and any other obligor on the Notes.

          All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.

          SECTION 1.04. Rules of Construction. Unless the context otherwise requires:

     (a) a term has the meaning assigned to it;

     (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

     (c) “or” is not exclusive;

     (d) “including” means including without limitation;

     (e) words in the singular include the plural and words in the plural include the singular;

-36-

     (f) unsecured Indebtedness shall not be deemed to be subordinate or junior to Secured Indebtedness merely by virtue of its nature as unsecured Indebtedness;

     (g) unless otherwise specified herein, the principal amount of any non-interest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP; and

     (h) unless otherwise specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with GAAP.

ARTICLE 2

THE NOTES

          SECTION 2.01. Amount of Notes. The aggregate principal amount of Notes which may be authenticated and delivered under this Indenture on the Issue Date is $275,000,000. The Initial Notes, any Additional Notes and any Exchange Notes will be treated as a single series of Notes for purposes of this Indenture.

          The Company may from time to time after the Issue Date issue Additional Notes under this Indenture in an unlimited principal amount, so long as (i) the Incurrence of the Indebtedness represented by such Additional Notes is at such time permitted by Section 4.03 and (ii) such Additional Notes are issued in compliance with the other applicable provisions of this Indenture, including Section 4.12. Additional Notes shall have identical terms as the Initial Notes Issued on the Issue Date, other than with respect to the date of issuance and issue price and as contemplated by clause (4) below. With respect to any Additional Notes issued after the Issue Date (except for Notes authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections 2.07, 2.08, 2.09, 2.10, 3.08, 4.06(i), 4.08(c) or Appendix A), there shall be (a) established in or pursuant to a resolution of the Board of Directors of the Company and (b) (i) set forth or determined in the manner provided in an Officers’ Certificate or (ii) established in one or more indentures supplemental hereto, prior to the issuance of such Additional Notes:

     (1) the aggregate principal amount of such Additional Notes which may be authenticated and delivered under this Indenture;

     (2) the issue price and issuance date of such Additional Notes, including the date from which interest on such Additional Notes will accrue;

     (3) if applicable, that such Additional Notes shall be issuable in whole or in part in the form of one or more Global Notes and, in such case, the respective depositaries for such Global Notes, the form of any legend or legends which shall be borne by such Global Notes in addition to or in lieu of those set forth in Appendix A hereto and any circumstances in addition to or in lieu of those set forth in Appendix A in which any such Global Note may be exchanged in whole or in part for Additional Notes registered, or any

-37-

transfer of such Global Note in whole or in part may be registered, in the name or names of Persons other than the depositary for such Global Note or a nominee thereof; and

     (4) if applicable, that such Additional Notes that are not Transfer Restricted Notes shall not be issued in the form of Initial Notes as set forth in Appendix A, but shall be issued in the form of Exchange Notes as set forth in Appendix A.

          If any of the terms of any Additional Notes are established by action taken pursuant to a resolution of the Board of Directors of the Company, a copy of an appropriate record of such action shall be certified by the Secretary or any Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers’ Certificate or the indenture supplemental hereto setting forth the terms of the Additional Notes.

          SECTION 2.02. Form and Dating. Provisions relating to the Notes are set forth in Appendix A, which is hereby incorporated in and expressly made a part of this Indenture. The (i) Initial Notes and the Trustee’s certificate of authentication and (ii) any Additional Notes (if issued as Transfer Restricted Notes) and the Trustee’s certificate of authentication shall each be substantially in the form set forth in Appendix A, which is hereby incorporated in and expressly made a part of this Indenture. The (i) Exchange Notes and the Trustee’s certificate of authentication and (ii) any Additional Exchange Notes issued other than as Transfer Restricted Notes and the Trustee’s certificate of authentication shall each be substantially in the form set forth in Appendix A, which is hereby incorporated in and expressly made a part of this Indenture. The Notes may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company or any Guarantor is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Company). Each Note shall be dated the date of its authentication. The Notes shall be issuable only in registered form without interest coupons and only in denominations of $1,000 and any integral multiples thereof.

          SECTION 2.03. Execution and Authentication. (a) The Trustee shall authenticate and make available for delivery upon a written order of the Company signed by one Officer (i) Notes for original issue on the date hereof in an aggregate principal amount of $275,000,000, (ii) subject to the terms of this Indenture, Additional Notes in an aggregate principal amount to be determined at the time of issuance and specified therein and (iii) the Exchange Notes for issue in a Registered Exchange Offer or Private Exchange pursuant to a Registration Rights Agreement for a like principal amount of Initial Notes and, if applicable, any Additional Notes. Such order shall specify the amount of the Notes to be authenticated, the date on which the original issue of Notes is to be authenticated and whether the Notes are to be Initial Notes, Additional Notes or Exchange Notes. Notwithstanding anything to the contrary in this Indenture or Appendix A, any issuance of Additional Notes after the Issue Date shall be in a principal amount of at least $1,000.

          (b) One Officer shall sign the Notes for the Company by manual or facsimile signature.

          (c) If an Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.

-38-

          (d) A Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture.

          (e) The Trustee may appoint one or more authenticating agents reasonably acceptable to the Company to authenticate the Notes. Any such appointment shall be evidenced by an instrument signed by a Trust Officer, a copy of which shall be furnished to the Company. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands.

          (f) The Trustee is hereby authorized to enter into a letter of representations with the Depository in the form provided by the Company and to act in accordance with such letter.

          SECTION 2.04. Registrar and Paying Agent. (a) The Company shall maintain (i) an office or agency where Notes may be presented for registration of transfer or for exchange (the “Registrar”), and (ii) an office or agency where Notes may be presented for payment (the “Paying Agent”). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may have one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrars. The term “Paying Agent” includes the Paying Agent and any additional paying agents. The Company initially appoints the Trustee as (i) Registrar and Paying Agent in connection with the Notes and (ii) the Custodian with respect to the Global Notes.

          (b) The Company shall enter into an appropriate agency agreement with any Registrar or Paying Agent not a party to this Indenture, which shall incorporate the terms of the TIA. The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. The Company or any of the Company’s domestically organized Wholly Owned Subsidiaries may act as Paying Agent or Registrar.

          (c) The Company may remove any Registrar or Paying Agent upon written notice to such Registrar or Paying Agent and to the Trustee; provided, however, that no such removal shall become effective until (i) if applicable, acceptance of an appointment by a successor as evidenced by an appropriate agreement entered into by the Company and such successor Registrar or Paying Agent, as the case may be, and delivered to the Trustee or (ii) notification to the Trustee that the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in accordance with clause (i) above. The Registrar or Paying Agent may resign at any time upon written notice to the Company and the Trustee; provided, however, that the Trustee may resign as Paying Agent or Registrar only if the Trustee also resigns as Trustee in accordance with Section 7.08.

          SECTION 2.05. Paying Agent to Hold Money in Trust. On or prior to 12:00 p.m. on each due date of the principal of and interest on any Note, the Company shall deposit

-39-

with each Paying Agent a sum sufficient to pay such principal and interest when so becoming due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that a Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by a Paying Agent for the payment of principal of and interest on the Notes, and shall notify the Trustee of any default by the Company in making any such payment. If the Company or a Wholly Owned Subsidiary of Company acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it in trust for the benefit of the Persons entitled thereto. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by such Paying Agent. Upon complying with this Section 2.05, a Paying Agent shall have no further liability for the money delivered to the Trustee.

          SECTION 2.06. Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders. If the Trustee is not the Registrar, the Company shall furnish, or cause the Registrar to furnish, to the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders.

          SECTION 2.07. Transfer and Exchange. (a) The Notes shall be issued in registered form and shall be transferable only upon the surrender of a Note for registration of transfer and in compliance with Appendix A. When a Note is presented to the Registrar with a request to register a transfer, the Registrar shall register the transfer as requested if its requirements therefor are met. When Notes are presented to the Registrar with a request to exchange them for an equal principal amount of Notes of other denominations, the Registrar shall make the exchange as requested if the same requirements are met. To permit registration of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Notes at the Registrar’s request. The Company may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges in connection with any transfer or exchange pursuant to this Section 2.07. The Company shall not be required to make, and the Registrar need not register, transfers or exchanges of Notes selected for redemption (except, in the case of Notes to be redeemed in part, the portion thereof not to be redeemed) or of any Notes for a period of 15 days before a selection of Notes to be redeemed.

          (b) Prior to the due presentation for registration of transfer of any Note, the Company, the Guarantors, the Trustee, each Paying Agent and the Registrar may deem and treat the Person in whose name a Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest, if any, on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and none of the Company, any Guarantor, the Trustee, a Paying Agent or the Registrar shall be affected by notice to the contrary.

          (c) Any Holder of a beneficial interest in a Global Note shall, by acceptance of such beneficial interest, agree that transfers of beneficial interests in such Global Note may be effected only through a book-entry system maintained by (1) the Holder of such Global Note (or its agent) or (2) any Holder of a beneficial interest in such Global Note, and that ownership of a beneficial interest in such Global Note shall be required to be reflected in a book entry.

-40-

          (d) All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Notes surrendered upon such transfer or exchange.

          SECTION 2.08. Replacement Notes. (a) If a mutilated Note is surrendered to the Registrar or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Note if the requirements of Section 8-405 of the Uniform Commercial Code are met, such that the Holder (1) satisfies the Company within a reasonable time after such Holder has notice of such loss, destruction or wrongful taking and the Registrar does not register a transfer prior to receiving such notification, (2) makes such request to the Company prior to the Note being acquired by a protected purchaser as defined in Section 8—303 of the Uniform Commercial Code (a “protected purchaser”) and (3) satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Company, such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and reasonably satisfactory to the Trustee to protect the Company, the Trustee, a Paying Agent and the Registrar from any loss that any of them may suffer if a Note is replaced. The Company and the Trustee may charge the Holder for their expenses in replacing a Note (including attorneys’ fees and disbursements in replacing such Note). In the event any such mutilated, lost, destroyed or wrongfully taken Note has become or is about to become due and payable, the Company in its discretion may pay such Note instead of issuing a new Note in replacement thereof.

          (b) Every replacement Note is an additional obligation of the Company and the Guarantors.

          (c) The provisions of this Section 2.08 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, lost, destroyed or wrongfully taken Notes.

          SECTION 2.09. Outstanding Notes. (a) Notes outstanding at any time are all Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those redeemed pursuant to Article 3 and those described in this Section 2.09 as not outstanding. Subject to Section 13.06, a Note does not cease to be outstanding because the Company, a Guarantor or an Affiliate of the Company or a Guarantor holds the Note.

          (b) If a Note is replaced pursuant to Section 2.08 (other than a mutilated Note surrendered for replacement), it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Note is held by a protected purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note and replacement thereof pursuant to Section 2.08.

          (c) If a Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date money sufficient to pay all principal and interest payable on that date with respect to the Notes (or portions thereof) to be redeemed or maturing, as the case may be, then on and after that date such Notes (or portions thereof) cease to be outstanding and interest on them ceases to accrue.

-41-

          SECTION 2.10. Temporary Notes. In the event that Definitive Notes are to be issued under the terms of this Indenture, until such Definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Notes and make them available for delivery in exchange for temporary Notes upon surrender of such temporary Notes at the office or agency of the Company, without charge to the Holder. Until such exchange, temporary Notes shall be entitled to the same rights, benefits and privileges as Definitive Notes.

          SECTION 2.11. Cancellation. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and each Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment or cancellation and shall dispose of canceled Notes in accordance with its customary procedures. The Company may not issue new Notes to replace Notes it has redeemed, paid or delivered to the Trustee for cancellation. The Trustee shall not authenticate Notes in place of canceled Notes other than pursuant to the terms of this Indenture.

          SECTION 2.12. Defaulted Interest. If the Company defaults in a payment of interest on the Notes, the Company shall pay the defaulted interest then borne by the Notes as set forth in Section 1 of the form of Note contained in Appendix A, as the case may be (plus interest on such defaulted interest to the extent lawful), in any lawful manner. The Company may pay the defaulted interest to the Persons who are Holders on a subsequent special record date. The Company shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail or cause to be mailed to each affected Holder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid.

          SECTION 2.13. CUSIP Numbers, ISINs, etc. The Company in issuing the Notes may use CUSIP numbers, ISINs and “Common Code” numbers (if then generally in use) and, if so, the Trustee shall use CUSIP numbers, ISINs and “Common Code” numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers, either as printed on the Notes or as contained in any notice of a redemption, that reliance may be placed only on the other identification numbers printed on the Notes and that any such redemption shall not be affected by any defect in or omission of such numbers. The Company shall advise the Trustee of any change in the CUSIP numbers, ISINs and “Common Code” numbers.

          SECTION 2.14. Calculation of Principal Amount of Notes. The aggregate principal amount of the Notes, at any date of determination, shall be the principal amount of the Notes outstanding at such date of determination. With respect to any matter requiring consent, waiver, approval or other action of the Holders of a specified percentage of the principal amount of all the Notes then outstanding, such percentage shall be calculated, on the relevant date of determination, by dividing (a) the principal amount, as of such date of determination, of Notes, the Holders of which have so consented by (b) the aggregate principal amount, as of such date of determination, of the Notes then outstanding, in each case, as determined in accordance with the

-42-

preceding sentence, Section 2.09 and Section 13.06 of this Indenture. Any such calculation made pursuant to this Section 2.14 shall be made by the Company and delivered to the Trustee pursuant to an Officers’ Certificate.

ARTICLE 3

REDEMPTION

          SECTION 3.01. Redemption. The Notes may be redeemed, in whole, or from time to time in part, subject to the conditions and at the redemption prices set forth in Paragraph 5 of the form of Notes set forth in Appendix A, which are hereby incorporated by reference and made a part of this Indenture, together with accrued and unpaid interest and additional interest, if any, to the redemption date.

          SECTION 3.02. Applicability of Article. Redemption of Notes at the election of the Company or otherwise, as permitted or required by the Notes or any provision of this Indenture, shall be made in accordance with the Notes, such provision and this Article.

          SECTION 3.03. Notices to Trustee. If the Company elects to redeem Notes pursuant to the optional redemption provisions of Paragraph 5 of the Note, they shall notify the Trustee in writing of (i) the Section of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. The Company shall give notice to the Trustee provided for in this paragraph at least 40 days but not more than 60 days before a redemption date if the redemption is pursuant to Paragraph 5 of the Note, unless a shorter period is acceptable to the Trustee. Such notice shall be accompanied by an Officers’ Certificate and Opinion of Counsel from the Company to the effect that such redemption will comply with the conditions herein. The record date relating to such redemption shall be selected by the Company and given to the Trustee, which record date shall be prior to the mailing of the notice of redemption. Any such notice may be canceled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect.

          SECTION 3.04. Selection of Notes to Be Redeemed. In the case of any partial redemption of Notes, selection of the Notes for redemption will be made by the Trustee on a pro rata basis to the extent practicable; provided, however, that no Notes of $1,000 or less shall be redeemed in part. The Trustee shall make the selection from outstanding Notes not previously called for redemption. The Trustee may select for redemption portions of the principal of Notes that have denominations larger than $1,000 and portions of them the Trustee selects shall be in amounts of $1,000 or a multiple of $1,000. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. The Trustee shall notify the Company promptly of the Notes or portions of Notes to be redeemed.

          SECTION 3.05. Notice of Optional Redemption. (a) At least 30 days but not more than 60 days before a redemption date, the Company shall mail or cause to be mailed by first-class mail a notice of redemption to each Holder whose Notes are to be redeemed. Notices of redemption may not be conditional.

-43-

     Any such notice shall identify the Notes to be redeemed and shall state:

     (i) the redemption date;

     (ii) the redemption price and the amount of accrued interest to the redemption date;

     (iii) the name and address of a Paying Agent;

     (iv) that Notes called for redemption must be surrendered to a Paying Agent to collect the redemption price, plus accrued interest;

     (v) if fewer than all the outstanding Notes are to be redeemed, the certificate numbers and principal amounts of the particular Notes to be redeemed, the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption;

     (vi) that, unless the Company defaults in making such redemption payment, interest on Notes (or portion thereof) called for redemption ceases to accrue on and after the redemption date;

     (vii) the CUSIP number, ISIN or “Common Code” number, if any, printed on the Notes being redeemed;

     (viii) that no representation is made as to the correctness or accuracy of the CUSIP number or ISIN or “Common Code” number, if any, listed in such notice or printed on the Notes; and

     (ix) the applicable provision in this Indenture or the Notes pursuant to which the Company is redeeming such Notes.

          (b) At the Company’s written request, the Trustee shall give the notice of redemption in the Company’s name and at the Company’s expense; provided, however, that the Company has delivered to the Trustee an Opinion of Counsel and an Officers’ Certificate, each covering the matters set forth in Sections 13.04 and 13.05. In such event, the Company shall provide the Trustee with the information required by this Section 3.05 in no event less than 10 days in advance of the proposed mailing of the notice of redemption.

          SECTION 3.06. Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.05, Notes called for redemption become due and payable on the redemption date and at the redemption price stated in the notice. Upon surrender to any Paying Agent, such Notes shall be paid at the redemption price stated in the notice, plus accrued interest to the redemption date; provided, however, that if the redemption date is after a regular record date and on or prior to the interest payment date, the accrued interest shall be payable to the Holder of the redeemed Notes registered on the relevant record date. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder.

-44-

          SECTION 3.07. Deposit of Redemption Price. With respect to any Notes, prior to 10:00 a.m., New York City time, on the redemption date, the Company shall deposit with the Paying Agent (or, if the Company or a Wholly Owned Subsidiary of the Company is a Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest on all Notes or portions thereof to be redeemed on that date other than Notes or portions of Notes called for redemption that have been delivered by the Company to the Trustee for cancellation. On and after the redemption date, interest shall cease to accrue on Notes or portions thereof called for redemption so long as the Company has deposited with the Paying Agent funds sufficient to pay the principal of, plus accrued and unpaid interest on, the Notes to be redeemed.

          SECTION 3.08. Notes Redeemed in Part. Upon surrender of a Note that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder (at the Company’s expense) a new Note equal in principal amount to the unredeemed portion of the Note surrendered.

ARTICLE 4

COVENANTS

          SECTION 4.01. Payment of Notes. (a) The Company shall promptly pay the principal of (and premium, if any) and interest, on the Notes on the dates and in the manner provided in the Notes and in this Indenture. An installment of principal of or interest on the Notes shall be considered paid on the date it is due if on such date the Trustee or any Paying Agent (other than the Company or any of its Affiliates) holds in accordance with this Indenture money sufficient to pay all principal and interest then due.

          (b) The Company shall pay interest on overdue principal at the rate specified therefor in the Notes and shall pay interest on overdue installments of interest at the same rate borne by the Notes to the extent lawful.

          SECTION 4.02. Reports and Other Information. (a) Notwithstanding that the Company may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, the Company shall file with the SEC (and provide the Trustee and Holders with copies thereof, without cost to each Holder, within 15 days after it files them with the SEC),

     (i) within the time periods specified by the Exchange Act, annual reports on Form 10-K (or any successor or comparable form) containing the information required to be contained therein (or required in such successor or comparable form),

     (ii) within the time periods specified by the Exchange Act, reports on Form 10-Q (or any successor or comparable form),

     (iii) promptly from time to time after the occurrence of an event required to be therein reported (and in any event within the time period specified for filing current

-45-

reports on Form 8-K by the SEC), such other reports on Form 8-K (or any successor or comparable form), and

     (iv) any other information, documents and other reports which the Company would be required to file with the SEC if it were subject to Section 13 or 15(d) of the Exchange Act;

provided, however, that the Company shall not be so obligated to file such reports with the SEC if the SEC does not permit such filing, in which event the Company shall post the reports specified above on its website within the time periods that would apply if the Company were required to file those reports with the SEC. In addition, the Company shall make available such information to prospective purchasers of Notes, in addition to providing such information to the Trustee and the Holders, in each case within 15 days after the time the Company would be required to file such information with the SEC if it were subject to Section 13 or 15(d) of the Exchange Act.

          (b) Notwithstanding the foregoing, the Company shall be deemed to have furnished such reports referred to above to the Trustee and the Holders if it has filed such reports with the SEC via the EDGAR filing system and such reports are publicly available. In addition, such requirements shall be deemed satisfied prior to the commencement of the Registered Exchange Offer relating to the applicable Notes or the effectiveness of the Shelf Registration Statement by the filing with the SEC of an exchange offer registration statement or Shelf Registration Statement in accordance with the provisions of the Registration Rights Agreement, and any amendments thereto, with such financial information that satisfies Regulation S-X of the Securities Act and provided that such registration statement or amendments thereto are filed at times that otherwise satisfy the time requirements set forth in this Section 4.02.

     (c) In the event that:

     (i) the rules and regulations of the SEC permit the Company and any direct or indirect parent company of the Company to report at such parent entity’s level on a consolidated basis; and

     (ii) such parent entity of the Company is not engaged in any business in any material respect other than incidental to its ownership, directly or indirectly, of the capital stock of the Company,

then such consolidated reporting at such parent entity’s level in a manner consistent with that described in this Section 4.02 for the Company shall satisfy this Section 4.02.

          (d) Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively (subject to Article 7 hereof) on Officers’ Certificates).

          SECTION 4.03. Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock. (a) (i) The Company shall not, and shall not permit any

-46-

of its Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness (including Acquired Indebtedness) or issue any shares of Disqualified Stock; and (ii) the Company shall not permit any of its Restricted Subsidiaries to issue any shares of Preferred Stock; provided, however, that the Company and any Restricted Subsidiary may Incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock and any Restricted Subsidiary may issue shares of Preferred Stock, in each case if the Fixed Charge Coverage Ratio of the Company for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is Incurred or such Disqualified Stock or Preferred Stock is issued would have been at least 2.00 to 1.00 determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been Incurred, or the Disqualified Stock or Preferred Stock had been issued, as the case may be, and the application of proceeds therefrom had occurred at the beginning of such four-quarter period.

          In addition, if any Indebtedness is Incurred, or any Disqualified Stock or Preferred Stock is issued, in each case pursuant to the first paragraph of Section 4.03(a) and in contemplation of a merger or an acquisition of an operating unit (including a service center) or business, whether directly or through the acquisition of Capital Stock of another Person, or to provide all or a portion of the funds or credit support required to consummate such merger or acquisition, the Consolidated Total Debt Ratio would be no greater than 4.75 to 1.0 at the time of such Incurrence or issuance, as the case may be, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom and giving pro forma effect to such merger or acquisition), as if the additional Indebtedness had been Incurred, or the Disqualified Stock or Preferred Stock had been issued, as the case may be, and the application of proceeds therefrom and the consummation of such merger or acquisition had occurred at the beginning of such four-quarter period.

     (b) The limitations set forth in Section 4.03(a) shall not apply to:

     (i) the Incurrence by the Company or its Restricted Subsidiaries of Indebtedness under any Credit Agreement and the issuance and creation of letters of credit and bankers’ acceptances thereunder (with letters of credit and bankers’ acceptances being deemed to have a principal amount equal to the face amount thereof) up to an aggregate principal amount then outstanding equal to the greater of (1) $450.0 million less the sum of (A) the amount of any such Indebtedness Incurred pursuant to this clause (i) that is permanently retired with the Net Proceeds from any Asset Sale applied from and after the Issue Date to reduce the outstanding amounts pursuant to Section 4.06 and (B) the aggregate Off-Balance Sheet Financing Amount attributable to all Qualified Receivables Financings then outstanding and (2) the sum of (x) 70% of the net book value of the inventory of the Company and its Restricted Subsidiaries and (y) 90% of the net book value of the accounts receivable of the Company and its Restricted Subsidiaries (in each case, determined by the net book value set forth on the consolidated balance sheet of the Company for the fiscal quarter immediately preceding the date on which such Indebtedness is Incurred for which internal financial statements are available);

-47-

     (ii) the Incurrence by the Company and the Guarantors of Indebtedness represented by the Notes (not including any Additional Notes or Exchange Notes issued in exchange therefor) and the Guarantees, as applicable;

     (iii) Indebtedness existing on the Issue Date (after giving effect to the Transactions) (other than Indebtedness described in clauses (i) and (ii) of this Section 4.03(b));

     (iv) Indebtedness (including Capitalized Lease Obligations) Incurred by the Company or any of its Restricted Subsidiaries to finance the purchase, lease, construction or improvement of property (real or personal) or equipment (whether through the direct purchase of assets or the Capital Stock of any Person owning such assets (but no other material assets)) in an aggregate principal amount which, when aggregated with the principal amount of all other Indebtedness then outstanding that was Incurred (or deemed incurred pursuant to clause (xiv) below) pursuant to this clause (iv), does not exceed the greater of (x) 3.5% of Total Assets and (y) $45.0 million;

     (v) Indebtedness Incurred by the Company or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims; provided, however, that upon the drawing of such letters of credit, such obligations are reimbursed within 30 days following such drawing;

     (vi) Indebtedness arising from agreements of the Company or any of its Restricted Subsidiaries providing for adjustment of purchase price or similar obligations, in each case, Incurred in connection with the acquisition or disposition of any business, assets or a Subsidiary of the Company in accordance with the terms of this Indenture, other than guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition; provided, however, that, at the time of closing, the amount of such Indebtedness is not determinable and, to the extent such Indebtedness thereafter becomes fixed and determined, the Indebtedness is paid within 60 days thereafter;

     (vii) Indebtedness of the Company to a Restricted Subsidiary; provided, however, that any such Indebtedness is subordinated in right of payment to the obligations of the Company under the Notes and this Indenture; provided further, however, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to another Restricted Subsidiary) shall be deemed, in each case, to be an Incurrence of such Indebtedness;

     (viii) shares of Preferred Stock of a Restricted Subsidiary issued to the Company or another Restricted Subsidiary; provided, however, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any Restricted

-48-

Subsidiary that holds such shares of Preferred Stock of another Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the Company or another Restricted Subsidiary) shall be deemed, in each case, to be an issuance of shares of Preferred Stock;

     (ix) Indebtedness of a Restricted Subsidiary to the Company or another Restricted Subsidiary; provided, however, that (1) any such Indebtedness is made pursuant to an intercompany note and (2) if a Subsidiary Guarantor Incurs such Indebtedness to a Restricted Subsidiary that is not a Guarantor such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor; provided further, however, that any subsequent issuance or transfer of any Capital Stock or any other event which results in any Restricted Subsidiary holding such Indebtedness ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to another Restricted Subsidiary) shall be deemed, in each case, to be an Incurrence of such Indebtedness;

     (x) Hedging Obligations that are not Incurred for speculative purposes and are (1) for the purpose of fixing or hedging interest rate risk with respect to any Indebtedness that is permitted by the terms of this Indenture to be outstanding; (2) for the purpose of fixing or hedging currency exchange rate risk with respect to any currency exchanges; or (3) for the purpose of fixing or hedging commodity price risk with respect to any metal or other commodity purchases or sales;

     (xi) obligations in respect of performance, bid, appeal and surety bonds, including surety bonds issued in respect of workers’ compensation claims, and completion guarantees provided by the Company or any Restricted Subsidiary in the ordinary course of business;

     (xii) Indebtedness or Disqualified Stock of the Company or any Restricted Subsidiary of the Company not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, as applicable, which, when aggregated with the principal amount or liquidation preference of all other Indebtedness and Disqualified Stock then outstanding and Incurred pursuant to this clause (xii), does not exceed $50.0 million at any one time outstanding (it being understood that any Indebtedness Incurred under this clause (xii) shall cease to be deemed Incurred or outstanding for purposes of this clause (xii) but shall be deemed Incurred for purposes of Section 4.03(a) from and after the first date on which the Company, or the Restricted Subsidiary, as the case may be, could have Incurred such Indebtedness under Section 4.03(a) without reliance upon this clause (xii));

     (xiii) any guarantee by the Company or any of its Restricted Subsidiaries of Indebtedness or other obligations of the Company or any of its Restricted Subsidiaries so long as the Incurrence of such Indebtedness or other obligations Incurred by the Company or such Restricted Subsidiary is permitted under the terms of this Indenture; provided, however, that if such Indebtedness is by its express terms subordinated in right of payment to the Notes or the Guarantee of such Restricted Subsidiary, as applicable, any such guarantee of any Guarantor with respect to such Indebtedness shall be

-49-

subordinated in right of payment to such Guarantor’s Guarantee with respect to the Notes substantially to the same extent as such Indebtedness is subordinated to the Notes or the Guarantee of such Guarantor, as applicable;

     (xiv) the Incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness which serves to refund, refinance or defease any Indebtedness Incurred under Section 4.03(a) or clause (ii), (iii), (iv), (xiv), (xv) or (xix) of this Section 4.03(b) (subject to the following proviso, “Refinancing Indebtedness”); provided, however, that such Refinancing Indebtedness:

     (1) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is Incurred which is not less than the shorter of (x) the remaining Weighted Average Life to Maturity of the Indebtedness being refunded or refinanced and (y) the Weighted Average Life to Maturity that would result if all payments of principal on the Indebtedness being refunded or refinanced that were due on or after the date one year following the last maturity date of any Notes then outstanding were instead due on such date one year following;

     (2) has a Stated Maturity which is no earlier than the earlier of (x) the Stated Maturity of the Indebtedness being refunded or refinanced or (y) one year following the last maturity date of any Notes then outstanding;

     (3) to the extent such Refinancing Indebtedness refinances Indebtedness junior to the Notes or the Guarantee of such Restricted Subsidiary, as applicable, such Refinancing Indebtedness is junior to the Notes or the Guarantee of such Restricted Subsidiary, as applicable;

     (4) is Incurred in an aggregate principal amount (or if issued with significant original issue discount, an aggregate issue price) that is equal to or less than the aggregate principal amount (or if issued with significant original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced plus premium and fees and expenses Incurred in connection with such refinancing;

     (5) shall not include (x) Indebtedness of a Restricted Subsidiary of the Company that is not a Guarantor that refinances Indebtedness of the Company or another Guarantor (unless such Restricted Subsidiary is an obligor with respect to such Indebtedness being refinanced), or (y) Indebtedness of the Company or a Restricted Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary; and

     (6) in the case of any Refinancing Indebtedness Incurred to refinance Indebtedness outstanding under clause (iv) or (xix) of this Section 4.03(b), shall be deemed to have been Incurred and to be outstanding under such clause (iv) or (xix) of this Section 4.03(b), as applicable, and not this clause (xiv) for purposes of determining amounts outstanding under such clauses (iv) or (xix) of this Section 4.03(b), as applicable;

-50-

provided further, however, that subclauses (1), (2) and (3) of this clause (xiv) shall not apply to any Refinancing Indebtedness Incurred to refund, refinance or defease the Notes;

     (xv) Indebtedness or Disqualified Stock of Persons that are acquired by the Company or any of its Restricted Subsidiaries or merged into the Company or a Restricted Subsidiary in accordance with the terms of this Indenture; provided, however, that such Indebtedness or Disqualified Stock is not Incurred in contemplation of such acquisition or merger or to provide all or a portion of the funds or credit support required to consummate such acquisition or merger; provided further, however, that after giving effect to such acquisition and the Incurrence of such Indebtedness either:

     (1) the Company would be permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.03(a); or

     (2) the Fixed Charge Coverage Ratio would be greater than immediately prior to such acquisition;

     (xvi) Indebtedness Incurred by a Receivables Subsidiary in a Qualified Receivables Financing that is not recourse (except for Standard Securitization Undertakings) to the Company or any Restricted Subsidiary other than a Receivables Subsidiary;

     (xvii) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of its Incurrence;

     (xviii) Indebtedness of the Company or any Restricted Subsidiary supported by a letter of credit issued pursuant to any Credit Agreement, in a principal amount not in excess of the stated amount of such letter of credit;

     (xix) Contribution Indebtedness;

     (xx) Indebtedness of Foreign Subsidiaries of the Company Incurred for working capital purposes; and

     (xxi) Indebtedness of the Company or any Restricted Subsidiary consisting of (x) the financing of insurance premiums or (y) take-or-pay obligations contained in supply arrangements, in each case, entered into in the ordinary course of business.

          (c) Notwithstanding the foregoing, the Company and the Guarantors may not Incur any Indebtedness pursuant to Section 4.03(b) if the proceeds thereof are used, directly or indirectly, to repay, prepay, redeem, defease, retire, refund or refinance any Subordinated Indebtedness unless such Indebtedness shall be subordinated to the Notes or such Guarantor’s Guarantee, as applicable, to at least the same extent as such Subordinated Indebtedness. For purposes of determining compliance with this Section 4.03, (A) Indebtedness need not be Incurred solely by reference to one category of permitted Indebtedness described in clauses (i) through (xxi) of Section 4.03(b) or pursuant to Section 4.03(a) but is permitted to be Incurred in

-51-

part under any combination thereof and (B) in the event that an item of Indebtedness (or any portion thereof) meets the criteria of one or more of the categories of permitted Indebtedness described in clauses (i) through (xxi) of Section 4.03(b) or is entitled to be Incurred pursuant to Section 4.03(a), the Company shall, in its sole discretion, classify or reclassify such item of Indebtedness (or any portion thereof) in any manner that complies with this Section 4.03 and will only be required to include the amount and type of such item of Indebtedness in one of the above clauses and such item of Indebtedness shall be treated as having been Incurred pursuant to only one of such clauses or pursuant to Section 4.03(a); provided, however, that all Indebtedness under the Credit Agreement outstanding on the Issue Date shall be deemed to have been Incurred pursuant to clause (i) of Section 4.03(b) and the Company shall not be permitted to reclassify all or any portion of Indebtedness Incurred pursuant to such clause. Accrual of interest, the accretion of accreted value, amortization of original issue discount, the payment of interest in the form of additional Indebtedness with the same terms or in the form of common stock of the Company, the payment of dividends on Preferred Stock in the form of additional shares of Preferred Stock of the same class, the accretion of liquidation preference and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies or increases in the value of property securing Indebtedness described in clause (3) of the definition of “Indebtedness” shall not be deemed to be an Incurrence of Indebtedness for purposes of this Section 4.03. Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness which is otherwise included in the determination of a particular amount of Indebtedness shall not be included in the determination of such amount of Indebtedness; provided, however, that the Incurrence of the Indebtedness represented by such guarantee or letter of credit, as the case may be, was in compliance with this Section 4.03.

          SECTION 4.04. Limitation on Restricted Payments. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly:

     (i) declare or pay any dividend or make any distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests, including any payment with respect to such Equity Interests made in connection with any merger or consolidation (other than (A) dividends or distributions payable solely in Equity Interests (other than Disqualified Stock) of the Company; or (B) dividends or distributions by a Restricted Subsidiary; provided, however, that in the case of any dividend or distribution payable on or in respect of any Equity Interests issued by a Restricted Subsidiary other than a Wholly Owned Restricted Subsidiary, the Company or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its ownership percentage of such Equity Interests);

     (ii) purchase or otherwise acquire or retire for value any Equity Interests of the Company or any direct or indirect parent company of the Company;

     (iii) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value, in each case prior to any scheduled repayment or scheduled maturity, any Subordinated Indebtedness of the Company or any Subsidiary Guarantor (other than the payment, redemption, repurchase, defeasance, acquisition or retirement of (A) Subordinated Indebtedness in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of

-52-

such payment, redemption, repurchase, defeasance, acquisition or retirement and (B) Indebtedness permitted under clauses (vii) and (ix) of Section 4.03(b)); or

     (iv) make any Restricted Investment

(all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as “Restricted Payments”), unless, at the time of such Restricted Payment:

     (1) no Default shall have occurred and be continuing or would occur as a consequence thereof;

     (2) immediately after giving effect to such transaction on a pro forma basis, the Company could Incur $1.00 of additional Indebtedness under the first paragraph of Section 4.03(a); and

     (3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the Issue Date (including Restricted Payments permitted by clauses (i), (iv) (only to the extent of one-half of the amounts paid pursuant to such clause), (vi) and (viii) of Section 4.04(b), but excluding all other Restricted Payments permitted by Section 4.04(b)), is less than the sum of, without duplication,

     (A) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from September 30, 2005 to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, in the case such Consolidated Net Income for such period is a deficit, minus 100% of such deficit), plus

     (B) 100% of the aggregate net cash proceeds received by the Company after the Issue Date from the issue or sale of Equity Interests of the Company (excluding Refunding Capital Stock, Designated Preferred Stock, Cash Contribution Amounts, Excluded Contributions and Disqualified Stock), including Equity Interests issued upon conversion of Indebtedness (in which case the Company will be deemed to have received an amount equal to the aggregate principal amount of such Indebtedness (or, if such Indebtedness was issued at a significant original issue discount, an amount equal to the accreted value of such Indebtedness at such time)) or upon exercise of warrants or options (other than an issuance or sale to a Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any of its Subsidiaries), plus

     (C) 100% of the aggregate amount of cash contributions to the capital of the Company received after the Issue Date (other than Excluded Contributions, Refunding Capital Stock, Designated Preferred Stock, contributions from the issuance of Designated Preferred Stock, Disqualified Stock and the Cash Contribution Amount), plus

-53-

     (D) 100% of the aggregate amount received by the Company or any Restricted Subsidiary in cash subsequent to the Issue Date, from:

     (I) the sale or other disposition (other than to the Company or a Restricted Subsidiary of the Company) of Restricted Investments made by the Company and its Restricted Subsidiaries and from repurchases and redemptions of such Restricted Investments from the Company and its Restricted Subsidiaries by any Person (other than the Company or any of its Subsidiaries) and from repayments of loans or advances which constituted Restricted Investments (other than in each case to the extent that the Restricted Investment was made pursuant to clause (vii) or (x) of Section 4.04(b)),

     (II) the sale (other than to the Company or a Restricted Subsidiary of the Company) of the Capital Stock of an Unrestricted Subsidiary, or

     (III) a distribution or dividend from an Unrestricted Subsidiary, plus

     (E) in the event any Unrestricted Subsidiary of the Company has been redesignated as a Restricted Subsidiary or has been merged, consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company, in each case subsequent to the Issue Date, the Fair Market Value (as determined in accordance with the next succeeding sentence) of the Investment of the Company in such Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable), after deducting any Indebtedness associated with the Unrestricted Subsidiary so designated or combined or any Indebtedness associated with the assets so transferred or conveyed (other than in each case to the extent that the designation of such Subsidiary as an Unrestricted Subsidiary was made pursuant to clause (vii) or (x) of Section 4.04(b) or constituted a Permitted Investment).

     (b) The provisions of Section 4.04(a) shall not prohibit:

     (i) the payment of any dividend or distribution within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of this Indenture;

     (ii) (A) the repurchase, retirement or other acquisition of any Equity Interests (“Retired Capital Stock”) of the Company or any direct or indirect parent company of the Company or Subordinated Indebtedness of the Company or any Subsidiary Guarantor in exchange for, or out of the proceeds of the substantially concurrent sale of, Equity Interests of the Company or any direct or indirect parent company of the Company or contributions to the equity capital of the Company (other than Designated Preferred Stock, Cash Contribution Amounts, Excluded Contributions and Disqualified Stock or any Equity Interests sold to a Subsidiary of the Company or to an employee stock ownership plan or any trust established by the Company or any of its Subsidiaries)

-54-

(collectively, including any such contributions, “Refunding Capital Stock”); and (B) the declaration and payment of accrued dividends on the Retired Capital Stock out of the proceeds of the substantially concurrent sale (other than to a Subsidiary of the Company or to an employee stock ownership plan or any trust established by the Company or any of its Subsidiaries) of Refunding Capital Stock;

     (iii) the payment, redemption, repurchase, defeasance or other acquisition or retirement of Subordinated Indebtedness of the Company or any Subsidiary Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, new Indebtedness of the Company or such Subsidiary Guarantor, respectively, which is Incurred in accordance with Section 4.03 so long as

     (A) the principal amount of such new Indebtedness (or, if such Indebtedness is issued at a significant original issue discount, the aggregate issue price) does not exceed the principal amount (or, if such Indebtedness was issued at a significant original issue discount, the aggregate accreted value at such time) of the Subordinated Indebtedness being so paid, redeemed, repurchased, defeased, acquired or retired for value (plus the amount of any premium required to be paid under the terms of the instrument governing the Subordinated Indebtedness being so redeemed, repurchased, acquired or retired plus any fees and expenses incurred in connection therewith),

     (B) such Indebtedness is subordinated to the Notes or the related Guarantees, as the case may be, at least to the same extent as such Subordinated Indebtedness so paid, purchased, exchanged, redeemed, repurchased, defeased, acquired or retired for value,

     (C) such Indebtedness has a Stated Maturity which is no earlier than the earlier of (x) the Stated Maturity of the Subordinated Indebtedness being so paid, redeemed, repurchased, defeased, acquired or retired or (y) one year following the last maturity date of any Notes then outstanding, and

     (D) such Indebtedness has a Weighted Average Life to Maturity at the time Incurred which is not less than the shorter of (x) the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness being so paid, redeemed, repurchased, defeased, acquired or retired and (y) the Weighted Average Life to Maturity that would result if all payments of principal on the Subordinated Indebtedness being paid, redeemed, repurchased, defeased, acquired or retired that were due on or after the date one year following the last maturity date of any Notes then outstanding were instead due on such date one year following;

     (iv) the repurchase, retirement or other acquisition (or dividends to any direct or indirect parent company of the Company to finance any such repurchase, retirement or other acquisition) for value of Equity Interests of the Company or any direct or indirect parent company of the Company held by any future, present or former employee, director or consultant of the Company, or any direct or indirect parent company of the Company

-55-

or any Subsidiary of the Company pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or other agreement or arrangement; provided, however, that the aggregate amounts paid under this clause (iv) do not exceed $10.0 million in any calendar year (with unused amounts in any calendar year being permitted to be carried over for the next succeeding calendar year); provided further, however, that such amount in any calendar year may be increased by an amount not to exceed:

     (A) the cash proceeds received by the Company or any of its Restricted Subsidiaries from the sale of Equity Interests (excluding Refunding Capital Stock, Designated Preferred Stock, Cash Contribution Amounts, Excluded Contributions and Disqualified Stock) of the Company or any direct or indirect parent company of the Company (to the extent contributed to the Company) to members of management, directors or consultants of the Company and its Restricted Subsidiaries or any direct or indirect parent company of the Company that occurs after the Issue Date; provided, however, that the amount of such cash proceeds utilized for any such repurchase, retirement, other acquisition or dividend shall not increase the amount available for Restricted Payments under Section 4.04(a)(3); plus

     (B) the cash proceeds of key man life insurance policies received by the Company or any direct or indirect parent company of the Company (to the extent contributed to the Company) and its Restricted Subsidiaries after the Issue Date;

(provided, however, that the Company may elect to apply all or any portion of the aggregate increase contemplated by clauses (A) and (B) above in any calendar year and, to the extent any payment described under this clause (iv) is made by delivery of Indebtedness and not in cash, such payment shall be deemed to occur only when, and to the extent, the obligor on such Indebtedness makes payments with respect to such Indebtedness);

     (v) the declaration and payment of dividends or distributions to holders of any class or series of Disqualified Stock of the Company or any of its Restricted Subsidiaries issued or incurred in accordance with Section 4.03;

     (vi) the declaration and payment of dividends or distributions to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) issued after the Issue Date and the declaration and payment of dividends to any direct or indirect parent entity of the Company, the proceeds of which will be used to fund the payment of dividends to holders of any class or series of Designated Preferred Stock (other than Disqualified Stock) of any direct or indirect parent company of the Company issued after the Issue Date the proceeds of which were contributed to the Company; provided, however, that (A) for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of issuance of such Designated Preferred Stock, after giving effect to such issuance (and the payment of dividends or distributions) on a pro forma basis, the Company would have had a Fixed Charge Coverage Ratio of at least 2.25 to 1.00 and (B) the aggregate amount of dividends

-56-

declared and paid pursuant to this clause (vi) does not exceed the net cash proceeds actually received by the Company from the sale of such Designated Preferred Stock (other than Disqualified Stock) issued after the Issue Date;

     (vii) Investments in Unrestricted Subsidiaries having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (vii) that are at that time outstanding, not to exceed $20.0 million at the time of such Investment (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value);

     (viii) the payment of dividends on the Company’s common stock or Preferred Stock (or the payment of dividends to any direct or indirect parent of the Company to fund the payment by any direct or indirect parent of the Company of dividends on such entity’s common stock or Preferred Stock) of up to 6.0% per annum of the net proceeds received by the Company from any public offering of common stock or Preferred Stock or contributed to the Company by any direct or indirect parent of the Company from any public offering of common stock or Preferred Stock; provided, however, that such Preferred Stock was issued in a registered public offering;

     (ix) Investments that are made with Excluded Contributions;

     (x) other Restricted Payments in an aggregate amount not to exceed $20.0 million;

     (xi) the distribution, as a dividend or otherwise, of shares of Capital Stock of, or Indebtedness owed to the Company or a Restricted Subsidiary of the Company by, Unrestricted Subsidiaries;

     (xii) (A) with respect to each tax year or portion thereof that the Company qualifies as a Flow Through Entity, the distribution by the Company to the holders of Capital Stock of the Company of an amount equal to the product of (i) the amount of aggregate net taxable income of the Company allocated to the holders of Capital Stock of the Company for such period and (ii) the Presumed Tax Rate for such period; and (B) with respect to any tax year or portion thereof that the Company does not qualify as a Flow Through Entity and files a consolidated U.S. federal tax return with its direct or indirect parent company, the payment of dividends or other distributions to any direct or indirect parent company of the Company that files a consolidated U.S. federal tax return that includes the Company and its Subsidiaries in an amount not to exceed the amount that the Company and its Restricted Subsidiaries would have been required to pay in respect of federal, state or local taxes (as the case may be) in respect of such year if the Company and its Restricted Subsidiaries paid such taxes directly as a stand-alone taxpayer (or stand-alone group);

     (xiii) the payment of dividends, other distributions or other amounts by the Company:

     (A) in amounts equal to the amounts required for any direct or indirect parent of the Company to pay fees and expenses (including franchise or similar taxes) required to maintain its corporate existence, customary salary, bonus and

-57-

other benefits payable to, and indemnity provided on behalf of, officers and employees of any direct or indirect parent of the Company and general corporate overhead expenses of any direct or indirect parent of the Company, in each case to the extent such fees, expenses salaries, bonuses, benefits and indemnities are attributable to the ownership or operation of the Company and its respective Subsidiaries; provided, however, that any such dividends, distributions or other amounts shall not exceed $1.0 million per year and shall be treated as an operating expense of the Company for purposes of determining the Consolidated Net Income of the Company; and

     (B) in amounts equal to amounts required for any direct or indirect parent of the Company to pay interest or principal on Indebtedness the proceeds of which have been contributed to the Company or any of its Restricted Subsidiaries and that has been guaranteed by, or is otherwise considered Indebtedness of, the Company Incurred in accordance with Section 4.03; provided, however, that any such contribution will not increase the amount available for Restricted Payments under Section 4.04(a)(3) or be used to Incur Contribution Indebtedness or to make a Restricted Payment pursuant to Section 4.04(b) (other than payments permitted by this clause (xiii); provided further, however, any such dividends, other distributions or other amounts used to pay interest shall be treated as interest payments of the Company for purposes of this Indenture;

     (xiv) cash dividends or other distributions on the Company’s Capital Stock used to, or the making of loans to any direct or indirect parent of the Company to, fund the Transactions or the payment of fees and expenses incurred in connection with the Transactions or owed by the Company or any Restricted Subsidiaries of the Company to Affiliates, in each case to the extent permitted by Section 4.07;

     (xv) repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants;

     (xvi) purchases of receivables pursuant to a Receivables Repurchase Obligation in connection with a Qualified Receivables Financing;

     (xvii) in the event of a Change of Control, the payment, purchase, redemption, defeasance or other acquisition or retirement of Subordinated Indebtedness, Disqualified Stock or Preferred Stock of the Company or Subordinated Indebtedness of any Guarantor or Disqualified Stock or Preferred Stock of any Restricted Subsidiary, in each case, at a purchase price not greater than 101% of the principal amount or liquidation preference, as applicable (or, if such Subordinated Indebtedness was issued with significant original issue discount, 101% of the accreted value), of such Subordinated Indebtedness, Disqualified Stock or Preferred Stock, plus any accrued and unpaid interest or dividends thereon; provided, however, that prior to such payment, purchase, redemption, defeasance or other acquisition or retirement, the Company (or a third party to the extent permitted by this Indenture) has made a Change of Control Offer with respect to the Notes as a

-58-

result of such Change of Control and have repurchased all Notes validly tendered and not withdrawn in connection with such Change of Control Offer;

     (xviii) in the event of an Asset Sale that requires the Company to offer to purchase Notes pursuant to Section 4.06, the payment, purchase, redemption, defeasance or other acquisition or retirement of Subordinated Indebtedness, Disqualified Stock or Preferred Stock of the Company or Subordinated Indebtedness of any Guarantor or Disqualified Stock or Preferred Stock of any Restricted Subsidiary, in each case, at a purchase price not greater than 100% of the principal amount or liquidation preference, as applicable (or, if such Subordinated Indebtedness was issued with significant original issue discount, 100% of the accreted value), of such Subordinated Indebtedness, Disqualified Stock or Preferred Stock, plus any accrued and unpaid interest or dividends thereon; provided, however, that (i) prior to such payment, purchase, redemption, defeasance or other acquisition or retirement, the Company (or a third party to the extent permitted by this Indenture) has made an Asset Sale Offer or Notes Collateral Asset Sale Offer, as applicable, with respect to the Notes as a result of such Asset Sale and have repurchased all Notes validly tendered and not withdrawn in connection with such Asset Sale Offer or Notes Collateral Asset Sale Offer, as applicable, and (ii) the aggregate amount of all such payments, purchases, redemptions, defeasances or other acquisitions or retirements of all such Subordinated Indebtedness, Disqualified Stock and Preferred Stock may not exceed the amount of the Excess Proceeds or Notes Collateral Excess Amount used to determine the aggregate purchase price of the Notes tendered for in such Asset Sale Offer or Notes Collateral Asset Sale Offer, as applicable, less the aggregate amount applied in connection with such Asset Sale Offer or Notes Collateral Asset Sale Offer, as applicable;

     (xix) any Restricted Payments made in connection with the consummation of the Transactions or as contemplated by the Merger Agreement, including any payments or loans made to any direct or indirect parent to enable it to make any such payments; and

     (xx) payments of cash, or dividends, distributions or advances by the Company or any Restricted Subsidiary to allow any such entity to make payments of cash, in lieu of the issuance of fractional shares upon the exercise of warrants or upon the conversion or exchange of Capital Stock of any such Person; provided, however, the aggregate amount of such payments, dividends, distributions or advances does not exceed $2.5 million;

provided, however, that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (vi), (vii), (x), (xi), (xvii) and (xviii) of this Section 4.04(b), no Default shall have occurred and be continuing or would occur as a consequence thereof.

          (c) The Company shall not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the definition of “Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated shall be deemed to be Restricted Payments in an amount determined as set forth in the last sentence of the definition of “Investments.” Such designation shall only be

-59-

permitted if a Restricted Payment in such amount would be permitted at such time and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.

          SECTION 4.05. Dividend and Other Payment Restrictions Affecting Subsidiaries. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to:

     (a) (i) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock; or (2) with respect to any other interest or participation in, or by, its profits or (ii) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries;

     (b) make loans or advances to the Company or any of its Restricted Subsidiaries; or

     (c) sell, lease or transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries;

     except in each case for such encumbrances or restrictions existing under or by reason of:

     (1) contractual encumbrances or restrictions in effect on the Issue Date, including pursuant to the Credit Agreement and the other Senior Credit Documents;

     (2) this Indenture, the Notes, the Security Documents and the Intercreditor Agreement;

     (3) applicable law or any applicable rule, regulation or order;

     (4) any agreement or other instrument relating to Indebtedness of a Person acquired by the Company or any Restricted Subsidiary which was in existence at the time of such acquisition (but not created in contemplation thereof or to provide all or any portion of the funds or credit support utilized to consummate such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired;

     (5) any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition;

     (6) Secured Indebtedness otherwise permitted to be Incurred pursuant to Sections 4.03 and 4.12 that limit the right of the debtor to dispose of the assets securing such Indebtedness;

     (7) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

-60-

     (8) customary provisions in joint venture agreements and other similar agreements that the Board of Directors of the Company determines in good faith at the time the joint venture or other similar agreement is entered into that such encumbrances or restrictions will not materially adversely affect the Company’s ability to make timely payment of interest, premium (if any) or principal on the Notes when due;

     (9) purchase money obligations for property acquired in the ordinary course of business or Capitalized Lease Obligations that impose restrictions of the nature discussed in clause (c) above on the property so acquired;

     (10) customary provisions contained in leases, licenses and other similar agreements entered into in the ordinary course of business that impose restrictions of the type described in clause (c) above on the property subject to such lease, license or other similar agreement;

     (11) any encumbrance or restriction of a Receivables Subsidiary effected in connection with a Qualified Receivables Financing; provided, however, that such restrictions apply only to such Receivables Subsidiary;

     (12) other Indebtedness

     (i) of (A) the Company or (B) any Restricted Subsidiary of the Company, in each case that (x) is Incurred subsequent to the Issue Date pursuant to Section 4.03 and (y) an Officer reasonably and in good faith determines at the time such Indebtedness is Incurred (and at the time of any modification of the terms of any such encumbrance or restriction) that any such encumbrance or restriction will not materially adversely affect the Company’s ability to satisfy its obligations under the Notes and this Indenture and any other Indebtedness that is an obligation of the Company and such determination is set forth in an Officers’ Certificate delivered to the Trustee, or

     (ii) that is Incurred by a Foreign Subsidiary of the Company subsequent to the Issue Date pursuant to clauses (iv), (xii), (xiii) (but limited to guarantees of Indebtedness of other Foreign Subsidiaries described in this clause (12)(ii)), (xiv) (but only to the extent such Indebtedness refunds, refinances or decreases Indebtedness of such Foreign Subsidiary Incurred pursuant to clause (iv) or (xii)) or (xx) of Section 4.03(b); provided, however, that such encumbrance or restriction applies only to Foreign Subsidiaries of the Company;

     (13) any encumbrances or restrictions of the type referred to in clauses (a), (b) and (c) above imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (12) above; provided, however, that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Company, no more restrictive with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment,

-61-

modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing; or

     (14) any encumbrances or restrictions of the type referred to in clause (c) above imposed by any Permitted Liens referred to in clauses (1) and (4) of the definition thereof.

For purposes of determining compliance with this Section 4.05, (i) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock shall not be deemed a restriction on the ability to make distributions on Capital Stock and (ii) the subordination of loans or advances made to the Company to other Indebtedness Incurred by the Company shall not be deemed a restriction on the ability to make loans or advances.

          SECTION 4.06. Asset Sales. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, cause or make an Asset Sale of any Notes Collateral unless:

     (i) the Company or any of its Restricted Subsidiaries, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value (as determined in good faith by the Company) of the assets sold or otherwise disposed of;

     (ii) at least 75% of the consideration thereof received by the Company or such Restricted Subsidiary is in the form of Cash Equivalents or Asset Sale Cash Equivalents;

     (iii) (A) to the extent that any assets received by the Company and its Restricted Subsidiaries in such Asset Sale constitute securities or may be used or useful in a Similar Business, such assets are concurrently with their acquisition added to the Notes Collateral securing the Notes and (B) to the extent that any assets received by the Company and its Restricted Subsidiaries in such Asset Sale constitute the Capital Stock of any Person, the assets of such Person that may be used or useful in a Similar Business with a Fair Market Value that is equal to or greater than the Fair Market Value of the Notes Collateral that is the subject of such Asset Sale (measured together with the consideration described in clause (a)(ii) above) are concurrently with the acquisition added to the Notes Collateral securing the Notes and

     (iv) an amount equal to 100% of the Net Proceeds from such Asset Sale is paid directly by the purchaser thereof to the Notes Collateral Agent to be held in trust for application in accordance with Section 4.06(b).

          (b) The Company or such Restricted Subsidiary may use the Net Proceeds from any Asset Sale of any Notes Collateral at its option to do any one or more of the following:

     (i) within 365 days after the Notes Collateral Agent’s receipt of such Net Proceeds, to make an Asset Sale Investment (or to reimburse the Company for customary out-of-pocket costs incurred by the Company or such Restricted Subsidiary and directly related to such an investment), the assets which are acquired pursuant to such Asset Sale Investment are concurrently with their acquisition added to the Notes Collateral securing the Notes; provided, however, that (i) to the extent that the assets acquired by the

-62-

Company and its Restricted Subsidiaries in such Asset Sale Investment may be used or useful in a Similar Business, such assets are concurrently with their acquisition added to the Notes Collateral securing the Notes and (ii) to the extent that the assets acquired by the Company and its Restricted Subsidiaries pursuant to such Asset Sale Investment constitute the Capital Stock of any Person, the assets of such Person that may be used or useful in a Similar Business, other than such assets that constitute ABL Collateral, are concurrently with the acquisition added to the Notes Collateral securing the Notes, or

     (ii) within 365 days after the Notes Collateral Agent’s receipt of such Net Proceeds, to make one or more offers to the holders of the Notes (and, at the option of the Company, the holders of Other Pari Passu Lien Obligations) to purchase the maximum principal amount of Notes (and principal amount or accreted value, as applicable, of such Other Pari Passu Lien Obligations), that is an integral multiple of $1,000 that may be purchased out of the Notes Collateral Excess Amount at an offer price in cash in an amount equal to 100% of the principal amount thereof (or, in the event such Other Pari Passu Lien Obligations were issued with significant original issue discount, “principal amount” shall refer to 100% of the accreted value thereof), plus accrued and unpaid interest and additional interest, if any (or, in respect of such Other Pari Passu Lien Obligations, such lesser price, if any, as may be provided for by the terms of such Other Pari Passu Lien Obligations), to the date fixed for the closing of such offer, pursuant to and subject to the conditions contained in this Indenture (each, a “Notes Collateral Asset Sale Offer”); provided, however, that in connection with any prepayment, repayment or purchase of Indebtedness pursuant to this clause (B), the Company or such Restricted Subsidiary shall permanently retire such Indebtedness and shall cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased.

Notwithstanding the foregoing provisions of this Section 4.06(b), (i) if during the 365-day period described in this Section 4.06(b), the Company or a Restricted Subsidiary enters into a binding agreement committing it to apply such Net Proceeds of any Asset Sale of any Notes Collateral in an Asset Sale Investment in the manner set forth in Section 4.06(b)(i), such 365-day period will be extended with respect to the amount of Net Proceeds so committed until such Net Proceeds are required to be applied in accordance with such agreement (or, if earlier, until termination of such agreement) (but such extension will in no event be for a period longer than 180 days); and (ii) the Company and the Restricted Subsidiaries will not be required to apply any Net Proceeds in accordance with this Section 4.06(b) except to the extent that the aggregate Net Proceeds from all Asset Sales of Notes Collateral which are not applied in accordance with Section 4.06(b) exceeds $3.0 million (the aggregate amount of such Net Proceeds, the “Notes Collateral Excess Amount”).

          The Company will commence a Notes Collateral Asset Sale Offer with respect to the Net Proceeds from any Asset Sale of Notes Collateral not later than 10 Business Days after the later of (x) the 365th day (or such later date provided in this Section 4.06(b)) after the receipt of such Net Proceeds to the extent such Net Proceeds have not been used in accordance with Section 4.06(b)(i) or (ii) and (y) the date that the Net Proceeds from Asset Sales of Notes Collateral not applied in accordance with this Section 4.06(b) exceeds $3.0 million by mailing the notice required pursuant to Section 4.06(h), with a copy to the Trustee. After the Company

-63-

or any Restricted Subsidiary has applied the Net Proceeds from any Asset Sale of any Notes Collateral as provided in, and within the time periods required by, this Section 4.06(b), the balance of such Net Proceeds, if any, from such Asset Sale of any Notes Collateral shall be released by the Notes Collateral Agent to the Company or such Restricted Subsidiary for use by the Company or such Restricted Subsidiary for any purpose not prohibited by the terms of this Indenture and shall cease to constitute Net Proceeds of Asset Sales of Notes Collateral subject to the provisions of this Section 4.06(b). If the aggregate principal amount of Notes (and such Other Pari Passu Lien Obligations) surrendered by holders thereof exceeds the amount of Notes Collateral Excess Amount, the Trustee shall select the Notes (and such Other Pari Passu Lien Obligations) to be purchased in the manner set forth in Section 4.06(g). Upon completion of any such Notes Collateral Asset Sale Offer, the amount of Notes Collateral Excess Amount which served as the basis for such Notes Collateral Asset Sale Offer shall be reduced to zero.

          (c) The Company will not, and will not permit any of its Restricted Subsidiaries to, cause or make an Asset Sale (other than an Asset Sale of Notes Collateral), unless (1) the Company or any of its Restricted Subsidiaries, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value (as determined in good faith by the Company) of the assets sold or otherwise disposed of, and (2) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary, as the case may be, is in the form of Cash Equivalents or Asset Sale Cash Equivalents.

          (d) Within 365 days after the Company’s or any Restricted Subsidiary of the Company’s receipt of the Net Proceeds of any Asset Sale (other than an Asset Sale of Notes Collateral), the Company or such Restricted Subsidiary may apply the Net Proceeds from such Asset Sale at its option to any one or more of the following:

     (i) to permanently reduce any Indebtedness constituting Indebtedness of a Restricted Subsidiary that is not a Guarantor (and, in the case of revolving Obligations, to correspondingly reduce commitments with respect thereto) or any Pari Passu Indebtedness, in each case other than Indebtedness owed to the Company or an Affiliate of the Company; provided, however, that if the Company or any Guarantor shall so reduce any Pari Passu Indebtedness, the Company will equally and ratably reduce Indebtedness under the Notes by making an offer to all holders of Notes to purchase at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest and additional interest, if any, the pro rata principal amount of the Notes, such offer to be conducted in accordance with the procedures set forth below for an Asset Sale Offer but without any further limitation in amount; or

     (ii) to make an Asset Sale Investment.

Pending the final application of any such Net Proceeds, the Company or such Restricted Subsidiary of the Company may temporarily reduce Indebtedness under a revolving credit facility, if any, or otherwise invest such Net Proceeds in Cash Equivalents or Investment Grade Securities. Any Net Proceeds from any Asset Sale (other than an Asset Sale of Notes Collateral) that are not applied as provided and within the 365-day time period set forth in the first sentence of this Section 4.06(d) will be deemed to constitute “Excess Proceeds”; provided, however, that if during such 365-day time period the Company or a Restricted Subsidiary enters into a binding

-64-

agreement committing it to apply such Net Proceeds in accordance with the requirements of Section 4.06(d)(ii) after the 365th day, such 365-day time period will be extended with respect to the amount of Net Proceeds so committed until such Net Proceeds are required to be applied in accordance with such agreement (or, if earlier, until termination of such agreement) (but such extension will in no event be longer than 180 days). When the aggregate amount of Excess Proceeds exceeds $12.5 million, the Company shall make an offer to all holders of Notes (and, at the option of the Company, to holders of any Pari Passu Indebtedness) (an “Asset Sale Offer”) to purchase the maximum principal amount of Notes (and principal amount or accreted value, as applicable, of such Pari Passu Indebtedness), that is an integral multiple of $1,000 that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof (or, in the event such Pari Passu Indebtedness was issued with significant original issue discount, “principal amount” shall refer to 100% of the accreted value thereof), plus accrued and unpaid interest and additional interest, if any (or, in respect of such Pari Passu Indebtedness, such lesser price, if any, as may be provided for by the terms of such Pari Passu Indebtedness), to the date fixed for the closing of such offer, in accordance with the procedures set forth in this Indenture. The Company will commence an Asset Sale Offer with respect to Excess Proceeds not later than ten business days after the date that Excess Proceeds exceed $12.5 million by mailing the notice required pursuant to the terms of Section 4.06(h), with a copy to the Trustee. To the extent that the aggregate amount of Notes (and such Pari Passu Indebtedness) tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Notes (and such Pari Passu Indebtedness) surrendered by holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes (and such Pari Passu Indebtedness) to be purchased in the manner set forth in Section 4.06(g). Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds which served as the basis for such Asset Sale Offer shall be reduced to zero.

          (e) The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to a Notes Collateral Asset Sale Offer or an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations set forth in this Indenture by virtue thereof.

          (f) Not later than the date upon which written notice of a Notes Collateral Asset Sale Offer or an Asset Sale Offer, as applicable, is delivered to the Trustee as provided above, the Company shall deliver to the Trustee an Officers’ Certificate as to (i) in the case of an Asset Sale Offer, the amount of the Excess Proceeds, (ii) the allocation of the Net Proceeds from the Asset Sales pursuant to which such Notes Collateral Asset Sale Offer or Asset Sale Offer, as applicable, is being made and (iii) the compliance of such allocation with the provisions of Section 4.06(b) or Section 4.06(d), as applicable. On such date, in the case of an Asset Sale Offer, the Company shall also irrevocably deposit with the Trustee or with a paying agent (or, if the Company or a Wholly Owned Restricted Subsidiary of the Company is acting as a Paying Agent, segregate and hold in trust) an amount equal to the Excess Proceeds to be invested in Cash Equivalents, as directed in writing by the Company, and to be held for payment in accordance with the provisions of this Section 4.06. Upon the expiration of the period for which

-65-

the Notes Collateral Asset Sale Offer or the Asset Sale Offer, as applicable, remains open (the “Offer Period”), the Company shall deliver to the Trustee for cancellation the Notes or portions thereof that have been properly tendered to and are to be accepted by the Company. The Trustee (or a Paying Agent, if not the Trustee) shall, on the date of purchase, mail or deliver payment to each tendering Holder in the amount of the purchase price. In the event that (x) in the case of an Asset Sale Offer, the Excess Proceeds delivered by the Company to the Trustee as provided in this Section 4.06(f) or (y) in the case of a Notes Collateral Asset Sale Offer, the aggregate amount held by the Trustee pursuant to clause (iv) of Section 4.06(a) is greater than the purchase price of the Notes tendered, the Trustee shall deliver the excess to the Company immediately after the expiration of the Offer Period for use in any manner not prohibited by this Section 4.06.

          (g) Holders electing to have a Note purchased shall be required to surrender the Note, with an appropriate form duly completed, to the Company at the address specified in the notice at least three Business Days prior to the purchase date. Holders shall be entitled to withdraw their election if the Trustee or the Company receives not later than one Business Day prior to the Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note which was delivered by the Holder for purchase and a statement that such Holder is withdrawing his election to have such Note purchased. If at the end of the Offer Period more Notes (and any Other Pari Passu Lien Obligations) are tendered pursuant to a Notes Collateral Asset Sale Offer than the Company is required to purchase, the principal amount of the Notes (and such Other Pari Passu Lien Obligations) to be purchased will be determined pro rata based on the principal amounts so tendered and the selection of the actual Notes for purchase will be made by the Trustee on a pro rata basis to the extent practicable; provided, however, that no Notes (or any Other Pari Passu Lien Obligations) of $1,000 or less shall be purchased in part. If at the end of the Offer Period more Notes (and Pari Passu Indebtedness) are tendered pursuant to an Asset Sale Offer than the Company is required to purchase, the principal amount of the Notes (and Pari Passu Indebtedness) to be purchased will be determined pro rata based on the principal amounts so tendered and the selection of the actual Notes for purchase will be made by the Trustee on a pro rata basis to the extent practicable; provided, however, that no Notes (or Pari Passu Indebtedness) of $1,000 or less shall be purchased in part.

          (h) Notices of a Notes Collateral Asset Sale Offer or an Asset Sale Offer shall be mailed by first class mail, postage prepaid, at least 30 but not more than 60 days before the purchase date to each Holder at such Holder’s registered address. If any Note is to be purchased in part only, any notice of purchase that relates to such Note shall state the portion of the principal amount thereof that is to be purchased.

          (i) A new Note in principal amount equal to the unpurchased portion of any Note purchased in part shall be issued in the name of the Holder thereof upon cancellation of the original Note. On and after the purchase date, unless the Company defaults in payment of the purchase price, interest shall cease to accrue on Notes or portions thereof purchased.

          SECTION 4.07. Transactions with Affiliates. (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction or series of transactions,

-66-

contract, agreement, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Company (each of the foregoing, an “Affiliate Transaction”) involving aggregate consideration in excess of $2.0 million, unless:

     (i) such Affiliate Transaction is on terms that are not materially less favorable to the Company or the relevant Restricted Subsidiary than those that could reasonably have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unaffiliated party; and

     (ii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, the Company delivers to the Trustee a resolution adopted in good faith by the majority of the Board of Directors of the Company, approving such Affiliate Transaction and set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (i) above.

     (b) The provisions of Section 4.07(a) shall not apply to the following:

     (i) (A) transactions between or among the Company or any of its Restricted Subsidiaries and (B) any merger of the Company and any direct parent company of the Company; provided, however, that such parent shall have no material liabilities and no material assets other than cash, Cash Equivalents and the Capital Stock of the Company and such merger is otherwise in compliance with the terms of this Indenture and effected for a bona fide business purpose;

     (ii) Restricted Payments permitted by Section 4.04 and Permitted Investments (other than pursuant to clauses (3), (6), (9), (10) and (13) of the definition thereof) permitted under this Indenture;

     (iii) (A) the entering into of any agreement to pay, and the payment of, annual management, consulting, monitoring and advisory fees and expenses to the Sponsor in an aggregate amount in any fiscal year not to exceed the greater of (x) $3.0 million and (y) 3.0% of Adjusted EBITDA of the Company and its Restricted Subsidiaries for the immediately preceding fiscal year; provided, however, that any payment not made in any fiscal year may be carried forward and paid in the following two fiscal years and (B) the payment of the present value of all amounts payable pursuant to any agreement described in clause (iii)(A) in connection with the termination of such agreement;

     (iv) the payment of reasonable and customary fees paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any Restricted Subsidiary or any direct or indirect parent company of the Company;

     (v) payments by the Company or any of its Restricted Subsidiaries to the Sponsor made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities, including, without limitation, in connection with acquisitions or divestitures, which payments are (x) approved by a majority of the Board of Directors of the Company in good faith or (y) made pursuant to any agreement described under the caption “Certain Relationships and Related Party

-67-

Transactions” in the Offering Circular, including the transaction fee agreement described thereunder;

     (vi) transactions in which the Company or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to the Company or such Restricted Subsidiary from a financial point of view or meets the requirements of clause (i) of Section 4.07(a);

     (vii) payments or loans (or cancellation of loans) to employees or consultants in the ordinary course of business which are approved by a majority of the Board of Directors of the Company in good faith;

     (viii) the existence of, or the performance by the Company or any of its Restricted Subsidiaries under the terms of, any agreement or instrument (other than with the Sponsor, except to the extent the Sponsor includes the Company, any of its direct or indirect parents, Holdings or any Subsidiary of the Company) as in effect as of the Issue Date or any amendment thereto (so long as any such agreement or instrument together with all amendments thereto, taken as a whole, is not more disadvantageous to the Holders of the Notes in any material respect than the original agreement or instrument as in effect on the Issue Date) or any transaction contemplated thereby;

     (ix) the existence of, or the performance by the Company or any of its Restricted Subsidiaries of its obligations under the terms of, the Merger Agreement, any stockholders agreement or investor rights agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Issue Date and any amendment thereto or similar agreements which it may enter into thereafter; provided, however, that the existence of, or the performance by the Company or any of its Restricted Subsidiaries of its obligations under, any future amendment to any such existing agreement or under any similar agreement entered into after the Issue Date shall only be permitted by this clause (ix) to the extent that the terms of any such existing agreement together with all amendments thereto, taken as a whole, or new agreement are not otherwise more disadvantageous to the Holders of the Notes in any material respect than the original agreement as in effect on the Issue Date or any transactions contemplated thereby;

     (x) transactions to effect the Transactions and the payment of all fees and expenses related to the Transactions, including fees to the Sponsor, in each case that are described in the Offering Circular;

     (xi) (A) transactions with customers, clients, suppliers, toll manufactures or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Indenture, on terms that are not materially less favorable to the Company or the relevant Restricted Subsidiary than those that could reasonably have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unaffiliated party or (B) transactions with joint ventures or Unrestricted Subsidiaries for the purchase or sale of goods or services entered into in the ordinary course of business;

-68-

     (xii) any transaction effected as part of a Qualified Receivables Financing;

     (xiii) the issuance of Equity Interests (other than Disqualified Stock) of the Company;

     (xiv) the issuances of securities or other payments, awards or grants in cash, securities or otherwise pursuant to or the funding of, employment arrangements, stock option and stock ownership plans or similar employee benefit plans approved by the Board of Directors of the Company or of a Restricted Subsidiary, as appropriate, in good faith;

     (xv) the entering into of any tax sharing agreement or arrangement and any payments permitted by Section 4.04(b)(xii);

     (xvi) any contribution to the capital of the Company; and

     (xvii) any employment agreements entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business.

          SECTION 4.08. Change of Control. (a) Not later than 30 days following any Change of Control, unless the Company has given notice of redemption pursuant to Section 3.05 with respect to all the Notes, the Company will mail a Change of Control Offer to each Holder with a copy to the Trustee.

          (b) A “Change of Control Offer” means a notice mailed to each Holder with a copy to the Trustee stating:

     (i) that a Change of Control has occurred and that such Holder has the right to require the Company to purchase all or a portion of such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase (subject to the right of the Holders of record on the relevant record date to receive interest on the relevant interest payment date);

     (ii) the circumstances and relevant facts and financial information regarding such Change of Control;

     (iii) the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and

     (iv) the instructions determined by the Company, consistent with this Section, that a Holder must follow in order to have its Notes purchased.

          A Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.

          (c) Holders electing to have a Note purchased shall be required to surrender the Note, with an appropriate form duly completed, to the Company at the address specified in the

-69-

notice at least three Business Days prior to the purchase date. The Holders shall be entitled to withdraw their election if the Trustee or the Company receives not later than one Business Day prior to the purchase date a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such Note purchased. Holders whose Notes are purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered.

          (d) On the purchase date, all Notes purchased by the Company under this Section 4.08 shall be delivered to the Trustee for cancellation, and the Company shall pay the purchase price plus accrued and unpaid interest to the Holders entitled thereto.

          (e) Notwithstanding the foregoing provisions of this Section, the Company shall be deemed to have made a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in Section 4.08(b) applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

          (f) At the time the Company delivers Notes to the Trustee which are to be accepted for purchase, the Company shall also deliver an Officers’ Certificate stating that such Notes are to be accepted by the Company pursuant to and in accordance with the terms of this Section 4.08. A Note shall be deemed to have been accepted for purchase at the time the Trustee, directly or through an agent, mails or delivers payment therefor to the surrendering Holder.

          (g) Prior to any Change of Control Offer, the Company shall deliver to the Trustee an Officers’ Certificate stating that all conditions precedent contained herein to the right of the Company to make such offer have been complied with.

          (h) The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 4.08, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have failed to make a Change of Control Offer or purchase the Notes pursuant thereto under this Section by virtue thereof.

          SECTION 4.09. Compliance Certificate. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company an Officers’ Certificate stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally have knowledge of any Default and whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe the Default, its status and what action the Company is taking or proposes to take with respect thereto. The Company also shall comply with Section 314(a)(4) of the TIA.

-70-

          So long as any of the Notes are outstanding (i) if any Default or Event of Default has occurred and is continuing or (ii) if any Holder seeks to exercise any remedy hereunder with respect to a claimed Default under this Indenture or the Notes, then, within 30 days of the occurrence of such Default or Event of Default or the Company receiving written notice of any action by a Holder described in the preceding clause (ii), the Company shall deliver to the Trustee by registered or certified mail or by telegram, telex or facsimile transmission followed by hard copy by registered or certified mail an Officers’ Certificate specifying such Default, Event of Default or notice.

          SECTION 4.10. Further Instruments and Acts. Upon request of the Trustee, the Company shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.

          SECTION 4.11. Future Guarantors. After the Issue Date, the Company shall cause each of its Restricted Subsidiaries (other than (x) a Foreign Subsidiary or (y) a Receivables Subsidiary) that:

     (a) guarantees any Indebtedness of the Company or any of its Restricted Subsidiaries; or

     (b) Incurs any Indebtedness or issues any shares of Disqualified Stock permitted to be Incurred or issued pursuant to clause (i) or (xii) of Section 4.03(b) or not permitted to be Incurred by such Section 4.03

to execute and deliver to the Trustee a supplemental indenture substantially in the form of Appendix B pursuant to which such Subsidiary shall guarantee payment of the Notes. The parties hereto hereby acknowledge that the Subsidiary Guarantors party to this Indenture as of the date any supplemental indenture is to be executed need not be party to such supplemental indenture.

          SECTION 4.12. Liens. Holdings and the Company shall not, and the Company shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, Incur or suffer to exist any Lien (the “Initial Lien”) on any asset or property of Holdings, the Company or such Restricted Subsidiary of the Company, or any income or profits therefrom, or assign or convey any right to receive income therefrom, whether owned at the Issue Date or thereafter acquired, except

     (i) in the case of the Notes Collateral, any Initial Lien if (A) such Initial Lien expressly ranks junior to the first-priority security interest intended to be created in favor of the Notes Collateral Agent for the benefit of the Trustee and the holders of the Notes pursuant to the Security Documents; provided, however, that the terms of such junior interest will be no more favorable to the beneficiaries thereof than the terms contained in the Intercreditor Agreement; or (B) such Initial Lien is a Permitted Collateral Lien;

     (ii) in the case of the ABL Collateral, any Initial Lien if (A) the Notes are equally and ratably secured on a second priority basis by such ABL Collateral until such time as such Initial Lien is released or (B) such Initial Lien is a Permitted Lien; and

-71-

     (iii) in the case of any other asset or property, any Initial Lien if (A) the Notes are equally and ratably secured with (or on a senior basis to, in the case such Initial Lien secures any Subordinated Obligations) the obligations secured by such Initial Lien or (B) such Initial Lien is a Permitted Lien.

          Any Lien created for the benefit of the Holders of the Notes pursuant to clause (ii) or (iii) of the preceding paragraph shall provide by its terms that such Lien shall be automatically and unconditionally released and discharged upon the release and discharge of the Initial Lien, in the case of clause (ii) to the extent provided for in Section 11.03, which release and discharge in the case of any sale of any such asset or property shall not affect any Lien that the Notes Collateral Agent may have on the proceeds from such sale.

          SECTION 4.13. Maintenance of Office or Agency.

          (a) The Company shall maintain an office or agency (which may be an office of the Trustee or an affiliate of the Trustee or Registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the corporate trust office of the Trustee as set forth in Section 13.02.

          (b) The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

          (c) The Company hereby designates the corporate trust office of the Trustee or its Agent as such office or agency of the Company in accordance with Section 2.04.

          SECTION 4.14. Impairment of Security Interest. Subject to the rights of the holders of Permitted Liens and Permitted Collateral Liens, the Company shall not, and shall not permit any of its Restricted Subsidiaries to, take or knowingly or negligently omit to take, any action which action or omission would or could reasonably be expected to have the result of materially impairing the security interest with respect to the Collateral for the benefit of the Trustee and the Holders, subject to limited exceptions. The Company shall not amend, modify or supplement, or permit or consent to any amendment, modification or supplement of, the Security Documents in any way that would be adverse to the Holders in any material respect, except as permitted under Articles 9 or 11 hereof or the Intercreditor Agreement.

          SECTION 4.15. After-Acquired Property. Upon the acquisition by the Company or any Guarantor of any After-Acquired Property (but subject to the limitations, if applicable, set forth in Section 11.01), the Company or such Guarantor shall execute and deliver such mortgages, deeds of trust, security instruments, financing statements and certificates and

-72-

opinions of counsel as shall be reasonably necessary to vest in the Notes Collateral Agent a perfected security interest in such After-Acquired Property and to have such After-Acquired Property added to the Notes Collateral or the ABL Collateral, as applicable, and thereupon all provisions of this Indenture relating to the Notes Collateral or the ABL Collateral, as applicable, shall be deemed to relate to such After-Acquired Property to the same extent and with the same force and effect.

ARTICLE 5

MERGER, CONSOLIDATION OR SALE OF ALL
OR SUBSTANTIALLY ALL ASSETS

          SECTION 5.01. Merger, Consolidation or Sale of All or Substantially All Assets. (a) The Company shall not consolidate or merge with or into or wind up into (whether or not the Company is the surviving entity), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets in one or more related transactions to, any Person (other than any such consolidation, merger, sale, assignment, transfer, lease, conveyance or disposition in connection with the Transactions described in the Offering Circular) unless:

     (i) the Company is the surviving entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation, limited partnership or limited liability company organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (the Company or such Person, as the case may be, being herein called the “Successor Company”); provided, however, that if such Successor Company is not a corporation, such Successor Company will form a Wholly Owned Subsidiary that is a corporation and cause such Wholly Owned Subsidiary to become a co-issuer of the Notes;

     (ii) the Successor Company (if other than the Company) expressly assumes all the obligations of the Company under this Indenture and the Notes pursuant to supplemental indentures or other documents or instruments in form reasonably satisfactory to the Trustee;

     (iii) immediately after giving effect to such transaction no Default shall have occurred and be continuing;

     (iv) immediately after giving pro forma effect to such transaction, as if such transaction had occurred at the beginning of the applicable four-quarter period (and treating any Indebtedness which becomes an obligation of the Successor Company or any of its Restricted Subsidiaries as a result of such transaction as having been Incurred by the Successor Company or such Restricted Subsidiary at the time of such transaction), either

-73-

     (A) the Successor Company would be permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.03(a); or

     (B) the Fixed Charge Coverage Ratio for the Successor Company and its Restricted Subsidiaries would be greater than the Fixed Charge Coverage Ratio for the Company and its Restricted Subsidiaries immediately prior to such transaction; and

     (v) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indentures (if any) comply with this Indenture.

          The Successor Company (if other than the Company) shall succeed to, and be substituted for, the Company under this Indenture, and the predecessor Company, except in the case of a lease of all or substantially all assets, will be released from all obligations with respect to this Indenture and the Notes. Notwithstanding the foregoing clauses (iii) and (iv), (A) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company or to another Restricted Subsidiary, and (B) the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in another state of the United States so long as the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby.

          (b) The Company shall not permit any Subsidiary Guarantor to consolidate or merge with or into or wind up into (whether or not such Subsidiary Guarantor is the surviving entity), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets in one or more related transactions to, any Person (other than any such consolidation, merger, sale, assignment, transfer, lease, conveyance or disposition in connection with the Transactions described in the Offering Circular) unless:

     (i) except in the case of a Subsidiary Guarantor (x) that has been disposed of in its entirety to another Person (other than to the Company, Holdings or a Subsidiary of the Company or Holdings), whether through a merger, consolidation or sale of Capital Stock or assets or (y) that, as a result of the disposition of all or a portion of its Capital Stock, ceases to be a Subsidiary, in both cases, if in connection therewith the Company provides an Officers’ Certificate to the Trustee to the effect that the Company will comply with its obligations under Section 4.06 in respect of such disposition, such Subsidiary Guarantor is the surviving entity or the Person formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation, partnership or limited liability company organized and existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (such Subsidiary Guarantor or such Person, as the case may be, except in the case of clause (x) or (y), being herein called the “Successor Guarantor”);

     (ii) the Successor Guarantor (if other than such Guarantor) (to the extent applicable) expressly assumes all the obligations of such Guarantor under this Indenture

-74-

and such Guarantors’ Guarantee pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Trustee;

     (iii) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Guarantor (to the extent applicable) or any of its Subsidiaries as a result of such transaction as having been Incurred by the Successor Guarantor (to the extent applicable) or such Subsidiary at the time of such transaction) no Default shall have occurred and be continuing; and

     (iv) the Successor Guarantor (if other than such Subsidiary Guarantor) (to the extent applicable) shall have delivered or caused to be delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture.

          The Successor Guarantor (to the extent applicable) shall succeed to, and be substituted for, such Guarantor under this Indenture and such Guarantor’s Guarantee, and the predecessor Subsidiary Guarantor, except in the case of a lease of all or substantially all assets, will be released from all obligations with respect to its Guarantee, this Indenture and the Notes. Notwithstanding the foregoing clause (iii), (A) a Guarantor may merge with an Affiliate incorporated solely for the purpose of reincorporating such Guarantor in another state of the United States, so long as the amount of Indebtedness of the Guarantor is not increased thereby and (B) a Guarantor may merge with another Guarantor or the Company.

          (c) Holdings shall not consolidate or merge with or into or wind up into (whether or not Holdings is the surviving entity), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets in one or more related transactions to, any Person (other than any such consolidation, merger, sale, assignment, transfer, lease, conveyance or disposition in connection with the Transactions described in the Offering Circular) unless:

     (i) Holdings is the surviving entity or the Person formed by or surviving any such consolidation or merger (if other than Holdings) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation, partnership or limited liability company organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (Holdings or such Person, as the case may be, being herein called the “Successor Holdings Guarantor”);

     (ii) the Successor Holdings Guarantor (if other than Holdings) expressly assumes all the obligations of Holdings under this Indenture and Holdings’ Guarantee of the Notes pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Trustee;

     (iii) immediately after giving effect to such transaction no Default shall have occurred and be continuing; and

     (iv) the Successor Holdings Guarantor (if other than Holdings) shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating

-75-

that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture.

          The Successor Holdings Guarantor shall succeed to, and be substituted for, Holdings under this Indenture and such Holdings’ Guarantee of the Notes and the predecessor Holdings, except in the case of a lease of all or substantially all assets, will be released from all obligations with respect to its Guarantee, this Indenture and the Notes. Notwithstanding the foregoing clauses (iii), (A) Holdings may merge with an Affiliate incorporated solely for the purpose of reincorporating Holdings in another state of the United States and (B) Holdings may merge with another Guarantor or the Company.

ARTICLE 6

DEFAULTS AND REMEDIES

          SECTION 6.01. Events of Default. An “Event of Default” with respect to all of the Notes occurs if:

     (a) the Company defaults in any payment of interest on any Note when the same becomes due and payable, and such default continues for a period of 30 days,

     (b) the Company defaults in the payment of principal or premium, if any, of any Note when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise;

     (c) the Company or Holdings fails to comply with its obligations under Section 5.01,

     (d) the Company or any of its Restricted Subsidiaries fails to comply with any of its obligations under the covenants set forth in Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.11, 4.12, 4.14 or 4.15 (in each case, other than a failure to purchase Notes when required under Section 4.06) and such failure continues for 30 days after the notice specified below,

     (e) the Company, Holdings or any Restricted Subsidiary of the Company fails to comply with any of its agreements in the Notes or this Indenture (other than those referred to in (a), (b), (c), or (d) above) and such failure continues for 60 days after the notice specified below,

     (f) the Company, Holdings or any Significant Subsidiary fails to pay any Indebtedness (other than Indebtedness owing to the Company or a Restricted Subsidiary of the Company) within any applicable grace period after final maturity or the acceleration of any such Indebtedness by the holders thereof because of a default, in each case, if the total amount of such Indebtedness unpaid or accelerated exceeds $15.0 million or its foreign currency equivalent,

-76-

     (g) the Company, Holdings or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

     (i) commences a voluntary case;

     (ii) consents to the entry of an order for relief against it in an involuntary case;

     (iii) consents to the appointment of a Custodian of it or for any substantial part of its property; or

     (iv) makes a general assignment for the benefit of its creditors or takes any comparable action under any foreign laws relating to insolvency,

     (h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

     (i) is for relief against the Company, Holdings or any Significant Subsidiary in an involuntary case;

     (ii) appoints a Custodian of the Company, Holdings or any Significant Subsidiary or for any substantial part of its property; or

     (iii) orders the winding up or liquidation of the Company, Holdings or any Significant Subsidiary;

or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days,

     (i) the Company, Holdings or any Significant Subsidiary fails to pay final judgments aggregating in excess of $15.0 million or its foreign currency equivalent (net of any amounts which are covered by enforceable insurance policies issued by solvent carriers), which judgments are not discharged, waived or stayed for a period of 60 days following the entry thereof,

     (j) the Guarantee of the Notes by Holdings or a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms thereof or by this Indenture) or any Guarantor denies or disaffirms in writing its obligations under this Indenture or any Guarantee and such Default continues for 10 days,

     (k) unless all of the Collateral has been released from the Liens in accordance with the provisions of the Security Documents, the Company, Holdings or any Subsidiary shall assert, in any pleading in any court of competent jurisdiction, that any such security interest is invalid or unenforceable and, in the case of any such Subsidiary, the Company fails to cause such Subsidiary to rescind such assertions within 30 days after the Company has actual knowledge of such assertions, or

     (l) the failure by the Company, Holdings or any Restricted Subsidiary to comply for 60 days after notice with its other agreements contained in the Security Documents

-77-

except for a failure that would not be material to the Holders and would not materially affect the value of the Collateral taken as a whole.

          The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

          The term “Bankruptcy Law” means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

          A Default under clause (d), (e) or (l) above shall not constitute an Event of Default until the Trustee notifies the Company or the Holders of at least 25% in principal amount of the outstanding Notes notify the Company and the Trustee of the Default and the Company does not cure such Default within the time specified in clauses (d), (e) or (l) above after receipt of such notice. Such notice must specify the Default, demand that it be remedied and state that such notice is a “Notice of Default.” The Company shall deliver to the Trustee, within 30 days after the occurrence thereof, written notice in the form of an Officers’ Certificate of any event which is, or with the giving of notice or the lapse of time or both would become, an Event of Default, its status and what action the Company is taking or proposes to take with respect thereto.

          SECTION 6.02. Acceleration. If an Event of Default (other than an Event of Default specified in Section 6.01(g) or (h) with respect to the Company) occurs and is continuing, the Trustee by notice to the Company or the Holders of at least 25% in principal amount of outstanding Notes by notice to the Company and the Trustee, may declare the principal of, premium, if any, and accrued but unpaid interest on all the Notes to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in Section 6.01(g) or (h) with respect to the Company occurs, the principal of, premium, if any, and interest on all the Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders. The Holders of a majority in principal amount of the Notes by notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto.

          SECTION 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy at law or in equity to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

          The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair

-78-

the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative.

          SECTION 6.04. Waiver of Past Defaults. When a Default is waived, it is deemed cured and the Company, the Trustee and the Holders will be restored to their former positions and rights under this Indenture, but no such waiver shall extend to any subsequent or other Default or impair any consequent right.

          SECTION 6.05. Control by Majority. The Holders of a majority in principal amount of the Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law, this Indenture, the Intercreditor Agreement or any Security Document or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability; provided, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action under this Indenture, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

          SECTION 6.06. Limitation on Suits. (a) Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no Holder may pursue any remedy with respect to this Indenture or the Notes unless:

     (i) such Holder gives to the Trustee written notice stating that an Event of Default is continuing;

     (ii) the Holders of at least 25% in principal amount of the Notes make a written request to the Trustee to pursue the remedy;

     (iii) such Holder or Holders offer to the Trustee reasonable security or indemnity satisfactory to it against any loss, liability or expense;

     (iv) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and

     (v) the Holders of a majority in principal amount of the Notes do not give the Trustee a direction inconsistent with the request during such 60-day period.

          (b) A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder.

          SECTION 6.07. Rights of the Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and interest on the Notes held by such Holder, on or after the respective due dates expressed or provided for in the Notes, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

-79-

          SECTION 6.08. Collection Suit by Trustee. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or any other obligor on the Notes for the whole amount then due and owing (together with interest on overdue principal and (to the extent lawful) on any unpaid interest at the rate provided for in the Notes) and the amounts provided for in Section 7.07.

          SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation, expenses disbursements and advances of the Trustee (including counsel, accountants, experts or such other professionals as the Trustee deems necessary, advisable or appropriate)) and the Holders allowed in any judicial proceedings relative to the Company or any Guarantor, their creditors or their property, shall be entitled to participate as a member, voting or otherwise, of any official committee of creditors appointed in such matters and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07.

          SECTION 6.10. Priorities. Subject to the Intercreditor Agreement, if the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order:

          FIRST: to the Trustee, its agents and attorneys for amounts due under Section 7.07 and the Notes Collateral Agent for any amounts, expenses, costs or liabilities owed to or incurred by it relating to or in connection with any Security Document;

          SECOND: to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and interest, respectively; and

          THIRD: to the Company or, to the extent the Trustee collects any amount for or from any Guarantor, to such Guarantor.

          The Trustee may fix a record date and payment date for any payment to the Holders pursuant to this Section. At least 15 days before such record date, the Trustee shall mail to each Holder and the Company a notice that states the record date, the payment date and amount to be paid.

          SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess

-80-

reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in principal amount of the Notes.

          SECTION 6.12. Waiver of Stay or Extension Laws. Neither the Company nor any Guarantor (to the extent it may lawfully do so) shall at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company and each Guarantor (to the extent that it may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE 7

TRUSTEE

          SECTION 7.01. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs.

          (b) Except during the continuance of an Event of Default:

     (i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants, obligations, responsibilities or duties shall be read into this Indenture against the Trustee; and

     (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates (including Officers’ Certificates) or opinions (including Opinions of Counsel) furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of certificates or opinions required by any provision hereof to be provided to it, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

          (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

     (i) this paragraph does not limit the effect of paragraph (b) of this Section;

     (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts;

-81-

     (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.02, 6.04 or 6.05; and

     (iv) no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers.

          (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.

          (e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.

          (f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

          (g) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section and to the provisions of the TIA.

          SECTION 7.02. Rights of Trustee. (a) The Trustee may conclusively rely and shall be fully protected in acting or refraining from acting on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document.

          (b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers’ Certificate or Opinion of Counsel.

          (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.

          (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Trustee’s conduct does not constitute willful misconduct or negligence.

          (e) The Trustee may consult with counsel of its own selection and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

          (f) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, note or other paper or document unless requested in writing to do so by the Holders of not less than a majority in principal amount of the Notes at the time outstanding, but the Trustee, in its discretion, may make such further inquiry or

-82-

investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney, at the expense of the Company and shall incur no liability of any kind by reason of making or not making such inquiry or investigation.

          (g) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.

          (h) The rights, privileges, protections, immunities and benefits given to the Trustee, including its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder including as Notes Collateral Agent and in its capacity as Trustee and Notes Collateral Agent under the Security Documents and as a party to the Intercreditor Agreement, and each agent, custodian and other Person employed to act hereunder and thereunder.

          (i) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

          (j) The permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as a duty.

          (k) The Trustee may request that the Company deliver an Incumbency Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Incumbency Certificate may be signed by any person authorized to sign an Incumbency Certificate, including a person as so authorized in any such certificate previously delivered and not suspended.

          SECTION 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent or Registrar may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.

          SECTION 7.04. Trustee’s Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, any Guarantee or the Notes, it shall not be accountable for the Company’s use of the proceeds from the Notes, and it shall not be responsible for any statement of the Company or any Guarantor in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee’s certificate of authentication. The Trustee shall not be charged with knowledge of any Default other than (i) any Event of Default occurring pursuant to Sections 6.01(a) or (b) or (ii) any Default of which a Trust Officer shall have actual knowledge thereof or the Trustee shall have received written notice thereof in accordance with Section 13.02 hereof from the Company,

-83-

any Guarantor or any Holder. As used herein, actual knowledge means the actual fact or statement of knowing, without any duty to make any investigation with regard thereto.

          SECTION 7.05. Notice of Defaults. If a Default occurs and is continuing and if it is actually known to the Trustee, the Trustee shall mail to each Holder notice of the Default within the earlier of 90 days after it occurs or 30 days after it is actually known to a Trust Officer or written notice of it is received by the Trustee. Except in the case of a Default in the payment of principal of, premium (if any) or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of the Holders.

          SECTION 7.06. Reports by Trustee to the Holders. As promptly as practicable after each August 1 beginning with the August 1 following the date of this Indenture, and in any event prior to September 1 in each year, the Trustee shall mail to each Holder a brief report dated as of such August 1 that complies with Section 313(a) of the TIA if and to the extent required thereby. The Trustee shall also comply with Section 313(b) of the TIA.

          A copy of each report at the time of its mailing to the Holders shall be filed with the SEC and each stock exchange (if any) on which the Notes are listed. The Company agrees to notify promptly the Trustee whenever the Notes become listed on any stock exchange and of any delisting thereof.

          SECTION 7.07. Compensation and Indemnity. The Company shall pay to the Trustee from time to time reasonable compensation for its services. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses, disbursements or advances incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee’s agents, counsel, accountants and experts. The Company and each Guarantor, jointly and severally shall indemnify and hold harmless the Trustee and its Related Persons against any and all loss, liability, claim, damage or expense (including reasonable attorneys’ fees and expenses) incurred by or in connection with the acceptance or administration of this trust and the performance of its duties hereunder, and under any Security Document to which the Trustee is a party and the Intercreditor Agreement, including the costs and expenses of enforcing this Indenture, the Notes or Guarantee against the Company or a Guarantor (including this Section 7.07) and defending itself against or investigating any claim (whether asserted by the Company, any Guarantor, any Holder or any other Person). The Trustee shall notify the Company of any claim for which it may seek indemnity promptly upon obtaining actual knowledge thereof; provided, however, that any failure so to notify the Company shall not relieve the Company or any Guarantor of its indemnity obligations hereunder. The Company shall defend the claim and the indemnified party shall provide reasonable cooperation at the Company’s expense in the defense. Such indemnified parties may have separate counsel and the Company and the Guarantors, as applicable shall pay the fees and expenses of such counsel; provided, however, that the Company shall not be required to pay such fees and expenses if it assumes such indemnified parties’ defense and, in such indemnified parties’ reasonable judgment, there is no conflict of interest between the Company and the Guarantors, as applicable, and such parties in connection with such defense.

-84-

The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by an indemnified party through such party’s own willful misconduct, negligence or bad faith.

          To secure the Company’s and the Guarantors’ payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Notes.

          The Company’s and the Guarantors’ payment obligations pursuant to this Section shall survive the termination, satisfaction or discharge of this Indenture, any rejection or termination of this Indenture under any bankruptcy law or the resignation or removal of the Trustee. Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(g) or (h) with respect to the Company, the expenses are intended to constitute expenses of administration under the Bankruptcy Law.

          SECTION 7.08. Replacement of Trustee. (a) The Trustee may resign at any time by so notifying the Company. The Holders of a majority in principal amount of the Notes may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Company shall remove the Trustee if:

          (i) the Trustee fails to comply with Section 7.10;

          (ii) the Trustee is adjudged bankrupt or insolvent;

          (iii) a receiver or other public officer takes charge of the Trustee or its property; or

          (iv) the Trustee otherwise becomes incapable of acting.

          (b) If the Trustee has or shall acquire a conflicting interest within the meaning of the TIA, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the TIA and this Indenture.

          (c) If the Trustee resigns, is removed by the Company or by the Holders of a majority in principal amount of the Notes and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee.

          (d) A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to the Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the Lien provided for in Section 7.07.

-85-

          (e) If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in principal amount of the Notes may petition at the expense of the Company any court of competent jurisdiction for the appointment of a successor Trustee.

          (f) If the Trustee fails to comply with Section 7.10, unless the Trustee’s duty to resign is stayed as provided in Section 310(b) of the TIA, any Holder who has been a bona fide holder of a Note for at least six months may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

          (g) Notwithstanding the replacement of the Trustee pursuant to this Section, the Company’s obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.

          SECTION 7.09. Successor Trustee by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.

          In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Trustee shall have.

          SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all times satisfy the requirements of Section 310(a) of the TIA. The Trustee shall have a combined capital and surplus of at least $100,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with Section 310(b) of the TIA, subject to its right to apply for a stay of its duty to resign under the penultimate paragraph of Section 310(b) of the TIA; provided, however, that there shall be excluded from the operation of Section 310(b)(1) of the TIA any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in Section 310(b)(1) of the TIA are met.

          SECTION 7.11. Preferential Collection of Claims Against the Company. The Trustee shall comply with Section 311(a) of the TIA, excluding any creditor relationship listed in Section 311(b) of the TIA. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the TIA to the extent indicated.

-86-

ARTICLE 8

DISCHARGE OF INDENTURE; DEFEASANCE

          SECTION 8.01. Discharge of Liability on Notes; Defeasance. (a) This Indenture shall be discharged and shall cease to be of further effect (except as to surviving rights of registration of transfer or exchange of Notes, as expressly provided for in this Indenture) as to all outstanding Notes and their obligations under this Indenture with respect to the Holders of the Notes:

     (i) when (1) all the Notes theretofore authenticated and delivered (other than Notes pursuant to Section 2.08 which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust) have been delivered to the Trustee for cancellation or (2) all of the Notes (a) have become due and payable, (b) will become due and payable at their stated maturity within one year or (c) if redeemable at the option of the Company, are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company has irrevocably deposited or caused to be deposited with the Trustee funds in respect of the Notes, cash in U.S. Dollars, U.S. Government obligations or a combination thereof in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the Notes to the date of deposit together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;

     (ii) the Company or the Guarantors have paid all other sums payable under this Indenture; and

     (iii) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel stating that all conditions precedent under this Indenture relating to the satisfaction and discharge of this Indenture have been complied with.

          (b) Subject to Sections 8.01(c) and 8.02, the Company at any time may terminate (i) all of its obligations under the Notes and this Indenture with respect to the Notes (“legal defeasance option”) or (ii) its obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.11, 4.12, 4.14 and 4.15 for the benefit of the Notes and the operation of Section 5.01(a)(iv), 5.01(b) and 5.01(c) and Sections 6.01(c) (only as it applies to Section 5.01(a)(iv), 5.01(b) and 5.01(c)), 6.01(d), 6.01(f), 6.01(g) (with respect to Significant Subsidiaries only), 6.01(h) (with respect to Significant Subsidiaries only), 6.01(i) (with respect to Significant Subsidiaries only), 6.01(j), 6.01(k) and 6.01(l) for the benefit of the Notes (“covenant defeasance option”). The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. In the event that the Company exercises its legal defeasance option or its covenant defeasance option, the obligations of each Guarantor under its Guarantee of the Notes shall be terminated simultaneously with the termination of such obligations.

-87-

          If the Company exercises its legal defeasance option, payment of the Notes so defeased may not be accelerated because of an Event of Default. If the Company exercises its covenant defeasance option, payment of the Notes so defeased may not be accelerated because of an Event of Default specified in Section 6.01(c), 6.01(d), 6.01(f), 6.01(g) (with respect to Significant Subsidiaries only), 6.01(h) (with respect to Significant Subsidiaries only), 6.01(i) (with respect to Significant Subsidiaries only), 6.01(j), 6.01(k) or 6.01(l) or because of the failure of the Company to comply with Section 5.01(a)(iv). Any exercise of the Company’s covenant defeasance option or legal defeasance option will not have any effect on the Notes and their rights under this Indenture or on the obligations of the Company, Holdings and the Guarantors with respect to the Notes.

          Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates.

          (c) Notwithstanding clauses (a) and (b) above, the Company’s obligations in Sections 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 7.07, 7.08 and in this Article 8 shall survive until all the Notes have been paid in full. Thereafter, the Company’s obligations in Sections 7.07, 8.05 and 8.06 shall survive such satisfaction and discharge.

          SECTION 8.02. Conditions to Defeasance. (a) The Company may exercise its legal defeasance option or its covenant defeasance option only if:

     (i) the Company irrevocably deposits in trust with the Trustee in respect of cash in U.S. Dollars, U.S. Government Obligations or a combination thereof in an amount sufficient or Government Obligations, the principal of and the interest on which will be sufficient, or a combination thereof sufficient, to pay the principal of, and premium (if any) and interest on the applicable Notes when due at maturity or redemption, as the case may be, including interest thereon to maturity or such redemption date;

     (ii) the Company delivers to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal, premium, if any, and interest when due on all the Notes to maturity or redemption, as the case may be;

     (iii) 123 days pass after the deposit is made and during the 123-day period no Default specified in Section 6.01(g) or (h) with respect to the Company occurs which is continuing at the end of the period;

     (iv) the deposit does not constitute a default under any other agreement binding on the Company and its Restricted Subsidiaries;

     (v) the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940, as amended;

-88-

     (vi) in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (1) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (2) since the date of this Indenture there has been a change in the applicable Federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred. Notwithstanding the foregoing, the Opinion of Counsel required with respect to a legal defeasance need not be delivered if all the Notes not theretofore delivered to the Trustee for cancellation have become due and payable;

     (vii) in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders will not recognize income, gain or loss for Federal income tax purposes as a result of such deposit and defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred; and

     (viii) the Company delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Notes to be so defeased and discharged as contemplated by this Article 8 have been complied with.

          (b) Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for the redemption of such Notes at a future date in accordance with Article 3.

          SECTION 8.03. Application of Trust Money. The Trustee shall hold in trust money or Government Obligations (including proceeds thereof) deposited with it pursuant to this Article 8. It shall apply the deposited money and the money from Government Obligations through each Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Notes so discharged or defeased.

          SECTION 8.04. Repayment to the Company. Each of the Trustee and each Paying Agent shall promptly turn over to the Company upon request any money or Government Obligations held by it as provided in this Article which, in the written opinion of nationally recognized firm of independent public accountants delivered to the Trustee (which delivery shall only be required if Government Obligations have been so deposited), are in excess of the amount thereof which would then be required to be deposited to effect an equivalent discharge or defeasance in accordance with this Article.

          Subject to any applicable abandoned property law, the Trustee and each Paying Agent shall pay to the Company upon written request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look to the Company for payment as general creditors, and the Trustee and each Paying Agent shall have no further liability with respect to such monies.

-89-

          SECTION 8.05. Indemnity for Government Obligations. The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited Government Obligations or the principal and interest received on such Government Obligations.

          SECTION 8.06. Reinstatement. If the Trustee or any Paying Agent is unable to apply any money or Government Obligations in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s and the Guarantors’ obligations under this Indenture and the Notes so discharged or defeased shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or any Paying Agent is permitted to apply all such money or Government Obligations in accordance with this Article 8; provided, however, that, if the Company has made any payment of principal of or interest on, any such Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Obligations held by the Trustee or any Paying Agent.

ARTICLE 9

AMENDMENTS AND WAIVERS

          SECTION 9.01. Without Consent of the Holders. The Company, the Guarantors, the Trustee and the Notes Collateral Agent may amend this Indenture, the Notes, any Security Document or the Intercreditor Agreement without notice to or consent of any Holder:

     (i) to cure any ambiguity, omission, defect, mistake or inconsistency;

     (ii) to comply with Article 5;

     (iii) to provide for uncertificated Notes in addition to or in place of certificated Notes; provided, however, that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code;

     (iv) to add additional Guarantees with respect to the Notes;

     (v) to add to the covenants of the Company or any Restricted Subsidiary for the benefit of the Holders or to surrender any right or power herein conferred upon the Company or any Guarantor;

     (vi) to comply with any requirement of the SEC in connection with qualifying or maintaining the qualification of this Indenture under the TIA;

     (vii) to make any change that does not adversely affect the rights of any Holder;

-90-

     (viii) to provide for the issuance of the Exchange Notes or Additional Notes, which, except as otherwise provided herein, shall have terms substantially identical in all material respects to the Initial Notes;

     (ix) to make any amendment to the provisions of this Indenture relating to the transfer and legending of Notes; provided, however, that (a) compliance with this Indenture as so amended would not result in Notes being transferred in violation of the Securities Act or any other applicable securities law and (b) such amendment does not materially and adversely affect the rights of holders to transfer Notes;

     (x) to secure the Notes or to add additional assets as Collateral;

     (xi) to release Collateral from the Lien or any Guarantor from its Guarantee pursuant to this Indenture, the Security Documents and the Intercreditor Agreement when permitted or required by this Indenture or the Security Documents; or

     (xii) except as provided in clause (x) of Section 9.02, to amend the Intercreditor Agreement in accordance with the provisions thereof;

     provided, however, that the Company has delivered to the Trustee (and to the Notes Collateral Agent, if applicable) an Opinion of Counsel and an Officers’ Certificate, each reasonably satisfactory to the Trustee and each stating that such amendment or supplement complies with the provisions of this Section 9.01 and covering the matters set forth in Sections 13.04 and 13.05.

          After an amendment under this Section 9.01 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.01.

          SECTION 9.02. With Consent of the Holders. (a) The Company, the Trustee and the Notes Collateral Agent may amend this Indenture, the Notes, any Security Document or the Intercreditor Agreement with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange for the Notes) and any past default or compliance with any provisions may be waived with the consent of the holders of a majority in principal amount of the Notes then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange for the Notes); provided, however, that the Company has delivered to the Trustee (and to the Notes Collateral Agent, if applicable) an Opinion of Counsel and an Officer’s Certificate, each reasonably satisfactory to the Trustee and each stating that such amendment or supplement complies with the provisions of this Section 9.02 and covering the matters set forth in Sections 13.04 and 13.05. However, without the consent of each Holder of an outstanding Note affected, an amendment may not:

     (i) reduce the amount of Notes whose Holders must consent to an amendment,

     (ii) reduce the rate of or extend the time for payment of interest on any Note,

-91-

     (iii) reduce the principal of or change the Stated Maturity of any Note,

     (iv) reduce the amount payable upon the redemption of any Note or change the time when any Note may be redeemed in accordance with Article 3,

     (v) make any Note payable in money other than that stated in such Note,

     (vi) make any change in Section 6.04, 6.07 or the second sentence of this Section 9.02,

     (vii) impair the right of any holder to receive payment of principal of, premium, if any, and interest on such holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder’s Notes,

     (viii) expressly subordinate the Notes or any Guarantee to any other Indebtedness of the Company or any Guarantor,

     (ix) modify the Guarantees in any manner adverse to the Holders, or

     (x) make any change in the Intercreditor Agreement or the provisions in this Indenture in each case dealing with the application of Trust proceeds of the Collateral that would adversely affect the Noteholders.

          Without the consent of the holders of at least two-thirds in aggregate principal amount of the Notes then outstanding, no amendment or waiver may release from the Lien of this Indenture and the Security Documents all or substantially all of the Collateral.

          It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.

          (b) After an amendment under this Section 9.02 becomes effective, the Company shall mail to the Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.02.

          SECTION 9.03. Compliance with Trust Indenture Act. From the date on which this Indenture is qualified under the TIA, every amendment, waiver or supplement to this Indenture or the Notes or any Security Document or the Intercreditor Agreement shall comply, to the extent applicable, with the TIA as then in effect.

          SECTION 9.04. Revocation and Effect of Consents and Waivers. (a) A consent to an amendment or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on the Note. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s Note or portion of the Note if the Trustee receives the notice of revocation before the date on which the Trustee receives an Officers’ Certificate from the Company certifying that the requisite principal

-92-

amount of Notes have consented. After an amendment or waiver becomes effective, it shall bind every Holder. An amendment or waiver becomes effective upon the (i) receipt by the Company or the Trustee of consents by the Holders of the requisite principal amount of securities, (ii) satisfaction of conditions to effectiveness as set forth in this Indenture and any indenture supplemental hereto containing such amendment or waiver and (iii) execution of such amendment or waiver (or supplemental indenture) by the Company and the Trustee.

          (b) The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date.

          SECTION 9.05. Notation on or Exchange of Notes. If an amendment, supplement or waiver changes the terms of a Note, the Company may require the Holder of the Note to deliver it to the Trustee. The Trustee may place an appropriate notation on the Note regarding the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment, supplement or waiver.

          SECTION 9.06. Trustee to Sign Amendments. The Trustee and the Notes Collateral Agent shall sign any amendment, supplement or waiver authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee and the Notes Collateral Agent. If it does, the Trustee and the Notes Collateral Agent may but need not sign it. In signing any amendment, supplement or waiver, the Trustee and the Notes Collateral Agent shall be entitled to receive indemnity reasonably satisfactory to it and shall be provided with, and (subject to Section 7.01) shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that such amendment, supplement or waiver is authorized or permitted by this Indenture and that such amendment, supplement or waiver is the legal, valid and binding obligation of the Company and the Guarantors, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof (including Section 9.03) and covering the matters set forth in Sections 13.04 and 13.05 hereof. Such opinion shall not be an expense of the Trustee.

          SECTION 9.07. Payment for Consent. Neither the Company nor any Affiliate of the Company shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid to all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement.

          SECTION 9.08. Additional Voting Terms; Calculation of Principal Amount. Except as expressly provided in this Indenture, including under Section 9.02, all Notes issued

-93-

under this Indenture shall vote and consent together on all matters (as to which any of such Notes may vote) as one class. Determinations as to whether Holders of the requisite aggregate principal amount of Notes have concurred in any direction, waiver or consent shall be made in accordance with this Article 9 and Section 2.14.

ARTICLE 10

GUARANTEES

          SECTION 10.01. Guarantees. (a) Each Guarantor hereby jointly and severally, irrevocably and unconditionally guarantees, as a primary obligor and not merely as a surety on a senior basis, to each Holder and to the Trustee and its successors and assigns (i) the full and punctual payment when due, whether at Stated Maturity, by acceleration, by redemption or otherwise, of all obligations of the Company (including obligations to the Trustee and the Notes Collateral Agent) under this Indenture, the Notes, the Security Documents and the Intercreditor Agreement, whether for payment of principal of, premium, if any, or interest on the Notes and all other monetary obligations of the Company under this Indenture, the Notes, the Security Documents and the Intercreditor Agreement and (ii) the full and punctual performance within applicable grace periods of all other obligations of the Company whether for fees, expenses, indemnification or otherwise under this Indenture, the Notes, the Security Documents and the Intercreditor Agreement (all the foregoing being hereinafter collectively called the “Guaranteed Obligations”). Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from each such Guarantor, and that each such Guarantor shall remain bound under this Article 10 notwithstanding any extension or renewal of any Guaranteed Obligation. The Guaranteed Obligations of a Guarantor will be secured by security interests in the Collateral owned by such Guarantor to the extent provided for in the Security Documents and as required pursuant to Sections 4.12 and 4.15.

          (b) Each Guarantor waives presentation to, demand of payment from and protest to the Company of any of the Guaranteed Obligations and also waives notice of protest for nonpayment. Each Guarantor waives notice of any default under the Notes or the Guaranteed Obligations. The obligations of each Guarantor hereunder shall not be affected by (i) the failure of any Holder, the Trustee or the Notes Collateral Agent to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Indenture, the Notes, any Security Document, or any other agreement or otherwise; (ii) any extension or renewal of this Indenture, the Notes, any Security Document or any other agreement; (iii) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Notes, any Security Document or any other agreement; (iv) the release of any security held by any Holder, the Trustee or the Notes Collateral Agent for the Guaranteed Obligations or any Guarantor; (v) the failure of any Holder, Trustee or the Notes Collateral Agent to exercise any right or remedy against any other guarantor of the Guaranteed Obligations; or (vi) any change in the ownership of such Guarantor, except as provided in Section 10.02(b).

          (c) Subject to Section 10.02(a), each Guarantor hereby waives any right to which it may be entitled to have its obligations hereunder divided among the Guarantors, such that such Guarantor’s obligations would be less than the full amount claimed. Each Guarantor hereby waives any right to which it may be entitled to have the assets of the Company or any other

-94-

Guarantor first be used and depleted as payment of the Company’s or such Guarantor’s obligations hereunder prior to any amounts being claimed from or paid by such Guarantor hereunder. Each Guarantor hereby waives any right to which it may be entitled to require that the Company be sued prior to an action being initiated against such Guarantor.

          (d) Each Guarantor further agrees that its Guarantee herein constitutes a guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder, the Trustee or the Notes Collateral Agent to any security held for payment of the Guaranteed Obligations.

          (e) Except as expressly set forth in Sections 8.01, 10.02 and 10.06, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder, the Trustee or the Notes Collateral Agent to assert any claim or demand or to enforce any remedy under this Indenture, the Notes, any Security Document or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Guarantor or would otherwise operate as a discharge of any Guarantor as a matter of law or equity.

          (f) Except as expressly set forth in Sections 8.01 and 10.02, each Guarantor agrees that its Guarantee shall remain in full force and effect until payment in full of all the Guaranteed Obligations. Except as expressly set forth in Sections 8.01 and 10.02, each Guarantor further agrees that its Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Guaranteed Obligation is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or reorganization of the Company or otherwise.

          (g) In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee or Notes Collateral Agent has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Company to pay the principal of or interest on any Guaranteed Obligation when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, or to perform or comply with any other Guaranteed Obligation, each Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee in accordance with this Indenture, forthwith pay, or cause to be paid, in cash, to the Holders, the Trustee or Notes Collateral Agent an amount equal to the sum of (i) the unpaid principal amount of such Guaranteed Obligations, (ii) accrued and unpaid interest on such Guaranteed Obligations (but only to the extent not prohibited by applicable law) and (iii) all other monetary obligations of the Company then due to the Holders, the Trustee and the Notes Collateral Agent in respect of the Guaranteed Obligations.

-95-

          (h) Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any Guaranteed Obligations guaranteed hereby until payment in full of all Guaranteed Obligations. Each Guarantor further agrees that, as between it, on the one hand, and the Holders, the Trustee and the Notes Collateral Agent, on the other hand, (i) the maturity of the Guaranteed Obligations guaranteed hereby may be accelerated as provided in Article 6 for the purposes of any Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such Guaranteed Obligations as provided in Article 6, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purposes of this Section 10.01.

          (i) Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees and expenses) incurred by the Trustee, the Notes Collateral Agent or any Holder in enforcing any rights under this Section 10.01.

          (j) Upon request of the Trustee, each Guarantor shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.

          SECTION 10.02. Limitation on Liability. (a) Any term or provision of this Indenture to the contrary notwithstanding, the maximum aggregate amount of the Guaranteed Obligations guaranteed hereunder by any Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering the Guarantee, as it relates to such Guarantor, voidable under applicable laws relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally.

          (b) A Guarantee as to any Restricted Subsidiary shall terminate and be of no further force or effect and such Subsidiary Guarantor shall be deemed to be automatically released from all obligations under this Article 10 upon:

     (i) the sale, disposition or other transfer (including through merger or consolidation) of the Capital Stock (including any sale, disposition or other transfer following which the applicable Subsidiary Guarantor is no longer a Restricted Subsidiary), or all or substantially all the assets, of the applicable Subsidiary Guarantor if such sale, disposition or other transfer is made in compliance with this Indenture, in each case other than to the Company or a Subsidiary of the Company or Holdings; provided, however, that such Subsidiary Guarantor is released from its guarantees, if any, of, and all pledges and security, if any, granted in connection with, the Credit Agreement and any other Indebtedness of the Company or any Restricted Subsidiary of the Company;

     (ii) the Company designating such Subsidiary Guarantor to be an Unrestricted Subsidiary in accordance with the provisions set forth under Section 4.04 and the definition of “Unrestricted Subsidiary”;

     (iii) the release or discharge of all guarantees by such Restricted Subsidiary and the repayment of all Indebtedness and retirement of all Disqualified Stock of such Restricted

-96-

Subsidiary which, if Incurred by such Restricted Subsidiary, would require such Restricted Subsidiary to guarantee the Notes under Section 4.11; or

     (iv) the Company’s exercise of the Company’s legal defeasance option or covenant defeasance option in accordance with Section 8.01 or if the obligations of such Guarantor under this Indenture are discharged in accordance with the terms of this Indenture.

          SECTION 10.03. Successors and Assigns. This Article 10 shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of the successors and assigns of the Trustee, Notes Collateral Agent and the Holders and, in the event of any transfer or assignment of rights by any Holder, Notes Collateral Agent or the Trustee, the rights and privileges conferred upon that party in this Indenture and in the Notes shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture.

          SECTION 10.04. No Waiver. Neither a failure nor a delay on the part of either the Trustee, Notes Collateral Agent or the Holders in exercising any right, power or privilege under this Article 10 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee, Notes Collateral Agent and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article 10 at law, in equity, by statute or otherwise.

          SECTION 10.05. Modification. No modification, amendment or waiver of any provision of this Article 10, nor the consent to any departure by any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice or demand in the same, similar or other circumstances.

          SECTION 10.06. Execution of Supplemental Indenture for Future Guarantors. Each Person which is required to become a Guarantor after the Issue Date pursuant to Section 4.11 shall promptly execute and deliver to the Trustee a supplemental indenture in the form of Appendix B hereto pursuant to which such Person shall become a Guarantor under this Article 10 and shall guarantee the Guaranteed Obligations. Concurrently with the execution and delivery of such supplemental indenture, the Company shall deliver to the Trustee an Opinion of Counsel and an Officers’ Certificate to the effect that such supplemental indenture has been duly authorized, executed and delivered by such Person and that, subject to the application of bankruptcy, insolvency, moratorium, fraudulent conveyance or transfer and other similar laws relating to creditors’ rights generally and to the principles of equity, whether considered in a proceeding at law or in equity, the Guarantee of such Guarantor is a legal, valid and binding obligation of such Guarantor, enforceable against such Guarantor in accordance with its terms and/or to such other matters as the Trustee may reasonably request.

-97-

ARTICLE 11

SECURITY DOCUMENTS

          SECTION 11.01. Collateral and Security Documents. (a) The due and punctual payment of the principal of and interest (including additional interest, if any) on the Notes when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of and interest (including additional interest, if any) on the Notes and performance of all other Guaranteed Obligations of the Company and the Guarantors to the Holders, the Trustee or the Notes Collateral Agent under this Indenture, the Notes, the Intercreditor Agreement and the Security Documents, according to the terms hereunder or thereunder, shall be secured as provided in the Security Documents, which define the terms of the Liens that secure the Guaranteed Obligations, subject to the terms of the Intercreditor Agreement. The Trustee and the Company hereby acknowledge and agree that the Trustee or the Notes Collateral Agent, as the case may be, holds the Collateral in trust for the benefit of the Trustee and the Holders, in each case pursuant to the terms of the Security Documents and the Intercreditor Agreement. Each Holder, by accepting a Note, consents and agrees to the terms of the Security Documents (including the provisions providing for the possession, use, release and foreclosure of Collateral) and the Intercreditor Agreement as the same may be in effect or may be amended from time to time in accordance with their terms and this Indenture and the Intercreditor Agreement, and authorizes and directs the Notes Collateral Agent and, as applicable, the Trustee to enter into the Security Documents and the Intercreditor Agreement and to perform its obligations and exercise its rights thereunder in accordance therewith; provided, however, that if any of the provisions of the Security Documents limit, qualify or conflict with the duties imposed by the provisions of the TIA, the TIA shall control. The Company shall deliver to the Trustee (if it is not itself then the Notes Collateral Agent) copies of all documents delivered to the Notes Collateral Agent pursuant to the Security Documents, and will do or cause to be done all such acts and things as may be reasonably required by the next sentence of this Section 11.01, to assure and confirm to the Trustee and the Notes Collateral Agent the security interest in the Collateral contemplated hereby, by the Security Documents or any part thereof, as from time to time constituted, so as to render the same available for the security and benefit of this Indenture and of the Notes secured hereby, according to the intent and purposes herein expressed. The Company shall take, and shall cause Holdings and the Subsidiaries of the Company to take, any and all actions reasonably required to cause the Security Documents to create and maintain, as security for the Obligations of the Company and the Guarantors hereunder, a valid and enforceable perfected Lien and security interest in and on all of the Collateral (subject to the terms of the Intercreditor Agreement), in favor of the Notes Collateral Agent for the benefit of the Trustee, the Holders and the other Secured Parties under the Security Documents.

          (b) Notwithstanding the foregoing, (i) the Capital Stock and other securities of the Subsidiaries of the Company that are owned by the Company or any Subsidiary Guarantor will constitute Notes Collateral only to the extent that such Capital Stock and other securities can secure the Notes without Rule 3-10 or Rule 3-16 of Regulation S-X under the Securities Act (“Rule 3-10” and “Rule 3-16,” respectively) (or any other law, rule or regulation) requiring separate financial statements of such Subsidiary to be filed with the SEC (or any other governmental agency);

-98-

     (ii) in the event that either Rule 3-10 or Rule 3-16 requires or is amended, modified or interpreted by the SEC to require (or is replaced with another rule or regulation, or any other law, rule or regulation is adopted, which would require) the filing with the SEC (or any other governmental agency) of separate financial statements of any Subsidiary (other than the Company) due to the fact that such Subsidiary’s Capital Stock and other securities secure the Notes, the performance of Guaranteed Obligations of the Company or any Guarantee, then the Capital Stock and other securities of such Subsidiary shall automatically be deemed not to be part of the Notes Collateral, but only to the extent necessary to not be subject to such requirement (and, in such event, the Security Documents may be amended or modified, without the consent of any Holder of the Notes, to the extent necessary to release the first-priority security interests in the shares of Capital Stock and other securities that are so deemed to no longer constitute part of the Notes Collateral); and

     (iii) in the event that either Rule 3-10 or Rule 3-16 is amended, modified or interpreted by the SEC to permit (or is replaced with another rule or regulation, or any other law, rule or regulation is adopted, which would permit) such Subsidiary’s Capital Stock and other securities to secure the Notes in excess of the amount then pledged without the filing with the SEC (or any other governmental agency) of separate financial statements of such Subsidiary, then the Capital Stock and other securities of such Subsidiary shall automatically be deemed to be a part of the Notes Collateral but only to the extent necessary to not be subject to any such financial statement requirement (and, in such event, the Security Documents may be amended or modified, without the consent of any Holder of the Notes, to the extent necessary to subject to the Liens under the Security Documents such additional Capital Stock and other securities).

          (c) In addition to the limitations described in Section 11.01(b), the Notes Collateral will not include (i) property or assets as to which the Notes Collateral Agent has notified any Grantor in writing that it has reasonably determined that the costs of obtaining a security interest are excessive in relation to the value of the security to be afforded thereby, (ii) the property and assets securing the Industrial Revenue Bonds and the letter of credit reimbursement obligations relating thereto, (iii) the property and assets securing capital leases existing on the Issue Date and purchase money obligations existing on the Issue Date and (iv) the equipment, fixtures and real estate acquired after the Issue Date that is subject to a Permitted Lien pursuant to clause (6) or (10) of the definition thereof.

          (d) In the case of any Foreign Subsidiary, the Notes Collateral will be limited to 100% of the non-voting stock (if any) and 65% of the voting stock of first-tier Foreign Subsidiaries owned by a Guarantor.

          SECTION 11.02. Recordings and Opinions. (a) The Company and the Guarantors shall furnish to the Notes Collateral Agent and the Trustee (if the Trustee is not then the Notes Collateral Agent), on or before the time when the Company is required to provide annual reports pursuant to Section 4.02 with respect to the preceding fiscal year, an opinion of counsel:

-99-

          (i) stating substantially to the effect that, in the opinion of such counsel, such action has been taken with respect to the recordings, registerings, filings, re-recordings, re-registerings and re-filings of this Indenture, the Security Documents and all financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the Lien of this Indenture or any Security Documents in the Collateral and reciting with respect to the security interests in such Collateral the details of such action or referencing to prior Opinions of Counsel in which such details are given; or

          (ii) to the effect that, in the opinion of such counsel, no such action is necessary to maintain such Lien under this Indenture and the Security Documents.

          (b) The Company will comply with the provisions of TIA § 314(b).

          SECTION 11.03. Release of Collateral. (a) Subject to Section 11.03(b) and 11.04 hereof, Collateral may be released from the Lien and security interest created by the Security Documents at any time or from time to time in accordance with the provisions of the Security Documents, the Intercreditor Agreement or as provided hereby. The Company and the Guarantors will be entitled to a release of assets included in the Collateral from the Liens securing the Notes, and the Trustee shall release, or instruct the Notes Collateral Agent to release, as applicable, the same from such Liens at the Company’s sole cost and expense, under one or more of the following circumstances:

     (1) to enable the Company or any Restricted Subsidiary to sell, exchange or otherwise dispose of any of the Collateral to the extent not prohibited under Section 4.06;

     (2) in the case of a Guarantor that is released from its Guarantee with respect to the Notes, the release of the property and assets of such Guarantor;

     (3) pursuant to an amendment or waiver in accordance with Article 9 of this Indenture; or

     (4) if the Notes have been defeased pursuant to Section 8.01.

          The second-priority lien on the ABL Collateral securing the Notes will terminate and be released automatically if the first-priority liens on the ABL Collateral are released by the Bank Collateral Agent (unless, at the time of such release of such first-priority liens, an Event of Default shall have occurred and be continuing under this Indenture). Notwithstanding the existence of an Event of Default, the second-priority lien on the ABL Collateral securing the Notes shall also terminate and be released automatically to the extent the first-priority liens on the ABL Collateral are released by the Bank Collateral Agent in connection with a sale, transfer or disposition of ABL Collateral that is either not prohibited under the Indenture or occurs in connection with the foreclosure of, or other exercise of remedies with respect to, such ABL Collateral by the Bank Collateral Agent (except with respect to any proceeds of such sale, transfer or disposition that remain after satisfaction in full of the Lenders Debt). The liens on the Collateral securing the Notes that otherwise would have been released pursuant to the first sentence of this paragraph will be released when such Event of Default and all other Events of Default under this Indenture cease to exist.

-100-

          Upon receipt of an Officers’ Certificate and an Opinion of Counsel certifying that all conditions precedent under the Indenture and the Security Documents, if any, to such release have been met and any necessary or proper instruments of termination, satisfaction or release prepared by the Company, the Notes Collateral Agent shall execute, deliver or acknowledge (at the Company’s expense) such instruments or releases to evidence the release of any Collateral permitted to be released pursuant to this Indenture or the Security Documents or the Intercreditor Agreement.

          (b) At any time when a Default or Event of Default has occurred and is continuing and the maturity of the Notes has been accelerated (whether by declaration or otherwise) and the Trustee (if not then the Notes Collateral Agent) has delivered a notice of acceleration to the Notes Collateral Agent, no release of Collateral pursuant to the provisions of this Indenture or the Security Documents will be effective as against the Holders, except as otherwise provided in the Intercreditor Agreement.

          SECTION 11.04. Permitted Releases Not To Impair Lien; Trust Indenture Act Requirements. The release of any Collateral from the terms hereof and of the Security Documents or the release of, in whole or in part, the Liens created by the Security Documents, will not be deemed to impair the security under this Indenture in contravention of the provisions hereof if and to the extent the Collateral or Liens are released pursuant to (x) the applicable Security Documents and the terms of this Article 11 or (y) the Intercreditor Agreement. Each of the Holders acknowledges that a release of Collateral or a Lien strictly in accordance with the terms of the Security Documents and the Intercreditor Agreement and of this Article 11 will not be deemed for any purpose to be in contravention of the terms of this Indenture. To the extent applicable, the Company shall cause TIA § 313(b), relating to reports, and TIA § 314(d), relating to the release of property or securities from the Lien hereof and of the Security Documents, to be complied with. Any certificate or opinion required by § 314(d) of the TIA may be made by an Officer of the Company or legal counsel, except in cases which § 314(d) of the TIA requires that such certificate or opinion be made by an independent Person, which Person shall be an independent engineer, appraiser or other expert selected by or reasonably satisfactory to the Trustee. Notwithstanding anything to the contrary in this Section 11.04, the Company will not be required to comply with all or any portion of TIA §314(d) if it determines, in good faith based on the written advice of counsel, a copy of which written advice shall be provided to the Trustee and the Notes Collateral Agent with written confirmation that it may be relied upon by the Trustee and Notes Collateral Agent, that under the terms of TIA §314(d) or any interpretation or guidance as to the meaning thereof of the SEC and its staff, including “no action” letters or exemptive orders, all or any portion of TIA §314(d) is inapplicable to any release or series of releases of Collateral.

          SECTION 11.05. Certificates of the Trustee. In the event that the Company wishes to release Collateral in accordance with this Indenture and the Security Documents and the Intercreditor Agreement at a time when the Trustee is not itself also the Notes Collateral Agent and the Company has delivered the certificates and documents required by the Security Documents and Section 11.03 hereof, if TIA § 314(d) is applicable to such releases (the applicability of which will be established to the reasonable satisfaction of the Trustee pursuant to Section 11.04 or otherwise), the Trustee will determine whether it has received all documentation required by TIA § 314(d) in connection with such release and, based on an

-101-

Opinion of Counsel pursuant to Section 13.04, will deliver a certificate to the Notes Collateral Agent setting forth such determination. The Trustee, however, shall have no duty to confirm the legality or validity of such documents, its sole duty being to certify such documents which, on their face, conform to § 314(d) of the TIA.

          SECTION 11.06. Suits To Protect the Collateral. Subject to the provisions of Article 7 hereof and the Intercreditor Agreement, the Trustee in its sole discretion and without the consent of the Holders, on behalf of the Holders, may or may direct the Notes Collateral Agent to take all actions it deems necessary or appropriate in order to:

     (a) enforce any of the terms of the Security Documents; and

     (b) collect and receive any and all amounts payable in respect of the Guaranteed Obligations of the Company hereunder.

          Subject to the provisions of the Security Documents and the Intercreditor Agreement, the Trustee shall have power to institute and to maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Collateral by any acts which may be unlawful or in violation of any of the Security Documents or this Indenture, and such suits and proceedings as the Trustee, in its sole discretion, may deem expedient to preserve or protect its interests and the interests of the Holders in the Collateral (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the Lien on the Collateral or be prejudicial to the interests of the Holders or the Trustee).

          SECTION 11.07. Authorization of Receipt of Funds by the Trustee Under the Security Documents. Subject to the provisions of the Intercreditor Agreement, the Trustee is authorized to receive any funds for the benefit of the Holders distributed under the Security Documents, and to make further distributions of such funds to the Holders according to the provisions of this Indenture.

          SECTION 11.08. Purchaser Protected. In no event shall any purchaser in good faith of any property purported to be released hereunder be bound to ascertain the authority of the Notes Collateral Agent or the Trustee to execute the release or to inquire as to the satisfaction of any conditions required by the provisions hereof for the exercise of such authority or to see to the application of any consideration given by such purchaser or other transferee; nor shall any purchaser or other transferee of any property or rights permitted by this Article 11 to be sold be under any obligation to ascertain or inquire into the authority of the Company or the applicable Guarantor to make any such sale or other transfer.

          SECTION 11.09. Powers Exercisable by Receiver or Trustee. In case the Collateral shall be in the possession of a receiver or trustee, lawfully appointed, the powers conferred in this Article 11 upon the Company or a Guarantor with respect to the release, sale or other disposition of such property may be exercised by such receiver or trustee, and an instrument signed by such receiver or trustee shall be deemed the equivalent of any similar instrument of the Company or a Guarantor or of any officer or officers thereof required by the

-102-

provisions of this Article 11; and if the Trustee shall be in the possession of the Collateral under any provision of this Indenture, then such powers may be exercised by the Trustee.

          SECTION 11.10. Release Upon Termination of the Company’s Obligations. In the event that the Company delivers to the Trustee, in form and substance reasonably acceptable to it, an Officers’ Certificate certifying that (i) payment in full of the principal of, together with accrued and unpaid interest (including additional interest, if any) on, the Notes and all other Obligations under this Indenture, the Guarantees and the Security Documents that are due and payable at or prior to the time such principal, together with accrued and unpaid interest (including additional interest, if any), are paid or (ii) the Company shall have exercised its legal defeasance option or its covenant defeasance option, in each case in compliance with the provisions of Article 8, the Trustee shall deliver to the Company and the Notes Collateral Agent a notice stating that the Trustee, on behalf of the Holders, disclaims and gives up any and all rights it has in or to the Collateral (other than with respect to funds held by the Trustee pursuant to Article 8), and any rights it has under the Security Documents, and upon receipt by the Notes Collateral Agent of such notice, the Notes Collateral Agent shall be deemed not to hold a Lien in the Collateral on behalf of the Trustee and shall do or cause to be done all acts reasonably necessary to release such Lien as soon as is reasonably practicable.

          SECTION 11.11. Notes Collateral Agent. (a) The Trustee and each of the Holders by acceptance of the Notes hereby designates and appoints the Notes Collateral Agent as its agent under this Indenture, the Security Documents and the Intercreditor Agreement and the Trustee and each of the Holders by acceptance of the Notes hereby irrevocably authorizes the Notes Collateral Agent to take such action on its behalf under the provisions of this Indenture, the Security Documents and the Intercreditor Agreement and to exercise such powers and perform such duties as are expressly delegated to the Notes Collateral Agent by the terms of this Indenture, the Security Documents and the Intercreditor Agreement, together with such powers as are reasonably incidental thereto. The Notes Collateral Agent agrees to act as such on the express conditions contained in this Section 11.11. The provisions of this Section 11.11 are solely for the benefit of the Notes Collateral Agent and none of the Trustee, any of the Holders nor any of the Grantors shall have any rights as a third party beneficiary of any of the provisions contained herein other than as expressly provided in Section 11.03. Notwithstanding any provision to the contrary contained elsewhere in this Indenture, the Security Documents and the Intercreditor Agreement, the Notes Collateral Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Notes Collateral Agent have or be deemed to have any fiduciary relationship with the Trustee, any Holder or any Grantor, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Indenture, the Security Documents and the Intercreditor Agreement or otherwise exist against the Notes Collateral Agent. Without limiting the generality of the foregoing sentence, the use of the term “agent” in this Indenture with reference to the Notes Collateral 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. Except as expressly otherwise provided in this Indenture, the Notes Collateral Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions which the Notes Collateral Agent is expressly entitled to take or assert under this Indenture, the Security

-103-

Documents and the Intercreditor Agreement, including the exercise of remedies pursuant to Article VI, and any action so taken or not taken shall be deemed consented to by the Trustee and the Holders.

          (b) The Notes Collateral Agent may execute any of its duties under this Indenture, the Security Documents or the Intercreditor Agreement by or through agents, employees, attorneys-in-fact or through its Related Persons and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Notes Collateral Agent shall not be responsible for the negligence or misconduct of any agent, employee, attorney-in-fact or Related Person that it selects as long as such selection was made without negligence or willful misconduct.

          (c) None of the Notes Collateral Agent or any of its respective Related Persons shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Indenture or the transactions contemplated hereby (except for its own negligence or willful misconduct) or under or in connection with any Security Document or Intercreditor Agreement or the transactions contemplated thereby (except for its own negligence or willful misconduct), or (ii) be responsible in any manner to any of the Trustee or any Holder for any recital, statement, representation, warranty, covenant or agreement made by the Company or any Grantor or Affiliate of any Grantor, or any officer or Related Person thereof, contained in this or any Indenture, or in any certificate, report, statement or other document referred to or provided for in, or received by the Notes Collateral Agent under or in connection with, this or any other Indenture, the Security Documents or the Intercreditor Agreement, or the validity, effectiveness, genuineness, enforceability or sufficiency of this or any other Indenture, the Security Documents or the Intercreditor Agreement, or for any failure of any Grantor or any other party to this Indenture, the Security Documents or the Intercreditor Agreement to perform its obligations hereunder or thereunder. None of the Notes Collateral Agent or any of its respective Related Persons shall be under any obligation to the Trustee or any Holder to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this or any other Indenture, the Security Documents or the Intercreditor Agreement or to inspect the properties, books, or records of any Grantor or any Grantor’s Affiliates.

          (d) The Notes Collateral Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex, or telephone 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, without limitation, counsel to any Grantor), independent accountants and other experts selected by the Notes Collateral Agent. The Notes Collateral Agent shall be fully justified in failing or refusing to take any action under this or any other Indenture, the Security Documents or the Intercreditor Agreement unless it shall first receive such advice or concurrence of the Trustee as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Holders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Notes Collateral Agent shall in all cases be fully protected in acting, or in refraining from acting, under this or any other Indenture, the Security Documents or the Intercreditor Agreement in accordance with a request or consent of the Trustee

-104-

and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Holders.

          (e) The Notes Collateral Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, unless the Notes Collateral Agent shall have received written notice from the Trustee or a Grantor referring to this Indenture, describing such Default or Event of Default and stating that such notice is a “notice of default.” The Notes Collateral Agent shall take such action with respect to such Default or Event of Default as may be requested by the Trustee in accordance with Article 6; provided, however, that unless and until the Notes Collateral Agent has received any such request, the Notes Collateral Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable.

          (f) Wells Fargo Bank, N.A. and its respective 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 any Grantor and its Affiliates as though it was not the Notes Collateral Agent hereunder and without notice to or consent of the Trustee. The Trustee and the Holders acknowledge that, pursuant to such activities, Wells Fargo Bank, N.A. or its respective Affiliates may receive information regarding any Grantor or its Affiliates (including information that may be subject to confidentiality obligations in favor of any such Grantor or such Affiliate) and acknowledge that the Notes Collateral Agent shall not be under any obligation to provide such information to the Trustee or the Holders.

          (g) The Notes Collateral Agent may resign at any time upon thirty (30) days prior written notice to the Trustee and the Grantors, such resignation to be effective upon the acceptance of a successor agent to its appointment as Notes Collateral Agent. If the Notes Collateral Agent resigns under this Indenture, the Trustee, subject to the consent of the Issuer (which shall not be unreasonably withheld and which shall not be required during a continuing Event of Default), shall appoint a successor collateral agent. If no successor collateral agent is appointed prior to the effective date of the resignation of the Notes Collateral Agent, the Notes Collateral Agent may appoint, after consulting with the Trustee, subject to the consent of the Company (which shall not be unreasonably withheld and which shall not be required during a continuing Event of Default), a successor collateral agent. Upon the acceptance of its appointment as successor collateral agent hereunder, such successor collateral agent shall succeed to all the rights, powers and duties of the retiring Notes Collateral Agent, and the term “Notes Collateral Agent” shall mean such successor collateral agent, and the retiring Notes Collateral Agent’s appointment, powers and duties as the Notes Collateral Agent shall be terminated. After the retiring Notes Collateral Agent’s resignation hereunder, the provisions of this Section 11.11 shall inure to its benefit and the retiring Notes Collateral Agent shall not by reason of such resignation be deemed to be released from liability as to any actions taken or omitted to be taken by it while it was the Notes Collateral Agent under this Indenture.

          (h) The Trustee shall initially act as Notes Collateral Agent and shall be authorized to appoint co-Notes Collateral Agents as necessary in its sole discretion. Except as otherwise explicitly provided herein or in the Security Documents or the Intercreditor Agreement, neither the Notes Collateral Agent nor any of its respective officers, directors,

-105-

employees or agents or other Related Persons shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request of any other Person or to take any other action whatsoever with regard to the Collateral or any part thereof. The Notes Collateral Agent shall be accountable only for amounts that it actually receives as a result of the exercise of such powers, and neither the Notes Collateral Agent nor any of its officers, directors, employees or agents shall be responsible for any act or failure to act hereunder, except for its own willful misconduct, negligence or bad faith.

          (i) The Trustee, as Notes Collateral Agent, is authorized and directed to (i) enter into the Security Documents, (ii) enter into the Intercreditor Agreement, (iii) bind the Holders on the terms as set forth in the Security Documents and the Intercreditor Agreement and (iv) perform and observe its obligations under the Security Documents and the Intercreditor Agreement.

          (j) The Trustee agrees that it shall not, and shall not instruct the Notes Collateral Agent to, unless specifically requested to do so by a majority of the Holders, take or cause to be taken any action to enforce its rights under this Indenture or against any Grantor, including the commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.

          If at any time or times the Trustee shall receive (i) by payment, foreclosure, set-off or otherwise, any proceeds of Collateral or any payments with respect to the Obligations arising under, or relating to, this Indenture, except for any such proceeds or payments received by the Trustee from the Notes Collateral Agent pursuant to the terms of this Indenture, or (ii) payments from the Notes Collateral Agent in excess of the amount required to be paid to the Trustee pursuant to Article VI, the Trustee shall promptly turn the same over to the Notes Collateral Agent, in kind, and with such endorsements as may be required to negotiate the same to the Notes Collateral Agent.

          (k) The Trustee is each Holder’s agent for the purpose of perfecting the Holders’ security interest in assets which, in accordance with Article 9 of the UCC can be perfected only by possession. Should the Trustee obtain possession of any such Collateral, upon request from the Company, the Trustee shall notify the Notes Collateral Agent thereof, and, promptly upon the Notes Collateral Agent’s request therefor shall deliver such Collateral to the Notes Collateral Agent or otherwise deal with such Collateral in accordance with the Notes Collateral Agent’s instructions.

          (l) The Notes Collateral Agent shall have no obligation whatsoever to the Trustee or any of the Holders to assure that the Collateral exists or is owned by any Grantor or is cared for, protected, or insured or has been encumbered, or that the Notes Collateral Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, maintained or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure, or fidelity, or to continue exercising, any of the rights, authorities, and powers granted or available to the Notes Collateral Agent pursuant to this Indenture, any Security Document or the Intercreditor Agreement, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, the Notes

-106-

Collateral Agent may act in any manner it may deem appropriate, in its sole discretion given the Notes Collateral Agent’s own interest in the Collateral and that the Notes Collateral Agent shall have no other duty or liability whatsoever to the Trustee or any Holder as to any of the foregoing.

          (m) If the Company (i) Incurs any obligations in respect of Lenders Debt at any time when no intercreditor agreement is in effect or at any time when Indebtedness constituting Lenders Debt entitled to the benefit of an existing Intercreditor Agreement is concurrently retired, and (ii) delivers to the Notes Collateral Agent an Officers’ Certificate so stating and requesting the Notes Collateral Agent to enter into an intercreditor agreement (on substantially the same terms as the Intercreditor Agreement) in favor of a designated agent or representative for the holders of the Lenders Debt so Incurred, the Notes Collateral Agent shall (and is hereby authorized and directed to) enter into such intercreditor agreement (at the sole expense and cost of the Company, including legal fees and expenses of the Notes Collateral Agent), bind the Holders on the terms set forth therein and perform and observe its obligations thereunder.

          SECTION 11.12. Designations. Except as provided in the next sentence, for purposes of the provisions hereof and the Intercreditor Agreement requiring the Company to designate Indebtedness for the purposes of the terms “Lenders Debt” and “Other Pari Passu Lien Obligations” or any other such designations hereunder or under the Intercreditor Agreement, any such designation shall be sufficient if the relevant designation is set forth in writing, signed on behalf of the Company by an Officer and delivered to the Trustee, the Notes Collateral Agent and the Bank Collateral Agent. For all purposes hereof and the Intercreditor Agreement, the Company hereby designates the Obligations pursuant to the ABL Facility as “Lenders Debt.”

ARTICLE 12

[INTENTIONALLY LEFT BLANK]

ARTICLE 13

MISCELLANEOUS

          SECTION 13.01. Trust Indenture Act Controls. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by, or with another provision (an “incorporated provision”) included in this Indenture by operation of, Sections 310 to 318 of the TIA, inclusive, such imposed duties or incorporated provision shall control.

-107-

          SECTION 13.02. Notices. (a) Any notice or communication required or permitted hereunder shall be in writing and delivered in person, via facsimile or mailed by first-class mail addressed as follows:

if to the Company or a Guarantor:

Attention of: General Counsel
Facsimile:

if to the Trustee:

Wells Fargo Bank, N.A.
213 Court Street, Suite 703
Middletown, CT 06457
Attention of: Joseph P. O’Donnell
Facsimile: (860) 704-6219

The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

          (b) Any notice or communication mailed to a Holder shall be mailed, first class mail, to the Holder at the Holder’s address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.

          (c) Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it, except that notices to the Trustee are effective only if received.

          SECTION 13.03. Communication by the Holders with Other Holders. The Holders may communicate pursuant to Section 312(b) of the TIA with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and other Persons shall have the protection of Section 312(c) of the TIA.

          SECTION 13.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee at the request of the Trustee:

     (a) an Officers’ Certificate in form reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

     (b) an Opinion of Counsel in form reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

-108-

          SECTION 13.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture (other than pursuant to Section 4.09) shall include:

     (a) a statement that the individual making such certificate or opinion has read such covenant or condition;

     (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

     (c) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

     (d) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with; provided, however, that with respect to matters of fact an Opinion of Counsel may rely on an Officers’ Certificate or certificates of public officials.

          SECTION 13.06. When Notes Disregarded. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, any Guarantor or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any Guarantor shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which the Trustee knows are so owned shall be so disregarded. Subject to the foregoing, only Notes outstanding at the time shall be considered in any such determination.

          SECTION 13.07. Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable rules for action by or a meeting of the Holders. The Registrar and a Paying Agent may make reasonable rules for their functions.

          SECTION 13.08. Legal Holidays. If a payment date is not a Business Day, payment shall be made on the next succeeding day that is a Business Day, and no interest shall accrue on any amount that would have been otherwise payable on such payment date if it were a Business Day for the intervening period. If a regular record date is not a Business Day, the record date shall not be affected.

          SECTION 13.09. GOVERNING LAW. THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

          SECTION 13.10. No Recourse Against Others. No affiliate, director, officer, employee, incorporator or holder of any equity interests in the Company or of any Guarantor or any direct or indirect parent corporation of Holdings, as such, shall have any liability for any obligations of the Company or the Guarantors under the Notes or this Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation; provided, however, the

-109-

foregoing will not affect or limit any liability of any Guarantor under this Indenture or its Guarantee. Each Holder of Notes by accepting a Note waives and releases all such liability.

          SECTION 13.11. Successors. All agreements of the Company and each Guarantor in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors.

          SECTION 13.12. Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture.

          SECTION 13.13. Table of Contents; Headings. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

          SECTION 13.14. Indenture Controls. If and to the extent that any provision of the Notes limits, qualifies or conflicts with a provision of this Indenture, such provision of this Indenture shall control.

          SECTION 13.15. Intercreditor Agreement Governs. Reference is made to the Lien Subordination and Intercreditor Agreement dated as of November 30, 2005, among Bank of America, N.A., as collateral agent for the Revolving Facility Secured Parties referred to therein; Wells Fargo Bank, N.A., as Trustee; Wells Fargo Bank, N.A., as Noteholder Collateral Agent; Flag Intermediate Holdings Corporation; Flag Acquisition Corporation; and the other subsidiaries of Metals USA, Inc. named therein (the “Intercreditor Agreement”). Each Holder, by its acceptance of a Note, (a) consents to the subordination of Liens provided for in the Intercreditor Agreement, (b) agrees that it will be bound by and will take no actions contrary to the provisions of the Intercreditor Agreement and (c) authorizes and instructs the Trustee to enter into the Intercreditor Agreement as Trustee and on behalf of such Holder. The foregoing provisions are intended as an inducement to the holders of Lenders Debt to extend credit and such holders are intended third party beneficiaries of such provisions and the provisions of the Intercreditor Agreement.

          SECTION 13.16. Severability. In case any provision in this Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.

          SECTION 13.17. Currency of Account; Conversion of Currency; Foreign Exchange Restrictions. (a) U.S. Dollars are the sole currency of account and payment for all sums payable by the Company and the Guarantors under or in connection with the Notes, the Guarantees and this Indenture, including damages related thereto. Any amount received or recovered in a currency other than U.S. Dollars by a Holder (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Company or otherwise) in respect of any sum expressed to be due to it from

-110-

the Company or a Guarantor shall only constitute a discharge to the Company or any such Guarantor to the extent of the U.S. Dollar amount, which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so). If that U.S. Dollar amount is less than the U.S. Dollar amount expressed to be due to the recipient under the applicable Notes, the Company and the Guarantors shall indemnify it against any loss sustained by it as a result as set forth in Section 13.16(b). In any event, the Company and the Guarantors shall indemnify the recipient against the cost of making any such purchase. For the purposes of this Section 13.16, it will be sufficient for the Holder of a Note to certify in a satisfactory manner (indicating sources of information used) that it would have suffered a loss had an actual purchase of U.S. Dollars been made with the amount so received in that other currency on the date of receipt or recovery (or, if a purchase of U.S. Dollars on such date had not been practicable, on the first date on which it would have been practicable, it being required that the need for a change of date be certified in the manner mentioned above).

          (b) The Company and the Guarantors, jointly and severally, covenant and agree that the following provisions shall apply to conversion of currency in the case of the Notes, the Guarantees and this Indenture:

     (1) (A) If for the purpose of obtaining judgment in, or enforcing the judgment of, any court in any country, it becomes necessary to convert into a currency (the “Judgment Currency”) an amount due in any other currency (the “Base Currency”), then the conversion shall be made at the rate of exchange prevailing on the Business Day before the day on which the judgment is given or the order of enforcement is made, as the case may be (unless a court shall otherwise determine).

     (B) If there is a change in the rate of exchange prevailing between the Business Day before the day on which the judgment is given or an order of enforcement is made, as the case may be (or such other date as a court shall determine), and the date of receipt of the amount due, the Company and the Guarantors will pay such additional (or, as the case may be, such lesser) amount, if any, as may be necessary so that the amount paid in the Judgment Currency when converted at the rate of exchange prevailing on the date of receipt will produce the amount in the Base Currency originally due.

     (2) In the event of the winding-up of the Company or any Guarantor at any time while any amount or damages owing under the Notes, the Guarantees and this Indenture, or any judgment or order rendered in respect thereof, shall remain outstanding, the Company and the Guarantors shall indemnify and hold the Holders and the Trustee harmless against any deficiency arising or resulting from any variation in rates of exchange between (i) the date as of which the foreign currency equivalent of the amount due or contingently due under the Notes, the Guarantees and this Indenture (other than under this subsection (b)(2)) is calculated for the purposes of such winding-up and (ii) the final date for the filing of proofs of claim in such winding-up. For the purpose of this subsection (b)(2), the final date for the filing of proofs of claim in the winding-up of the Company or any Guarantor shall be the date fixed by the liquidator or otherwise in

-111-

accordance with the relevant provisions of applicable law as being the latest practicable date as at which liabilities of the Company or such Guarantor may be ascertained for such winding-up prior to payment by the liquidator or otherwise in respect thereto.

          (c) The obligations contained in subsections (a), (b)(1)(B) and (b)(2) of this Section 13.16 shall constitute separate and independent obligations from the other obligations of the Company and the Guarantors under this Indenture, shall give rise to separate and independent causes of action against the Company and the Guarantors, shall apply irrespective of any waiver or extension granted by any Holder or the Trustee or either of them from time to time and shall continue in full force and effect notwithstanding any judgment or order or the filing of any proof of claim in the winding-up of the Company or any Guarantor for a liquidated sum in respect of amounts due hereunder (other than under subsection (b)(2) above) or under any such judgment or order. Any such deficiency as aforesaid shall be deemed to constitute a loss suffered by the Holders or the Trustee, as the case may be, and no proof or evidence of any actual loss shall be required by the Company or any Guarantor or the liquidator or otherwise or any of them. In the case of subsection (b)(2) above, the amount of such deficiency shall not be deemed to be reduced by any variation in rates of exchange occurring between the said final date and the date of any liquidating distribution.

          (d) The term “rate(s) of exchange” shall mean the rate of exchange quoted by Reuters at 10:00 a.m. (New York time) for spot purchases of the Base Currency with the Judgment Currency other than the Base Currency referred to in subsections (b)(1) and (b)(2) above and includes any premiums and costs of exchange payable.

-112-

          IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.

FLAG ACQUISITION CORPORATION,
By:	/s/ M. ALI RASHID
	Name:	M. Ali Rashid
	Title:	President
FLAG INTERMEDIATE HOLDINGS CORPORATION,
By:	/s/ M. ALI RASHID
	Name:	M. Ali Rashid
	Title:	President

Signature page to the Indenture

S-1

WELLS FARGO BANK, N.A., as Trustee
By:	/s/ JOSEPH P. O’DONNELL
	Name:	Joseph P. O’Donnell
	Title:	Vice President
WELLS FARGO BANK, N.A., as Notes Collateral Agent
By:	/s/ JOSEPH P. O’DONNELL
	Name:	Joseph P. O’Donnell
	Title:	Vice President

Signature page to the Indenture

S-2

Rule 144A/REGULATION S/IAI APPENDIX

PROVISIONS RELATING TO INITIAL NOTES,
PRIVATE EXCHANGE NOTES AND EXCHANGE NOTES

     1. Definitions

     1.1 Definitions

     For the purposes of this Appendix the following terms shall have the meanings indicated below:

          “Applicable Procedures” means, with respect to any transfer or transaction involving a Temporary Regulation S Global Note or beneficial interest therein, the rules and procedures of the Depository for such a Temporary Regulation S Global Note, to the extent applicable to such transaction and as in effect from time to time.

          “Definitive Note” means a certificated Initial Note or Exchange Note or Private Exchange Note bearing, if required, the appropriate restricted notes legend set forth in Section 2.3(e).

          “Depository” means The Depository Trust Company, its nominees and their respective successors.

          “Distribution Compliance Period,” with respect to any Notes, means the period of 40 consecutive days beginning on and including the later of (i) the day on which such Notes are first offered to Persons other than distributors (as defined in Regulation S under the Securities Act) in reliance on Regulation S and (ii) the issue date with respect to such Notes.

          “Exchange Notes” means (1) the 11¹/₈% Senior Secured Notes Due 2015 issued pursuant to the Indenture in connection with a Registered Exchange Offer pursuant to a Registration Rights Agreement and (2) Additional Notes, if any, issued pursuant to a registration statement filed with the SEC under the Securities Act.

          “IAI” means an institutional “accredited investor”, as defined in Rule 501(a)(1), (2), (3) and (7) of Regulation D under the Securities Act.

          “Initial Notes” means (1) $275,000,000 in aggregate principal amount at maturity of 11¹/₈% Senior Secured Notes Due 2015 issued on the Issue Date and (2) Additional Notes, if any, issued in a transaction exempt from the registration requirements of the Securities Act.

          “Initial Purchasers” means (a) with respect to the Initial Notes issued on the Issue Date, Credit Suisse First Boston LLC and CIBC World Markets Corp. and (b) with respect to each issuance of Additional Notes, the Persons purchasing or underwriting such Additional Notes under the related Purchase Agreement.

2

          “Notes Custodian” means the custodian with respect to a Global Note (as appointed by the Depository), or any successor Person thereto, and shall initially be the Trustee.

          “Private Exchange” means the offer by the Company, pursuant to a Registration Rights Agreement, to the Initial Purchasers to issue and deliver to each such Initial Purchaser, in exchange for the Initial Notes held by such Initial Purchaser as part of the initial distribution of such Initial Notes, a like aggregate principal amount of Private Exchange Notes.

          “Private Exchange Notes” means any Notes issued in connection with a Private Exchange.

          “Purchase Agreement” means (a) with respect to the Initial Notes issued on the Issue Date, the Purchase Agreement dated November 21, 2005, among the Company, the Guarantors and the Initial Purchasers and (b) with respect to each issuance of Additional Notes, the purchase agreement or underwriting agreement among the Company, the Guarantors and the Persons purchasing or underwriting such Additional Notes.

          “QIB” means a “qualified institutional buyer” as defined in Rule 144A.

          “Registered Exchange Offer” means the offer by the Company, pursuant to a Registration Rights Agreement, to certain Holders of Initial Notes, to issue and deliver to such Holders, in exchange for the Initial Notes, a like aggregate principal amount of Exchange Notes registered under the Securities Act.

          “Rule 144A Notes” means all Notes offered and sold to QIBs in reliance on Rule 144A.

          “Shelf Registration Statement” means the registration statement issued by the Company in connection with the offer and sale of Initial Notes or Private Exchange Notes pursuant to a Registration Rights Agreement.

          “Transfer Restricted Notes” means Notes that bear or are required to bear a legend relating to restrictions on transfer relating to the Securities Act set forth in Section 2.3(e).

3

     1.2 Other Definitions

	Defined in
Term	Section:
“Agent Members”		2.1	(b)
“Global Notes”		2.1	(a)
“IAI Global Note”		2.1	(a)
“Permanent Regulation S Global Note”		2.1	(a)
“Regulation S”		2.1	(a)
“Regulation S Global Note”		2.1	(a)
“Rule 144A”		2.1	(a)
“Rule 144A Global Note”		2.1	(a)
“Temporary Regulation S Global Note”		2.1	(a)

2. The Notes

     2.1 (a) Form and Dating. The Initial Notes will be offered and sold by the Company pursuant to the Purchase Agreement. The Initial Notes will be resold initially only to (i) QIBs in reliance on Rule 144A under the Securities Act (“Rule 144A”) and (ii) Persons other than U.S. Persons (as defined in Regulation S) in reliance on Regulation S under the Securities Act (“Regulation S”). Initial Notes may thereafter be transferred to, among others, QIBs, IAIs and purchasers in reliance on Regulation S, subject to the restrictions on transfer set forth herein. Initial Notes initially resold pursuant to Rule 144A shall be issued initially in the form of one or more permanent global Notes in definitive, fully registered form (collectively, the “Rule 144A Global Note”); Initial Notes initially resold to IAIs shall be issued initially in the form of one or more permanent global Notes in definitive, fully registered form (collectively, the “IAI Global Note”); and Initial Notes initially resold pursuant to Regulation S shall be issued initially in the form of one or more temporary global notes in fully registered form (collectively, the “Temporary Regulation S Global Note”), in each case without interest coupons and with the global notes legend and the applicable restricted notes legend set forth in Exhibit 1 hereto, which shall be deposited on behalf of the purchasers of the Initial Notes represented thereby with the Notes Custodian and registered in the name of the Depository or a nominee of the Depository, duly executed by the Company and authenticated by the Trustee as provided in this Indenture. Except as set forth in this Section 2.1(a), beneficial ownership interests in the Temporary Regulation S Global Note will not be exchangeable for interests in the Rule 144A Global Note, the IAI Global Note, a permanent global note (the “Permanent Regulation S Global Note”, and together with the Temporary Regulation S Global Note, the “Regulation S Global Note”) or any other Note prior to the expiration of the Distribution Compliance Period and then, after the expiration of the Distribution Compliance Period, may be exchanged for interests in a Rule 144A Global Note, an IAI Global Note or the Permanent Regulation S Global Note only upon certification in form reasonably satisfactory to the Trustee that (i) beneficial ownership interests in such Temporary Regulation S Global Note are owned either by non-U.S. persons or U.S. persons who purchased such interests in a transaction that did not require registration under the Securities Act and (ii) in the case of an exchange for an

4

IAI Global Note, certification that the interest in the Temporary Regulation S Global Note is being transferred to an institutional “accredited investor” under the Securities Act that is an institutional accredited investor acquiring the notes for its own account or for the account of an institutional accredited investor.

          Beneficial interests in Temporary Regulation S Global Notes (after the expiration of the Distribution Compliance Period) or IAI Global Notes may be exchanged for interests in Rule 144A Global Notes if (1) such exchange occurs in connection with a transfer of Notes in compliance with Rule 144A and (2) the transferor of the beneficial interest in the Temporary Regulation S Global Note or the IAI Global Note, as applicable, first delivers to the Trustee a written certificate (in a form satisfactory to the Trustee) to the effect that the beneficial interest in the Temporary Regulation S Global Note or the IAI Global Note, as applicable, is being transferred to a Person (a) who the transferor reasonably believes to be a QIB, (b) purchasing for its own account or the account of a QIB in a transaction meeting the requirements of Rule 144A, and (c) in accordance with all applicable securities laws of the States of the United States and other jurisdictions.

          Beneficial interests in Temporary Regulation S Global Notes (after the expiration of the Distribution Compliance Period) and Rule 144A Global Notes may be exchanged for an interest in IAI Global Notes if (1) such exchange occurs in connection with a transfer of the Notes in compliance with an exemption under the Securities Act and (2) the transferor of the Regulation S Global Note or Rule 144A Global Note, as applicable, first delivers to the trustee a written certificate (substantially in the form of Exhibit 2) to the effect that (A) the Regulation S Global Note or Rule 144A Global Note, as applicable, is being transferred (a) to an “accredited investor” within the meaning of 501(a)(1),(2),(3) and (7) under the Securities Act that is an institutional investor acquiring the notes for its own account or for the account of such an institutional accredited investor, in each case in a minimum principal amount of the notes of $250,000, for investment purposes and not with a view to or for offer or sale in connection with any distribution in violation of the Securities Act and (B) in accordance with all applicable securities laws of the States of the United States and other jurisdictions.

          Beneficial interests in a Rule 144A Global Note or an IAI Global Note may be transferred to a Person who takes delivery in the form of an interest in a Regulation S Global Note, whether before or after the expiration of the Distribution Compliance Period, only if the transferor first delivers to the Trustee a written certificate (in the form provided in this Indenture) to the effect that such transfer is being made in accordance with Rule 903 or 904 of Regulation S or Rule 144 (if applicable).

          The Rule 144A Global Note, the IAI Global Note, the Temporary Regulation S Global Note and the Permanent Regulation S Global Note are collectively referred to herein as “Global Notes.” The aggregate principal amount of the Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depository or its nominee as hereinafter provided.

5

     (b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a Global Note deposited with or on behalf of the Depository.

          The Company shall execute and the Trustee shall, in accordance with this Section 2.1(b), authenticate and deliver initially one or more Global Notes that (a) shall be registered in the name of the Depository for such Global Note or Global Notes or the nominee of such Depository and (b) shall be delivered by the Trustee to such Depository or pursuant to such Depository’s instructions or held by the Trustee as custodian for the Depository.

          Members of, or participants in, the Depository (“Agent Members”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depository or by the Trustee as the custodian of the Depository or under such Global Note, and the Company, the Trustee and any agent of the Company, the Guarantors or the Trustee shall be entitled to treat the Depository as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Guarantors, the Trustee or any agent of the Company, the Guarantors or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices of such Depository governing the exercise of the rights of a holder of a beneficial interest in any Global Note.

     (c) Definitive Notes. Except as provided in this Section 2.1 or Section 2.3 or 2.4, owners of beneficial interests in Global Notes shall not be entitled to receive physical delivery of Definitive Notes.

     2.2 Authentication

          The Trustee shall authenticate and deliver: (1) on the Issue Date, an aggregate principal amount of $275,000,000 Notes, (2) any Additional Notes for an original issue in an aggregate principal amount specified in the written order of the Company pursuant to Section 2.03 of the Indenture and (3) Exchange Notes or Private Exchange Notes for issue only in a Registered Exchange Offer or a Private Exchange, respectively, pursuant to a Registration Rights Agreement, for a like principal amount of Initial Notes, in each case upon a written order of the Company signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company. Such order shall specify the amount of the Notes to be authenticated and the date on which the original issue of Notes is to be authenticated and, in the case of any issuance and Additional Notes pursuant to Section 2.01 of the Indenture, shall certify that such issuance is in compliance with Section 4.03 of the Indenture.

     2.3 Transfer and Exchange

          (a) Transfer and Exchange of Definitive Notes. When Definitive Notes are presented to the Registrar with a request:

(x) to register the transfer of such Definitive Notes; or

6

(y) to exchange such Definitive Notes for an equal principal amount of Definitive Notes of other authorized denominations,

the Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Definitive Notes surrendered for transfer or exchange:

     (i) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Registrar, duly executed by the Holder thereof or its attorney duly authorized in writing; and

     (ii) if such Definitive Notes are required to bear a restricted notes legend, they are being transferred or exchanged pursuant to an effective registration statement under the Securities Act, pursuant to Section 2.3(b) or pursuant to clause (A), (B) or (C) below, and are accompanied by the following additional information and documents, as applicable:

     (A) if such Definitive Notes are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect; or

     (B) if such Definitive Notes are being transferred to the Company, a certification to that effect; or

     (C) if such Definitive Notes are being transferred (x) pursuant to an exemption from registration in accordance with Rule 144A, Regulation S or Rule 144 under the Securities Act; or (y) in reliance upon another exemption from the requirements of the Securities Act: (i) a certification to that effect (in the form set forth on the reverse of the Note) and (ii) if the Company so requests, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the legend set forth in Section 2.3(e)(i).

          (b) Restrictions on Transfer of a Definitive Note for a Beneficial Interest in a Global Note. A Definitive Note may not be exchanged for a beneficial interest in a Rule 144A Global Note, an IAI Global Note or a Permanent Regulation S Global Note except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Trustee, together with:

     (i) certification, in the form set forth on the reverse of the Note, that such Definitive Note is either (A) being transferred to a QIB in accordance with Rule 144A, (B) being transferred to an IAI or (C) being transferred after expiration of the Distribution Compliance Period by a Person who initially purchased such Note in reliance on Regulation S to a buyer who elects to hold its interest in such Note in the form of a beneficial interest in the Permanent Regulation S Global Note; and

7

     (ii) written instructions directing the Trustee to make, or to direct the Notes Custodian to make, an adjustment on its books and records with respect to such Rule 144A Global Note (in the case of a transfer pursuant to clause (b)(i)(A)), IAI Global Note (in the case of a transfer pursuant to clause (b)(i)(B) or Permanent Regulation S Global Note (in the case of a transfer pursuant to clause (b)(i)(C)) to reflect an increase in the aggregate principal amount of the Notes represented by the Rule 144A Global Note, IAI Global Note or Permanent Regulation S Global Note, as applicable, such instructions to contain information regarding the Depository account to be credited with such increase,

then the Trustee shall cancel such Definitive Note and cause, or direct the Notes Custodian to cause, in accordance with the standing instructions and procedures existing between the Depository and the Notes Custodian, the aggregate principal amount of Notes represented by the Rule 144A Global Note, IAI Global Note or Permanent Regulation S Global Note, as applicable, to be increased by the aggregate principal amount of the Definitive Note to be exchanged and shall credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Rule 144A Global Note, IAI Global Note or Permanent Regulation S Global Note, as applicable, equal to the principal amount of the Definitive Note so canceled. If no Rule 144A Global Notes, IAI Global Notes or Permanent Regulation S Global Notes, as applicable, are then outstanding, the Company shall issue and the Trustee shall authenticate, upon written order of the Company in the form of an Officers’ Certificate of the Company, a new Rule 144A Global Note, IAI Global Note or Permanent Regulation S Global Note, as applicable, in the appropriate principal amount.

          (c) Transfer and Exchange of Global Notes.

          (i) The transfer and exchange of Global Notes or beneficial interests therein shall be effected through the Depository, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depository therefor. A transferor of a beneficial interest in a Global Note shall deliver to the Registrar a written order given in accordance with the Depository’s procedures containing information regarding the participant account of the Depository to be credited with a beneficial interest in the Global Note. The Registrar shall, in accordance with such instructions, instruct the Depository to credit to the account of the Person specified in such instructions a beneficial interest in the Global Note and to debit the account of the Person making the transfer the beneficial interest in the Global Note being transferred.

          (ii) If the proposed transfer is a transfer of a beneficial interest in one Global Note to a beneficial interest in another Global Note, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Note to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of the Global Note from which such interest is being transferred.

8

     (iii) Notwithstanding any other provisions of this Appendix (other than the provisions set forth in Section 2.4), a Global Note may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository.

     (iv) In the event that a Global Note is exchanged for Definitive Notes pursuant to Section 2.4 of this Appendix, prior to the consummation of a Registered Exchange Offer or the effectiveness of a Shelf Registration Statement with respect to such Notes, such Notes may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of this Section 2.3 (including the certification requirements set forth on the reverse of the Initial Notes intended to ensure that such transfers comply with Rule 144A, Regulation S or another applicable exemption under the Securities Act, as the case may be) and such other procedures as may from time to time be adopted by the Company.

          (d) Restrictions on Transfer of Temporary Regulation S Global Notes. During the Distribution Compliance Period, beneficial ownership interests in Temporary Regulation S Global Notes may only be sold, pledged or transferred in accordance with the Applicable Procedures and only (i) to the Company, (ii) in an offshore transaction in accordance with Regulation S (other than a transaction resulting in an exchange for an interest in a Permanent Regulation S Global Note), or (iii) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any State of the United States.

     (e) Legend.

     (i) Except as permitted by the following paragraphs (ii), (iii) and (iv), each Note certificate evidencing the Global Notes (and all Notes issued in exchange therefor or in substitution thereof), in the case of Notes offered otherwise than in reliance on Regulation S, shall bear a legend in substantially the following form:

THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY, (II) WITHIN THE UNITED STATES TO A PERSON WHOM

9

THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (IV) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (V) PURSUANT TO EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (VI), IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

          Each certificate evidencing a Note offered in reliance on Regulation S shall, in lieu of the foregoing, bear a legend in substantially the following form:

THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.

Each Definitive Note shall also bear the following additional legend:

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM

10

     THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

     (ii) Upon any sale or transfer of a Transfer Restricted Note (including any Transfer Restricted Note represented by a Global Note) pursuant to Rule 144 under the Securities Act, the Registrar shall permit the transferee thereof to exchange such Transfer Restricted Note for a certificated Note that does not bear the legend set forth above and rescind any restriction on the transfer of such Transfer Restricted Note, if the transferor thereof certifies in writing to the Registrar that such sale or transfer was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Note).

     (iii) After a transfer of any Initial Notes or Private Exchange Notes pursuant to and during the period of the effectiveness of a Shelf Registration Statement with respect to such Initial Notes or Private Exchange Notes, as the case may be, all requirements pertaining to legends on such Initial Note or such Private Exchange Note will cease to apply, the requirements requiring any such Initial Note or such Private Exchange Note issued to certain Holders be issued in global form will cease to apply, and a certificated Initial Note or Private Exchange Note or an Initial Note or Private Exchange Note in global form, in each case without restrictive transfer legends, will be available to the transferee of the Holder of such Initial Notes or Private Exchange Notes upon exchange of such transferring Holder’s certificated Initial Note or Private Exchange Note or directions to transfer such Holder’s interest in the Global Note, as applicable.

     (iv) Upon the consummation of a Registered Exchange Offer with respect to the Initial Notes, all requirements pertaining to such Initial Notes that Initial Notes issued to certain Holders be issued in global form will still apply with respect to Holders of such Initial Notes that do not exchange their Initial Notes, and Exchange Notes in certificated or global form, in each case without the restricted notes legend set forth in Exhibit 1 hereto, will be available to Holders that exchange such Initial Notes in such Registered Exchange Offer.

     (v) Upon the consummation of a Private Exchange with respect to the Initial Notes, all requirements pertaining to such Initial Notes that Initial Notes issued to certain Holders be issued in global form will still apply with respect to Holders of such Initial Notes that do not exchange their Initial Notes, and Private Exchange Notes in global form with the global notes legend and the applicable restricted notes legend set forth in Exhibit 1 hereto will be available to Holders that exchange such Initial Notes in such Private Exchange.

          (f) Cancellation or Adjustment of Global Note. At such time as all beneficial interests in a Global Note have either been exchanged for Definitive Notes, redeemed, purchased or canceled, such Global Note shall be returned to the Depository for cancellation or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for certificated Notes, redeemed, purchased or canceled, the principal amount of Notes represented by

11

such Global Note shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Notes Custodian for such Global Note) with respect to such Global Note, by the Trustee or the Notes Custodian, to reflect such reduction.

     (g) No Obligation of the Trustee.

     (i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Note, a member of, or a participant in the Depository or other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depository) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders under the Notes shall be given or made only to or upon the order of the registered Holders (which shall be the Depository or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through the Depository subject to the applicable rules and procedures of the Depository. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its members, participants and any beneficial owners.

     (ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depository participants, members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

2.4 Certificated Notes

          (a) A Global Note deposited with the Depository or with the Trustee as Notes Custodian for the Depository pursuant to Section 2.1 shall be transferred to the beneficial owners thereof in the form of Definitive Notes in an aggregate principal amount equal to the principal amount of such Global Note, in exchange for such Global Note, only if such transfer complies with Section 2.3 hereof and (i) the Depository notifies the Company that it is unwilling or unable to continue as Depository for such Global Note and the Depository fails to appoint a successor depositary or if at any time such Depository ceases to be a “clearing agency” registered under the Exchange Act and, in either case, a successor Depository is not appointed by the Company within 90 days of such notice, or (ii) an Event of Default has occurred and is continuing or (iii) the Company, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of Definitive Notes under this Indenture.

12

          (b) Any Global Note that is transferable to the beneficial owners thereof pursuant to this Section 2.4 shall be surrendered by the Depository to the Trustee located at its principal corporate trust office, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Note, an equal aggregate principal amount of Definitive Notes of authorized denominations. Any portion of a Global Note transferred pursuant to this Section 2.4 shall be executed, authenticated and delivered only in denominations of $1,000 principal amount and any integral multiple thereof and registered in such names as the Depository shall direct. Any Definitive Note delivered in exchange for an interest in the Transfer Restricted Note shall, except as otherwise provided by Section 2.3(e) hereof, bear the applicable restricted notes legend and definitive note legend set forth in Exhibit 1 hereto.

          (c) Subject to the provisions of Section 2.4(b) hereof, the registered Holder of a Global Note shall be entitled to grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes.

          (d) In the event of the occurrence of one of the events specified in Section 2.4(a) hereof, the Company shall promptly make available to the Trustee a reasonable supply of Definitive Notes in definitive, fully registered form without interest coupons. In the event that such Definitive Notes are not issued, the Company expressly acknowledges, with respect to the right of any Holder to pursue a remedy pursuant to Section 6.06 of this Indenture, the right of any beneficial owner of Notes to pursue such remedy with respect to the portion of the Global Note that represents such beneficial owner’s Notes as if such Definitive Notes had been issued.

EXHIBIT 1 to Rule 144A/REGULATION S/IAI APPENDIX

[FORM OF FACE OF INITIAL NOTE]

[Global Notes Legend]

          UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE ISSUERS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

          TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

          [[FOR REGULATION S GLOBAL NOTE ONLY] UNTIL 40 DAYS AFTER THE LATER OF COMMENCEMENT OR COMPLETION OF THE OFFERING, AN OFFER OR SALE OF NOTES WITHIN THE UNITED STATES BY A DEALER (AS DEFINED IN THE SECURITIES ACT) MAY VIOLATE THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IF SUCH OFFER OR SALE IS MADE OTHERWISE THAN IN ACCORDANCE WITH RULE 144A THEREUNDER.]

[Restricted Notes Legend for Notes Offered Otherwise than in Reliance
on Regulation S]

          THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

2

          THE HOLDER OF THIS NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY, (II) WITHIN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (IV) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (V) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (VI) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

[Restricted Notes Legend for Notes Offered in Reliance on Regulation S.]

          THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT.

[Temporary Regulation S Global Note Legend]

          EXCEPT AS SET FORTH BELOW, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL NOTE WILL NOT BE EXCHANGEABLE FOR INTERESTS IN THE PERMANENT REGULATION S GLOBAL NOTE OR ANY OTHER NOTE REPRESENTING AN INTEREST IN THE NOTES REPRESENTED HEREBY WHICH DO NOT CONTAIN A LEGEND CONTAINING RESTRICTIONS ON TRANSFER, UNTIL THE EXPIRATION OF THE “40-DAY DISTRIBUTION COMPLIANCE PERIOD” (WITHIN THE MEANING

3

OF RULE 903(b)(2) OF REGULATION S UNDER THE SECURITIES ACT) AND THEN ONLY UPON CERTIFICATION IN FORM REASONABLY SATISFACTORY TO THE TRUSTEE THAT SUCH BENEFICIAL INTERESTS ARE OWNED EITHER BY NON-U.S. PERSONS OR U.S. PERSONS WHO PURCHASED SUCH INTERESTS IN A TRANSACTION THAT DID NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT. DURING SUCH 40-DAY DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL NOTE MAY ONLY BE SOLD, PLEDGED OR TRANSFERRED (I) TO THE COMPANY, (II) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (III) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (III) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. HOLDERS OF INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL NOTE WILL NOTIFY ANY PURCHASER OF THIS NOTE OF THE RESALE RESTRICTIONS REFERRED TO ABOVE, IF THEN APPLICABLE.

          AFTER THE EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL NOTE MAY BE EXCHANGED FOR INTERESTS IN A RULE 144A GLOBAL NOTE ONLY IF (1) SUCH EXCHANGE OCCURS IN CONNECTION WITH A TRANSFER OF THE NOTES IN COMPLIANCE WITH RULE 144A AND (2) THE TRANSFEROR OF THE REGULATION S GLOBAL NOTE FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT THE REGULATION S GLOBAL NOTE IS BEING TRANSFERRED (A) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES TO BE A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, (B) TO A PERSON WHO IS PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, AND (C) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

          AFTER THE EXPIRATION OF THE DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL NOTE MAY BE EXCHANGED FOR INTERESTS IN AN IAI GLOBAL NOTE ONLY IF (1) SUCH EXCHANGE OCCURS IN CONNECTION WITH A TRANSFER OF THE NOTES IN COMPLIANCE WITH AN EXEMPTION UNDER THE SECURITIES ACT AND (2) THE TRANSFEROR OF THE REGULATION S GLOBAL NOTE FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT THE REGULATION S GLOBAL NOTE IS BEING TRANSFERRED (A) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(A)(1),(2),(3) OR (7) UNDER THE SECURITIES ACT THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING

4

CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

          BENEFICIAL INTERESTS IN A RULE 144A GLOBAL NOTE OR AN IAI GLOBAL NOTE MAY BE TRANSFERRED TO A PERSON WHO TAKES DELIVERY IN THE FORM OF AN INTEREST IN THE REGULATION S GLOBAL NOTE, WHETHER BEFORE OR AFTER THE EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD, ONLY IF THE TRANSFEROR FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT SUCH TRANSFER IS BEING MADE IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S OR RULE 144 (IF AVAILABLE).

[Definitive Notes Legend]

          IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

5

[FLAG ACQUISITION CORPORATION

11¹/₈% Senior Secured Notes Due 2015

	CUSIP No. [   ]
	ISIN No. [ ]
No. [ ]	$ [ ]

          FLAG ACQUISITION CORPORATION, a Delaware corporation, promises to pay to [   ], or its registered assigns, the principal sum of [   ] Dollars ($[   ]) on December 1, 2015.

          Interest Payment Dates: June 1 and December 1

          Record Dates: May 15 and November 15

          Additional provisions of this Note are set forth on the other side of this Note.

Dated:

SIGNATURE PAGE FOLLOWS]

6

          IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

Dated:

FLAG ACQUISITION CORPORATION
by
	Name:
	Title:

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

WELLS FARGO BANK, N.A.

     as Trustee, certifies

that this is one of
the Notes referred
to in the Indenture.

by

          Authorized Signatory

7

[FORM OF REVERSE SIDE OF INITIAL NOTE]

11¹/₈% Senior Secured Notes Due 2015

1. Interest

          Flag Acquisition Corporation, a Delaware corporation (such Person, and its respective successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Note at a rate per annum of 11¹/₈%; provided, however, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Note at a rate of 0.25% per annum (increasing by an additional 0.25% per annum after each consecutive 90-day period that occurs after the date on which such Registration Default occurs up to a maximum additional interest rate of 1.00%) from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured and, if practicable, the Company shall notify the Trustee in writing of the occurrence of a Registration Default promptly (and in any event prior to the next stated payment of interest) and of the cure of such Registration Default promptly following the occurrence thereof (and in any event prior to the next scheduled payment of interest). The Company will pay interest semiannually in arrears to the holders of record of the Notes on June 1 and December 1 of each year, commencing June 1, 2006. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the Issue Date. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company will pay interest on overdue principal at the rate borne by this Note plus 1.0% per annum, and it will pay interest on overdue installments of interest at the same rate to the extent lawful.

2. Method of Payment

          The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered holders of Notes at the close of business on the May 15 and November 15 next preceding the interest payment date even if Notes are canceled after the record date and on or before the interest payment date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Notes represented by a Global Note (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by the Depository. The Company will make all payments in respect of a certificated Note (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof; provided, however, that payments on a certificated Note will be made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately

8

preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

3. Paying Agent and Registrar

          Initially, Wells Fargo Bank, N.A. (the “Trustee”), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. Holdings or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.

4. Indenture

          The Company issued the Notes under an Indenture dated as of November 30, 2005 (the “Indenture”), among the Company, the Guarantors, the Trustee and the Notes Collateral Agent. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) (the “Act”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all such terms, and Noteholders are referred to the Indenture and the Act for a statement of those terms.

          The Notes are secured obligations of the Company. The Indenture contains covenants that, among other things, limit the ability of the Company and its Restricted Subsidiaries to incur additional indebtedness; pay dividends or distributions on, or redeem or repurchase capital stock; make investments; engage in transactions with affiliates; create liens on assets to secure indebtedness; transfer or sell assets; guarantee indebtedness; restrict dividends or other payments of subsidiaries; consolidate, merge or transfer all or substantially all of its assets; and engage in sale/leaseback transactions. These covenants are subject to important exceptions and qualifications contained in the Indenture.

5. Optional Redemption

          Except as set forth below, the Company shall not be entitled to redeem the Notes.

          On and after December 1, 2010, the Company may redeem the Notes at its option, in whole at any time or in part from time to time, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each holder’s registered address, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on December 1 of the years set forth below:

9

	Redemption
Period	Price
2010		105.563	%
2011		103.708	%
2012		101.854	%
2013 and thereafter		100.000	%

          In addition, prior to December 1, 2010, the Company may redeem the Notes at its option, in whole at any time or in part from time to time, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each holder’s registered address, at a redemption price equal to 100% of the principal amount of the Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and additional interest, if any, to the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

          Notwithstanding the foregoing, at any time and from time to time on or prior to December 1, 2008, the Company may redeem, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each holder’s registered address, in the aggregate principal amount not to exceed 35% of the aggregate principal amount of the Notes (which includes Additional Notes, if any) with the net cash proceeds of one or more Equity Offerings (1) by the Company or (2) by any direct or indirect parent of the Company, to the extent the net cash proceeds thereof are contributed to the common equity capital of the Company or used to purchase Capital Stock (other than Disqualified Stock) of the Company from it, at a redemption price (expressed as a percentage of principal amount thereof) of 111.13% plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that at least 65% of the aggregate principal amount of Notes (which includes Additional Notes, if any), remains outstanding after each such redemption; provided further, however, that such redemption shall occur within 90 days after the date on which any such Equity Offering is consummated and otherwise in accordance with the procedures set forth in the Indenture.

6. Notice of Redemption

          Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at his registered address. Notes in denominations larger than $1,000 principal amount may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Notes (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such

10

date interest ceases to accrue on such Notes (or such portions thereof) called for redemption.

7. Put Provisions

          Unless the Company has given notice of redemption as described under Paragraph 5 of this Note with respect to all the Notes, not later than 30 days following any Change of Control, any Holder of Notes will have the right to cause the Company to purchase all or any part of the Notes of such Holder at a purchase price equal to 101% of the principal amount of the Notes to be purchased plus accrued interest to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date) as provided in, and subject to the terms of the Indenture.

8. Guarantee

          The payment by the Company of the principal of, and premium and interest on, the Notes is fully and unconditionally guaranteed on a joint and several basis by each of the Guarantors to the extent set forth in the Indenture.

9. Security

          The Notes will be secured by the Collateral on the terms and subject to the conditions set forth in the Indenture and the Security Documents. The Trustee and the Notes Collateral Agent, as the case may be, hold the Collateral in trust for the benefit of the Trustee and the Holders, in each case pursuant to the Security Documents and the Intercreditor Agreement. Each Holder, by accepting this Note, consents and agrees to the terms of the Security Documents (including the provisions providing for the foreclosure and release of Collateral) and the Intercreditor Agreement as the same may be in effect or may be amended from time to time in accordance with their terms and the Indenture and authorizes and directs the Notes Collateral Agent to enter into the Security Documents and the Intercreditor Agreement, and to perform its obligations and exercise its rights thereunder in accordance therewith.

10. Denominations; Transfer; Exchange

          The Notes are in registered form without coupons in denominations of $1,000 principal amount and whole multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes selected for redemption (except, in the case of a Note to be redeemed in part, the portion of the Note not to be redeemed) or any Notes for a period of 15 days before a selection of Notes to be redeemed or 15 days before an interest payment date.

11

11. Persons Deemed Owners

          The registered Holder of this Note may be treated as the owner of it for all purposes.

12. Unclaimed Money

          If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment.

13. Discharge and Defeasance

          Subject to certain conditions set forth in the Indenture, the Company at any time shall be entitled to terminate some or all of their and the Guarantors’ obligations under the Notes and the Indenture if the Company deposits with the Trustee money or, in certain cases, U.S. Government Obligations for the payment of principal and interest on the Notes to redemption or maturity, as the case may be.

14. Amendment, Waiver

          Subject to certain exceptions set forth in the Indenture, the Company and the Trustee may amend the Indenture, the Notes, any Security Document or the Intercreditor Agreement with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange for the Notes) and any past default or compliance with any provisions may be waived with the consent of the holders of a majority in principal amount of the Notes then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange for the Notes). Subject to certain exceptions set forth in the Indenture, the Company, the Guarantors and the Trustee may amend the Indenture, the Notes, any Security Document or the Intercreditor Agreement without notice to or consent of any Holder to cure any ambiguity, omission, defect, mistake or inconsistency; to comply with Article 5 of the Indenture; to provide for uncertificated Notes in addition to or in place of certificated Notes; provided, however, that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code; to add additional Guarantees with respect to the Notes; to add to the covenants of the Company or any Restricted Subsidiary for the benefit of the Holders or to surrender any right or power herein conferred upon the Company or any Guarantor; to comply with any requirement of the SEC in connection with qualifying or maintaining the qualification of the Indenture under the TIA; to make any change that does not adversely affect the rights of any Holder; to provide for the issuance of the Exchange Notes or Additional Notes, which, except as otherwise provided in the Indenture, shall have terms substantially identical in all material respects to the Initial Notes; to make any amendment to the provisions of the Indenture relating to the

12

transfer and legending of Notes; provided, however, that (a) compliance with the Indenture as so amended would not result in Notes being transferred in violation of the Securities Act or any other applicable securities law and (b) such amendment does not materially and adversely affect the rights of holders to transfer the Notes; to secure the Notes or to add additional assets as Collateral; to release Collateral from the Lien or any Guarantor from its Guarantee pursuant to the Indenture, the Security Documents and the Intercreditor Agreement when permitted or required by the Indenture or the Security Documents; or except as provided in clause (x) of Section 9.02 of the Indenture, to amend the Intercreditor Agreement in accordance with the provisions thereof.

15. Defaults and Remedies

          Under the Indenture, Events of Default include (a) default for 30 days in payment of interest on the Notes; (b) default in payment of principal on the Notes at maturity, upon redemption pursuant to Paragraph 5 of the Notes, upon acceleration or otherwise, or failure by the Company to redeem or purchase Notes when required; (c) failure by the Company, Holdings or certain Subsidiaries to comply with other agreements in the Indenture or the Notes, in certain cases subject to notice and lapse of time; (d) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Company, Holdings or Significant Subsidiaries if the amount accelerated (or so unpaid) exceeds $15.0 million; (e) certain events of bankruptcy or insolvency with respect to the Company, Holdings and the Significant Subsidiaries; (f) certain judgments or decrees for the payment of money in excess of $15.0 million; (g) certain defaults with respect to Guarantees; and (h) certain defaults relating to the Collateral under the Security Documents. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Notes may declare all such Notes to be due and payable immediately, subject to certain conditions set forth in the Indenture. Certain events of bankruptcy or insolvency are Events of Default which will result in the Notes being due and payable immediately upon the occurrence of such Events of Default.

          Noteholders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Notes unless it receives indemnity or security reasonably satisfactory to it. Subject to certain limitations, Holders of a majority in principal amount of the Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Noteholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders.

16. Trustee Dealings with the Company

          Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.

13

17. No Recourse Against Others

          A director, officer, employee or stockholder, as such, of the Company or the Trustee shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation; provided, however, the foregoing will not affect or limit any liability of any Guarantor under the Indenture or its Guarantee. By accepting a Note, each Noteholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Notes.

18. Authentication

          This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Note.

19. Abbreviations

          Customary abbreviations may be used in the name of a Noteholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

20. CUSIP Numbers

          Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company have caused CUSIP numbers to be printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Noteholders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

21. Holders’ Compliance with Registration Rights Agreement

          Each Holder of a Note, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including the obligations of the Holders with respect to a registration and the indemnification of the Company to the extent provided therein.

22. Governing Law

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

          The Company will furnish to any Noteholder upon written request and without charge to the Noteholder a copy of the Indenture which has in it the text of this Note in larger type. Requests may be made to:

14

Flag Acquisition Corporation
c/o Apollo Management, LP
9 West 57th Street, 43rd Floor
New York, NY 10019
Attention: General Counsel

ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to

     (Print or type assignee’s name, address and zip code)

     (Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint                     agent to transfer this Note on the books of the Company. The agent may substitute another to act for him.

Date: Your Signature:

Sign exactly as your name appears on the other side of this Note.

In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the period referred to in Rule 144(k) under the Securities Act after the later of the date of original issuance of such Notes and the last date, if any, on which such Notes were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Notes are being transferred in accordance with its terms:

CHECK ONE BOX BELOW

o to the Company; or

(1	)	o	pursuant to an effective registration statement under the Securities Act of 1933; or
(2	)	o	inside the United States to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or
(3	)	o	outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or
(4	)	o	pursuant to the exemption from registration provided by Rule 144 under the Securities Act of 1933; or

2

(5 ) o to an institutional “accredited investor” (as defined in Rule 501(a)(1),(2),(3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and agreements.

Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (3), (4) or (5) is checked, the Trustee shall be entitled to require, prior to registering any such transfer of the Notes, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

______________________________
Signature

Signature Guarantee:

Signature must be guaranteed Signature

     Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

3

TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.

          The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

Dated:
	Notice:	To be executed by
		an executive officer

4

[TO BE ATTACHED TO GLOBAL NOTES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

The following increases or decreases in this Global Note have been made:

	Amount of decrease in	Amount of increase in	Principal amount of this	Signature of authorized
	Principal amount of this	Principal amount of this	Global Note following such	officer of Trustee or Notes
Date of Exchange	Global Note	Global Note	decrease or increase	Custodian

5

OPTION OF HOLDER TO ELECT PURCHASE

          If you want to elect to have this Note purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture, check the box:

          If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture, state the amount in principal amount: $___

Dated:	Your Signature:
		(Sign exactly as your name appears
		on the other side of this Note.)

Signature Guarantee:
	(Signature must be guaranteed)

     Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

EXHIBIT A

FORM OF FACE OF EXCHANGE NOTE
OR PRIVATE EXCHANGE NOTE^*/**/

^*/ If the Note is to be issued in global form add the Global Notes Legend from Exhibit 1 to Appendix A and the attachment from such Exhibit 1 captioned “[TO BE ATTACHED TO GLOBAL NOTES] - SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE”.

^**/ If the Note is a Private Exchange Note issued in a Private Exchange to an Initial Purchaser holding an unsold portion of its initial allotment, add the Restricted Notes Legend from Exhibit 1 to Appendix A and replace the Assignment Form included in this Exhibit A with the Assignment Form included in such Exhibit 1.

2

[FLAG ACQUISITION CORPORATION

11¹/₈% Senior Secured Notes Due 2015

CUSIP No. [    ]
ISIN No. [    ]

    No. [    ] $ [     ]

          FLAG ACQUISITION CORPORATION, a Delaware corporation, promises to pay to [   ], or its registered assigns, the principal sum of [    ] Dollars ($[    ]) on December 1, 2015.

          Interest Payment Dates: June 1 and December 1

          Record Dates: May 15 and November 15

          Additional provisions of this Note are set forth on the other side of this Note.

Dated:

SIGNATURE PAGE FOLLOWS]

3

          IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

Dated:

          FLAG ACQUISITION CORPORATION

by
	Name:
	Title:

TRUSTEE’S CERTIFICATE OF
           AUTHENTICATION

WELLS FARGO BANK, N.A.
      as Trustee, certifies that this is one of
           the Notes referred to in the Indenture.

By
	Authorized Signatory

EXHIBIT A

[FORM OF REVERSE SIDE OF EXCHANGE NOTE
OR PRIVATE EXCHANGE NOTE]

11¹/₈% Senior Secured Notes Due 2015

1. Interest

     Flag Acquisition Corporation, a Delaware corporation (such Person, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Note at a rate per annum of 11¹/₈% [; provided, however, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Note at a rate of 0.25% per annum (increasing by an additional 0.25% per annum after each consecutive 90-day period that occurs after the date on which such Registration Default occurs up to a maximum additional interest rate of 1.00%) from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured and, if practicable, the Company shall notify the Trustee in writing of the occurrence of a Registration Default promptly (and in any event prior to the next stated payment of interest) and of the cure of such Registration Default promptly following the occurrence thereof (and in any event prior to the next scheduled payment of interest).]¹ The Company will pay interest semiannually in arrears to the holders of record of the Notes on June 1 and December 1 of each year, commencing June 1, 2006. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the Issue Date. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Company will pay interest on overdue principal at the rate borne by this Note plus 1.0% per annum, and it will pay interest on overdue installments of interest at the same rate to the extent lawful.

2. Method of Payment

          The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered holders of Notes at the close of business on the May 15 and November 15 next preceding the interest payment date even if Notes are canceled after the record date and on or before the interest payment date. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Notes represented by a Global Note (including principal, premium and interest) will be made by wire transfer of immediately available funds to the accounts specified by the Depository. The Company will make all payments in respect of a certificated Note (including principal, premium and interest) by mailing a check to the registered address of each Holder thereof; provided, however, that payments on a certificated Note will be

¹ Insert if at the date of issuance of the Exchange Note or Private Exchange Note (as the case may be) any Registration Default has occurred with respect to the related Initial Notes during the interest period in which such date of issuance occurs.

2

made by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

3. Paying Agent and Registrar

          Initially, Wells Fargo Bank, N.A. (the “Trustee”), will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. Holdings or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.

4. Indenture

          The Company issued the Notes under an Indenture dated as of November 30, 2005 (the “Indenture”), among the Company, the Guarantors, the Trustee and the Notes Collateral Agent. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) (the “Act”). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Notes are subject to all such terms, and Noteholders are referred to the Indenture and the Act for a statement of those terms.

          The Notes are secured obligations of the Company. The Indenture contains covenants that, among other things, limit the ability of the Company and its Restricted Subsidiaries to incur additional indebtedness; pay dividends or distributions on, or redeem or repurchase capital stock; make investments; engage in transactions with affiliates; create liens on assets to secure indebtedness; transfer or sell assets; guarantee indebtedness; restrict dividends or other payments of subsidiaries; consolidate, merge or transfer all or substantially all of its assets; and engage in sale/leaseback transactions. These covenants are subject to important exceptions and qualifications contained in the Indenture.

5. Optional Redemption

          Except as set forth below, the Company shall not be entitled to redeem the Notes.

          On and after December 1, 2010, the Company may redeem the Notes at its option, in whole at any time or in part from time to time, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each holder’s registered address, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on December 1 of the years set forth below:

3

	Redemption
Period	Price
2010		105.563	%
2011		103.708	%
2012		101.854	%
2013 and thereafter		100.000	%

          In addition, prior to December 1, 2010, the Company may redeem the Notes at its option, in whole at any time or in part from time to time, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each holder’s registered address, at a redemption price equal to 100% of the principal amount of the Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and additional interest, if any, to the applicable redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date).

          Notwithstanding the foregoing, at any time and from time to time on or prior to December 1, 2008, the Company may redeem, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail to each holder’s registered address, in the aggregate principal amount not to exceed 35% of the original aggregate principal amount of the Notes (which includes Additional Notes, if any) with the net cash proceeds of one or more Equity Offerings (1) by the Company or (2) by any direct or indirect parent of the Company, to the extent the net cash proceeds thereof are contributed to the common equity capital of the Company or used to purchase Capital Stock (other than Disqualified Stock) of the Company from it, at a redemption price (expressed as a percentage of principal amount thereof) of 111.13% plus accrued and unpaid interest and additional interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that at least 65% of the aggregate principal amount of the Notes (which includes Additional Notes, if any), remains outstanding after each such redemption; provided further, however, that such redemption shall occur within 90 days after the date on which any such Equity Offering is consummated and otherwise in accordance with the procedures set forth in the Indenture.

6. Notice of Redemption

          Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at his registered address. Notes in denominations larger than $1,000 principal amount may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Notes (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Notes (or such portions thereof) called for redemption.

4

7. Put Provisions

          Unless the Company has given notice of redemption as described under Paragraph 5 of this Note with respect to all the Notes, not later than 30 days following any Change of Control, any Holder of Notes will have the right to cause the Company to purchase all or any part of the Notes of such Holder at a purchase price equal to 101% of the principal amount of the Notes to be purchased plus accrued interest to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date) as provided in, and subject to the terms of the Indenture.

8. Guarantee

          The payment by the Company of the principal of, and premium and interest on, the Notes is fully and unconditionally guaranteed on a joint and several basis by each of the Guarantors to the extent set forth in the Indenture.

9. Security

          The Notes will be secured by the Collateral on the terms and subject to the conditions set forth in the Indenture and the Security Documents. The Trustee and the Notes Collateral Agent, as the case may be, hold the Collateral in trust for the benefit of the Trustee and the Holders, in each case pursuant to the Security Documents and the Intercreditor Agreement. Each Holder, by accepting this Note, consents and agrees to the terms of the Security Documents (including the provisions providing for the foreclosure and release of Collateral) and the Intercreditor Agreement as the same may be in effect or may be amended from time to time in accordance with their terms and the Indenture and authorizes and directs the Notes Collateral Agent to enter into the Security Documents and the Intercreditor Agreement, and to perform its obligations and exercise its rights thereunder in accordance therewith.

10. Denominations; Transfer; Exchange

          The Notes are in registered form without coupons in denominations of $1,000 principal amount and whole multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Notes selected for redemption (except, in the case of a Note to be redeemed in part, the portion of the Note not to be redeemed) or any Notes for a period of 15 days before a selection of Notes to be redeemed or 15 days before an interest payment date.

11. Persons Deemed Owners

          The registered Holder of this Note may be treated as the owner of it for all purposes.

5

12. Unclaimed Money

          If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment.

13. Discharge and Defeasance

          Subject to certain conditions set forth in the Indenture, the Company at any time shall be entitled to terminate some or all of their and the Guarantors’ obligations under the Notes and the Indenture if the Company deposits with the Trustee money or, in certain cases, U.S. Government Obligations for the payment of principal and interest on the Notes to redemption or maturity, as the case may be.

14. Amendment, Waiver

          Subject to certain exceptions set forth in the Indenture, the Company and the Trustee may amend the Indenture, the Notes, any Security Document or the Intercreditor Agreement with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange for the Notes) and any past default or compliance with any provisions may be waived with the consent of the holders of a majority in principal amount of the Notes then outstanding voting as a single class (including consents obtained in connection with a tender offer or exchange for the Notes). Subject to certain exceptions set forth in the Indenture, the Company, the Guarantors and the Trustee may amend the Indenture, the Notes, any Security Document or the Intercreditor Agreement without notice to or consent of any Holder to cure any ambiguity, omission, defect, mistake or inconsistency; to comply with Article 5 of the Indenture; to provide for uncertificated Notes in addition to or in place of certificated Notes; provided, however, that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code; to add additional Guarantees with respect to the Notes; to add to the covenants of the Company or any Restricted Subsidiary for the benefit of the Holders or to surrender any right or power herein conferred upon the Company or any Guarantor; to comply with any requirement of the SEC in connection with qualifying or maintaining the qualification of the Indenture under the TIA; to make any change that does not adversely affect the rights of any Holder; to provide for the issuance of the Exchange Notes or Additional Notes, which, except as otherwise provided in the Indenture, shall have terms substantially identical in all material respects to the Initial Notes; to make any amendment to the provisions of the Indenture relating to the transfer and legending of Notes; provided, however, that (a) compliance with the Indenture as so amended would not result in Notes being transferred in violation of the Securities Act or any other applicable securities law and (b) such amendment does not materially and adversely affect the rights of holders to transfer the Notes; to secure the Notes or to add additional assets as Collateral; to release Collateral from the Lien or any Guarantor from its Guarantee pursuant to the Indenture, the Security Documents and the Intercreditor Agreement when permitted or required by the Indenture or the Security Documents; or except as provided in

6

clause (x) of Section 9.02 of the Indenture, to amend the Intercreditor Agreement in accordance with the provisions thereof.

15. Defaults and Remedies

          Under the Indenture, Events of Default include (a) default for 30 days in payment of interest on the Notes; (b) default in payment of principal on the Notes at maturity, upon redemption pursuant to Paragraph 5 of the Notes, upon acceleration or otherwise, or failure by the Company to redeem or purchase Notes when required; (c) failure by the Company, Holdings or certain Subsidiaries to comply with other agreements in the Indenture or the Notes, in certain cases subject to notice and lapse of time; (d) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Company, Holdings or Significant Subsidiaries if the amount accelerated (or so unpaid) exceeds $15.0 million; (e) certain events of bankruptcy or insolvency with respect to the Company, Holdings and the Significant Subsidiaries; (f) certain judgments or decrees for the payment of money in excess of $15.0 million; (g) certain defaults with respect to Guarantees; and (h) certain defaults relating to the Collateral under the Security Documents. If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Notes may declare all such Notes to be due and payable immediately, subject to certain conditions set forth in the Indenture. Certain events of bankruptcy or insolvency are Events of Default which will result in the Notes being due and payable immediately upon the occurrence of such Events of Default.

          Noteholders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Notes unless it receives indemnity or security reasonably satisfactory to it. Subject to certain limitations, Holders of a majority in principal amount of the Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Noteholders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders.

16. Trustee Dealings with the Company

          Subject to certain limitations imposed by the Act, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.

17. No Recourse Against Others

          A director, officer, employee or stockholder, as such, of the Company or the Trustee shall not have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation; provided, however, the foregoing will not affect or limit any liability of any Guarantor under the Indenture or its Guarantee. By accepting a Note, each Noteholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Notes.

7

18. Authentication

          This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Note.

19. Abbreviations

          Customary abbreviations may be used in the name of a Noteholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

20. CUSIP Numbers

          Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company have caused CUSIP numbers to be printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Noteholders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

21. Holders’ Compliance with Registration Rights Agreement

          Each Holder of a Note, by acceptance hereof, acknowledges and agrees to the provisions of the Registration Rights Agreement, including the obligations of the Holders with respect to a registration and the indemnification of the Company to the extent provided therein.]²

22. Governing Law

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

          The Company will furnish to any Noteholder upon written request and without charge to the Noteholder a copy of the Indenture which has in it the text of this Note in larger type. Requests may be made to:

Flag Acquisition Corporation
c/o Apollo Management, LP
9 West 57th Street, 43rd Floor
New York, NY 10019
Attention: General Counsel

² Delete if this Note is not being issued in exchange for an Initial Note.

8

ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to

     (Print or type assignee’s name, address and zip code)

     (Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint                     agent to transfer this Note on the books of the Company. The agent may substitute another to act for him.

Date: Your Signature:

Sign exactly as your name appears on the other side of this Note.

9

OPTION OF HOLDER TO ELECT PURCHASE

          If you want to elect to have this Note purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture, check the box:

          If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture, state the amount in principal amount: $___

Dated:	Your Signature:
		(Sign exactly as your name appears
		on the other side of this Note.)

Signature Guarantee:
	(Signature must be guaranteed)

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

EXHIBIT 2 to Rule 144A/REGULATION S/IAI APPENDIX

Form of
Transferee Letter of Representation

Flag Acquisition Corporation

In care of
[     ]
[     ]
[     ]

Ladies and Gentlemen:

     This certificate is delivered to request a transfer of $[ ] principal amount of the 11¹/₈% Senior Secured Notes Due 2015 (the “Notes”) of Flag Acquisition Corporation, a Delaware corporation, (the “Company”).

     Upon transfer, the Notes would be registered in the name of the new beneficial owner as follows:

Name:____________________________

Address:__________________________

Taxpayer ID Number:_______________

     The undersigned represents and warrants to you that:

     1. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the “Securities Act”)), purchasing for our own account or for the account of such an institutional “accredited investor” at least $250,000 principal amount of the Notes, and we are acquiring the Notes not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we invest in or purchase notes similar to the Notes in the normal course of our business. We, and any accounts for which we are acting, are each able to bear the economic risk of our or its investment.

     2. We understand that the Notes have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Notes to offer, sell or otherwise transfer such Notes prior to the date that is two years after the later of the date of original issue and the last date on which the Company or any affiliate of the Company was the owner of such Notes (or any predecessor thereto) (the “Resale Restriction Termination Date”) only (i) to the Company, (ii) in the United States to a person whom the seller reasonably

believes is a qualified institutional buyer in a transaction meeting the requirements of Rule 144A, (iii) to an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is an institutional accredited investor purchasing for its own account or for the account of an institutional accredited investor, in each case in a minimum principal amount of the Notes of $250,000, (iv) outside the United States in a transaction complying with the provisions of Rule 904 under the Securities Act, (v) pursuant to an exemption from registration under the Securities Act provided by Rule 144 (if available) or (vi) pursuant to an effective registration statement under the Securities Act, in each of cases (i) through (vi) subject to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Notes is proposed to be made pursuant to clause (iii) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Company and the Trustee, which shall provide, among other things, that the transferee is an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring such Notes for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges that the Company and the Trustee reserve the right prior to the offer, sale or other transfer prior to the Resale Restriction Termination Date of the Notes pursuant to clause (iii), (iv) or (v) above to require the delivery of an opinion of counsel, certifications or other information satisfactory to the Company and the Trustee.

TRANSFEREE:_________________,

by:__________________

APPENDIX B

[FORM OF SUPPLEMENTAL INDENTURE TO BE
DELIVERED BY ADDITIONAL SUBSIDIARY GUARANTORS]

          SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of [   ] among [   ] (the “Additional Subsidiary Guarantor”), a [   ] corporation and a [direct][indirect] subsidiary of Metals USA, Inc. (or its permitted successor) (the “Company”), the Company, Flag Intermediate Holdings Corporation, Wells Fargo Bank, N.A., as trustee under the Indenture (the “Trustee”) and Wells Fargo Bank, N.A., as notes collateral agent under the Indenture (the “Notes Collateral Agent”).

WITNESSETH :

          WHEREAS the Company, Holdings and the Subsidiary Guarantors have heretofore executed and delivered to the Trustee an Indenture (the “Indenture”), dated as of November 30, 2005, providing for the issuance of 11¹/₈% Senior Secured Notes Due 2015 (the “Notes”);

          WHEREAS, Section 4.11 and Section 10.06 of the Indenture provide that under certain circumstances the Company will cause the Additional Subsidiary Guarantor to execute and deliver to the Trustee a guaranty agreement pursuant to which the Additional Subsidiary Guarantor will Guarantee payment of the Notes on the same terms and conditions as those set forth in Article 10 of the Indenture; and

          WHEREAS, pursuant to Section 9.01(iv) of the Indenture, the Trustee and the Company are authorized to execute and deliver this Supplemental Indenture.

          NOW THEREFORE, in consideration of the foregoing and for good and valuable consideration, the receipt of which is hereby acknowledged, the Company, the Additional Subsidiary Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

          SECTION 1. Capitalized Terms. Capitalized terms used herein but not defined shall have the meanings assigned to them in the Indenture.

          SECTION 2. Guarantees. The Additional Subsidiary Guarantor hereby agrees, jointly and severally with all other Guarantors, to guarantee the Company’s obligations under the Notes on the terms and subject to the conditions set forth in Article 10 of the Indenture and to be bound by all other applicable provisions of the Indenture (including Article 11).

          SECTION 3. Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

2

          SECTION 4. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

          SECTION 5. Trustee Makes No Representation. The Trustee makes no representation as to the validity or sufficiency of this Supplemental Indenture.

          SECTION 6. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

          SECTION 7. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction of this Supplemental Indenture.

3

          IN WITNESS WHEREOF, the parties have caused this Supplemental Indenture to be duly executed as of the date first written above.

FLAG ACQUISITION CORPORATION,
by
	Name:
	Title:
[ADDITIONAL SUBSIDIARY GUARANTOR],
by
	Name:
	Title:
WELLS FARGO BANK, N.A.,
by
	Name:
	Title:

EX-4.8

Exhibit 4.8
EXECUTION COPY

$275,000,000

METALS USA, INC.

11¹/₈% Senior Secured Notes Due 2015

REGISTRATION RIGHTS AGREEMENT

November 30, 2005

Credit Suisse First Boston LLC
CIBC World Markets Corp.,
   c/o Credit Suisse First Boston LLC,
     Eleven Madison Avenue,
          New York, New York 10010-3629

Dear Sirs:

     Flag Acquisition Corporation, a Delaware corporation (“Flag Acquisition”), proposes to issue and sell to Credit Suisse First Boston LLC and CIBC World Markets Corp. (collectively, the “Initial Purchasers”), upon the terms set forth in a purchase agreement dated as of November 21, 2005 (the “Purchase Agreement”), $275,000,000 principal amount of its 11¹/₈% Senior Secured Notes Due 2015 (the “Initial Securities”) to be unconditionally guaranteed (the “Guarantees”), on a senior secured basis by Flag Intermediate Holdings Corporation, a Delaware corporation (“Holdings”) and each of the subsidiaries of Metals USA, Inc., a Delaware corporation (“Metals USA”), set forth on Schedule B to the Purchase Agreement (the “Subsidiary Guarantors” and, together with Holdings, the “Guarantors”). The Initial Securities will be issued pursuant to an Indenture, dated as of the date hereof (the “Indenture”), among Flag Acquisition, the Guarantors, Wells Fargo Bank, N.A., as trustee (in such capacity, the “Trustee”), and Wells Fargo Bank, N.A., as collateral agent. As used in this Agreement, (i) the term “Issuer” means, prior to the Merger (as defined in the Purchase Agreement), Flag Acquisition and, thereafter, Metals USA and (ii) the term “Company” means, the Issuer and the Guarantors.

     As an inducement to the Initial Purchasers to enter into the Purchase Agreement, the Company has agreed to enter into this Agreement. Accordingly, the Company agrees with the Initial Purchasers, for the benefit of the Initial Purchasers and the holders of the Securities (as defined below) (collectively the “Holders”), as follows:

     1. Registered Exchange Offer. Unless not permitted by applicable law or applicable interpretations thereof by the staff of the Securities and Exchange Commission (the “Commission”), the Company shall, after the date of original issue of the Initial Securities (the “Issue Date”) prepare and use its commercially reasonable efforts to file with the Commission a registration statement (the “Exchange Offer Registration Statement”) on an appropriate form under the Securities Act of 1933, as amended (the “Securities Act”), with respect to a proposed offer (the “Registered Exchange Offer”) to the Holders of Transfer Restricted Securities (as defined in Section 6 hereof), who are not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer, to issue and deliver to such Holders, in exchange for the Initial Securities in connection with the Registered Exchange Offer, a like aggregate principal amount of debt securities (the “Exchange Securities”) of the Company issued under the Indenture, substantially identical in all material respects to the Initial Securities (except for the transfer restrictions relating to the Initial Securities and the provisions relating to the matters described in Section 6 hereof) and registered under the Securities Act. The Company shall use its commercially reasonable efforts (i) to cause such Exchange Offer Registration Statement to become effective under the Securities Act and (ii) keep the Exchange Offer Registration Statement effective for not less than 20 business days (or longer, if required by applicable law) after the date notice of the Registered Exchange Offer is mailed to the Holders (such period being called the “Exchange Offer Registration Period”).

     If the Company commences the Registered Exchange Offer, the Company (i) will be entitled to consummate the Registered Exchange Offer 20 business days after such commencement (provided that the Company has accepted all the Initial Securities theretofore validly tendered in accordance with the terms of the Registered Exchange Offer) and (ii) will be required to consummate the Registered Exchange Offer, unless not permitted by applicable law or applicable interpretations thereof by the staff of the Commission, no later than 60 days after the date on which the Exchange Offer Registration Statement is declared effective (such 60th day being the “Consummation Deadline”). For purposes of this Agreement, “consummate” shall mean compliance by the Company with provisions (a) — (e) and (x) — (z) of this Section 1, as set forth below.

     Following the declaration of the effectiveness of the Exchange Offer Registration Statement, the Company shall, as promptly as practicable, commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder of Transfer Restricted Securities (as defined in Section 6 hereof) electing to exchange the Initial Securities for Exchange Securities (assuming that such Holder is not an affiliate of the Company within the meaning of the Securities Act, acquires the Exchange Securities in the ordinary course of such Holder’s business and has no arrangements with any person to participate in the distribution of the Exchange Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States.

     The Company acknowledges that, pursuant to current interpretations by the Commission’s staff of Section 5 of the Securities Act, in the absence of an applicable exemption therefrom, (i) each Holder which is a broker-dealer electing to exchange Initial Securities, acquired for its own account as a result of market making activities or other trading activities, for Exchange Securities (an “Exchanging Dealer”), is required to deliver a prospectus containing the information set forth in (a) Annex A hereto on the cover, (b) Annex B hereto in the “Exchange Offer Procedures” section and the “Purpose of the Exchange Offer” section, and (c) Annex C hereto in the “Plan of Distribution” section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) an Initial Purchaser that elects to sell Securities (as defined below) acquired in exchange for Initial Securities constituting any portion of an unsold allotment is required to deliver a prospectus containing the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in connection with such sale.

     The Company shall keep the Exchange Offer Registration Statement effective and shall amend and supplement the prospectus contained therein in order to permit such prospectus to be lawfully delivered by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; provided, however, that (i) in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be the lesser of 180 days and the date on which all Exchanging Dealers and the Initial Purchasers have sold all Exchange Securities held by them (unless such period is extended pursuant to Section 3(j) below) and (ii) the Company shall make such prospectus and any amendment or supplement thereto available to any broker-dealer for use in connection with any resale of any Exchange Securities for a period of not less than 180 days after the consummation of the Registered Exchange Offer (or such shorter period during which such persons are required by applicable law to deliver such prospectus).

     If, upon consummation of the Registered Exchange Offer, any Initial Purchaser holds Initial Securities acquired by it as part of its initial distribution, the Company, simultaneously with the delivery of the Exchange Securities pursuant to the Registered Exchange Offer, shall issue and deliver to such Initial Purchaser upon the written request of such Initial Purchaser, in exchange (the “Private Exchange”) for the Initial Securities held by such Initial Purchaser, a like principal amount of debt securities of the Company issued under the Indenture and identical in all material respects (including the existence of restrictions on transfer under the Securities Act and the securities laws of the several states of the United States, but excluding provisions relating to the matters described in Section 6 hereof) to the Initial Securities (the

2

“Private Exchange Securities”). The Initial Securities, the Exchange Securities and the Private Exchange Securities are herein collectively called the “Securities”.

In connection with the Registered Exchange Offer, the Company shall:

     (a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents;

     (b) keep the Registered Exchange Offer open for not less than 20 business days (or longer, if required by applicable law) after the date notice thereof is mailed to the Holders;

     (c) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York, which may be the Trustee or an affiliate of the Trustee;

     (d) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and

     (e) otherwise comply in all material respects with all applicable laws.

     As soon as practicable after the close of the Registered Exchange Offer or the Private Exchange, as the case may be, the Company shall, unless not permitted by applicable law and applicable interpretations thereof by the staff of the Commission:

     (x) accept for exchange all the Securities validly tendered and not withdrawn pursuant to the Registered Exchange Offer and the Private Exchange;

     (y) deliver to the Trustee for cancellation all the Initial Securities so accepted for exchange; and

     (z) cause the Trustee to authenticate and deliver promptly to each Holder of the Initial Securities, Exchange Securities or Private Exchange Securities, as the case may be, equal in principal amount to the Initial Securities of such Holder so accepted for exchange.

     The Indenture will provide that the Exchange Securities will not be subject to the transfer restrictions set forth in the Indenture and that all the Securities will vote and consent together on all matters as one class and that none of the Securities will have the right to vote or consent as a class separate from one another on any matter.

     Interest on each Exchange Security and Private Exchange Security issued pursuant to the Registered Exchange Offer and in the Private Exchange will accrue from the last interest payment date on which interest was paid on the Initial Securities surrendered in exchange therefor or, if no interest has been paid on the Initial Securities, from the date of original issue of the Initial Securities.

     Each Holder participating in the Registered Exchange Offer shall be required to represent in writing (which may be contained in the applicable letter of transmittal) to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act, (iii) such Holder is not an “affiliate,” as defined in Rule 405 of the Securities Act, of the Company or if it is an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Securities and (v) if such Holder is a broker-dealer, that it will receive Exchange Securities for its own

3

account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities and that it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities.

     Notwithstanding any other provisions hereof, the Company will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies as to form in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

     2. Shelf Registration. If, (i) because of applicable law or applicable interpretations thereof by the staff of the Commission, the Company is not permitted to effect a Registered Exchange Offer, as contemplated by Section 1 hereof, (ii) the Registered Exchange Offer is not consummated by the 300th day after the Issue Date, (iii) any Initial Purchaser so requests in writing on or prior to the 60th day after the consummation of the Registered Exchange Offer with respect to the Initial Securities (or the Private Exchange Securities) not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer and held by it following consummation of the Registered Exchange Offer or (iv) any Holder (other than an Exchanging Dealer) is not eligible to participate in the Registered Exchange Offer or, in the case of any Holder (other than an Exchanging Dealer) that participates in the Registered Exchange Offer, such Holder does not receive freely tradeable Exchange Securities on the date of the exchange or may not resell the Exchange Securities acquired by it in the Registered Exchange Offer to the public without delivering a prospectus, and any such Holder so requests in writing on or prior to the 60th day after the consummation of the Registered Exchange Offer, the Company shall take the following actions (the date on which any of the conditions described in the foregoing clauses (i) through (iv) occur, including in the case of clauses (iii) or (iv) the receipt of the required notice, being a “Trigger Date”):

     (a) The Company shall, at its cost, file with the Commission and thereafter use its commercially reasonable efforts to cause to be declared effective (x) in the case of a Shelf Registration Statement filed pursuant to clause (i) of the foregoing paragraph, no later than 300 days after the Issue Date and (y) in the case of a Shelf Registration Statement filed pursuant to clause (ii), (iii) or (iv) of the foregoing paragraph, no later than the later of (i) the 300^th day after the Issue Date and (ii) the 60^th day after the Trigger Date (such 300^th day or such 60^th day, as the case may be, being an “Effectiveness Deadline”) a registration statement (the “Shelf Registration Statement” and, together with the Exchange Offer Registration Statement, a “Registration Statement”) on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities by the Holders thereof from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereinafter, the “Shelf Registration”); provided, however, that no Holder (other than an Initial Purchaser) shall be entitled to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder.

     (b) The Company shall use its commercially reasonable efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus included therein to be lawfully delivered by the Holders of the relevant Securities, for a period of two years (or for such longer period if extended pursuant to Section 3(j) below) from the date of its effectiveness or such shorter period that will terminate when all the Securities covered by the Shelf Registration Statement (i) have been sold pursuant thereto or (ii) can be sold pursuant to Rule 144 under the Securities Act, without any limitations under clauses (c), (e), (f) and (h) thereof.

4

     (c) Notwithstanding any other provisions of this Agreement to the contrary, the Company shall cause the Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement, amendment or supplement, (i) to comply as to form in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

     3. Registration Procedures. In connection with any Shelf Registration contemplated by Section 2 hereof and, to the extent applicable, any Registered Exchange Offer contemplated by Section 1 hereof, the following provisions shall apply:

     (a) The Company shall (i) furnish to each Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and, in the event that an Initial Purchaser (with respect to any portion of an unsold allotment from the original offering) is participating in the Registered Exchange Offer or the Shelf Registration Statement, the Company shall use its commercially reasonable efforts to reflect in each such document, when so filed with the Commission, such comments as such Initial Purchaser reasonably may propose; (ii) include the information set forth in Annex A hereto on the cover, in Annex B hereto in the “Exchange Offer Procedures” section and the “Purpose of the Exchange Offer” section and in Annex C hereto in the “Plan of Distribution” section of the prospectus forming a part of the Exchange Offer Registration Statement and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; (iii) if requested by an Initial Purchaser in writing, include the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement; (iv) include within the prospectus contained in the Exchange Offer Registration Statement a section entitled “Plan of Distribution,” reasonably acceptable to the Initial Purchasers, which shall contain a summary statement of the positions taken or policies made by the staff of the Commission with respect to the potential “underwriter” status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of Exchange Securities received by such broker-dealer in the Registered Exchange Offer (a “Participating Broker-Dealer”), whether such positions or policies have been publicly disseminated by the staff of the Commission or such positions or policies, in the reasonable judgment of the Initial Purchasers based upon advice of counsel (which may be in-house counsel), represent the prevailing views of the staff of the Commission; and (v) in the case of a Shelf Registration Statement and subject to subsection (n) below, include the names of the Holders who propose to sell Securities pursuant to the Shelf Registration Statement as selling securityholders.

     (b) The Company shall give written notice to the Initial Purchasers, any Participating Broker-Dealer from whom the Company has received prior written notice that it will be a Participating Broker-Dealer in the Registered Exchange Offer and, in the case of a Shelf Registration only, each Holder of the Securities (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made):

     (i) when the Registration Statement or any post-effective amendment thereto has become effective;

     (ii) of any request by the Commission after the Registration Statement has become effective for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information;

5

     (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose;

     (iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

     (v) of the happening of any event during the period that the Registration Statement is effective that requires the Company to make changes in the Registration Statement or the prospectus in order that the Registration Statement or the prospectus do not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading.

     (c) The Company shall use its commercially reasonable efforts to obtain the withdrawal at the earliest possible time of any order suspending the effectiveness of the Registration Statement.

     (d) The Company shall furnish to each Holder of Securities included within the coverage of the Shelf Registration, without charge, at least one copy of the Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference).

     (e) The Company shall deliver to each Exchanging Dealer and each Initial Purchaser, and to any other Holder who so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any Initial Purchaser or any such Holder requests, all exhibits thereto (including those incorporated by reference).

     (f) The Company shall, during the Shelf Registration Period, deliver to each Holder of Securities included within the coverage of the Shelf Registration, without charge, as many copies of the prospectus (including each preliminary prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of the Securities in connection with the offering and sale of the Securities covered by the prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement.

     (g) The Company shall deliver to each Initial Purchaser, any Exchanging Dealer, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement and any amendment or supplement thereto as such persons may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by any Initial Purchaser, if necessary, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer in connection with the offering and sale of the Exchange Securities covered by the prospectus, or any amendment or supplement thereto, included in such Exchange Offer Registration Statement.

     (h) Prior to any public offering of the Securities pursuant to any Registration Statement the Company shall use its commercially reasonable efforts to register or qualify or cooperate with the Holders of the Securities included therein and their respective counsel in connection with the registration or qualification of the Securities for offer and sale under the securities or “blue sky” laws of such states of the United States as any Holder of the Securities reasonably requests in

6

writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities covered by such Registration Statement; provided, however, that the Company shall not be required to (i) qualify generally to do business or as a dealer in securities in any jurisdiction where it is not then so qualified or (ii) take any action which would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject.

     (i) The Company shall cooperate with the Holders of the Securities to facilitate the timely preparation and delivery of certificates representing the Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reasonable period of time prior to sales of the Securities pursuant to such Registration Statement.

     (j) Upon the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 3(b) above during the period for which the Company is required to maintain an effective Registration Statement, the Company shall promptly prepare and file a post-effective amendment to the Registration Statement or a supplement to the related prospectus and any other required document so that, as thereafter delivered to Holders of the Securities or purchasers of Securities, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Initial Purchasers, the Holders of the Securities and any known Participating Broker-Dealer in accordance with paragraphs (ii) through (v) of Section 3(b) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Initial Purchasers, the Holders of the Securities and any such Participating Broker-Dealers shall suspend use of such prospectus and expressly agree to maintain the information contained in such notice confidential (except that such information may be disclosed to its counsel) until it has been publicly disclosed by the Company; notwithstanding the foregoing, the Company shall not be required to amend or supplement a Registration Statement or any related prospectus if (i) an event occurs and is continuing as a result of which the Shelf Registration or any related prospectus would, in the Company’s good faith judgment, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading (with respect to such prospectus only, in light of the circumstances under which they were made) and (ii) (a) the Company determines in its good faith judgment that the disclosure of such event at such time would have a material adverse effect on its business, operations or prospects or (b) the disclosure otherwise relates to a pending material business transaction that has not yet been publicly disclosed; and the period of effectiveness of the Shelf Registration Statement provided for in Section 2(b) above and the Exchange Offer Registration Statement provided for in Section 1 above shall each be extended by the number of days from and including the date of the giving of such notice to and including the date when the Initial Purchasers, the Holders of the Securities and any known Participating Broker-Dealer shall have received such amended or supplemented prospectus pursuant to this Section 3(j).

     (k) Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be.

     (l) The Company will comply in all material respects with all rules and regulations of the Commission to the extent and so long as they are applicable to the Registered Exchange Offer or the Shelf Registration and will make generally available to its security holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earning statement satisfying the provisions of Section 11(a) of the Securities Act, no later than 50 days after the end of a 12-month period (or 105 days, if such period is a fiscal year) beginning with the first month of the Issuer’s first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period.

7

     (m) The Company shall cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, in a timely manner and containing such changes, if any, as shall be necessary for such qualification. In the event that such qualification would require the appointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture.

     (n) The Company may require each Holder of Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of the Securities as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement, and the Company may exclude from such registration the Securities of any Holder that fails to furnish such information within a reasonable time after receiving such request.

     (o) In the case of an offering of Securities to an underwriter or underwriters for reoffering to the public (an “Underwritten Offering”) pursuant to any Shelf Registration, the Company shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other customary action, if any, as any Holder of the Securities shall reasonably request in order to facilitate the disposition of the Securities pursuant to any Shelf Registration.

     (p) In the case of any Shelf Registration, the Company shall (i) make reasonably available for inspection by the Holders of the Securities, any underwriter participating in any disposition pursuant to the Shelf Registration Statement and any attorney, accountant or other agent retained by the Holders of the Securities or any such underwriter, at reasonable times and in a reasonable manner, all relevant financial and other records, pertinent corporate documents and properties of the Company and (ii) cause the Company’s officers, directors, employees, accountants and auditors to supply all relevant information reasonably requested by the Holders of the Securities or any such underwriter, attorney, accountant or agent in connection with the Shelf Registration Statement, in each case, as shall be reasonably necessary to enable such persons to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the Initial Purchasers by you and on behalf of the other parties, by one counsel designated by and on behalf of such other parties as described in Section 4 hereof; and provided, further, that each such Holder, underwriter, attorney, accountant or agent shall agree in writing that it will keep such information confidential and that it will not disclose any of the information that the Company determines, in good faith, to be confidential and notifies them in writing are confidential unless (A) the disclosure of such information is necessary to avoid or correct a material misstatement or material omission in such Registration Statement or prospectus, (B) the release of such information is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, or is reasonably necessary in order to establish a “due diligence” defense pursuant to Section 11 of the Securities Act, or (C) the information has been made generally available to the public other than by any of such persons or their respective affiliates; provided, however, that prior notice shall be provided as soon as practicable to the Company of the potential disclosure of any information by such person pursuant to clause (A) or (B) of this sentence in order to permit the Company to obtain a protective order (or to waive the provisions of this paragraph (p)).

     (q) In the case of an Underwritten Offering pursuant to any Shelf Registration, the Company, if requested by any Holder of Securities covered thereby, shall cause (i) its counsel to deliver an opinion and updates thereof relating to the Securities in customary form and covering matters customarily covered in opinions delivered in connection with such transactions and addressed to such Holders and the managing underwriters, if any, thereof and dated, in the case of the initial opinion, the effective date of such Shelf Registration Statement; (ii) its officers to execute and deliver all customary documents and certificates and updates thereof requested by any underwriters of the applicable Securities and (iii) its independent public accountants to provide to the selling Holders of the applicable Securities and any underwriter therefor a comfort letter in

8

customary form and covering matters of the type customarily covered in comfort letters in connection with primary underwritten offerings, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72.

     (r) If a Registered Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Initial Securities by Holders to the Company (or to such other Person as directed by the Company) in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be, the Company shall mark, or cause to be marked, on the Initial Securities so exchanged that such Initial Securities are being canceled in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be; in no event shall the Initial Securities be marked as paid or otherwise satisfied.

     (s) The Company will use its commercially reasonable efforts to (a) if the Initial Securities have been rated prior to the initial sale of such Initial Securities, confirm such ratings will apply to the Securities covered by a Registration Statement, or (b) if the Initial Securities were not previously rated, cause the Securities covered by a Registration Statement to be rated with the appropriate rating agencies, if so requested by Holders of a majority in aggregate principal amount of Securities covered by such Registration Statement, or by the managing underwriters, if any.

     (t) In the event that any broker-dealer registered under the Exchange Act shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or “assist in the distribution” (within the meaning of the Conduct Rules (the “Rules”) of the National Association of Securities Dealers, Inc. (“NASD”)) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company will cooperate with such broker-dealer in complying with the requirements of such Rules, including, without limitation, by (i) if such Rules, including Rule 2720, shall so require, at the expense of the Holders, engaging a “qualified independent underwriter” (as defined in Rule 2720) to participate in the preparation of the Registration Statement relating to such Securities, to exercise usual standards of due diligence in respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities, (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 5 hereof and (iii) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the Rules.

     4. Registration Expenses. All expenses incident to the Company’s performance of and compliance with this Agreement will be borne by the Company, regardless of whether a Registration Statement is ever filed or becomes effective, including without limitation;

     (a) all registration and filing fees and expenses;

     (b) all fees and expenses of compliance with federal securities and state “blue sky” or securities laws;

     (c) all expenses of printing (including printing of Prospectuses), messenger and delivery services and telephone;

     (d) all fees and disbursements of counsel for the Company; and

     (e) all fees and disbursements of independent certified public accountants of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance).

9

The Company will bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any person, including special experts, retained by the Company. Each Holder shall pay all underwriting discounts and commissions, and the fees of any counsel retained by or on behalf of the underwriters, and transfer taxes, if any, related to the sale or disposition of a Holder’s Securities pursuant to any Shelf Registration Statement.

5. Indemnification.

     (a) The Company agrees to indemnify and hold harmless each Holder of the Securities, any Participating Broker-Dealer and each person, if any, who controls such Holder or such Participating Broker-Dealer within the meaning of the Securities Act or the Exchange Act (each Holder, any Participating Broker-Dealer and such controlling persons are referred to collectively as the “Indemnified Parties”) from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities) to which each Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action in respect thereof; provided, however, that (i) the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein and (ii) with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus relating to a Shelf Registration Statement, the indemnity agreement contained in this subsection (a) shall not inure to the benefit of any Holder or Participating Broker-Dealer from whom the person asserting any such losses, claims, damages or liabilities purchased the Securities concerned, to the extent that a prospectus relating to such Securities was required to be delivered by such Holder or Participating Broker-Dealer under the Securities Act in connection with such purchase and any such loss, claim, damage or liability of such Holder or Participating Broker-Dealer results from the fact that there was not sent or given to such person, at or prior to the written confirmation of the sale of such Securities to such person, a copy of the final prospectus if the Company had previously furnished copies thereof to such Holder or Participating Broker-Dealer; provided further, however, that this indemnity agreement will be in addition to any liability which the Company may otherwise have to such Indemnified Party. The Company shall also indemnify underwriters, their officers and directors and each person who controls such underwriters within the meaning of the Securities Act or the Exchange Act to the same extent as provided above with respect to the indemnification of the Holders of the Securities if requested by such Holders.

     (b) Each Holder of the Securities, severally and not jointly, will indemnify and hold harmless the Company and each person, if any, who controls the Issuer or any of the Guarantors within the meaning of the Securities Act or the Exchange Act from and against any losses, claims, damages or liabilities or any actions in respect thereof, to which the Company or any such controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary

10

prospectus relating to a Shelf Registration, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein; and, subject to the limitation set forth immediately preceding this clause, shall reimburse, as incurred, the Company for any legal or other expenses reasonably incurred by the Company or any such controlling person in connection with investigating or defending any loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability which such Holder may otherwise have to the Company or any of their controlling persons.

     (c) Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action or proceeding (including a governmental investigation), such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 5, notify the indemnifying party of the commencement thereof; but the failure to notify the indemnifying party shall not relieve the indemnifying party from any liability that it may have under subsection (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (which counsel shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the contrary; (ii) the indemnifying party has failed within a reasonable time to retain counsel reasonably satisfactory to the indemnified party; (iii) the indemnified party shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the indemnifying party: or (iv) the named parties in any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood and agreed that the indemnifying party shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses or more than one separate firm (in addition to any local counsel) for all indemnified parties, and that all such fees and expenses shall be reimbursed as they are incurred. Any such separate firm for any Initial Purchaser, its affiliates, directors and officers and any control persons of such Initial Purchaser shall be designated in writing by CSFB and any such separate firm for the Issuer, the Guarantors, their directors and officers and any control persons of the Issuer and the Guarantors shall be designated in writing by the Company. No indemnifying party shall, without the prior written consent of the indemnified party, provided that such consent is not unreasonably withheld or delayed, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action, and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

11

     (d) If the indemnification provided for in this Section 5 is unavailable or insufficient (although applicable in accordance with its terms) to hold harmless an indemnified party under subsections (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party or parties on the one hand and the indemnified party on the other from the issuance and sale of the Securities to the Initial Purchasers, pursuant to the transactions contemplated by the Purchase Agreement, or (ii) if the allocation provided by the foregoing clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or such Holder or such other indemnified party, as the case may be, on the other, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding any other provision of this Section 5(d), the Holders of the Securities shall not be required to contribute any amount in excess of the amount by which the net proceeds received by such Holders from the sale of the Securities pursuant to a Registration Statement exceeds the amount of damages which such Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph (d), each person, if any, who controls such indemnified party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such indemnified party and each person, if any, who controls the Issuer or any of the Guarantors within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company.

     (e) The agreements contained in this Section 5 shall survive the sale of the Securities pursuant to a Registration Statement and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party.

6. Additional Interest Under Certain Circumstances.

     (a) Additional interest (the “Additional Interest”) with respect to the Securities shall be assessed as follows if any of the following events occur (each such event in clauses (i) through (i) below being herein called a “Registration Default”):

     (i) if the Company fails to file the Exchange Offer Registration Statement with the Commission on or prior to the 180th day after the Issue Date;

     (ii) if the Registered Exchange Offer is not consummated by the 300^th day after the Issue Date;

     (iii) if obligated to file a Shelf Registration Statement pursuant to Section 2(i), a Shelf Registration Statement is not declared effective by the Commission by the 300^th day after the Issue Date;

12

     (iv) if obligated to file a Shelf Registration Statement pursuant to Section 2(ii), (iii) or (iv), the Company fails to file the Shelf Registration Statement with the Commission on or prior to the later of the 180^th day after the Issue Date and the 30^th day after the date on which the obligation to file a Shelf Registration Statement arises;

     (v) if obligated to file a Shelf Registration Statement pursuant to Section 2(ii), (iii) or (iv), the Shelf Registration Statement is not declared effective on or prior to the Effectiveness Deadline; or

     (vi) if after either the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, is declared effective (A) such Registration Statement thereafter ceases to be effective; or (B) such Registration Statement or the related prospectus ceases to be usable (except as permitted in paragraph (b)) in connection with resales of Transfer Restricted Securities during the periods specified herein because either (1) any event occurs as a result of which the related prospectus forming part of such Registration Statement would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading or (2) it shall be necessary to amend such Registration Statement or supplement the related prospectus to comply with the Securities Act or the Exchange Act or the respective rules thereunder.

Each of the foregoing will constitute a Registration Default whatever the reason for any such event and whether it is voluntary or involuntary or is beyond the control of the Company or pursuant to operation of law or as a result of any action or inaction by the Commission.

Additional Interest shall accrue on the Securities over and above the interest set forth in the title of the Securities from and including the date on which any such Registration Default shall occur to but excluding the date on which all such Registration Defaults have been cured, at a rate of 0.25% per annum (the “Additional Interest Rate”) for the first 90-day period immediately following the occurrence of such Registration Default. The Additional Interest Rate shall increase by an additional 0.25% per annum with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum Additional Interest Rate of 1.0% per annum. In no event shall the Company be obligated to pay Additional Interest under more than one of the clauses in this Section 6(a) at any one time and, in the case of a Shelf Registration, it is expressly understood that Additional Interest should be payable only with respect to Securities so requested to be registered pursuant to Section 2 hereof.

     (b) A Registration Default referred to in Section 6(a)(vi) hereof shall be deemed not to have occurred and be continuing in relation to a Shelf Registration Statement or the related prospectus if (i) such Registration Default has occurred solely as a result of (x) the filing of a post-effective amendment to such Shelf Registration Statement to incorporate annual audited financial information with respect to the Company where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related prospectus, (y) other material events with respect to the Company that would need to be described in such Shelf Registration Statement or the related prospectus or (z) the suspension of the effectiveness of such Registration Statement because the Company does not wish to disclose publicly a pending material business transaction that has not yet been publicly disclosed, and (ii) in the case of clause (y), the Company is proceeding promptly and in good faith to amend or supplement such Shelf Registration Statement and related prospectus to describe such events; provided, however, that if (A) in the case of a Registration Default described in clause(i)(x), such Registration Default occurs for a continuous period in excess of 30 days and (B) in the case of a Registration Default described in clause(i)(y) or (i)(z), such Registration Default occurs for a period of more than 45 days in any three-month period or more than an aggregate of 90 days in any 12-month period, then Additional Interest shall be payable in accordance with the above paragraph from the day such Registration Default occurs until such Registration Default is cured.

13

     (c) Any amounts of Additional Interest due pursuant to Section 6(a) will be payable in cash on the regular interest payment dates with respect to the Securities. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest Rate by the principal amount of the Securities and further multiplied by a fraction, the numerator of which is the number of days such Additional Interest Rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the denominator of which is 360.

     (d) “Transfer Restricted Securities” means each Security until (i) the date on which such Security has been exchanged by a person other than a broker-dealer for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered Exchange Offer of an Initial Security for an Exchange Security, the date on which such Exchange Security is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Security is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act.

     7. Agreement to Provide Information. The Issuer shall use commercially reasonable efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Issuer is not required to file such reports, it will, upon the request of any Holder of Transfer Restricted Securities, make publicly available other information so long as reasonably necessary to permit sales of their securities pursuant to Rules 144 and 144A. The Issuer will provide a copy of this Agreement to prospective purchasers of Initial Securities identified to the Issuer by the Initial Purchasers upon request. Upon the request of any Holder of Initial Securities, the Issuer shall deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act.

     8. Underwritten Registrations. If any of the Transfer Restricted Securities covered by any Shelf Registration are to be sold in an Underwritten Offering, the investment banker or investment bankers and manager or managers that will administer the offering (“Managing Underwriters”) will be selected by the Holders of a majority in aggregate principal amount of such Transfer Restricted Securities to be included in such offering.

     No person may participate in any Underwritten Offering hereunder unless such person (i) agrees to sell such person’s Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

9. Miscellaneous.

     (a) Remedies. The Company acknowledges and agrees that any failure by the Company to comply with its obligations under Section 1 and 2 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company’s obligations under Sections 1 and 2 hereof. The Company further agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

     (b) No Inconsistent Agreements. The Company will not on or after the date of this Agreement enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.

14

The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company’s securities under any agreement in effect on the date hereof.

(c) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Company and the written consent of the Holders of a majority in principal amount of the Securities affected by such amendment, modification, supplement, waiver or consents. Without the consent of the Holder of each Security, however, no modification may change the provisions relating to the payment of Additional Interest. Subject to the foregoing sentence, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders of Securities whose Securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect, impair, limit or compromise the rights of other Holders of Securities may be given by Holders of at least a majority in aggregate principal amount of the Securities being sold pursuant to such Registration Statement.

(d) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, first-class mail, facsimile transmission, or air courier which guarantees overnight delivery:

     (1) if to a Holder of the Securities, at the most current address given by such Holder to the Company.

(2) if to the Initial Purchasers;

c/o Credit Suisse First Boston LLC
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212) 325-8278
Attention: Transactions Advisory Group

with a copy to:

Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Fax No.: (212) 474-3700
Attention: LizabethAnn R. Eisen

(3) if to the Company:

c/o Apollo Management V, L.P.
c/o Flag Holdings Corporation
9 West 57th Street
43^rd Floor
New York, NY 10019
Attention: Eric L. Press
Facsimile: (212) 515-3253

with a copy to:

Wachtell, Lipton, Rosen & Katz
51 West 52^nd Street

15

New York, NY 10019
Fax No.: (212) 403-2000
Attention: Andrew J. Nussbaum

     All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three business days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged by recipient’s facsimile machine operator, if sent by facsimile transmission; and on the day delivered, if sent by overnight air courier guaranteeing next day delivery.

     (e) Third Party Beneficiaries. The Holders shall be third party beneficiaries to the agreements made hereunder between the Company, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect their rights or the rights of Holders hereunder.

     (f) Successors and Assigns. This Agreement shall be binding upon the Company and their successors and assigns.

     (g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

     Immediately upon consummation of the Merger, Metals USA will execute a counterpart to this Agreement in the form set forth in Exhibit A hereto and each Guarantor will execute a counterpart to this Agreement in the form set forth in Exhibit B hereto.

     (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

     (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

     (j) Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

     (k) Securities Held by the Company. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities is required hereunder, Securities held by the Company or its affiliates (other than subsequent Holders of Securities if such subsequent Holders are deemed to be affiliates solely by reason of their holdings of such Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

     (l) Submission to Jurisdiction. The Company hereby submits to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

16

     If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Issuer a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the several Initial Purchasers, the Issuer and the Guarantors in accordance with its terms.

Very truly yours,
FLAG ACQUISITION CORPORATION,
by	/s/ M. ALI RASHID
	Name:	M. Ali Rashid
	Title:	President
FLAG INTERMEDIATE HOLDINGS CORPORATION,
by	/s/ M. ALI RASHID
	Name:	M. Ali Rashid
	Title:	President

Signature page to the Registration Rights Agreement

17

The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written.

Credit Suisse First Boston LLC, as representative of the Initial Purchasers,
	by	/s/ MALCOLM PRICE
		Name:	Malcolm Price
		Title:	Managing Director

Signature page to the Registration Rights Agreement

18

FORM OF COUNTERPART TO THE REGISTRATION RIGHTS AGREEMENT
TO BE EXECUTED BY METALS USA, INC.

COUNTERPART TO THE REGISTRATION RIGHTS AGREEMENT

     Upon the consummation of the Merger, the undersigned hereby agrees to assume and be bound by all of the obligations of the Issuer under the terms of the Registration Rights Agreement, dated as of November 30, 2005 (the “Registration Rights Agreement”), among Flag Acquisition Corporation, a Delaware corporation, and the Initial Purchasers. The undersigned further agrees that all references in the Registration Rights Agreement to the “Issuer” and the “Company” shall be references to the undersigned. Capitalized terms used, but not defined, in this Counterpart to the Registration Rights Agreement shall have the meanings assigned to them in the Registration Rights Agreement. For the avoidance of doubt, such obligations shall include, but not be limited to, the obligations enumerated in Section 5(a) thereof.

     Dated: November 30, 2005

Very truly yours,
FLAG ACQUISITION CORPORATION,
By	/s/ LOURENCO GONCALVES
	Name:	Lourenco Goncalves
	Title:	President and CEO

Signature page to the Counterpart to the Registration Rights Agreement

FORM OF COUNTERPART TO THE REGISTRATION RIGHTS AGREEMENT
TO BE EXECUTED BY THE GUARANTORS

COUNTERPART TO THE REGISTRATION RIGHTS AGREEMENT

     Upon consummation of the Merger, the undersigned hereby agrees to be bound by all the obligations of a Guarantor under the terms of the Registration Rights Agreement (the “Registration Rights Agreement”) dated as of the date hereof, among Flag Acquisition Corporation, a Delaware corporation, and the Initial Purchasers. The undersigned further agrees that all references in the Registration Rights Agreement to the “Guarantors” and the “Company” shall be references to the undersigned. Capitalized terms used, but not defined, in this Counterpart to the Registration Rights Agreement shall have the meanings assigned to them in the Registration Rights Agreement. For the avoidance of doubt, such obligations shall include, but not be limited to, the obligations enumerated in Section 5(a) thereof.

     Dated: November 30, 2005

ALLMET GP, INC.
ALLMET LP, INC.
INTERSTATE STEEL SUPPLY CO. OF MARYLAND, INC.
INTSEL GP, INC.
INTSEL LP, INC.
I-SOLUTIONS DIRECT, INC.
JEFFREYS REAL ESTATE CORPORATION
LEVINSON STEEL GP, INC.
LEVINSON STEEL LP, INC.
METALS RECEIVABLES CORPORATION
METALS USA BUILDING PRODUCTS, L.P.
	By:	Allmet GP, Inc., its General Partner
METALS USA CARBON FLAT ROLLED, INC.
METALS USA FINANCE CORP.
METALS USA FLAT ROLLED CENTRAL, INC.
METALS USA MANAGEMENT CO, L.P.
	By:	MUSA GP, Inc., its General Partner
METALS USA PLATES AND SHAPES NORTHEAST, L.P.
	By:	Levinson Steel GP, Inc., its General Partner
METALS USA PLATES AND SHAPES SOUTHCENTRAL, INC.
METALS USA PLATES AND SHAPES SOUTHEAST, INC.
METALS USA PLATES AND SHAPES SOUTHWEST, LMITED PARTNERSHIP
	By:	Intsel GP, Inc., its General Partner
METALS USA REALTY COMPANY
METALS USA SPECIALTY METALS NORTHCENTRAL, INC.
MUSA GP, INC.
MUSA LP, INC.
QUEENSBORO, L.L.C.
	By:	Metals USA Plates and Shapes Southeast, Inc., its sole Member

By:	/s/ KEITH KOCI
	Name: Keith Koci
	Title: Treasurer

Signature page to the Counterpart to the Registration Rights Agreement

JEFFREYS STEEL HOLDINGS, L.L.C.
By:	/s/ JOHN A. HAGEMAN
	Name: John A. Hageman
	Title: Manager

Signature page to the Counterpart to the Registration Rights Agreement

ANNEX A

     Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date (as defined herein), it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”

ANNEX B

     Each broker-dealer that receives Exchange Securities for its own account in exchange for Initial Securities, where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See “Plan of Distribution.”

ANNEX C

PLAN OF DISTRIBUTION

     Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 180 days after the Expiration Date, it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until      , 200 , all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus.¹

     The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

     For a period of 180 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any brokers or dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

¹ In addition, the legend required by Item 502(e) of Regulation S-K will appear on the inside front cover page of the Exchange Offer prospectus below the Table of Contents.

ANNEX D

[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

Name: _____________________________________

Address: ___________________________________

If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

EX-4.9

Exhibit 4.9
EXECUTION COPY

          SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of November 30, 2005, among Metals USA, Inc., a Delaware corporation (or its permitted successor) (“Metals”), each of the parties identified as an Additional Subsidiary Guarantor on the signature pages hereto (each, an “Additional Subsidiary Guarantor” and collectively, the “Additional Subsidiary Guarantors”), Wells Fargo Bank, N.A., as trustee (the “Trustee”) and Wells Fargo Bank, N.A., as notes collateral agent (the “Notes Collateral Agent”) under the Indenture.

WITNESSETH:

          WHEREAS, Flag Acquisition Corporation, a Delaware corporation (“Flag Acquisition”), and Flag Intermediate Holdings Corporation, a Delaware corporation (“Holdings”), have heretofore executed and delivered to the Trustee an Indenture (the “Indenture”), dated as of November 30, 2005, providing for the issuance of 11¹/₈% Senior Secured Notes Due 2015 (the “Notes”);

          WHEREAS, Flag Acquisition has merged with and into Metals (the “Merger”), with Metals as the surviving entity in the Merger;

          WHEREAS, as a result of the Merger, Metals is assuming, by and under this Supplemental Indenture, the obligations of Flag Acquisition and the Company for the due and punctual payment of the principal of, premium, if any, and interest on all the Notes and the performance and observance of the Indenture on the part of Flag Acquisition (as defined as the Company under the Indenture);

          WHEREAS, Section 4.11 and Section 10.06 of the Indenture provide that under certain circumstances Metals will cause the Additional Subsidiary Guarantors to execute and deliver to the Trustee a supplemental indenture pursuant to which each Additional Subsidiary Guarantor will Guarantee payment of the Notes on the same terms and conditions as those set forth in Article 10 of the Indenture.

          WHEREAS, pursuant to Section 9.01(iv) of the Indenture, the Trustee, the Notes Collateral Agent, Metals and Holdings, as a Guarantor under the Indenture, are authorized to execute and deliver this Supplemental Indenture.

          NOW, THEREFORE, for and in consideration of the foregoing premises and for good and valuable consideration, the receipt of which is hereby acknowledged, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Notes, as follows:

          1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

          2. Assumption by Metals. Metals hereby assumes the obligations of Flag Acquisition and the Company for the due and punctual payment of the principal of, premium, if any, and interest on all outstanding Notes issued pursuant to the Indenture and the performance and observance of each other obligation and covenant set forth in

the Indenture to be performed or observed on the part of Flag Acquisition (as defined as the Company under the Indenture). Metals is hereby substituted for, and may exercise every right and power of, Flag Acquisition (as defined as the Company under the Indenture) under the Indenture with the same effect as if Metals had been named as Flag Acquisition (as defined as the Company under the Indenture) in the Indenture, and Metals is a successor corporation under the Indenture.

          3. Notation on Notes. Notes authenticated and delivered after the date hereof may bear the following notation, which may be stamped or imprinted thereon:

     “In connection with the merger of Flag Acquisition Corporation (“Flag Acquisition”) with and into Metals USA, Inc. (“Metals”), and pursuant to the Supplemental Indenture dated as of November 30, 2005, Metals has assumed the obligations of Flag Acquisition and the Company for the due and punctual payment of the principal of, premium, if any, and interest on this Note and the performance of each other obligation and covenant set forth in the Indenture to be performed or observed on the part of Flag Acquisition or the Company.”

          4. Agreements to Become Guarantors. Each Additional Subsidiary Guarantor hereby agrees, jointly and severally with all of the other Guarantors, to unconditionally and irrevocably guarantee the Company’s obligations under the Notes and the Indenture on the terms and subject to the conditions set forth in Article 10 of the Indenture and agrees to be bound by all other provisions of the Indenture and the Notes applicable to a Guarantor therein (including Article 11).

          5. Ratification of Indenture; Supplemental Indenture Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

          6. Notices. For purposes of the Indenture, the address for notices to Metals and the Additional Subsidiary Guarantors shall be the address for the Company and Guarantors set forth in Section 13.02 of the Indenture.

          7. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

          8. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together shall represent the same agreement.

          9. Effect of Headings. The section headings herein are for convenience only and shall not affect the construction of this Supplemental Indenture.

          10. The Trustee. The Trustee makes no representation as to the validity, sufficiency or enforceability of this Supplemental Indenture or any of the recitals, statements, representations, covenants or agreements contained herein.

METALS USA, INC.,
by	/s/ C. LOURENCO GONCALVES
	Name: C. Lourenco Goncalves
	Title: President and CEO

Signature page to the Supplemental Indenture

FLAG INTERMEDIATE HOLDINGS CORPORATION,
by	/s/ M. ALI RASHID
	Name: M. Ali Rashid
	Title: President

Signature page to the Supplemental Indenture

ALLMET GP, INC.
ALLMET LP, INC.
INTERSTATE STEEL SUPPLY CO. OF MARYLAND, INC.
INTSEL GP, INC.
INTSEL LP, INC.
I-SOLUTIONS DIRECT, INC.
JEFFREYS REAL ESTATE CORPORATION
LEVINSON STEEL GP, INC.
LEVINSON STEEL LP, INC.
METALS RECEIVABLES CORPORATION
METALS USA BUILDING PRODUCTS, L.P.
	By:	Allmet GP, Inc., its General Partner
METALS USA CARBON FLAT ROLLED, INC.
METALS USA FINANCE CORP.
METALS USA FLAT ROLLED CENTRAL, INC.
METALS USA MANAGEMENT CO, L.P.
	By:	MUSA GP, Inc., its General Partner
METALS USA PLATES AND SHAPES NORTHEAST, L.P.
	By:	Levinson Steel GP, Inc., its General Partner
METALS USA PLATES AND SHAPES SOUTHCENTRAL, INC.
METALS USA PLATES AND SHAPES SOUTHEAST, INC.
METALS USA PLATES AND SHAPES SOUTHWEST, LMITED PARTNERSHIP
	By:	Intsel GP, Inc., its General Partner
METALS USA REALTY COMPANY
METALS USA SPECIALTY METALS NORTHCENTRAL, INC.
MUSA GP, INC.
MUSA LP, INC.
QUEENSBORO, L.L.C.
	By:
		Metals USA Plates and Shapes Southeast, Inc., its sole Member

By:	/s/ KEITH KOCI
	Name: Keith Koci
	Title: Treasurer

Signature page to the Supplemental Indenture

JEFFREYS STEEL HOLDINGS, L.L.C.
By:	/s/ JOHN A. HAGEMAN
	Name: John A. Hageman
	Title: Manager

Signature page to the Supplemental Indenture

WELLS FARGO BANK, N.A., as Trustee
by	/s/ JOSEPH P. O’DONNELL
	Name: Joseph P. O’Donnell
	Title: Vice President

WELLS FARGO BANK, N.A., as Notes Collateral Agent
by	/s/ JOSEPH P. O’DONNELL
	Name: Joseph P. O’Donnell
	Title: Vice President

Signature page to the Supplemental Indenture

EX-4.10

Exhibit 4.10

SUPPLEMENTAL INDENTURE

     SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of March 31, 2006 is among MUSA Newark, LLC (the “Additional Subsidiary Guarantor”), a Delaware limited liability company and an indirect subsidiary of Metals USA, Inc. (or its permitted successor)(the “Company”), the Company, Flag Intermediate Holdings Corporation, a Delaware corporation (“Holdings”), Wells Fargo Bank, N.A., as trustee under the Indenture (the “Trustee”) and Wells Fargo Bank, N.A., as notes collateral agent under the Indenture (the “Notes Collateral Agent”).

W I T N E S S E T H:

     WHEREAS the Company, Holdings and the Subsidiary Guarantors have heretofore executed and delivered to the Trustee an Indenture (the “Indenture”), dated as of November 30, 2005, providing for the issuance of 11¹/₈% Senior Secured Notes Due 2015 (the “Notes”);

     WHEREAS, Section 4.11 and Section 10.06 of the Indenture provide that under certain circumstances the Company will cause the Additional Subsidiary Guarantor to execute and deliver to the Trustee a guaranty agreement pursuant to which the Additional Subsidiary Guarantor will Guarantee payment of the Notes on the same terms and conditions as those set forth in Article 10 of the Indenture; and

     WHEREAS, pursuant to Section 9.01(iv) of the Indenture, the Trustee and the Company are authorized to execute and deliver this Supplemental Indenture.

     NOW THEREFORE, in consideration of the foregoing and for good and valuable consideration, the receipt of which is hereby acknowledged, the Company, the Additional Subsidiary Guarantor and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

     SECTION 1. Capitalized Terms. Capitalized terms used herein but not defined shall have the meanings assigned to them in the Indenture.

     SECTION 2. Guarantees. The Additional Subsidiary Guarantor hereby agrees, jointly and severally with all other Guarantors, to unconditionally and irrevocably guarantee the Company’s obligations under the Notes and the Indenture on the terms and subject to the conditions set forth in Article 10 of the Indenture and to be bound by all other applicable provisions of the Indenture (including Article 11) and the Notes.

     SECTION 3. Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respect ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.

     SECTION 4. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     SECTION 5. Trustee Makes No Representation. The Trustee makes no representation as to the validity, sufficiency, or enforceability of this Supplemental Indenture, or any of the recitals, statements or agreements herein contained.

     SECTION 6. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

     SECTION 7. Effect of Headings. The Section headings herein are for convenience only and shall not effect the construction of this Supplemental Indenture.

-2-

     IN WITNESS WHEREOF, the parties have caused this Supplemental Indenture to be duly executed as of the date first written above.

METALS USA, INC.

By:

Name:

Title:

MUSA NEWARK, LLC

By: METALS USA PLATES AND SHAPES NORTHEAST, L.P., its sole Member

By: LEVINSON STEEL GP, INC., its General Partner

By:

Name:

Title:

FLAG INTERMEDIATE HOLDINGS CORPORATION

By:

Name:

Title:

Signature Page to Supplemental Indenture

WELLS FARGO BANK, N.A., as Trustee

By:

Name:

Title:

WELLS FARGO BANK, N.A., as Notes Collateral Agent

By:

Name:

Title:

Signature Page to Supplemental Indenture

EX-5.1

Exhibit 5.1

March 31, 2006

Flag Intermediate Holdings Corporation
Metals USA, Inc.
One Riverway, Suite 1100
Houston, Texas 77056

Re: Flag Intermediate Holdings Corporation and Metals USA, Inc.
Registration Statement on Form S-4

Ladies and Gentlemen:

We have acted as counsel to Flag Intermediate Holdings Corporation, a Delaware corporation (the "Flag Intermediate”), and Metals USA, Inc., a Delaware corporation (“Metals USA”), in connection with the registration, pursuant to a registration statement on Form S-4 (the “Registration Statement”), filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Act”), of (i) the proposed offer by Metals USA to exchange (the “Exchange Offer”) all outstanding 11¹/8% Senior Secured Notes due 2015 ($275 million aggregate principal amount outstanding) (the “Outstanding Notes”) of Metals USA for 11¹/8% Senior Secured Notes due 2015 ($275 million aggregate principal amount) (the “Registered Notes”) of Metals USA and (ii) the guarantees (the “Guarantees”) pursuant to the Indenture referred to below of Flag Intermediate and the other Guarantors listed in the Registration Statement (the “Registrant Guarantors”). The Outstanding Notes have been, and the Registered Notes will be, issued pursuant to an Indenture dated as of November 30, 2005 and supplemented by a supplemental indenture thereto, dated as of March 30, 2006 (as so supplemented, the “Indenture”) among Flag Acquisition Corporation (merged into Metals USA as surviving entity prior to the date hereof), Flag Intermediate, the other Registrant Guarantors and Wells Fargo Bank, N.A., a national banking association, as trustee and collateral agent (the "Trustee”).

We have examined originals or certified copies of the Indenture and such corporate records of Metals USA and Flag Intermediate and other certificates and documents of officials of Metals USA and Flag Intermediate, public officials and others as we have deemed appropriate for purposes of this letter. We have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to authentic original documents of all copies submitted to us as conformed and certified or reproduced copies. We also have assumed the legal capacity of natural persons, the corporate or other power of all persons signing on

1111 Louisiana Street, 44th Floor / Houston, Texas 77002-5200 / 713.220.5800 / fax: 713.236.0822 / akingump.com

Flag Intermediate Holdings Corporation
Metals USA, Inc.
March 31, 2006
Page 2

behalf of the parties thereto other than Flag Intermediate and Metals USA, the due authorization, execution and delivery of the Indenture, the Outstanding Notes and all other documents by the parties thereto other than Flag Intermediate and Metals USA, that the Registered Notes will conform to the specimens examined by us and that the Trustee’s certificate of authentication of Registered Notes will be manually signed by one of the Trustee’s authorized officers.

Based upon the foregoing and subject to the assumptions, exceptions, qualifications and limitations set forth hereinafter, we are of the opinion that when (a) the Registration Statement has become effective under the Act, (b) the Outstanding Notes have been exchanged in the manner described in the prospectus forming a part of the Registration Statement, (c) the Registered Notes have been duly executed, authenticated, issued and delivered by Metals USA in accordance with the terms of the Indenture, against receipt of the Outstanding Notes surrendered in exchange therefor, (d) the Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended and (e) applicable provisions of “blue sky” laws have been complied with,

1.	the Registered Notes proposed to be issued pursuant to the Exchange Offer will be valid and binding obligations of Metals USA and will be entitled to the benefits of the Indenture; and
2.	the Guarantees proposed to be issued pursuant to the Exchange Offer will be valid and binding obligations of each Registrant Guarantor.

The opinions and other matters in this letter are qualified in their entirety and subject to the following:

A.	We express no opinion as to the laws of any jurisdiction other than any published constitutions, treaties, laws, rules or regulations or judicial or administrative decisions (“Laws”) of (i) the State of New York and (ii) the General Corporation Law of the State of Delaware.
B.	This law firm is a registered limited liability partnership organized under the laws of the State of Texas.
C.	The matters expressed in this letter are subject to and qualified and limited by: (i) applicable bankruptcy, insolvency, fraudulent transfer and conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights and remedies generally; (ii) general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity); (iii) commercial

Flag Intermediate Holdings Corporation
Metals USA, Inc.
March 31, 2006
Page 3

reasonableness and unconscionability and an implied covenant of good faith and fair dealing; (iv) the power of the courts to award damages in lieu of equitable remedies; (v) securities Laws and public policy underlying such Laws with respect to rights to indemnification and contribution; and (vi) limitations on the waiver of rights under any stay, extension or usury Law or other Law, whether now or hereafter in force, which would prohibit or forgive Metals USA or a Registrant Guarantor from paying all or any portion of the Outstanding Notes or the Registered Notes as contemplated in the Indenture.

We hereby consent to the filing of copies of this opinion as an exhibit to the Registration Statement and to the use of our name in the prospectus forming a part of the Registration Statement under the caption “Legal Matters.” In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Act and the rules and regulations thereunder. This opinion speaks as of its date, and we undertake no (and hereby disclaim any) obligation to update this opinion.

Very truly yours,

AKIN GUMP STRAUSS HAUER & FELD LLP

EX-10.1

Execition Copy Exhibit 10.1

AMENDED EMPLOYMENT AGREEMENT (this “Agreement”) dated as of September 29, 2005, between FLAG ACQUISITION CORPORATION, a Delaware corporation, (the “Merger Sub”) and CELSO LOURENCO GONCALVES (“Goncalves”).

     WHEREAS, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) made and entered into as of the 18th day of May, 2005, by and among Flag Holdings Corporation, a Delaware corporation (“Parent”), the Merger Sub, a wholly owned subsidiary of Parent, and Metals USA, Inc. (the “Company”), Parent will acquire all of the capital stock of the Company by merging (the “Merger”) the Merger Sub with and into the Company (the “Transaction”);

     WHEREAS, concurrently with the execution of the Merger Agreement, as a condition and inducement to Parent’s and the Merger Sub’s willingness to enter into the Merger Agreement, the Merger Sub is entering into this Agreement;

     WHEREAS, in connection with the Transaction, the Company, as the Surviving Corporation (as that term is defined in the Merger Agreement) in the Merger, desires to employ Goncalves and Goncalves desires to be employed by the Company;

     WHEREAS, the Company and Goncalves are parties to that certain employment agreement dated February 18, 2003 (the “Prior Agreement”); and

     WHEREAS, Goncalves, as a condition of his employment, will make a substantial investment in Parent concurrently with the closing of the Transaction by purchasing 188,000 shares of common stock of Parent, par value $0.01, at a price of $10 per share;

     NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     Section 1. Employment Period.

     The initial term of Goncalves’ employment hereunder shall be for a period of five (5) years (the “Initial Term”) commencing on the closing of the Transaction (the “Effective Date”) and ending on the fifth anniversary of the Effective Date, unless terminated earlier pursuant to Section 3 of this Agreement (the “Employment Period”); provided, however, that the Employment Period shall automatically be renewed for successive one (1) year terms upon the Expiration of the Initial Term unless either party gives at least ninety (90) days written notice of its intention not to renew the Employment Period. Upon Goncalves’ termination of employment with the Company for any reason, he shall immediately resign all positions with the Company or any of its subsidiaries or affiliates, including any position as a member of the Parent’s Board of Directors and a member of the Company’s Board of Directors (the “Board”).

     Section 2. Terms of Employment.

          (a) Position. During the term of Goncalves’ employment, Goncalves shall serve as President and Chief Executive Officer of the Company and shall be responsible for the management and affairs of the Company as directed by the Company’s Board. In addition to serving as President and Chief Executive Officer, prior to an initial public offering of the Parent’s common stock, Goncalves shall be a member of the Parent’s Board of Directors and the Company’s Board. In performing his duties hereunder, Goncalves shall report directly to the Board.

          (b) Duties. During the term of Goncalves’ employment, Goncalves agrees to devote all of his business time to the business and affairs of the Company and to use Goncalves’ reasonable best efforts to perform faithfully, effectively and efficiently his responsibilities and obligations hereunder. Notwithstanding the foregoing, nothing herein shall prohibit Goncalves from (i) serving on civic or charitable boards or committees, (ii) delivering lectures or fulfilling speaking engagements and (iii) managing personal investments, so long as such activities do not materially interfere with the performance of Goncalves’ responsibilities hereunder.

          (c) Compensation.

               (i) Base Salary. During the term of Goncalves’ employment, Goncalves shall receive an initial annual base salary in an amount equal to $525,000.00 (the “Annual Base Salary”), less all applicable withholdings, which shall be paid in accordance with the customary payroll practices of the Company. Notwithstanding anything herein, the Annual Base Salary will not be reduced without Goncalves’ consent, unless the reduction is related to a broader compensation reduction that is not limited to Goncalves and does not exceed 10% of his Annual Base Salary.

               (ii) Bonuses. For fiscal year 2005,Goncalves shall be eligible to receive a bonus pursuant to the plan as in existence prior to the Effective Date in an amount to be determined by the Board in good faith. Thereafter, during the Employment Period, the Company shall establish a bonus plan for each fiscal year (the “Plan”) pursuant to which Goncalves will be eligible to receive an annual bonus (the “Bonus”). The Board or the Compensation Committee of the Board will administer the Plan and establish performance objectives for each year to be mutually agreed upon with Goncalves. In the event that the Company achieves target based on actual performance, Goncalves shall be entitled to receive a Bonus in an amount equal to no less than Goncalves’ Annual Base Salary. Goncalves will be entitled to receive the Bonus only upon the Company’s achievement of the specified performance objectives and if Goncalves is employed on the last day of the applicable performance period (subject to Section 4). The Bonus shall become payable on or before March 15 following the end of the applicable fiscal year provided that the Board or Compensation Committee finally determines (x) that the Company has achieved the applicable performance objectives and (y) the amount of bonuses that shall be paid to each executive entitled to receive a bonus for the applicable bonus year. Notwithstanding the immediately preceding sentence, in the event Goncalves’ employment is terminated: (A) as a result of Goncalves’ death or Disability; (B) by the Company without Cause; (C) by Goncalves for Good Reason; or (D) because the Company elects not to renew the Employment Period, Goncalves shall be entitled to receive a prorated Bonus for the year in which termination occurs,

2

based on actual performance for such year, the amount of which prorated bonus, if any, shall be determined and paid promptly following the end of the year to which such bonus relates.

               (iii) Compensation Consultant. Following the Effective Date, the Company shall retain a compensation consulting firm to conduct a compensation review, following which the Board shall consider, in its sole discretion, increasing Goncalves’ Annual Base Salary and bonus target retroactively to the Effective Date.

               (iv) Benefits. During the term of Goncalves’ employment hereunder, he shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other senior executives of the Company and shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company to the extent applicable generally to other senior executives of the Company. The benefits provided to Goncalves shall be individually the same and in the aggregate equal to or greater than those benefits that Goncalves was receiving at the Company immediately prior to the Effective Date. Notwithstanding anything in this Section 2(c)(iv) to the contrary, all benefit obligations are subject to guidance issued by the U.S. Department of Treasury under Section 409A of the Code. To the extent required, the Company may modify the benefits provided under this Section 2(c)(iv) to comply with such guidance; provided, however, that the aggregate value of benefits provided to Goncalves after such modification shall not be less than the aggregate value of the benefits provided to him prior to the modification.

               (v) Expenses. During the term of Goncalves’ employment, Goncalves shall be entitled to receive reimbursement for all reasonable expenses incurred by Goncalves in performance of his duties hereunder provided that Goncalves provides all necessary documentation in accordance with Company policy.

               (vi) Vacation and Holidays. During the term of Goncalves’ employment, Goncalves shall be entitled to five weeks of paid vacation.

               (vii) Stock Options. Concurrent with the closing of the Transaction, Parent shall grant Goncalves two stock option grants (the “Executive Options”) to purchase Parent’s common stock, par value $ .01, at an exercise price of $10 per share. Each grant will be pursuant to the terms and conditions set forth in the Parent’s 2005 Stock Incentive Plan (the “Stock Incentive Plan”) and will be subject to the terms of the Stock Incentive Plan and Goncalves’ Non-Qualified Stock Option Agreement.

                    (A) The first grant will be for options to purchase 406,900 shares of the Parent’s common stock and will be exercisable for a maximum of ten years subject to the vesting, termination and other terms set forth in Goncalves’ Stock Option Agreement.

                    (B) The second grant will be for options to purchase an additional 18,800 shares of the Parent’s common stock, which options will be fully vested as of the grant date and exercisable on or before March 30, 2006, on which date the options shall terminate. If Goncalves exercises all or a portion of these options on or before March 30, 2006, Goncalves will receive an additional 2.17 options to purchase shares of the Parent’s common

3

stock for each option exercised to a maximum additional award of 40,790 options. If the foregoing calculation results in a fractional number of options, the fractional option shall be disregarded. The options contingent upon the exercise of the options terminable on March 30, 2006 will be exercisable for a maximum of ten years subject to the vesting, termination and other terms set forth in Goncalves’ Stock Option Agreement.

               (viii) Restricted Stock. Concurrent with the closing of the Transaction, the Parent shall grant Goncalves 36,000 shares of its common stock, par value $ .01 (the “Stock Grant”). The Stock Grant will be pursuant to the terms and conditions set forth in the Stock Incentive Plan and will be subject to the terms of the Stock Incentive Plan and Goncalves’ Restricted Stock Agreement

               (ix) Investment. Concurrent with the closing of the Transaction, Goncalves shall purchase 188,000 shares of the Parent’s common stock, par value $0.01, at a price of $10 per share.

     Section 3. Termination of Employment.

          (a) Death or Disability. Goncalves’ employment shall terminate automatically upon Goncalves’ death. If Goncalves becomes subject to a Disability during the Term of Employment (pursuant to the definition of Disability set forth below), the Company may give Goncalves written notice in accordance with Sections 3(e) and 10(h) of its intention to terminate Goncalves’ employment. For purposes of this Agreement, “Disability” means (i) Goncalves’ inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical of mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident or health plan covering employees of the Company.

          (b) Cause. Goncalves’ employment may be terminated at any time by the Company for Cause. For purposes of this Agreement, “Cause” shall mean (i) the commission of a felony or a crime of moral turpitude; (ii) the commission of a willful and material act of dishonesty involving the Company; (iii) a material non-curable breach of Goncalves’ obligations under this Agreement; (iv) any breach of the Company’s policies or procedures which causes material harm to the Company; (v) any other willful misconduct which causes material harm to the Company or its business reputation; (vi) a failure by Goncalves to cure a material breach of his obligations under this Agreement, the Investor Rights Agreement among the shareholders of Parent, the Subscription Agreement between Goncalves and Parent or the Non-Qualified Stock Option Agreement between Goncalves and Parent within 30 days after written notice of such breach; (vii) breach of any of Goncalves’ representations contained in this Agreement; or (viii) prior to the closing of the Transaction, the emergence of any facts or developments that, in the aggregate, are reasonably likely to adversely impact (for the Company or Goncalves) the pending litigation involving Goncalves, or, whether before or after the closing of the Transaction, the occurrence of a materially adverse outcome in such litigation.

4

          (c) Termination Without Cause. The Company may terminate Goncalves’ employment hereunder without cause at any time.

          (d) Good Reason. Goncalves’ employment may be terminated at any time by Goncalves for Good Reason or without Good Reason upon ninety (90) days prior written notice. For purposes of this Agreement, “Good Reason” means voluntary resignation after any of the following actions are taken by the Company or any of its subsidiaries without Goncalves’ consent: (i) a reduction in Goncalves’ Annual Base Salary or Bonus potential described in Section 2(c)(ii) of this Agreement (but not including any diminution related to a broader compensation reduction that is not limited to any particular employee or executive); (ii) a material diminution of Goncalves’ responsibilities as President and Chief Executive Officer or, prior to an initial public offering, the failure to re-elect Goncalves to the Board of Directors of the Company or the Parent; (iii) relocation of Goncalves’ primary work place, as assigned to him by the Company, beyond a fifty (50) mile radius from the Company’s current corporate office in Houston, Texas; or (iv) a material breach by the Company of this Agreement; provided, however, that none of the events described in the foregoing clauses (i), (ii), (iii) or (iv) shall constitute Good Reason unless Goncalves shall have notified the Company in writing describing the events which constitute Good Reason and then only if the Company shall have failed to cure such events within thirty (30) days after the Company’s receipt of such written notice.

          (e) Notice of Termination. Any termination by the Company for Cause or without Cause, or by Goncalves for Good Reason or without Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 10(h). For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Goncalves’ employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date. The failure by Goncalves or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of Goncalves or the Company hereunder or preclude Goncalves or the Company from asserting such fact or circumstance in enforcing Goncalves’ or the Company’s rights hereunder.

          (f) Date of Termination. “Date of Termination” means (i) if Goncalves’ employment is terminated by the Company for Cause, without Cause or by reason of Disability, or by Goncalves for Good Reason or without Good Reason, the date of receipt of the Notice of Termination or any later date specified therein pursuant to Section 3(e), as the case may be and (ii) if Goncalves’ employment is terminated by reason of death, the date of death.

     Section 4. Obligations of the Company upon Termination.

          (a) With Good Reason; Other Than for Cause, Death or Disability; or Upon the Company’s Election Not to Renew the Employment Period. If during the Employment Period, the Company shall terminate Goncalves’ employment other than for Cause, Goncalves shall terminate his employment for Good Reason, the termination of Goncalves’ employment in any case is not due to his death or Disability or upon the Company’s election not to renew the

5

Employment Period, then the Company will provide Goncalves with the following severance payments and/or benefits:

          (i) The Company shall pay to Goncalves in a lump sum (i) the Annual Base Salary through the Date of Termination to the extent not paid, and (ii) to the extent not previously paid, the Bonus earned for any year prior to the year in which the Date of Termination occurs to the extent that Goncalves is employed on the last day of the applicable performance period such Bonus to be paid in accordance with the terms of the Plan. (“Accrued Obligations”);

          (ii) After the Date of Termination, the Company will pay Goncalves (x) within ten (10) days of the Date of Termination, a lump sum equal to twelve (12) months of his Annual Base Salary; and (y) commencing on the first day of the thirteenth month following the Date of Termination an amount equal to one-twelfth of his Annual Base Salary and continuing payment of such amount on the first day of each successive month until the earlier of (i) the first day of the twenty-fourth month following the Date of Termination (the “Severance Period”), and (ii) the date, if any, Goncalves violates the terms of this Agreement in any material respect.

          (iii) The Company will pay Goncalves a prorated Bonus for the year in which termination occurs, based on actual performance for such year, the amount of which prorated bonus, if any, shall be determined and paid on or before March 15 of the year immediately following the end of the year to which such bonus relates.

          (iv) After the Date of Termination, provided Goncalves elects to continue his and his beneficiaries’ participation in the Company’s medical benefit plan in which they participated prior to the Date of Termination pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”), the Company will reimburse Goncalves for the monthly cost of continuing such coverage within 10 business days of each payment by Goncalves for the lesser of: (x) eighteen months following the Date of Termination; and (y) the period preceding the date that Goncalves becomes eligible to receive medical coverage under another employee benefit plan (“COBRA Benefits”).

Thereafter, the Company shall have no further obligation to Goncalves or his legal representatives under this Section 4(a).

          (b) Death or Disability. If Goncalves’ employment shall be terminated by reason of Goncalves’ death or Disability, then the Company will provide Goncalves with the following severance payments and/or benefits:

               (i) The Company shall pay Goncalves or his legal representatives (A) the Accrued Obligations; (B) a lump sum equal to twelve months of his Annual Base Salary in the event his employment is terminated by reason of a Disability or a lump sum equal to twenty-four months of his Annual Base Salary in the event his employment is terminated by reason of his death; (C) his prorated Bonus for the year in which his termination occurs, the amount of which bonus, if any, shall be determined and paid on or before March 15 of the year immediately following the end of the year to which such bonus relates; (D) the continuance of death or

6

Disability benefits thereafter in accordance with the terms of such plans then in effect; and (E) COBRA Benefits. Thereafter, the Company shall have no further obligation to Goncalves or his legal representatives.

               (ii) In addition, in the event of Goncalves death, Goncalves’ beneficiary may, by written notice delivered to the Company within one hundred and eighty (180) days of Goncalves’ death , elect to sell all or any portion of the shares of common stock of Parent held by Goncalves (including any shares of the Parent’s common stock received upon a distribution from any deferred compensation plan or any common stock issuable upon exercise of any options held by Goncalves) for Fair Market Value (as each such term is defined in the Investor Rights Agreement dated as of the date hereof (the “Investor Rights Agreement”). The determination date for purposes of determining the Fair Market Value shall be the closing date of the purchase of the applicable shares. The closing date of the sale purchase pursuant to this Section 4(b)(ii) shall take place on a date designated by the Company or its subsidiaries (or their designee), as applicable, in accordance with the provisions of the Investor Rights Agreement. Notwithstanding the foregoing, the Company shall have no obligation to repurchase Goncalves’ common stock if: (x) such purchase would violate any restriction imposed on the Company by federal law, Delaware General Corporate Law or other applicable law; (y) the purchase would constitute a breach or other violation of the Company’s or its subsidiaries’ debt and equity financing agreements or any other agreements concerning the Company’s Indebtedness (as that term is defined in the Investor Rights Agreement); or (z) the Company and its subsidiaries lack current or project a future lack of cash reserves in excess of the Company’s and its subsidiaries cash operating requirements to finance the purchase.

          (c) Cause; Other than for Good Reason. If Goncalves’ employment shall be terminated by the Company for Cause or by Goncalves without Good Reason, then the Company shall have no further payment obligations to Goncalves other than for payment of the Accrued Obligations. Thereafter, the Company shall have no further obligation to Goncalves other than any indemnification rights he may have pursuant to Section 9, provided, however, that the Company shall have no obligation to indemnify Goncalves for any act resulting in his Termination for Cause.

          (d) Separation Agreement and General Release. The Company’s obligations to make payments under Sections 4(a) and 4(b) will be conditioned on Goncalves or his legal representatives executing and delivering a mutually agreeable separation agreement and general release of the Company and its Subsidiaries in a form acceptable to the Company, which form shall include inter alia a general release of Goncalves, but not a release of any claims arising out of (i) Goncalves’ willful misconduct or criminal acts; or (ii) third party claims.

     Section 5. Nondisclosure and Nonuse of Confidential Information.

          (a) Goncalves shall not disclose or use at any time, either during the Employment Period or thereafter, any Confidential Information (as hereinafter defined) of which Goncalves is or becomes aware, whether or not such information is developed by him, except to the extent that such disclosure or use is directly related to and required by Goncalves’ performance in good faith of duties assigned to Goncalves by the Company. Goncalves will take all appropriate steps to safeguard Confidential Information in his possession and to protect it

7

against disclosure, misuse, espionage, loss and theft. Goncalves shall deliver to the Company at the termination of the Employment Period, or at any time the Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) relating to the Confidential Information or the Work Product (as hereinafter defined) of the business of the Company or any of its Affiliates which Goncalves may then possess or have under his control.

          (b) As used in this Agreement, the term “Confidential Information” means information that is not generally known to the public and that is used, developed or obtained by the Company in connection with its business, including, but not limited to, information, observations and data obtained by Goncalves while employed by the Company or any predecessors thereof (including those obtained prior to the date of this Agreement) concerning (i) the business or affairs of the Company (or such predecessors), (ii) products or services, (iii) fees, costs and pricing structures, (iv) designs, (v) analyses, (vi) drawings, photographs and reports, (vii) computer software, including operating systems, applications and program listings, (viii) flow charts, manuals and documentation, (ix) data bases, (x) accounting and business methods, (xi) inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice, (xii) customers and clients and customer or client lists, (xiii) other copyrightable works, (xiv) all production methods, processes, technology and trade secrets, and (xv) all similar and related information in whatever form. Confidential Information will not include any information that has been published in a form generally available to the public prior to the date Goncalves proposes to disclose or use such information. Confidential Information will not be deemed to have been published or otherwise disclosed merely because individual portions of the information have been separately published, but only if all material features comprising such information have been published in combination.

          (c) As used in this Agreement, the term “Work Product” means all inventions, innovations, improvements, technical information, systems, software developments, methods, designs, analyses, drawings, reports, service marks, trademarks, trade names, logos and all similar or related information (whether patentable or unpatentable) which relates to the Company’s or any of its Affiliates’ actual or anticipated business, research and development or existing or future products or services and which are conceived, developed or made by Goncalves (whether or not during usual business hours and whether or not alone or in conjunction with any other person) while employed by the Company (including those conceived, developed or made prior to the date of this Agreement) together with all patent applications, letters patent, trademark, trade name and service mark applications or registrations, copyrights and reissues thereof that may be granted for or upon any of the foregoing.

     Section 6. Non-Solicitation; Non-Competition.

          (a) During the period commencing on the Effective Date and ending on the second anniversary of the Date of Termination (the “Restricted Period”), Goncalves shall not directly or indirectly through another Person (i) induce or attempt to induce any employee of the Company or any Affiliate of the Company to leave the employ of the Company or such Affiliate, or in any way interfere with the relationship between the Company or any such Affiliate, on the one hand, and any employee thereof, on the other hand, (ii) hire any person who was an

8

employee of the Company or any Affiliate of the Company until eighteen (18) months after such individual’s employment relationship with the Company or such Affiliate has been terminated or (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of the Company or any Affiliate of the Company to cease doing business with the Company or such Affiliate, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation, on the one hand, and the Company or any Affiliate, on the other hand.

          (b) Goncalves acknowledges that, in the course of his employment with the Company and/or its Affiliates and their predecessors, he has become familiar, or will become familiar, with the Company’s and its Affiliates’ and their predecessors’ trade secrets and with other confidential information concerning the Company, its Affiliates and their respective predecessors and that his services have been and will be of special, unique and extraordinary value to the Company and its Affiliates. Therefore, Goncalves agrees that during the period commencing on the Effective Date and continuing through the end of the Restricted Period, Goncalves shall not directly or indirectly, engage in the fabrication, sale or distribution of any product fabricated, sold or distributed by the Company or its subsidiaries on the Date of Termination or during the Restricted Period anywhere in the United States in which the Company or its subsidiaries is doing business. For purposes of this Agreement, the phrase “directly or indirectly engage in” shall include any direct or indirect ownership or profit participation interest in such enterprise, whether as an owner, stockholder, partner, joint venturer of or otherwise, and shall include any direct or indirect participation in such enterprise as an employee, consultant, licensor of technology or otherwise. Nothing herein shall prohibit Goncalves from being a passive owner of not more than 4.9% of the outstanding equity interest in any entity which is publicly traded, so long as Goncalves has no active participation in the business of such corporation.

          (c) In the event (i) Goncalves materially breaches the terms of this Agreement (including Section 5 or this Section 6 hereof), or materially breaches the terms of any other agreement between Goncalves and the Company or its subsidiaries; (ii) Goncalves’ employment is terminated by the Company for Cause; (iii) Goncalves resigns his employment for any reason other than Good Reason prior to the first anniversary of the Effective Date; or (iv) Goncalves experiences a Bankruptcy Event (as that term is defined in the Investor Rights Agreement), then Parent (or its designee) shall have the right, but not the obligation, to repurchase all or any portion of the shares of common stock of Parent held by Goncalves (including any shares of Parent’s common stock received upon a distribution from any deferred compensation plan or any common stock issuable upon exercise of any options held by Goncalves) for the lesser of (x) Original Cost and (y) Fair Market Value (as each such term is defined in the Investor Rights Agreement). The determination date for purposes of determining the Fair Market Value shall be the closing date of the purchase of the applicable shares. The closing date of the purchase pursuant to this Section 6(d) shall take place on a date designated by the Company or its subsidiaries (or their designee), as applicable, in accordance with the provisions of the Investor Rights Agreement. The Company (or its designee) shall have the right to record the transfer of the shares of common stock in connection with such purchase on its books and records without the consent of Goncalves.

9

     Section 7. Severance Payments.

          In addition to the foregoing, and not in any way in limitation thereof, or in limitation of any right or remedy otherwise available to the Company, if Goncalves violates any provision of the foregoing Sections 5 or 6, any severance payments then or thereafter due from the Company to Goncalves shall be terminated immediately and the Company’s obligation to pay and Goncalves’ right to receive such severance payments shall terminate and be of no further force or effect, if and when determined by a court of competent jurisdiction that Goncalves has violated Sections 5 or 6 of this Agreement, in each case without limiting or affecting Goncalves’ obligations under such Sections 5 and 6 or the Company’s other rights and remedies available at law or equity.

     Section 8. Executive’s Representations, Warranties and Covenants.

          (a) Goncalves hereby represents and warrants to the Company and Merger Sub that:

               (1) Goncalves has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by Goncalves;

               (2) the execution, delivery and performance of this Agreement by Goncalves does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which Goncalves is a party or any judgment, order or decree to which Goncalves is subject;

               (3) Goncalves is not a party to or bound by any employment agreement, consulting agreement, non-compete agreement, confidentiality agreement or similar agreement with any other Person;

               (4) upon the execution and delivery of this Agreement by the Merger Sub and Goncalves, this Agreement will be a legal, valid and binding obligation of Goncalves, enforceable in accordance with its terms;

               (5) Goncalves understands that Merger Sub and the Company will rely upon the accuracy and truth of the representations and warranties of Goncalves set forth herein and Goncalves consents to such reliance.

               (6) as of the date of execution of this Agreement, he is not in breach of any of its terms, including having committed any acts which would form the basis for a Cause termination as defined in Section 3 (b) of this Agreement if such act had occurred after the Effective Date.

          (b) The Company (and prior to closing of the Transactions, Merger Sub on behalf of the Company) hereby represents and warrants to Goncalves that:

10

               (1) the Company has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by the Company;

               (2) the execution, delivery and performance of this Agreement by the Company does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Company is a party or any judgment, order or decree to which the Company is subject;

               (3) upon the execution and delivery of this Agreement by the Company and Goncalves, this Agreement will be a legal, valid and binding obligation of the Company, enforceable in accordance with its terms; and

               (4) the Company understands that Goncalves will rely upon the accuracy and truth of the representations and warranties of the Company set forth herein and the Company consents to such reliance.

     Section 9. Indemnification.

          The Company shall secure Directors’ and Officers’ liability insurance for the benefit of Goncalves and shall indemnify Goncalves to the maximum extent permitted under the General Corporate Law of Delaware for acts taken within the scope of his employment and his indemnification shall be no less than the broadest indemnification afforded to all directors and officers of the Parent and the Company.

     Section 10. General Provisions.

          (a) Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable under any present or future law, and if the rights and obligations of any party under this Agreement will not be materially and adversely affected thereby, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction; furthermore, in lieu of such invalid or unenforceable provision there will be added automatically as a part of this Agreement, a legal, valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

          (b) Entire Agreement. This Agreement, the Investor Rights Agreement, the Amended Subscription Agreement, the Stock Incentive Plan, the Amended Non-Qualified Stock Option Agreement, the Second Non-Qualified Stock Option Agreement and the Restricted Stock Agreement embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings,

11

agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. For the avoidance of doubt, Goncalves and Merger Sub (or, from and after the closing of the Transaction, the Company) acknowledge that any agreement between Goncalves and Metals USA, Inc. entered into prior to the Effective Date, including without limitation, the Prior Agreement, the Employment Agreement between Goncalves and the Company dated May 18, 2005, the Non-Qualified Stock Option Agreement between Parent and Goncalves dated May 18, 2005 and the Subscription Agreement between Parent and Goncalves dated May 18, 2005, shall be of no further force and effect as of the Effective Date.

          (c) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

          (d) Successors and Assigns.

               (i) This Agreement is personal to Goncalves and without the prior written consent of Merger Sub (or, from and after the closing of the Transaction, the Company) shall not be assignable by Goncalves otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Goncalves’ legal representatives.

               (ii) Effective as of the Closing of the Transaction, the Merger Sub will require the Company to assume and agree to perform this Agreement.

               (iii) This Agreement shall inure to the benefit of and be binding upon Merger Sub (or, from and after the closing of the Transaction, the Company) and its successors and assigns. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

          (e) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

12

          (f) Remedies. Each of the parties to this Agreement and any such person or entity granted rights hereunder whether or not such person or entity is a signatory hereto (including, without limitation, Apollo Management V, L.P. and its Affiliates) shall be entitled to enforce its rights under this Agreement specifically to recover damages and costs for any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement, including Sections 5 and 6 of this Agreement, and that the Company may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or other injunctive relief (without posting any bond or deposit) in order to enforce or prevent any violations of the provisions of this Agreement or require Goncalves to account for and pay over to the Company all economic benefits derived from or received as a result of any transactions constituting a breach of the covenants contained herein in this Agreement, if and when final judgment of a court of competent jurisdiction is so entered against Goncalves. Each party shall be responsible for paying its own attorneys’ fees, costs and other expenses pertaining to any judgment or verdict unless the court awards otherwise.

          (g) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of Merger Sub (or, from and after the closing of the Transaction, the Company) and Goncalves and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision hereof.

          (h) Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, transmitted via telecopier, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated or at such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder and received when delivered personally, when received if transmitted via telecopier, five days after deposit in the U.S. mail and one day after deposit with a reputable overnight courier service.

     If to the Company, to:

Metals USA, Inc.
One Riverway, Suite 1100
Houston, Texas 77056
Facsimile: (713) 965-9967
Attention: Chairman of the Board

     with a copy (which shall not constitute notice) to:

The Apollo Group
9 West 57^th Street
New York, New York 10019
Facsimile: (212) 515-3288
Attention: Marc Becker

13

and
Dreier LLP
499 Park Avenue
New York, New York 10022
Facsimile: (212) 328-6101
Attention: Andrew Bernstein, Esq.

     If to Goncalves, to Goncalves’ address set forth on the signature page hereto.

          (i) Survival of Representations, Warranties and Agreements. All representations, warranties and agreements contained herein shall survive the consummation of the transactions contemplated hereby indefinitely.

          (j) Effectiveness. Notwithstanding the foregoing, none of Parent, Merger Sub or the Company shall have any obligations to Goncalves or his beneficiaries under this Agreement in the event Goncalves is unable to perform his duties hereunder or commits an act that constitutes Cause under Section 3(b) prior to the closing of the Transaction and this Agreement shall be of no force and effect. Further, this Agreement shall become of no force or effect if the Transaction does not close on or before December 15, 2005.

          (k) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

          (l) Construction. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

          (m) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

          (n) Legal Fees. The Company will reimburse Goncalves for his attorneys’ fees incurred in connection with the negotiation and execution of this Agreement, the Investors Rights Agreement, the Subscription Agreement, the 2005 Stock Incentive Plan, the Stock Option Agreement and the Second Stock Option Agreement.

[signature page follows]

14

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

FLAG ACQUISITION CORPORATION
By:	/s/ M. Ali Rashid
	Name:  M. Ali Rashid Title:    President
CELSO LOURENCO GONCALVES

Signature: /s/ CELSO LOURENCO GONCALVES

Residence Address:

30 Williamsburg Lane
Houston, Texas 77024

EX-10.2

Execution Copy Exhibit 10.2

AMENDED EMPLOYMENT AGREEMENT (this “Agreement”)
dated as of September 29, 2005, between FLAG
ACQUSITION CORPORATION, a Delaware corporation (the
“Merger Sub”), and JOHN A. HAGEMAN (“Hageman”).

     WHEREAS, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) made and entered into as of the 18^th day of May, 2005, by and among Flag Holdings Corporation, a Delaware corporation (“Parent”), the Merger Sub, and Metals USA, Inc. (the “Company”), Parent will acquire all of the capital stock of the Company by merging (“the Merger”) Merger Sub with and into the Company (the “Transaction”);

     WHEREAS, concurrently with the execution of the Merger Agreement, as a condition and inducement to Parent’s and the Merger Sub’s willingness to enter into the Merger Agreement, the Merger Sub is entering into this Agreement;

     WHEREAS, in connection with the Transaction, the Company, as the Surviving Corporation (as that term is defined in the Merger Agreement) in the Merger, desires to employ Hageman and Hageman desires to be employed by the Company; and

     WHEREAS, Hageman, as a condition of his employment, will make a substantial investment in Parent concurrently with the closing of the Transaction by purchasing 37,500 shares of common stock of Parent, par value $0.01, at a price of $10 per share;

     NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     Section 1. Employment Period.

     The initial term of Hageman’s employment hereunder shall be for a period of two (2) years (the “Initial Term”) commencing on the closing of the Transaction (the “Effective Date”) and ending on the second anniversary of the Effective Date, unless terminated earlier pursuant to Section 3 of this Agreement (the “Employment Period”); provided, however, that the Employment Period shall automatically be renewed for successive one (1) year terms upon the Expiration of the Initial Term unless either party gives at least ninety (90) days written notice of its intention not to renew the Employment Period. Upon Hageman’s termination of employment with the Company for any reason, he shall immediately resign all positions with the Company or any of its subsidiaries or affiliates.

     Section 2. Terms of Employment.

          (a) Position. During the term of Hageman’s employment, Hageman shall serve as Senior Vice President and Chief Legal Officer and Administrative Officer of the Company and perform such duties and responsibilities customary to such position.

          (b) Duties. During the term of Hageman’s employment, Hageman agrees to devote all of his business time to the business and affairs of the Company and to use Hageman’s reasonable best efforts to perform faithfully, effectively and efficiently his responsibilities and obligations hereunder. Notwithstanding the foregoing, nothing herein shall prohibit Hageman from (i) serving on civic or charitable boards or committees, (ii) delivering lectures or fulfilling speaking engagements and (iii) managing personal investments, so long as such activities do not materially interfere with the performance of Hageman’s responsibilities hereunder.

          (c) Compensation.

               (i) Base Salary. During the term of Hageman’s employment, Hageman shall receive an initial annual base salary in an amount equal to $270,000 (the “Annual Base Salary”), less all applicable withholdings, which shall be paid in accordance with the customary payroll practices of the Company. Notwithstanding anything herein, the Annual Base Salary will not be reduced without Hageman’s consent, unless the reduction is related to a broader compensation reduction that is not limited to Hageman’s and does not exceed 10% of his Annual Base Salary.

               (ii) Bonuses. For fiscal year 2005, Hageman shall be eligible to receive a bonus pursuant to the plan as in existence prior to the Effective Date in an amount to be determined by the Company’s Board of Directors (the “Board”) in good faith. Thereafter, during the Employment Period, the Company shall establish a bonus plan for each fiscal year (the “Plan”) pursuant to which Hageman will be eligible to receive an annual bonus (the “Bonus”). The Board or the Compensation Committee of the Board will administer the Plan and establish performance objectives for each year to be mutually agreed upon with Hageman. In the event that the Company achieves target based on actual performance, Hageman shall be entitled to receive a Bonus in an amount equal to 70 percent of the Annual Base Salary. Hageman will be entitled to receive the Bonus only upon the Company’s achievement of the specified performance objectives and if Hageman is employed on the last day of the applicable performance period (subject to Section 4). The Bonus shall become payable on or before March 15 following the end of the applicable fiscal year provided that the Board or Compensation Committee finally determines (x) that the Company has achieved the applicable performance objectives and (y) the amount of bonuses that shall be paid to each executive entitled to receive a bonus for the applicable bonus year. Notwithstanding the immediately preceding sentence, in the event Hageman’s employment is terminated: (A) by the Company without Cause; or (B) by Hageman for Good Reason, Hageman shall be entitled to receive a prorated Bonus for the year in which termination occurs, based on actual performance for such year, the amount of which prorated bonus, if any, shall be determined and paid promptly following the end of the year to which such bonus relates.

               (iii) Compensation Consultant. Following the Effective Date, the Company shall retain a compensation consulting firm to conduct a compensation review, following which the Board shall consider, in its sole discretion, increasing Hageman’s Annual Base Salary and bonus target retroactively to the Effective Date.

               (iv) Benefits. During the term of Hageman’s employment hereunder, he shall be entitled to participate in all incentive, savings and retirement plans, practices, policies

2

and programs applicable generally to other senior executives of the Company and shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company to the extent applicable generally to other senior executives of the Company. The benefits provided to Hageman shall be in the aggregate equal to those benefits that Hageman was receiving at the Company immediately prior to the Effective Date. Notwithstanding anything in this Section 2(c)(iv) to the contrary, all benefit obligations are subject to guidance issued by the U.S. Department of Treasury under Section 409A of the Code. To the extent required, the Company may modify the benefits provided under this Section 2(c)(iv) to comply with such guidance; provided, however, that the aggregate value of benefits provided to Hageman after such modification shall not be less than the aggregate value of the benefits provided to him prior to the modification.

               (v) Expenses. During the term of Hageman’s employment, Hageman shall be entitled to receive reimbursement for all reasonable expenses incurred by Hageman in performance of his duties hereunder provided that Hageman provides all necessary documentation in accordance with Company policy.

               (vi) Vacation and Holidays. During the term of Hageman’s employment, Hageman shall be entitled to five weeks of paid vacation.

               (vii) Stock Options. Concurrent with the closing of the Transaction, Parent shall grant Hageman stock options (the “Executive Options”) to purchase 73,000 shares of common stock of the Parent at an exercise price of $10 per share pursuant to the terms and conditions set forth in the Parent’s 2005 Stock Incentive Plan (the “Stock Incentive Plan”). The Executive Options shall be subject to the terms of the Stock Incentive Plan and Hageman’s Non-Qualified Stock Option Agreement.

               (viii) Restricted Stock. Concurrent with the closing of the Transaction, the Parent shall grant Hageman 8,000 shares of its common stock, par value $.01 (the “Stock Grant”). The Stock Grant will be pursuant to the terms and conditions set forth in the Stock Incentive Plan and will be subject to the terms of the Stock Incentive Plan and Hageman’s Restricted Stock Agreement.

               (ix) Investment. Concurrent with the closing of the Transaction, Hageman shall purchase 37,500 shares of common stock of the Parent, par value $0.01, at a price of $10 per share.

     Section 3. Termination of Employment.

          (a) Death or Disability. Hageman’s employment shall terminate automatically upon Hageman’s death. If Hageman becomes subject to a Disability during the Term of Employment (pursuant to the definition of Disability set forth below), the Company may give Hageman written notice in accordance with Sections 3(e) and 10(h) of its intention to terminate Hageman’s employment. For purposes of this Agreement, “Disability” means (i) Hageman’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any

3

medically determinable physical of mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident or health plan covering employees of the Company.

          (b) Cause. Hageman’s employment may be terminated at any time by the Company for Cause. For purposes of this Agreement, “Cause” shall mean (i) the commission of a felony or a crime of moral turpitude; (ii) a willful commission of a material act of dishonesty involving the Company; (iii) a material non-curable breach of Hageman’s obligations hereunder or any other agreement entered into between Hageman and the Company or any of its subsidiaries or affiliates; (iv) any material breach of the Company’s policies or procedures that is not reasonably curable in the Company’s sole discretion; (v) any other willful misconduct which causes material harm to the Company or its business reputation, including due to any adverse publicity; (vi) a failure by Hageman to cure a material breach of his obligations under this Agreement, the Investor Rights Agreement among the shareholders of Parent, the Subscription Agreement between Hageman and Parent or the Non-Qualified Stock Option Agreement between Hageman and Parent within 30 days after written notice of such breach; or (vii) a material breach of any of Hageman’s representations contained in this Agreement.

          (c) Termination Without Cause. The Company may terminate Hageman’s employment hereunder without cause at any time.

          (d) Good Reason. Hageman’s employment may be terminated at any time by Hageman for Good Reason or without Good Reason upon ninety (90) days prior written notice. For purposes of this Agreement, “Good Reason” means voluntary resignation after any of the following actions are taken by the Company or any of its subsidiaries without Hageman’s consent: (i) a reduction in Hageman’s Annual Base Salary or Bonus potential described in Section 2(c)(ii) of this Agreement (but not including any diminution related to a broader compensation reduction that is not limited to any particular employee or executive); (ii) a material diminution of Hageman’s responsibilities as Senior Vice President and Chief Legal and Administrative Officer; (iii) relocation of Hageman’s primary work place, as assigned to him by the Company, beyond a fifty (50) mile radius from Houston, Texas; or (iv) a material breach by the Company of this Agreement; provided, however, that none of the events described in the foregoing clauses (i), (ii), (iii) or (iv) shall constitute Good Reason unless Hageman shall have notified the Company in writing describing the events which constitute Good Reason and then only if the Company shall have failed to cure such events within thirty (30) days after the Company’s receipt of such written notice.

          (e) Notice of Termination. Any termination by the Company for Cause or without Cause, or by Hageman for Good Reason or without Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 10(h). For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Hageman’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date. The failure by Hageman or the Company to set forth in the Notice

4

of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of Hageman or the Company hereunder or preclude Hageman or the Company from asserting such fact or circumstance in enforcing Hageman’s or the Company’s rights hereunder.

          (f) Date of Termination. “Date of Termination” means (i) if Hageman’s employment is terminated by the Company for Cause, without Cause or by reason of Disability, or by Hageman for Good Reason or without Good Reason, the date of receipt of the Notice of Termination or any later date specified therein pursuant to Section 3(e), as the case may be and (ii) if Hageman’s employment is terminated by reason of death, the date of death.

     Section 4. Obligations of the Company upon Termination.

          (a) With Good Reason; Other Than for Cause, Death, Disability or Upon the Company’s Election Not to Renew the Employment Period. If during the Employment Period, the Company shall terminate Hageman’s employment other than for Cause, Hageman shall terminate his employment for Good Reason, the termination of Hageman’s employment in any case is not due to his death or Disability or upon the Company’s election not to renew the Employment Period, then the Company will provide Hageman with the following severance payments and/or benefits:

               (i) The Company shall pay to Hageman in a lump sum (i) the Annual Base Salary through the Date of Termination to the extent not paid, and (ii) to the extent not previously paid, the Bonus earned for any year prior to the year in which the Date of Termination occurs to the extent that Hageman is employed on the last day of the applicable performance period such Bonus to be paid in accordance with the terms of the Plan. (“Accrued Obligations”);

               (ii) After the Date of Termination, the Company will, in its sole discretion, either (a) continue to pay Hageman his Annual Base Salary until the earlier of (i) the end of the eighteenth month following the Date of Termination (the “Severance Period”), and (ii) the date, if any, Hageman violates the terms of this Agreement; or (b) a lump sum equal to eighteen months of Hageman’s Annual Base Salary; provided, however, that in the event that such payment is made in a lump sum and Hageman subsequently violates the terms of this Agreement, in addition to any other remedy that the Company may have at law or in equity, Hageman shall immediately return such payment.

               (iii) The Company will pay Hageman a prorated Bonus for the year in which termination occurs, based on actual performance for such year, the amount of which prorated bonus, if any, shall be determined and paid on or before March 15 of the year immediately following the end of the year to which such bonus relates.

               (iv) After the Date of Termination, provided Hageman elects to continue his and his beneficiaries’ participation in the Company’s medical benefit plan in which they participated prior to the Date of Termination pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”), the Company will reimburse Hageman for the monthly cost of continuing such coverage within 10 business days of each payment by Hageman for the

5

lesser of: (x) eighteen months following the Date of Termination; and (y) the period preceding the date that Hageman becomes eligible to receive medical coverage under another employee benefit plan (“COBRA Benefits”).

          (b) Death or Disability. If Hageman’s employment shall be terminated by reason of Hageman’s death or Disability, then the Company will provide Hageman with the following severance payments and/or benefits:

               (i) then the Company shall pay Hageman or his legal representatives (A) the Accrued Obligations; (B) a lump sum equal to twelve months of Hageman’s Annual Base Salary; (C) the continuance of death or Disability benefits thereafter in accordance with the terms of such plans then in effect; and (D) COBRA Benefits. With respect to the COBRA Benefits, provided Hageman elects to continue his and his beneficiaries’ medical coverage under COBRA, Hageman shall be responsible for the portion of the monthly premium for which he was responsible prior to the Date of Termination, which amount will be withheld from Hageman’s lump sum payment under (B) above and the Company shall pay the remainder of the monthly premium. Thereafter, the Company shall have no further obligation to Hageman or his legal representatives.

               (ii) In addition, in the event of Hageman death, Hageman’s beneficiary may, by written notice delivered to the Company within one hundred and eighty (180) days of Hageman’s death , elect to sell all or any portion of the shares of common stock of Parent held by Hageman (including any shares of the Parent’s common stock received upon a distribution from any deferred compensation plan or any common stock issuable upon exercise of any options held by Hageman) for Fair Market Value (as each such term is defined in the Investor Rights Agreement dated as of the date hereof (the “Investor Rights Agreement”). The determination date for purposes of determining the Fair Market Value shall be the closing date of the purchase of the applicable shares. The closing date of the sale purchase pursuant to this Section 4(b)(ii) shall take place on a date designated by the Company or its subsidiaries (or their designee), as applicable, in accordance with the provisions of the Investor Rights Agreement. Notwithstanding the foregoing, the Company shall have no obligation to repurchase Hageman’s common stock if: (x) such purchase would violate any restriction imposed on the Company by federal law, Delaware General Corporate Law or other applicable law; (y) the purchase would constitute a breach or other violation of the Company’s or its subsidiaries’ debt and equity financing agreements or any other agreements concerning the Company’s Indebtedness (as that term is defined in the Investor Rights Agreement); or (z) the Company and its subsidiaries lack current or project a future lack of cash reserves in excess of the Company’s and its subsidiaries cash operating requirements to finance the purchase.

          (c) Cause; Other than for Good Reason. If Hageman’s employment shall be terminated by the Company for Cause or by Hageman without Good Reason, then the Company shall have no further payment obligations to Hageman other than for payment of the Accrued Obligations. Thereafter, the Company shall have no further obligation to Hageman, other than any indemnification rights he may have pursuant to Section 9, provided, however, that the Company shall have no obligation to indemnify Hageman for any act resulting in his Termination for Cause.

6

          (d) Separation Agreement and General Release. The Company’s obligations to make payments under Sections 4(a) and 4(b) will be conditioned on Hageman or his legal representatives executing and delivering a mutually agreeable separation agreement and general release of the Company and its Subsidiaries in a form acceptable to the Company, which form shall include inter alia a general release of Hageman, but not a release of any claims arising out of (i) Hageman’ willful misconduct or criminal acts; or (ii) third party.

     Section 5. Nondisclosure and Nonuse of Confidential Information.

          (a) Hageman shall not disclose or use at any time, either during the Employment Period or thereafter, any Confidential Information (as hereinafter defined) of which Hageman is or becomes aware, whether or not such information is developed by him, except to the extent that such disclosure or use is directly related to and required by Hageman’s performance in good faith of duties assigned to Hageman by the Company. Hageman will take all appropriate steps to safeguard Confidential Information in his possession and to protect it against disclosure, misuse, espionage, loss and theft. Hageman shall deliver to the Company at the termination of the Employment Period, or at any time the Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) relating to the Confidential Information or the Work Product (as hereinafter defined) of the business of the Company or any of its Affiliates which Hageman may then possess or have under his control.

          (b) As used in this Agreement, the term “Confidential Information” means information that is not generally known to the public and that is used, developed or obtained by the Company in connection with its business, including, but not limited to, information, observations and data obtained by Hageman while employed by the Company or any predecessors thereof (including those obtained prior to the date of this Agreement) concerning (i) the business or affairs of the Company (or such predecessors), (ii) products or services, (iii) fees, costs and pricing structures, (iv) designs, (v) analyses, (vi) drawings, photographs and reports, (vii) computer software, including operating systems, applications and program listings, (viii) flow charts, manuals and documentation, (ix) data bases, (x) accounting and business methods, (xi) inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice, (xii) customers and clients and customer or client lists, (xiii) other copyrightable works, (xiv) all production methods, processes, technology and trade secrets, and (xv) all similar and related information in whatever form. Confidential Information will not include any information that has been published in a form generally available to the public prior to the date Hageman proposes to disclose or use such information. Confidential Information will not be deemed to have been published or otherwise disclosed merely because individual portions of the information have been separately published, but only if all material features comprising such information have been published in combination.

          (c) As used in this Agreement, the term “Work Product” means all inventions, innovations, improvements, technical information, systems, software developments, methods, designs, analyses, drawings, reports, service marks, trademarks, trade names, logos and all similar or related information (whether patentable or unpatentable) which relates to the Company’s or any of its Affiliates’ actual or anticipated business, research and development or

7

existing or future products or services and which are conceived, developed or made by Hageman (whether or not during usual business hours and whether or not alone or in conjunction with any other person) while employed if and to the extent such Work Product results from any work performed for the Company, any use of the Company’s premises or property or any use of the Company’s Confidential Information) by the Company (including those conceived, developed or made prior to the date of this Agreement) together with all patent applications, letters patent, trademark, trade name and service mark applications or registrations, copyrights and reissues thereof that may be granted for or upon any of the foregoing.

     Section 6. Non-Solicitation; Non-Compete.

          (a) During the period commencing on the Effective Date and ending on the second anniversary of the Date of Termination for any reason, Hageman shall not directly or indirectly through another Person (i) induce or attempt to induce any employee of the Company or any Affiliate of the Company to leave the employ of the Company or such Affiliate, or in any way interfere with the relationship between the Company or any such Affiliate, on the one hand, and any employee thereof, on the other hand, (ii) hire any person who was an employee of the Company or any Affiliate of the Company until twelve (12) months after such individual’s employment relationship with the Company or such Affiliate has been terminated or (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of the Company or any Affiliate of the Company to cease doing business with the Company or such Affiliate, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation, on the one hand, and the Company or any Affiliate, on the other hand.

          (b) Hageman acknowledges that, in the course of his employment with the Company and/or its Affiliates and their predecessors, he has become familiar, or will become familiar, with the Company’s and its Affiliates’ and their predecessors’ trade secrets and with other confidential information concerning the Company, its Affiliates and their respective predecessors and that his services have been and will be of special, unique and extraordinary value to the Company and its Affiliates. Therefore, Hageman agrees that, during the period commencing on the Effective Date and continuing through the eighteen month anniversary of the Date of Termination for any reason (“Restricted Period”), Hageman shall not directly or indirectly, engage in the fabrication, sale or distribution of any product fabricated, sold or distributed by the Company or its subsidiaries on the Date of Termination or during the Restricted Period anywhere in the United States in which the Company or its subsidiaries is doing business. For purposes of this Agreement, the phrase “directly or indirectly engage in” shall include any direct or indirect ownership or profit participation interest in such enterprise, whether as an owner, stockholder, partner, joint venturer of or otherwise, and shall include any direct or indirect participation in such enterprise as an employee, consultant, licensor of technology or otherwise. Nothing herein shall prohibit Hageman from being a passive owner of not more than 4.9% of the outstanding equity interest in any entity which is publicly traded, so long as Hageman has no active participation in the business of such corporation.

          (c) In the event (i) Hageman materially breaches the terms of this Agreement (including Section 5 or this Section 6 hereof), or materially breaches the terms of any other agreement between Hageman and the Company or its subsidiaries; (ii) Hageman’s employment is terminated by the Company for Cause; (iii) Hageman resigns his employment for any reason

8

other than Good Reason prior to the first anniversary of the Effective Date; or (iv) Hageman experiences a Bankruptcy Event (as that term is defined in the Investor Rights Agreement), then Parent (or its designee) shall have the right, but not the obligation, to repurchase all or any portion of the shares of common stock of Parent held by Hageman (including any shares of Parent’s common stock received upon a distribution from any deferred compensation plan or any common stock issuable upon exercise of any options held by Hageman) for the lesser of (x) Original Cost and (y) Fair Market Value (as each such term is defined in the Investor Rights Agreement). The determination date for purposes of determining the Fair Market Value shall be the closing date of the purchase of the applicable shares. The closing date of the purchase pursuant to this Section 6(d) shall take place on a date designated by the Company or its subsidiaries (or their designee), as applicable, in accordance with the provisions of the Investor Rights Agreement. The Company (or its designee) shall have the right to record the transfer of the shares of common stock in connection with such purchase on its books and records without the consent of Hageman upon receipt by Hageman of payment in full from Parent.

     Section 7. Severance Payments.

          In addition to the foregoing, and not in any way in limitation thereof, or in limitation of any right or remedy otherwise available to the Company, if Hageman violates any provision of the foregoing Sections 5 or 6, any severance payments then or thereafter due from the Company to Hageman shall be terminated immediately and the Company’s obligation to pay and Hageman’s right to receive such severance payments shall terminate and be of no further force or effect, if and when determined by a court of competent jurisdiction that Hageman has violated Sections 5 or 6 of this Agreement, in each case without limiting or affecting Hageman’s obligations under such Sections 5 and 6 or the Company’s other rights and remedies available at law or equity.

     Section 8. Executive’s Representations, Warranties and Covenants.

          (a) Hageman hereby represents and warrants to the Company and Merger Sub that:

               (1) Hageman has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by Hageman;

               (2) the execution, delivery and performance of this Agreement by Hageman does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which Hageman is a party or any judgment, order or decree to which Hageman is subject;

               (3) Hageman is not a party to or bound by any employment agreement, consulting agreement, non-compete agreement, confidentiality agreement or similar agreement with any other Person;

               (4) upon the execution and delivery of this Agreement by the Merger Sub and Hageman, this Agreement will be a legal, valid and binding obligation of Hageman, enforceable in accordance with its terms;

9

               (5) Hageman understands that Merger Sub and the Company will rely upon the accuracy and truth of the representations and warranties of Hageman set forth herein and Hageman consents to such reliance.

          (b) The Company (and prior to closing of the Transactions, Merger Sub on behalf of the Company) hereby represents and warrants to Hageman that:

               (1) the Company has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by the Company;

               (2) the execution, delivery and performance of this Agreement by the Company does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Company is a party or any judgment, order or decree to which the Company is subject;

               (3) upon the execution and delivery of this Agreement by the Company and Hageman, this Agreement will be a legal, valid and binding obligation of the Company, enforceable in accordance with its terms; and

               (4) the Company understands that Hageman will rely upon the accuracy and truth of the representations and warranties of the Company set forth herein and the Company consents to such reliance.

     Section 9. Indemnification.

          The Company shall secure Directors’ and Officers’ liability insurance for the benefit of Hageman and shall indemnify Hageman to the maximum extent permitted under the General Corporate Law of Delaware for acts taken within the scope of his employment and his indemnification shall be no less than the broadest indemnification afforded to all directors and officers of the Parent and the Company.

     Section 10. General Provisions.

          (a) Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable under any present or future law, and if the rights and obligations of any party under this Agreement will not be materially and adversely affected thereby, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction; furthermore, in lieu of such invalid or unenforceable provision there will be added automatically as a part of this Agreement, a legal, valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction,

10

be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

          (b) Entire Agreement. This Agreement, the Investor Rights Agreement, the Amended Subscription Agreement, the Stock Incentive Plan, the Amended Non-Qualified Stock Option Agreement and the Restricted Stock Agreement embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof. For the avoidance of doubt, Hageman and Merger Sub (or, from and after the closing of the Transaction, the Company) acknowledge that any agreement between Hageman and Metals USA, Inc. entered into prior to the Effective Date, including without limitation, the employment agreement between the Company and Hageman dated May 18, 2005, the Non-Qualified Stock Option Agreement dated May 18, 2005 between Parent and Hageman and the subscription agreement between Parent and Hageman dated May 18, 2005, shall be of no further force and effect as of the Effective Date.

          (c) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

          (d) Successors and Assigns.

               (i) This Agreement is personal to Hageman and without the prior written consent of Merger Sub (or, from and after the closing of the Transaction, the Company) shall not be assignable by Hageman otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Hageman’s legal representatives.

               (ii) Effective as of the Closing of the Transaction, the Merger Sub will require the Company to assume and agree to perform this Agreement.

               (iii) This Agreement shall inure to the benefit of and be binding upon Merger Sub (or, from and after the closing of the Transaction, the Company) and its successors and assigns. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

          (e) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE

11

FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

          (f) Remedies. Each of the parties to this Agreement and any such person or entity granted rights hereunder whether or not such person or entity is a signatory hereto (including, without limitation, Apollo Management V, L.P. and its Affiliates) shall be entitled to enforce its rights under this Agreement specifically to recover damages and costs for any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement, including Sections 5 and 6 of this Agreement, and that the Company may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or other injunctive relief (without posting any bond or deposit) in order to enforce or prevent any violations of the provisions of this Agreement or require Hageman to account for and pay over to the Company all economic benefits derived from or received as a result of any transactions constituting a breach of the covenants contained herein in this Agreement, if and when final judgment of a court of competent jurisdiction is so entered against Hageman. Each party shall be responsible for paying its own attorneys’ fees, costs and other expenses pertaining to any judgment or verdict unless the court awards otherwise.

          (g) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of Merger Sub (or, from and after the closing of the Transaction, the Company) and Hageman and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision hereof.

          (h) Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, transmitted via telecopier, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated or at such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder and received when delivered personally, when received if transmitted via telecopier, five days after deposit in the U.S. mail and one day after deposit with a reputable overnight courier service.

If to the Company, to:

Metals USA, Inc.
One Riverway, Suite 1100
Houston, Texas 77056
Facsimile: (713) 965-9967
Attention: Chairman of the Board

12

with a copy (which shall not constitute notice) to:

The Apollo Group
9 West 57^th Street
New York, New York 10019
Facsimile: (212) 515-3288
Attention: Marc Becker

and

Dreier LLP
499 Park Avenue
New York, New York
Facsimile: (212) 328-6101
Attention: Andrew Bernstein, Esq.

If to Hageman, to Hageman’s address set forth on the signature page hereto.

          (i) Survival of Representations, Warranties and Agreements. All representations, warranties and agreements contained herein shall survive the consummation of the transactions contemplated hereby indefinitely.

          (j) Effectiveness. Notwithstanding the foregoing, none of Parent, Merger Sub or the Company shall have any obligations to Hageman or his beneficiaries under this Agreement in the event Hageman is unable to perform his duties hereunder or commits an act that constitutes Cause under Section 3(b) prior to the closing of the Transaction and this Agreement shall be of no force and effect. Further, this Agreement shall become of no force or effect if the Transaction does not close on or before December 15, 2005.

          (k) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

          (l) Construction. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

          (m) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

[signature page follows]

13

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

FLAG ACQUISITION CORPORATION
By:	/s/ M. Ali Rashid
	Name:  M. Ali Rashid Title:    President

JOHN A. HAGEMAN
Signature:	/s/ JOHN A. HAGEMAN
Residence Address:
1 Waterford Circle
Woodlands, Texas 77381

EX-10.3

Execution Copy Exhibit 10.3

EMPLOYMENT AGREEMENT (this “Agreement”) dated as
of September 29, 2005, between FLAG ACQUISITION
CORPORATION, a Delaware corporation, (the “Merger
Sub”), and ROBERT C. MCPHERSON III (“McPherson”).

     WHEREAS, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) made and entered into as of the 18th day of May, 2005, by and among Flag Holdings Corporation, a Delaware corporation (“Parent”), the Merger Sub, a wholly owned subsidiary of Parent, and Metals USA, Inc. (the “Company”), Parent will acquire all of the capital stock of the Company by merging (the “Merger”) Merger Sub with and into the Company (the “Transaction”);

     WHEREAS, as a further inducement to Parent’s and the Merger Sub’s entry into the Merger Agreement, the Merger Sub is entering into this Agreement;

     WHEREAS, in connection with the Transaction, the Company desires, as the Surviving Corporation (as that term is defined in the Merger Agreement) in the Merger, to employ McPherson and McPherson desires to be employed by the Company; and

     WHEREAS, McPherson, as a condition of his employment, will make a substantial investment in Parent concurrently with the closing of the Transaction by purchasing 27,000 shares of common stock of Parent, par value $0.01, at a price of $10 per share;

     NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     Section 1. Employment Period.

     The initial term of McPherson’s employment hereunder shall be for a period of two (2) years (the “Initial Term”) commencing on the closing of the Transaction (the “Effective Date”) and ending on the second anniversary of the Effective Date, unless terminated earlier pursuant to Section 3 of this Agreement (the ‘Employment Period”); provided, however, that the Employment Period shall automatically be renewed for successive one (1) year terms upon the Expiration of the Initial Term unless either party gives at least ninety (90) days written notice of its intention not to renew the Employment Period. Upon McPherson’s termination of employment with the Company for any reason, he shall immediately resign all positions with the Company or any of its subsidiaries or affiliates.

     Section 2. Terms of Employment.

          (a) Position. During the term of McPherson’s employment, McPherson shall serve as Senior Vice President and Chief Financial Officer of the Company and perform such duties and responsibilities customary to such position.

          (b) Duties. During the term of McPherson’s employment, McPherson agrees to devote all of his business time to the business and affairs of the Company and to use McPherson’s reasonable best efforts to perform faithfully, effectively and efficiently his responsibilities and obligations hereunder. Notwithstanding the foregoing, nothing herein shall prohibit McPherson from (i) serving on civic or charitable boards or committees, (ii) delivering lectures or fulfilling speaking engagements and (iii) managing personal investments, so long as such activities do not materially interfere with the performance of McPherson’s responsibilities hereunder.

          (c) Compensation.

               (i) Base Salary. During the term of McPherson’s employment, McPherson shall receive an initial annual base salary in an amount equal to $300,000 (the “Annual Base Salary”), less all applicable withholdings, which shall be paid in accordance with the customary payroll practices of the Company. Notwithstanding anything herein, the Annual Base Salary will not be reduced without McPherson’s consent, unless the reduction is related to a broader compensation reduction that is not limited to McPherson and does not exceed 10% of his Annual Base Salary.

               (ii) Bonuses. For fiscal year 2005, McPherson shall be eligible to receive a bonus pursuant to the plan as in existence prior to the Effective Date in an amount to be determined by the Company’s Board of Directors (the “Board”) in good faith. Thereafter, during the Employment Period, the Company shall establish a bonus plan for each fiscal year (the “Plan”) pursuant to which McPherson will be eligible to receive an annual bonus (the “Bonus”). The Board or the Compensation Committee of the Board will administer the Plan and establish performance objectives for each year to be mutually agreed upon with McPherson. In the event that the Company achieves target based on actual performance, McPherson shall be entitled to receive a Bonus in an amount equal to 70 percent of the Annual Base Salary. McPherson will be entitled to receive the Bonus only upon the Company’s achievement of the specified performance objectives and if McPherson is employed on the last day of the applicable performance period (subject to Section 4). The Bonus shall become payable on or before March 15 following the end of the applicable fiscal year provided that the Board or Compensation Committee finally determines (x) that the Company has achieved the applicable performance objectives and (y) the amount of bonuses that shall be paid to each executive entitled to receive a bonus for the applicable bonus year. Notwithstanding the immediately preceding sentence, in the event McPherson’s employment is terminated: (A) by the Company without Cause; or (B) by McPherson for Good Reason, McPherson shall be entitled to receive a prorated Bonus for the year in which termination occurs, based on actual performance for such year, the amount of which prorated bonus, if any, shall be determined and paid promptly following the end of the year to which such bonus relates.

               (iii) Compensation Consultant. Following the Effective Date, the Company shall retain a compensation consulting firm to conduct a comprehensive review, following which the Board shall consider, in its sole discretion, increasing McPherson’s Annual Base Salary and bonus target retroactively to the Effective Date.

2

               (iv) Benefits. During the term of McPherson’s employment hereunder, he shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other senior executives of the Company and shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company to the extent applicable generally to other senior executives of the Company. The benefits provided to McPherson shall be in the aggregate equal to those benefits that McPherson was receiving at the Company immediately prior to the Effective Date. The benefits provided to McPherson shall be in the aggregate equal to those benefits that McPherson was receiving at the Company immediately prior to the Effective Date. Notwithstanding anything in this Section 2(c)(iv) to the contrary, all benefit obligations are subject to guidance issued by the U.S. Department of Treasury under Section 409A of the Code. To the extent required, the Company may modify the benefits provided under this Section 2(c)(iv) to comply with such guidance; provided, however, that the aggregate value of benefits provided to McPherson after such modification shall not be less than the aggregate value of the benefits provided to him prior to the modification.

               (v) Expenses. During the term of McPherson’s employment, McPherson shall be entitled to receive reimbursement for all reasonable expenses incurred by McPherson in performance of his duties hereunder provided that McPherson provides all necessary documentation in accordance with Company policy.

               (vi) Vacation and Holidays. During the term of McPherson’s employment, McPherson shall be entitled to five weeks of paid vacation.

               (vii) Stock Options. Concurrent with the closing of the Transaction, Parent shall grant McPherson stock options (the “Executive Options”) to purchase 49,500 shares of common stock of the Parent at an exercise price of $10 per share pursuant to the terms and conditions set forth in the Parent’s 2005 Stock Incentive Plan (the “Stock Incentive Plan”). The Executive Options shall be subject to the terms of the Stock Incentive Plan and McPherson’s Non-Qualified Stock Option Agreement.

               (viii) Restricted Stock. Concurrent with the closing of the Transaction, the Parent shall grant McPherson 5,500 shares of its common stock, par value $.01 (the “Stock Grant”). The Stock Grant will be pursuant to the terms and conditions set forth in the Stock Incentive Plan and will be subject to the terms of the Stock Incentive Plan and McPherson’s Restricted Stock Agreement.

          (d) Investment. Concurrent with the closing of the Transaction, McPherson shall purchase 27,000 shares of common stock of the Parent, par value $0.01, at a price of $10 per share.

     Section 3. Termination of Employment.

          (a) Death or Disability. McPherson’s employment shall terminate automatically upon McPherson’s death. If McPherson becomes subject to a Disability during the Term of Employment (pursuant to the definition of Disability set forth below), the Company may give McPherson written notice in accordance with Sections 3(e) and 10(h) of its intention to terminate McPherson’s employment. For purposes of this Agreement, “Disability” means (i)

3

McPherson’s inability to engage in any substantial gainful activity by reason of any medically determinable physical of mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident or health plan covering employees of the Company.

          (b) Cause. McPherson’s employment may be terminated at any time by the Company for Cause. For purposes of this Agreement, “Cause” shall mean (i) the commission of a felony or a crime of moral turpitude; (ii) a willful commission of a material act of dishonesty involving the Company; (iii) a material non-curable breach of McPherson’s obligations hereunder or any other agreement entered into between McPherson and the Company or any of its subsidiaries or affiliates; (iv) any material breach of the Company’s policies or procedures that is not reasonably curable in the Company’s sole discretion; (v) any other willful misconduct which causes material harm to the Company or its business reputation, including due to any adverse publicity; (vi) a failure by McPherson to cure a material breach of his obligations under this Agreement, the Investor Rights Agreement among the shareholders of Parent, the Subscription Agreement between McPherson and Parent or the Non-Qualified Stock Option Agreement between McPherson and Parent within 30 days after written notice of such breach; or (vii) a material breach of any of McPherson’s representations contained in this Agreement.

          (c) Termination Without Cause. The Company may terminate McPherson’s employment hereunder without cause at any time.

          (d) Good Reason. McPherson’s employment may be terminated at any time by McPherson for Good Reason or without Good Reason upon ninety (90) days prior written notice. For purposes of this Agreement, “Good Reason” means voluntary resignation after any of the following actions are taken by the Company or any of its subsidiaries without McPherson’s consent: (i) a reduction in McPherson’s Annual Base Salary or Bonus potential described in Section 2(c)(ii) of this Agreement (but not including any diminution related to a broader compensation reduction that is not limited to any particular employee or executive); (ii) a material diminution of McPherson’s responsibilities as Senior Vice President and Chief Financial Officer; (iii) relocation of McPherson’s primary work place, as assigned to him by the Company, beyond a fifty (50) mile radius from Houston, Texas; or (iv) a material breach by the Company of this Agreement; provided, however, that none of the events described in the foregoing clauses (i), (ii), (iii) or (iv) shall constitute Good Reason unless McPherson shall have notified the Company in writing describing the events which constitute Good Reason and then only if the Company shall have failed to cure such events within thirty (30) days after the Company’s receipt of such written notice.

          (e) Notice of Termination. Any termination by the Company for Cause or without Cause, or by McPherson for Good Reason or without Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 10(h). For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to

4

provide a basis for termination of McPherson’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date. The failure by McPherson or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of McPherson or the Company hereunder or preclude McPherson or the Company from asserting such fact or circumstance in enforcing McPherson’s or the Company’s rights hereunder.

          (f) Date of Termination. “Date of Termination” means (i) if McPherson’s employment is terminated by the Company for Cause, without Cause or by reason of Disability, or by McPherson for Good Reason or without Good Reason, the date of receipt of the Notice of Termination or any later date specified therein pursuant to Section 3(e), as the case may be and (ii) if McPherson’s employment is terminated by reason of death, the date of death.

     Section 4. Obligations of the Company upon Termination.

          (a) With Good Reason; Other Than for Cause, Death, Disability or Upon the Company’s Election Not to Renew the Employment Period. If during the Employment Period, the Company shall terminate McPherson’s employment other than for Cause, McPherson shall terminate his employment for Good Reason, the termination of McPherson’s employment in any case is not due to his death or Disability or upon the Company’s election not to renew the Employment Period, then the Company will provide McPherson with the following severance payments and/or benefits:

               (i) The Company shall pay to McPherson in a lump sum (i) the Annual Base Salary through the Date of Termination to the extent not paid, and (ii) to the extent not previously paid, the Bonus earned for any year prior to the year in which the Date of Termination occurs to the extent that McPherson is employed on the last day of the applicable performance period such Bonus to be paid in accordance with the terms of the Plan. (“Accrued Obligations”);

               (ii) After the Date of Termination, the Company will, in its sole discretion, either (a) continue to pay McPherson his Annual Base Salary until the earlier of (i) the end of the eighteenth month following the Date of Termination (the “Severance Period”), and (ii) the date, if any, McPherson violates the terms of this Agreement; or (b) a lump sum equal to eighteen months of McPherson’s Annual Base Salary; provided, however, that in the event that such payment is made in a lump sum and McPherson subsequently violates the terms of this Agreement in any material respect, in addition to any other remedy that the Company may have at law or in equity, McPherson shall immediately return such payment.

               (iii) The Company will pay McPherson a prorated Bonus for the year in which termination occurs, based on actual performance for such year, the amount of which prorated bonus, if any, shall be determined and paid on or before March 15 of the year immediately following the end of the year to which such bonus relates.

               (iv) After the Date of Termination, provided McPherson elects to continue his and his beneficiaries’ participation in the Company’s medical benefit plan in which they participated prior to the Date of Termination pursuant to the Consolidated Omnibus Budget

5

Reconciliation Act of 1986 (“COBRA”), the Company will reimburse McPherson for the monthly cost of continuing such coverage within 10 business days of each payment by McPherson for the lesser of: (x) eighteen months following the Date of Termination; and (y) the period preceding the date that McPherson becomes eligible to receive medical coverage under another employee benefit plan (“COBRA Benefits”).

Thereafter, the Company shall have no further obligation to McPherson or his legal representatives.

          (b) Death or Disability. If McPherson’s employment shall be terminated by reason of McPherson’s death or Disability, then the Company will provide McPherson with the following severance payments and/or benefits:

               (i) The Company shall pay McPherson or his legal representatives (A) the Accrued Obligations; (B) a lump sum equal to twelve months of McPherson’s Annual Base Salary; (C) the continuance of death or Disability benefits thereafter in accordance with the terms of such plans then in effect; and (D) COBRA Benefits. With respect to the COBRA Benefits, provided McPherson elects to continue his and his beneficiaries’ medical coverage under COBRA, McPherson shall be responsible for the portion of the monthly premium for which he was responsible prior to the Date of Termination, which amount will be withheld from McPherson’s lump sum payment under (B) above and the Company shall pay the remainder of the monthly premium. Thereafter, the Company shall have no further obligation to McPherson or his legal representatives.

               (ii) In addition, in the event of McPherson death, McPherson’s beneficiary may, by written notice delivered to the Company within one hundred and eighty (180) days of McPherson’s death , elect to sell all or any portion of the shares of common stock of Parent held by McPherson (including any shares of the Parent’s common stock received upon a distribution from any deferred compensation plan or any common stock issuable upon exercise of any options held by McPherson) for Fair Market Value (as each such term is defined in the Investor Rights Agreement dated May 18, 2005 (the “Investor Rights Agreement”). The determination date for purposes of determining the Fair Market Value shall be the closing date of the purchase of the applicable shares. The closing date of the sale purchase pursuant to this Section 4(b)(ii) shall take place on a date designated by the Company or its subsidiaries (or their designee), as applicable, in accordance with the provisions of the Investor Rights Agreement. Notwithstanding the foregoing, the Company shall have no obligation to repurchase McPherson’s common stock if: (x) such purchase would violate any restriction imposed on the Company by federal law, Delaware General Corporate Law or other applicable law; (y) the purchase would constitute a breach or other violation of the Company’s or its subsidiaries’ debt and equity financing agreements or any other agreements concerning the Company’s Indebtedness (as that term is defined in the Investor Rights Agreement); or (z) the Company and its subsidiaries lack current or project a future lack of cash reserves in excess of the Company’s and its subsidiaries cash operating requirements to finance the purchase.

          (c) Cause; Other than for Good Reason. If McPherson’s employment shall be terminated by the Company for Cause or by McPherson without Good Reason, then the Company shall have no further payment obligations to McPherson other than for payment of the

6

Accrued Obligations. Thereafter, the Company shall have no further obligation to McPherson, other than any indemnification rights he may have pursuant to Section 9, provided, however, that the Company shall have no obligation to indemnify McPherson for any act resulting in his Termination for Cause.

          (d) Separation Agreement and General Release. The Company’s and obligations to make payments under Sections 4(a) and 4(b) will be conditioned on McPherson or his legal representatives executing and delivering a mutually agreeable separation agreement and general release of the Company and its Subsidiaries in a form acceptable to the Company, which form shall include inter alia a general release of McPherson, but not a release of any claims arising out of (i) McPherson’s willful misconduct or criminal acts; or (ii) third party.

     Section 5. Nondisclosure and Nonuse of Confidential Information.

          (a) McPherson shall not disclose or use at any time, either during the Employment Period or thereafter, any Confidential Information (as hereinafter defined) of which McPherson is or becomes aware, whether or not such information is developed by him, except to the extent that such disclosure or use is directly related to and required by McPherson’s performance in good faith of duties assigned to McPherson by the Company. McPherson will take all appropriate steps to safeguard Confidential Information in his possession and to protect it against disclosure, misuse, espionage, loss and theft. McPherson shall deliver to the Company at the termination of the Employment Period, or at any time the Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) relating to the Confidential Information or the Work Product (as hereinafter defined) of the business of the Company or any of its Affiliates which McPherson may then possess or have under his control.

          (b) As used in this Agreement, the term “Confidential Information” means information that is not generally known to the public and that is used, developed or obtained by the Company in connection with its business, including, but not limited to, information, observations and data obtained by McPherson while employed by the Company or any predecessors thereof (including those obtained prior to the date of this Agreement) concerning (i) the business or affairs of the Company (or such predecessors), (ii) products or services, (iii) fees, costs and pricing structures, (iv) designs, (v) analyses, (vi) drawings, photographs and reports, (vii) computer software, including operating systems, applications and program listings, (viii) flow charts, manuals and documentation, (ix) data bases, (x) accounting and business methods, (xi) inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice, (xii) customers and clients and customer or client lists, (xiii) other copyrightable works, (xiv) all production methods, processes, technology and trade secrets, and (xv) all similar and related information in whatever form. Confidential Information will not include any information that has been published in a form generally available to the public prior to the date McPherson proposes to disclose or use such information. Confidential Information will not be deemed to have been published or otherwise disclosed merely because individual portions of the information have been separately published, but only if all material features comprising such information have been published in combination.

7

          (c) As used in this Agreement, the term “Work Product” means all inventions, innovations, improvements, technical information, systems, software developments, methods, designs, analyses, drawings, reports, service marks, trademarks, trade names, logos and all similar or related information (whether patentable or unpatentable) which relates to the Company’s or any of its Affiliates’ actual or anticipated business, research and development or existing or future products or services and which are conceived, developed or made by McPherson (whether or not during usual business hours and whether or not alone or in conjunction with any other person) while employed if and to the extent such Work Product results from any work performed for the Company, any use of the Company’s premises or property or any use of the Company’s Confidential Information) by the Company (including those conceived, developed or made prior to the date of this Agreement) together with all patent applications, letters patent, trademark, trade name and service mark applications or registrations, copyrights and reissues thereof that may be granted for or upon any of the foregoing.

     Section 6. Non-Solicitation; Non-Compete.

          (a) During the period commencing on the Effective Date and ending on the twenty-four (24) month anniversary of the Date of Termination for any reason, McPherson shall not directly or indirectly through another Person (i) induce or attempt to induce any employee of the Company or any Affiliate of the Company to leave the employ of the Company or such Affiliate, or in any way interfere with the relationship between the Company or any such Affiliate, on the one hand, and any employee thereof, on the other hand, (ii) hire any person who was an employee of the Company or any Affiliate of the Company until eighteen (18) months after such individual’s employment relationship with the Company or such Affiliate has been terminated or (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of the Company or any Affiliate of the Company to cease doing business with the Company or such Affiliate, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation, on the one hand, and the Company or any Affiliate, on the other hand.

          (b) McPherson acknowledges that, in the course of his employment with the Company and/or its Affiliates and their predecessors, he has become familiar, or will become familiar, with the Company’s and its Affiliates’ and their predecessors’ trade secrets and with other confidential information concerning the Company, its Affiliates and their respective predecessors and that his services have been and will be of special, unique and extraordinary value to the Company and its Affiliates. Therefore, McPherson agrees that, during the period commencing on the Effective Date and continuing through the eighteen (18) month anniversary of the date of termination for any reason (the “Restricted Period”), McPherson shall not directly or indirectly, engage in the fabrication, sale or distribution of any product fabricated, sold or distributed by the Company or its subsidiaries on the Date of Termination or during the Restricted Period anywhere in the United States in which the Company or its subsidiaries is doing business. For purposes of this Agreement, the phrase “directly or indirectly engage in” shall include any direct or indirect ownership or profit participation interest in such enterprise, whether as an owner, stockholder, partner, joint venturer of or otherwise, and shall include any direct or indirect participation in such enterprise as an employee, consultant, licensor of technology or otherwise. Nothing herein shall prohibit McPherson from being a passive owner of

8

not more than 4.9% of the outstanding equity interest in any entity which is publicly traded, so long as McPherson has no active participation in the business of such corporation.

          (c) In the event (i) McPherson materially breaches the terms of this Agreement (including Section 5 or this Section 6 hereof), or materially breaches the terms of any other agreement between McPherson and the Company or its subsidiaries; (ii) McPherson’s employment is terminated by the Company for Cause; (iii) McPherson resigns his employment for any reason other than Good Reason prior to the first anniversary of the Effective Date; or (iv) McPherson experiences a Bankruptcy Event (as that term is defined in the Investor Rights Agreement), then Parent (or its designee) shall have the right, but not the obligation, to repurchase all or any portion of the shares of common stock of Parent held by McPherson (including any shares of Parent’s common stock received upon a distribution from any deferred compensation plan or any common stock issuable upon exercise of any options held by McPherson) for the lesser of (x) Original Cost and (y) Fair Market Value (as each such term is defined in the Investor Rights Agreement). The determination date for purposes of determining the Fair Market Value shall be the closing date of the purchase of the applicable shares. The closing date of the purchase pursuant to this Section 6(d) shall take place on a date designated by the Company or its subsidiaries (or their designee), as applicable, in accordance with the provisions of the Investor Rights Agreement. The Company (or its designee) shall have the right to record the transfer of the shares of common stock in connection with such purchase on its books and records without the consent of McPherson upon receipt by McPherson of payment in full from Parent.

     Section 7. Severance Payments.

          In addition to the foregoing, and not in any way in limitation thereof, or in limitation of any right or remedy otherwise available to the Company, if McPherson violates any provision of the foregoing Sections 5 or 6, any severance payments then or thereafter due from the Company to McPherson shall be terminated immediately and the Company’s obligation to pay and McPherson’s right to receive such severance payments shall terminate and be of no further force or effect, if and when determined by a court of competent jurisdiction that McPherson has violated Sections 5 or 6 of this Agreement, in each case without limiting or affecting McPherson’s obligations under such Sections 5 and 6 or the Company’s other rights and remedies available at law or equity.

     Section 8. Executive’s Representations, Warranties and Covenants.

          (a) McPherson hereby represents and warrants to the Company and Merger Sub that:

     (1) McPherson has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by McPherson;

               (2) the execution, delivery and performance of this Agreement by McPherson does not and will not, with or without notice or the passage of time, conflict with,

9

breach, violate or cause a default under any agreement, contract or instrument to which McPherson is a party or any judgment, order or decree to which McPherson is subject;

               (3) McPherson is not a party to or bound by any employment agreement, consulting agreement, non-compete agreement, confidentiality agreement or similar agreement with any other Person;

               (4) upon the execution and delivery of this Agreement by the Merger Sub and McPherson, this Agreement will be a legal, valid and binding obligation of McPherson, enforceable in accordance with its terms;

               (5) McPherson understands that Merger Sub and the Company will rely upon the accuracy and truth of the representations and warranties of McPherson set forth herein and McPherson consents to such reliance.

          (b) The Company (and prior to the closing of the Transactions, Merger Sub on behalf of the Company) hereby represents and warrants to McPherson that:

               (1) the Company has all requisite power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and this Agreement has been duly executed by the Company;

               (2) the execution, delivery and performance of this Agreement by the Company does not and will not, with or without notice or the passage of time, conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Company is a party or any judgment, order or decree to which the Company is subject;

               (3) upon the execution and delivery of this Agreement by the Company and McPherson, this Agreement will be a legal, valid and binding obligation of the Company, enforceable in accordance with its terms; and

               (4) the Company understands that McPherson will rely upon the accuracy and truth of the representations and warranties of the Company set forth herein and the Company consents to such reliance.

     Section 9. Indemnification.

          The Company shall secure Directors’ and Officers’ liability insurance for the benefit of McPherson and shall indemnify McPherson to the maximum extent permitted under the General Corporate Law of Delaware for acts taken within the scope of his employment and his indemnification shall be no less than the broadest indemnification afforded to all directors and officers of the Parent and the Company.

     Section 10. General Provisions.

          (a) Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any

10

particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable under any present or future law, and if the rights and obligations of any party under this Agreement will not be materially and adversely affected thereby, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction; furthermore, in lieu of such invalid or unenforceable provision there will be added automatically as a part of this Agreement, a legal, valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

          (b) Entire Agreement. This Agreement, the Investor Rights Agreement, the Subscription Agreement, the Stock Incentive Plan, the Non-Qualified Stock Option Agreement and the Restricted Stock Agreement embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. For the avoidance of doubt, McPherson and Merger Sub (or, from and after the closing of the Transaction, the Company) acknowledge that any agreement between McPherson and Metals USA, Inc. entered into prior to the Effective Date, including without limitation, any employment agreement, shall be of no further force and effect as of the Effective Date.

          (c) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

          (d) Successors and Assigns.

               (i) This Agreement is personal to McPherson and without the prior written consent of Merger Sub (or, from and after the closing of the Transaction, the Company) shall not be assignable by McPherson otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by McPherson’s legal representatives.

               (ii) Effective as of the Closing of the Transaction, the Merger Sub will require the Company to assume and agree to perform this Agreement.

               (iii) This Agreement shall inure to the benefit of and be binding upon Merger Sub (or, from and after the closing of the Transaction, the Company) and its successors and assigns. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore

11

defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

          (e) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

          (f) Remedies. Each of the parties to this Agreement and any such person or entity granted rights hereunder whether or not such person or entity is a signatory hereto (including, without limitation, Apollo Management V, L.P. and its Affiliates) shall be entitled to enforce its rights under this Agreement specifically to recover damages and costs for any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement, including Sections 5 and 6 of this Agreement, and that the Company may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or other injunctive relief (without posting any bond or deposit) in order to enforce or prevent any violations of the provisions of this Agreement or require McPherson to account for and pay over to the Company all economic benefits derived from or received as a result of any transactions constituting a breach of the covenants contained herein in this Agreement, if and when final judgment of a court of competent jurisdiction is so entered against McPherson. Each party shall be responsible for paying its own attorneys’ fees, costs and other expenses pertaining to any judgment or verdict unless the court awards otherwise.

          (g) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of Merger Sub (or, from and after the closing of the Transaction, the Company) and McPherson and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision hereof.

          (h) Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, transmitted via telecopier, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated or at such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder and received when delivered personally, when received if transmitted via telecopier, five days after deposit in the U.S. mail and one day after deposit with a reputable overnight courier service.

12

If to the Company, to:

Metals USA, Inc.
One Riverway, Suite 1100
Houston, Texas 77056
Facsimile: (713) 965-9967
Attention: Chairman of the Board

with a copy (which shall not constitute notice) to:

The Apollo Group
9 West 57^th Street
New York, New York 10019
Facsimile: (212) 515-3288
Attention Marc Becker

and

Dreier LLP
499 Park Avenue
New York, New York
Facsimile: (212) 328-6101
Attention: Andrew Bernstein, Esq.

          If to McPherson, to McPherson’s address set forth on the signature page hereto.

          (i) Survival of Representations, Warranties and Agreements. All representations, warranties and agreements contained herein shall survive the consummation of the transactions contemplated hereby indefinitely.

          (j) Effectiveness. Notwithstanding the foregoing, none of Parent, Merger Sub or the Company shall have any obligations to McPherson or his beneficiaries under this Agreement in the event McPherson is unable to perform his duties hereunder or commits an act that constitutes Cause under Section 3(b) prior to the closing of the Transaction and this Agreement shall be of no force and effect. Further, this Agreement shall become of no force or effect if the Transaction does not close on or before December 15, 2005.

          (k) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

          (l) Construction. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

          (m) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

13

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

FLAG ACQUISITION CORPORATION
By:	/s/ M. Ali Rashid
	Name:  M. Ali Rashid Title:    President

ROBERT C. McPHERSON III
Signature:	/S/ ROBERT C. McPHERSON III
Residence Address:

14

EX-10.4

Execution Copy Exhibit 10.4

SEVERANCE AGREEMENT (this “Agreement”) dated as of September 29, 2005, between FLAG ACQUISITION CORPORATION, a Delaware corporation, (the “Merger Sub”), and ROGER KROHN (“Krohn”).

     WHEREAS, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) made and entered into as of the 18th day of May, 2005, by and among Flag Holdings Corporation, a Delaware corporation (“Parent”), the Merger Sub, a wholly owned subsidiary of Parent, and Metals USA, Inc. (the “Company”), Parent will acquire all of the capital stock of the Company by merging (the “Merger”) Merger Sub with and into the Company (the “Transaction”);

     WHEREAS, concurrently with the execution of the Merger Agreement, as a condition and inducement to Parent’s and the Merger Sub’s willingness to enter into the Merger Agreement, the Merger Sub is entering into this Agreement;

     WHEREAS, Krohn, as a condition of his employment, will make a substantial investment in Parent concurrently with the closing of the Transaction by purchasing 27,000 shares of common stock of Parent, par value $0.01, at a price of $10 per share;

     NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     Section 1. Severance.

     If after the effective date of the Transaction (the “Effective Date”), the Company terminates Krohn’s employment without Cause or Krohn resigns his employment for Good Reason, the Company shall provide the following to Krohn.

          (a) The Company will continue to pay Krohn his then current salary as of the Termination Date until the earlier of (i) the end of the twelfth month following the Termination Date (the “Severance Period”), and (ii) the date, if any, Krohn violates any other term of this Agreement.

          (b) After the Termination Date, provided Krohn elects to continue his and his beneficiaries’ participation in the Company’s medical benefit plan in which they participated prior to the Termination Date pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”), the Company will reimburse Krohn for the monthly cost of continuing such coverage within 10 business days of each payment by Krohn for the lesser of: (x) twelve months following the Termination Date; and (y) the period preceding the date that Krohn becomes eligible to receive medical coverage under another employee benefit plan (“COBRA Benefits”).

     If (i) the Company terminates Krohn’s employment for any reason other than without Cause (including for Cause, because of a disability or as a result of Krohn’s death), or (ii)

Krohn’s resigns his employment for any reason other than for a Good Reason, no severance will be paid to Krohn under this Section 1.

     Section 2. Notice of Termination. Any termination by the Company for Cause or without Cause, or by Krohn for Good Reason or without Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 7(h). For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Krohn’s employment under the provision so indicated and (iii) if the Termination Date is other than the date of receipt of such notice, specifies the termination date. The failure by Krohn or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of Krohn or the Company hereunder or preclude Krohn or the Company from asserting such fact or circumstance in enforcing Krohn’s or the Company’s rights hereunder.

     Section 3. Definitions.

          (a) Cause. “Cause” means that the Company terminated Krohn’s employment after any of the following actions are taken by Krohn without the Company’s consent: (i) the commission of a felony or a crime of moral turpitude; (ii) a willful commission of a material act of dishonesty involving the Company; (iii) a material non-curable breach of Krohn’s obligations hereunder or any other agreement entered into between Krohn and the Company or any of its subsidiaries or affiliates; (iv) any material breach of the Company’s policies or procedures that is not reasonably curable in the Company’s sole discretion; (v) any other willful misconduct which causes material harm to the Company or its business reputation, including due to any adverse publicity; or (vi) a failure by Krohn to cure a material breach of his obligations under this Agreement, the Investor Rights Agreement among the shareholders of Parent, the Subscription Agreement between Krohn and Parent, the Non-Qualified Stock Option Agreement between Krohn and Parent or the Restricted Stock Agreement between Krohn and Parent within 30 days after written notice of such breach.

          (b) Good Reason. “Good Reason” means the Krohn resigns his employment voluntarily within ninety (90) days after any of the following actions are taken by the Company or any of its subsidiaries without Krohn’s consent: (i) a reduction in Krohn’s current annual base salary or annual target bonus potential (but not including any diminution related to a broader compensation reduction that is not limited to any particular employee or executive); (ii) a material diminution of Krohn’s responsibilities as President, Plates and Shapes West; (iii) relocation of Krohn’s primary work place, as assigned to him by the Company, beyond a fifty (50) mile radius from Springfield, Ohio; or (iv) a material breach by the Company of this Agreement; provided, however, that none of the events described in the foregoing clauses (i), (ii), (iii) or (iv) shall constitute Good Reason unless Krohn shall have notified the Company in writing describing the events which constitute Good Reason and then only if the Company shall have failed to cure such events within thirty (30) days after the Company’s receipt of such written notice.

          (c) Termination Date. The “Termination Date” means (i) if Krohn’s employment is terminated by the Company for Cause, without Cause or by Krohn for Good

2

Reason or without Good Reason, the date of receipt of the Notice of Termination or any later date specified therein pursuant to Section 2, as the case may be.

     Section 4. Separation Agreement and General Release. The Company’s obligations to make payments and to provide benefits under Sections 1(a) and (b) will be conditioned on Krohn executing and delivering a mutually agreeable separation agreement and general release of the Company and its Subsidiaries in a form acceptable to the Company.

     Section 5. Nondisclosure and Nonuse of Confidential Information.

          (a) Krohn shall not disclose or use at any time, either during his employment with the Company or thereafter, any Confidential Information (as hereinafter defined) of which Krohn is or becomes aware, whether or not such information is developed by him, except to the extent that such disclosure or use is directly related to and required by Krohn’s performance in good faith of duties assigned to Krohn by the Company. Krohn will take all appropriate steps to safeguard Confidential Information in his possession and to protect it against disclosure, misuse, espionage, loss and theft. Krohn shall deliver to the Company at the termination of the Employment Period, or at any time the Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) relating to the Confidential Information of the business of the Company or any of its Affiliates which Krohn may then possess or have under his control.

          (b) As used in this Agreement, the term “Confidential Information” means information that is not generally known to the public and that is used, developed or obtained by Flag, the Company and their affiliates in connection with their business, including, but not limited to, information, observations and data obtained by the Executive while employed by the Company or any predecessors thereof (including those obtained prior to the date of this Agreement) concerning: (i) the business or affairs of Flag, the Company or their affiliates; (ii) products, services, designs, inventions, devices, developments and copyrightable works (whether patentable or unpatentable and whether or not reduced to practice); (iii) all production methods, processes, know-how, technology and trade secret; (iv) fees, costs and pricing structures, (v) non-public financial information, analyses and internal management documents; (vi) computer software and data bases, including operating systems, applications and program listings; (vii) flow charts, manuals and documentation; (viii) business methods (except those applicable to business, in general); (ix) customers and clients, including customer and client contracts and lists; (x) vendors and suppliers, including vender and supplier contracts and lists; and (xi) all information and documents related to the Transaction. Confidential Information will not include any information that has been published in a form generally available to the public prior to the date the Executive proposes to disclose or use such information. Confidential Information will not be deemed to have been published or otherwise disclosed merely because individual portions of the information have been separately published, but only if all material features comprising such information have been published in combination.

     Section 6. Non-Solicitation; Non-Compete.

          (a) During his employment with the Company and for the period commencing on the Termination Date and ending on the twenty-four (24) month anniversary of the

3

Termination Date for any reason, Krohn shall not directly or indirectly through another Person (i) induce or attempt to induce any employee of the Company or any Affiliate of the Company to leave the employ of the Company or such Affiliate, or in any way interfere with the relationship between the Company or any such Affiliate, on the one hand, and any employee thereof, on the other hand, (ii) hire any person who was an employee of the Company or any Affiliate of the Company until twelve (12) months after such individual’s employment relationship with the Company or such Affiliate has been terminated or (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of the Company or any Affiliate of the Company to cease doing business with the Company or such Affiliate, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation, on the one hand, and the Company or any Affiliate, on the other hand.

          (b) Krohn acknowledges that, in the course of his employment with the Company and/or its Affiliates and their predecessors, he has become familiar, or will become familiar, with the Company’s and its Affiliates’ and their predecessors’ trade secrets and with other Confidential Information concerning the Company, its Affiliates and their respective predecessors and that his services have been and will be of special, unique and extraordinary value to the Company and its Affiliates. Therefore, Krohn agrees that during his employment with the Company and for the period commencing on the Termination Date and continuing until the twelfth month anniversary of the Termination Date if his employment is terminated without Cause or he resigns his employment for Good Reason or for the period commencing on the Termination Date and continuing until the twenty-fourth month anniversary of the Termination Date if his employment is terminated for any other reason (the “Restricted Period”), Krohn shall not directly or indirectly, engage in the fabrication, sale or distribution of any product fabricated, sold or distributed by the Company or its subsidiaries on the Termination Date or during the Restricted Period anywhere in the United States in which the Company or its subsidiaries is doing business. For purposes of this Agreement, the phrase “directly or indirectly engage in” shall include any direct or indirect ownership or profit participation interest in such enterprise, whether as an owner, stockholder, partner, joint venturer of or otherwise, and shall include any direct or indirect participation in such enterprise as an employee, consultant, licensor of technology or otherwise. Nothing herein shall prohibit Krohn from being a passive owner of not more than 4.9% of the outstanding equity interest in any entity which is publicly traded, so long as Krohn has no active participation in the business of such corporation.

     Section 7. Severance Payments.

          In addition to any other rights or remedies available to the Company at law or equity, if Krohn violates any provision of the foregoing Sections 5 or 6, any severance payments then or thereafter due from the Company to Krohn shall be terminated immediately and the Company’s obligation to pay and Krohn’s right to receive such severance payments shall terminate and be of no further force or effect.

     Section 8. General Provisions.

          (a) At –Will Employment. Nothing in this Agreement shall confer upon Krohn any right to continue in the employ of the Company or any of its subsidiaries or affiliates

4

or interfere in any way with the right of the Company, its subsidiaries or its affiliates, as the case may be, in its sole discretion, to terminate Krohn’s employment at any time and for any reason.

          (b) Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable under any present or future law, and if the rights and obligations of any party under this Agreement will not be materially and adversely affected thereby, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction; furthermore, in lieu of such invalid or unenforceable provision there will be added automatically as a part of this Agreement, a legal, valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

          (c) Entire Agreement. This Agreement, the Investor Rights Agreement, the Subscription Agreement, the Stock Incentive Plan, the Non-Qualified Stock Option Agreement and the Restricted Stock Agreement embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. For the avoidance of doubt, Krohn and Merger Sub (or, from and after the closing of the Transaction, the Company) acknowledge that any agreement between Krohn and Metals USA, Inc. entered into prior to the Effective Date, including without limitation, any employment agreement, shall be of no further force and effect as of the Effective Date.

          (d) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

          (e) Successors and Assigns.

               (i) This Agreement is personal to Krohn and without the prior written consent of Merger Sub (or, from and after the closing of the Transaction, the Company) shall not be assignable by Krohn otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Krohn’s legal representatives.

               (ii) Effective as of the Closing of the Transaction, the Merger Sub will require the Company to assume and agree to perform this Agreement.

               (iii) This Agreement shall inure to the benefit of and be binding upon Merger Sub (or, from and after the closing of the Transaction, the Company) and its successors and assigns. The Company will require any successor (whether direct or indirect, by purchase,

5

merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

          (f) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

          (g) Remedies. Each of the parties to this Agreement and any such person or entity granted rights hereunder whether or not such person or entity is a signatory hereto (including, without limitation, Apollo Management V, L.P. and its Affiliates) shall be entitled to enforce its rights under this Agreement specifically to recover damages and costs for any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement, including Sections 5 or 6 of this Agreement, and that the Company may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or other injunctive relief (without posting any bond or deposit) in order to enforce or prevent any violations of the provisions of this Agreement or require Krohn to account for and pay over to the Company all economic benefits derived from or received as a result of any transactions constituting a breach of the covenants contained herein in this Agreement, if and when final judgment of a court of competent jurisdiction is so entered against Krohn. Each party shall be responsible for paying its own attorneys’ fees, costs and other expenses pertaining to any judgment or verdict unless the court awards otherwise.

          (h) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of Merger Sub (or, from and after the closing of the Transaction, the Company) and Krohn and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision hereof.

          (i) Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, transmitted via telecopier, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated or at such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder and received when

6

delivered personally, when received if transmitted via telecopier, five days after deposit in the U.S. mail and one day after deposit with a reputable overnight courier service.

     If to the Company, to:

Metals USA, Inc.
One Riverway, Suite 1100
Houston, Texas 77056
Facsimile: (713) 965-9967
Attention: Chairman of the Board

     with a copy (which shall not constitute notice) to:

The Apollo Group
9 West 57^th Street
New York, New York 10019
Facsimile: (212) 515-3288
Attention Marc Becker

     And with a copy (which shall not constitute notice) to:

Dreier LLP
499 Park Avenue
New York, New York
Facsimile: (212) 328-6101
Attention: Andrew Bernstein, Esq.

     If to Krohn, to Krohn’s address set forth on the signature page hereto.

          (j) Effectiveness. This Agreement shall become of no force or effect if the Transaction does not close on or before December 15, 2005.

          (k) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

          (l) Construction. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

          (m) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

[signature page follows]

7

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

FLAG ACQUISITION CORPORATION
By:	/s/ M. Ali Rashid
	Name:  M. Ali Rashid Title:    President

ROGER KROHN

Signature: /s/ ROGER KROHN

Residence Address:

425 W. Home Road
Springfield, Ohio 45504

8

EX-10.5

Exhibit 10.5

Execution Copy

SEVERANCE AGREEMENT (this “Agreement”) dated as
of September 29, 2005, between FLAG ACQUISITION
CORPORATION, a Delaware corporation, (the “Merger
Sub”), and DAVID MARTENS (“Martens”).

     WHEREAS, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) made and entered into as of the 18th day of May, 2005, by and among Flag Holdings Corporation, a Delaware corporation (“Parent”), the Merger Sub, a wholly owned subsidiary of Parent, and Metals USA, Inc. (the “Company”), Parent will acquire all of the capital stock of the Company by merging (the “Merger”) Merger Sub with and into the Company (the “Transaction”);

     WHEREAS, concurrently with the execution of the Merger Agreement, as a condition and inducement to Parent’s and the Merger Sub’s willingness to enter into the Merger Agreement, the Merger Sub is entering into this Agreement;

     WHEREAS, Martens, as a condition of his employment, will make a substantial investment in Parent concurrently with the closing of the Transaction by purchasing 7,500 shares of common stock of Parent, par value $0.01, at a price of $10 per share;

     NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     Section 1. Severance.

     If after the effective date of the Transaction (the “Effective Date”), the Company terminates Martens’ employment without Cause or Martens resigns his employment for Good Reason, the Company shall provide the following to Martens.

          (a) The Company will continue to pay Martens his then current salary as of the Termination Date until the earlier of (i) the end of the twelfth month following the Termination Date (the “Severance Period”), and (ii) the date, if any, Martens violates any other term of this Agreement.

          (b) After the Termination Date, provided Martens elects to continue his and his beneficiaries’ participation in the Company’s medical benefit plan in which they participated prior to the Termination Date pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”), the Company will reimburse Martens for the monthly cost of continuing such coverage within 10 business days of each payment by Martens for the lesser of: (x) twelve months following the Termination Date; and (y) the period preceding the date that Martens becomes eligible to receive medical coverage under another employee benefit plan (“COBRA Benefits”).

     If (i) the Company terminates Martens’ employment for any reason other than without Cause (including for Cause, because of a disability or as a result of Martens’ death), or (ii)

Martens’ resigns his employment for any reason other than for a Good Reason, no severance will be paid to Martens under this Section 1.

     Section 2. Notice of Termination. Any termination by the Company for Cause or without Cause, or by Martens for Good Reason or without Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 7(h). For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Martens’ employment under the provision so indicated and (iii) if the Termination Date is other than the date of receipt of such notice, specifies the termination date. The failure by Martens or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of Martens or the Company hereunder or preclude Martens or the Company from asserting such fact or circumstance in enforcing Martens’ or the Company’s rights hereunder.

     Section 3. Definitions.

          (a) Cause. “Cause” means that the Company terminated Martens’ employment after any of the following actions are taken by Martens without the Company’s consent: (i) the commission of a felony or a crime of moral turpitude; (ii) a willful commission of a material act of dishonesty involving the Company; (iii) a material non-curable breach of Martens’ obligations hereunder or any other agreement entered into between Martens and the Company or any of its subsidiaries or affiliates; (iv) any material breach of the Company’s policies or procedures that is not reasonably curable in the Company’s sole discretion; (v) any other willful misconduct which causes material harm to the Company or its business reputation, including due to any adverse publicity; or (vi) a failure by Martens to cure a material breach of his obligations under this Agreement, the Investor Rights Agreement among the shareholders of Parent, the Subscription Agreement between Martens and Parent, the Non-Qualified Stock Option Agreement between Martens and Parent or the Restricted Stock Agreement between Martens and Parent within 30 days after written notice of such breach.

          (b) Good Reason. “Good Reason” means the Martens resigns his employment voluntarily within ninety (90) days after any of the following actions are taken by the Company or any of its subsidiaries without Martens’ consent: (i) a reduction in Martens’ current annual base salary or annual target bonus potential (but not including any diminution related to a broader compensation reduction that is not limited to any particular employee or executive); (ii) a material diminution of Martens’ responsibilities as President, Plates and Shapes West; (iii) relocation of Martens’ primary work place, as assigned to him by the Company, beyond a fifty (50) mile radius from Enid, Oklahoma; or (iv) a material breach by the Company of this Agreement; provided, however, that none of the events described in the foregoing clauses (i), (ii), (iii) or (iv) shall constitute Good Reason unless Martens shall have notified the Company in writing describing the events which constitute Good Reason and then only if the Company shall have failed to cure such events within thirty (30) days after the Company’s receipt of such written notice.

          (c) Termination Date. The “Termination Date” means (i) if Martens’ employment is terminated by the Company for Cause, without Cause or by Martens for Good

2

Reason or without Good Reason, the date of receipt of the Notice of Termination or any later date specified therein pursuant to Section 2, as the case may be.

     Section 4. Separation Agreement and General Release. The Company’s obligations to make payments and to provide benefits under Sections 1(a) and (b) will be conditioned on Martens executing and delivering a mutually agreeable separation agreement and general release of the Company and its Subsidiaries in a form acceptable to the Company.

     Section 5. Nondisclosure and Nonuse of Confidential Information.

          (a) Martens shall not disclose or use at any time, either during his employment with the Company or thereafter, any Confidential Information (as hereinafter defined) of which Martens is or becomes aware, whether or not such information is developed by him, except to the extent that such disclosure or use is directly related to and required by Martens’ performance in good faith of duties assigned to Martens by the Company. Martens will take all appropriate steps to safeguard Confidential Information in his possession and to protect it against disclosure, misuse, espionage, loss and theft. Martens shall deliver to the Company at the termination of the Employment Period, or at any time the Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) relating to the Confidential Information of the business of the Company or any of its Affiliates which Martens may then possess or have under his control.

          (b) As used in this Agreement, the term “Confidential Information” means information that is not generally known to the public and that is used, developed or obtained by Flag, the Company and their affiliates in connection with their business, including, but not limited to, information, observations and data obtained by the Executive while employed by the Company or any predecessors thereof (including those obtained prior to the date of this Agreement) concerning: (i) the business or affairs of Flag, the Company or their affiliates; (ii) products, services, designs, inventions, devices, developments and copyrightable works (whether patentable or unpatentable and whether or not reduced to practice); (iii) all production methods, processes, know-how, technology and trade secret; (iv) fees, costs and pricing structures, (v) non-public financial information, analyses and internal management documents; (vi) computer software and data bases, including operating systems, applications and program listings; (vii) flow charts, manuals and documentation; (viii) business methods (except those applicable to business, in general); (ix) customers and clients, including customer and client contracts and lists; (x) vendors and suppliers, including vender and supplier contracts and lists; and (xi) all information and documents related to the Transaction. Confidential Information will not include any information that has been published in a form generally available to the public prior to the date the Executive proposes to disclose or use such information. Confidential Information will not be deemed to have been published or otherwise disclosed merely because individual portions of the information have been separately published, but only if all material features comprising such information have been published in combination.

     Section 6. Non-Solicitation; Non-Compete.

          (a) During his employment with the Company and for the period commencing on the Termination Date and ending on the twenty-four (24) month anniversary of the

3

Termination Date for any reason, Martens shall not directly or indirectly through another Person (i) induce or attempt to induce any employee of the Company or any Affiliate of the Company to leave the employ of the Company or such Affiliate, or in any way interfere with the relationship between the Company or any such Affiliate, on the one hand, and any employee thereof, on the other hand, (ii) hire any person who was an employee of the Company or any Affiliate of the Company until twelve (12) months after such individual’s employment relationship with the Company or such Affiliate has been terminated or (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of the Company or any Affiliate of the Company to cease doing business with the Company or such Affiliate, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation, on the one hand, and the Company or any Affiliate, on the other hand.

          (b) Martens acknowledges that, in the course of his employment with the Company and/or its Affiliates and their predecessors, he has become familiar, or will become familiar, with the Company’s and its Affiliates’ and their predecessors’ trade secrets and with other Confidential Information concerning the Company, its Affiliates and their respective predecessors and that his services have been and will be of special, unique and extraordinary value to the Company and its Affiliates. Therefore, Martens agrees that during his employment with the Company and for the period commencing on the Termination Date and continuing until the twelfth month anniversary of the Termination Date if his employment is terminated without Cause or he resigns his employment for Good Reason or for the period commencing on the Termination Date and continuing until the twenty-fourth month anniversary of the Termination Date if his employment is terminated for any other reason (the “Restricted Period”), Martens shall not directly or indirectly, engage in the fabrication, sale or distribution of any product fabricated, sold or distributed by the Company or its subsidiaries on the Termination Date or during the Restricted Period anywhere in the United States in which the Company or its subsidiaries is doing business. For purposes of this Agreement, the phrase “directly or indirectly engage in” shall include any direct or indirect ownership or profit participation interest in such enterprise, whether as an owner, stockholder, partner, joint venturer of or otherwise, and shall include any direct or indirect participation in such enterprise as an employee, consultant, licensor of technology or otherwise. Nothing herein shall prohibit Martens from being a passive owner of not more than 4.9% of the outstanding equity interest in any entity which is publicly traded, so long as Martens has no active participation in the business of such corporation.

     Section 7. Severance Payments.

          In addition to any other rights or remedies available to the Company at law or equity, if Martens violates any provision of the foregoing Sections 5 or 6, any severance payments then or thereafter due from the Company to Martens shall be terminated immediately and the Company’s obligation to pay and Martens’ right to receive such severance payments shall terminate and be of no further force or effect.

     Section 8. General Provisions.

          (a) At –Will Employment. Nothing in this Agreement shall confer upon Longo any right to continue in the employ of the Company or any of its subsidiaries or affiliates

4

or interfere in any way with the right of the Company, its subsidiaries or its affiliates, as the case may be, in its sole discretion, to terminate Longo’s employment at any time and for any reason

          (b) Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable under any present or future law, and if the rights and obligations of any party under this Agreement will not be materially and adversely affected thereby, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction; furthermore, in lieu of such invalid or unenforceable provision there will be added automatically as a part of this Agreement, a legal, valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

          (c) Entire Agreement. This Agreement, the Investor Rights Agreement, the Subscription Agreement, the Stock Incentive Plan, the Non-Qualified Stock Option Agreement and the Restricted Stock Agreement embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. For the avoidance of doubt, Martens and Merger Sub (or, from and after the closing of the Transaction, the Company) acknowledge that any agreement between Martens and Metals USA, Inc. entered into prior to the Effective Date, including without limitation, any employment agreement, shall be of no further force and effect as of the Effective Date.

          (d) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

          (e) Successors and Assigns.

               (i) This Agreement is personal to Martens and without the prior written consent of Merger Sub (or, from and after the closing of the Transaction, the Company) shall not be assignable by Martens otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Martens’ legal representatives.

               (ii) Effective as of the Closing of the Transaction, the Merger Sub will require the Company to assume and agree to perform this Agreement.

               (iii) This Agreement shall inure to the benefit of and be binding upon Merger Sub (or, from and after the closing of the Transaction, the Company) and its successors

5

and assigns. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

          (f) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

          (g) Remedies. Each of the parties to this Agreement and any such person or entity granted rights hereunder whether or not such person or entity is a signatory hereto (including, without limitation, Apollo Management V, L.P. and its Affiliates) shall be entitled to enforce its rights under this Agreement specifically to recover damages and costs for any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement, including Sections 5 or 6 of this Agreement, and that the Company may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or other injunctive relief (without posting any bond or deposit) in order to enforce or prevent any violations of the provisions of this Agreement or require Martens to account for and pay over to the Company all economic benefits derived from or received as a result of any transactions constituting a breach of the covenants contained herein in this Agreement, if and when final judgment of a court of competent jurisdiction is so entered against Martens. Each party shall be responsible for paying its own attorneys’ fees, costs and other expenses pertaining to any judgment or verdict unless the court awards otherwise.

          (h) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of Merger Sub (or, from and after the closing of the Transaction, the Company) and Martens and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision hereof.

          (i) Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, transmitted via telecopier, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated or at such other address or to the

6

attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder and received when delivered personally, when received if transmitted via telecopier, five days after deposit in the U.S. mail and one day after deposit with a reputable overnight courier service.

If to the Company, to:

Metals USA, Inc.
One Riverway, Suite 1100
Houston, Texas 77056
Facsimile: (713) 965-9967
Attention: Chairman of the Board

with a copy (which shall not constitute notice) to:

The Apollo Group
9 West 57^th Street
New York, New York 10019
Facsimile: (212) 515-3288
Attention Marc Becker

And with a copy (which shall not constitute notice) to:

Dreier LLP
499 Park Avenue
New York, New York
Facsimile: (212) 328-6101
Attention: Andrew Bernstein, Esq.

If to Martens, to Martens’ address set forth on the signature page hereto.

          (j) Effectiveness. This Agreement shall become of no force or effect if the Transaction does not close on or before December 15, 2005.

          (k) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

          (l) Construction. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

          (m) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

[signature page follows]

7

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

FLAG ACQUISITION CORPORATION
By:	/s/ M. Ali Rashid
	Name:  M. Ali Rashid Title:    President

DAVID MARTENS
Signature:	/s/ DAVID MARTENS
Residence Address:
2826 Edgewood
Enid, Oklahoma 73703

EX-10.6

Execution Copy

Exhibit 10.6

SEVERANCE AGREEMENT (this “Agreement”) dated as
of September 29, 2005, between FLAG ACQUISITION
CORPORATION, a Delaware corporation, (the “Merger
Sub”), and JOE LONGO (“Longo”).

     WHEREAS, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) made and entered into as of the 18th day of May, 2005, by and among Flag Holdings Corporation, a Delaware corporation (“Parent”), the Merger Sub, a wholly owned subsidiary of Parent, and Metals USA, Inc. (the “Company”), Parent will acquire all of the capital stock of the Company by merging (the “Merger”) Merger Sub with and into the Company (the “Transaction”);

     WHEREAS, concurrently with the execution of the Merger Agreement, as a condition and inducement to Parent’s and the Merger Sub’s willingness to enter into the Merger Agreement, the Merger Sub is entering into this Agreement;

     WHEREAS, Longo, as a condition of his employment, will make a substantial investment in Parent concurrently with the closing of the Transaction by purchasing 9,000 shares of common stock of Parent, par value $0.01, at a price of $10 per share;

     NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     Section 1. Severance.

     If after the effective date of the Transaction (the “Effective Date”), the Company terminates Longo’s employment without Cause or Longo resigns his employment for Good Reason, the Company shall provide the following to Longo.

          (a) The Company will continue to pay Longo his then current salary as of the Termination Date until the earlier of (i) the end of the twelfth month following the Termination Date (the “Severance Period”), and (ii) the date, if any, Longo violates any other term of this Agreement.

          (b) After the Termination Date, provided Longo elects to continue his and his beneficiaries’ participation in the Company’s medical benefit plan in which they participated prior to the Termination Date pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”), the Company will reimburse Longo for the monthly cost of continuing such coverage within 10 business days of each payment by Longo for the lesser of: (x) twelve months following the Termination Date; and (y) the period preceding the date that Longo becomes eligible to receive medical coverage under another employee benefit plan (“COBRA Benefits”).

     If (i) the Company terminates Longo’s employment for any reason other than without Cause (including for Cause, because of a disability or as a result of Longo’s death), or (ii)

Longo’s resigns his employment for any reason other than for a Good Reason, no severance will be paid to Longo under this Section 1.

     Section 2. Notice of Termination. Any termination by the Company for Cause or without Cause, or by Longo for Good Reason or without Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 7(h). For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Longo’s employment under the provision so indicated and (iii) if the Termination Date is other than the date of receipt of such notice, specifies the termination date. The failure by Longo or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of Longo or the Company hereunder or preclude Longo or the Company from asserting such fact or circumstance in enforcing Longo’s or the Company’s rights hereunder.

     Section 3. Definitions.

          (a) Cause. “Cause” means that the Company terminated Longo’s employment after any of the following actions are taken by Longo without the Company’s consent: (i) the commission of a felony or a crime of moral turpitude; (ii) a willful commission of a material act of dishonesty involving the Company; (iii) a material non-curable breach of Longo’s obligations hereunder or any other agreement entered into between Longo and the Company or any of its subsidiaries or affiliates; (iv) any material breach of the Company’s policies or procedures that is not reasonably curable in the Company’s sole discretion; (v) any other willful misconduct which causes material harm to the Company or its business reputation, including due to any adverse publicity; or (vi) a failure by Longo to cure a material breach of his obligations under this Agreement, the Investor Rights Agreement among the shareholders of Parent, the Subscription Agreement between Longo and Parent, the Non-Qualified Stock Option Agreement between Longo and Parent or the Restricted Stock Agreement between Longo and Parent within 30 days after written notice of such breach.

          (b) Good Reason. “Good Reason” means the Longo resigns his employment voluntarily within ninety (90) days after any of the following actions are taken by the Company or any of its subsidiaries without Longo’s consent: (i) a reduction in Longo’s current annual base salary or annual target bonus potential (but not including any diminution related to a broader compensation reduction that is not limited to any particular employee or executive); (ii) a material diminution of Longo’s responsibilities as President, Plates and Shapes East; (iii) relocation of Longo’s primary work place, as assigned to him by the Company, beyond a fifty (50) mile radius from York, Pennsylvania; or (iv) a material breach by the Company of this Agreement; provided, however, that none of the events described in the foregoing clauses (i), (ii), (iii) or (iv) shall constitute Good Reason unless Longo shall have notified the Company in writing describing the events which constitute Good Reason and then only if the Company shall have failed to cure such events within thirty (30) days after the Company’s receipt of such written notice.

          (c) Termination Date. The “Termination Date” means (i) if Longo’s employment is terminated by the Company for Cause, without Cause or by Longo for Good

2

Reason or without Good Reason, the date of receipt of the Notice of Termination or any later date specified therein pursuant to Section 2, as the case may be.

     Section 4. Separation Agreement and General Release. The Company’s obligations to make payments and to provide benefits under Sections 1(a) and (b) will be conditioned on Longo executing and delivering a mutually agreeable separation agreement and general release of the Company and its Subsidiaries in a form acceptable to the Company.

     Section 5. Nondisclosure and Nonuse of Confidential Information.

          (a) Longo shall not disclose or use at any time, either during his employment with the Company or thereafter, any Confidential Information (as hereinafter defined) of which Longo is or becomes aware, whether or not such information is developed by him, except to the extent that such disclosure or use is directly related to and required by Longo’s performance in good faith of duties assigned to Longo by the Company. Longo will take all appropriate steps to safeguard Confidential Information in his possession and to protect it against disclosure, misuse, espionage, loss and theft. Longo shall deliver to the Company at the termination of the Employment Period, or at any time the Company may request, all memoranda, notes, plans, records, reports, computer tapes and software and other documents and data (and copies thereof) relating to the Confidential Information of the business of the Company or any of its Affiliates which Longo may then possess or have under his control.

          (b) As used in this Agreement, the term “Confidential Information” means information that is not generally known to the public and that is used, developed or obtained by Flag, the Company and their affiliates in connection with their business, including, but not limited to, information, observations and data obtained by the Executive while employed by the Company or any predecessors thereof (including those obtained prior to the date of this Agreement) concerning: (i) the business or affairs of Flag, the Company or their affiliates; (ii) products, services, designs, inventions, devices, developments and copyrightable works (whether patentable or unpatentable and whether or not reduced to practice); (iii) all production methods, processes, know-how, technology and trade secret; (iv) fees, costs and pricing structures, (v) non-public financial information, analyses and internal management documents; (vi) computer software and data bases, including operating systems, applications and program listings; (vii) flow charts, manuals and documentation; (viii) business methods (except those applicable to business, in general); (ix) customers and clients, including customer and client contracts and lists; (x) vendors and suppliers, including vender and supplier contracts and lists; and (xi) all information and documents related to the Transaction. Confidential Information will not include any information that has been published in a form generally available to the public prior to the date the Executive proposes to disclose or use such information. Confidential Information will not be deemed to have been published or otherwise disclosed merely because individual portions of the information have been separately published, but only if all material features comprising such information have been published in combination.

     Section 6. Non-Solicitation; Non-Compete.

          (a) During his employment with the Company and for the period commencing on the Termination Date and ending on the twenty-four (24) month anniversary of the

3

Termination Date for any reason, Longo shall not directly or indirectly through another Person (i) induce or attempt to induce any employee of the Company or any Affiliate of the Company to leave the employ of the Company or such Affiliate, or in any way interfere with the relationship between the Company or any such Affiliate, on the one hand, and any employee thereof, on the other hand, (ii) hire any person who was an employee of the Company or any Affiliate of the Company until twelve (12) months after such individual’s employment relationship with the Company or such Affiliate has been terminated or (iii) induce or attempt to induce any customer, supplier, licensee or other business relation of the Company or any Affiliate of the Company to cease doing business with the Company or such Affiliate, or in any way interfere with the relationship between any such customer, supplier, licensee or business relation, on the one hand, and the Company or any Affiliate, on the other hand.

          (b) Longo acknowledges that, in the course of his employment with the Company and/or its Affiliates and their predecessors, he has become familiar, or will become familiar, with the Company’s and its Affiliates’ and their predecessors’ trade secrets and with other Confidential Information concerning the Company, its Affiliates and their respective predecessors and that his services have been and will be of special, unique and extraordinary value to the Company and its Affiliates. Therefore, Longo agrees that during his employment with the Company and for the period commencing on the Termination Date and continuing until the twelfth month anniversary of the Termination Date if his employment is terminated without Cause or he resigns his employment for Good Reason or for the period commencing on the Termination Date and continuing until the twenty-fourth month anniversary of the Termination Date if his employment is terminated for any other reason (the “Restricted Period”), Longo shall not directly or indirectly, engage in the fabrication, sale or distribution of any product fabricated, sold or distributed by the Company or its subsidiaries on the Termination Date or during the Restricted Period anywhere in the United States in which the Company or its subsidiaries is doing business. For purposes of this Agreement, the phrase “directly or indirectly engage in” shall include any direct or indirect ownership or profit participation interest in such enterprise, whether as an owner, stockholder, partner, joint venturer of or otherwise, and shall include any direct or indirect participation in such enterprise as an employee, consultant, licensor of technology or otherwise. Nothing herein shall prohibit Longo from being a passive owner of not more than 4.9% of the outstanding equity interest in any entity which is publicly traded, so long as Longo has no active participation in the business of such corporation.

     Section 7. Severance Payments.

          In addition to any other rights or remedies available to the Company at law or equity, if Longo violates any provision of the foregoing Sections 5 or 6, any severance payments then or thereafter due from the Company to Longo shall be terminated immediately and the Company’s obligation to pay and Longo’s right to receive such severance payments shall terminate and be of no further force or effect.

     Section 8. General Provisions.

          (a) At –Will Employment. Nothing in this Agreement shall confer upon Longo any right to continue in the employ of the Company or any of its subsidiaries or affiliates

4

or interfere in any way with the right of the Company, its subsidiaries or its affiliates, as the case may be, in its sole discretion, to terminate Longo’s employment at any time and for any reason.

          (b) Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable under any present or future law, and if the rights and obligations of any party under this Agreement will not be materially and adversely affected thereby, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction; furthermore, in lieu of such invalid or unenforceable provision there will be added automatically as a part of this Agreement, a legal, valid and enforceable provision as similar in terms to such invalid or unenforceable provision as may be possible. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

          (c) Entire Agreement. This Agreement, the Investor Rights Agreement, the Subscription Agreement, the Stock Incentive Plan, the Non-Qualified Stock Option Agreement and the Restricted Stock Agreement embody the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. For the avoidance of doubt, Longo and Merger Sub (or, from and after the closing of the Transaction, the Company) acknowledge that any agreement between Longo and Metals USA, Inc. entered into prior to the Effective Date, including without limitation, any employment agreement, shall be of no further force and effect as of the Effective Date.

          (d) Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

          (e) Successors and Assigns.

               (i) This Agreement is personal to Longo and without the prior written consent of Merger Sub (or, from and after the closing of the Transaction, the Company) shall not be assignable by Longo otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Longo’s legal representatives.

               (ii) Effective as of the Closing of the Transaction, the Merger Sub will require the Company to assume and agree to perform this Agreement.

               (iii) This Agreement shall inure to the benefit of and be binding upon Merger Sub (or, from and after the closing of the Transaction, the Company) and its successors and assigns. The Company will require any successor (whether direct or indirect, by purchase,

5

merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

          (f) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

          (g) Remedies. Each of the parties to this Agreement and any such person or entity granted rights hereunder whether or not such person or entity is a signatory hereto (including, without limitation, Apollo Management V, L.P. and its Affiliates) shall be entitled to enforce its rights under this Agreement specifically to recover damages and costs for any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement, including Sections 5 or 6 of this Agreement, and that the Company may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or other injunctive relief (without posting any bond or deposit) in order to enforce or prevent any violations of the provisions of this Agreement or require Longo to account for and pay over to the Company all economic benefits derived from or received as a result of any transactions constituting a breach of the covenants contained herein in this Agreement, if and when final judgment of a court of competent jurisdiction is so entered against Longo. Each party shall be responsible for paying its own attorneys’ fees, costs and other expenses pertaining to any judgment or verdict unless the court awards otherwise.

          (h) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of Merger Sub (or, from and after the closing of the Transaction, the Company) and Longo and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall be construed as a waiver of such provisions or affect the validity, binding effect or enforceability of this Agreement or any provision hereof.

          (i) Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, transmitted via telecopier, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated or at such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder and received when

6

delivered personally, when received if transmitted via telecopier, five days after deposit in the U.S. mail and one day after deposit with a reputable overnight courier service.

If to the Company, to:

Metals USA, Inc.
One Riverway, Suite 1100
Houston, Texas 77056
Facsimile: (713) 965-9967
Attention: Chairman of the Board

with a copy (which shall not constitute notice) to:

The Apollo Group
9 West 57^th Street
New York, New York 10019
Facsimile: (212) 515-3288
Attention Marc Becker

And with a copy (which shall not constitute notice) to:

Dreier LLP
499 Park Avenue
New York, New York
Facsimile: (212) 328-6101
Attention: Andrew Bernstein, Esq.

If to Longo, to Longo’s address set forth on the signature page hereto.

          (j) Effectiveness. This Agreement shall become of no force or effect if the Transaction does not close on or before December 15, 2005.

          (k) Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

          (l) Construction. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

          (m) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

[signature page follows]

7

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

FLAG ACQUISITION CORPORATION
By:	/s/ M. Ali Rashid
	Name:  M. Ali Rashid Title:    President

JOE LONGO
Signature:	/s/ JOE LONGO
Residence Address:
1385 Detwiler Drive
York, Pennsylvania 17404

8

EX-10.7

Exhibit 10.7

FLAG HOLDINGS CORPORATION
AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN

ARTICLE I

PURPOSE OF THE PLAN

     The purpose of the FLAG HOLDINGS CORPORATION AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN (the “Plan”) is (i) to further the growth and success of Flag Holdings Corporation, a Delaware corporation (the “Company”), and its Subsidiaries (as hereinafter defined) by enabling directors and employees of, or consultants to, the Company or any of its Subsidiaries to acquire Shares (as hereinafter defined), thereby increasing their personal interest in such growth and success, and (ii) to provide a means of rewarding outstanding performance by such persons to the Company and/or its Subsidiaries. Awards granted under the Plan (the “Awards”) shall be nonqualified stock options (referred to herein as “Options” or “NSOs”) and rights to purchase Shares. In the Plan, the terms “Parent” and “Subsidiary” mean “Parent Corporation” and “Subsidiary Corporation,” respectively, as such terms are defined in Sections 424(e) and (f) of the Internal Revenue Code of 1986, as amended (the “Code”).

ARTICLE II

DEFINITIONS

     As used in the Plan, the following terms shall have the meanings set forth below:

     “Adoption Agreement” means an agreement between the Company and a holder of Shares, pursuant to which such holder agrees to become a party to the Investor Rights Agreement.

     “Affiliate” means with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, such Person and/or one or more Affiliates thereof. As used in this definition, the term “control”, including the correlative terms “controlling”, “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies (whether through the ownership of securities or any partnership or other ownership interests, by contract or otherwise) of a Person. The term “Affiliate” shall not include at any time any portfolio companies of Apollo Management V, L.P. or any of its Affiliates, other than Flag Holdings Corporation and its Subsidiaries.

     “Award” has the meaning set forth in Article I hereof.

     “Award Agreement” means any writing setting forth the terms of an Award that has been duly authorized and approved by the Board or the Committee.

     “Board” has the meaning set forth in Section 3.1 hereof.

     “Capital Stock” means any and all shares of, interests and participations in, and other equivalents (however designated) of stock, including without limitation all Common Stock and preferred stock.

1

     “Cause” means, with respect to a Termination of Relationship: (i) if such Participant is at the time of termination a party to an employment agreement with the Company or any of its Subsidiaries which was entered into after the adoption of this Plan and defines such term, the meaning given in the employment agreement; (ii) otherwise if such Participant is at the time of termination a party to an Award Agreement which was entered into under this Plan and defines such term, the meaning given in the Award Agreement; and (iii) in all other cases, a Termination of Relationship by the Company or any of its Subsidiaries or Affiliates based on such Participant’s (A) commission of a felony or a crime of moral turpitude; (B) commission of a willful and material act of dishonesty involving the Company; (C) material non-curable breach of the Participant’s obligations hereunder or any other agreement entered into between the Participant and the Company or any of its Subsidiaries or Affiliates; (D) breach of the Company’s policies or procedures that causes material harm to the Company or its business reputation; (E) willful misconduct which causes material harm to the Company or its business reputation; or (F) failure to cure a material breach of his or her obligations under this Agreement or any other agreement entered into between the Participant and the Company or any of its Subsidiaries or Affiliates within 30 days after written notice of such breach.

     “Closing Date” shall have the meaning ascribed thereto in the Agreement and Plan of Merger, by and among the Company, Flag Acquisition Corporation and Metals USA, Inc., dated on or about May 17, 2005.

     “Code” has the meaning set forth in Article I hereof.

     “Committee” has the meaning set forth in Section 3.1 hereof.

     “Common Stock” means the common stock of the Company, par value $.01 per share.

     “Company” has the meaning set forth in Article I hereof.

     “Disability” means, with respect to each Participant, means that the Participant (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical of mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical of mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident or health plan covering employees of the Company.

     “Effective Date” means the date the Plan is adopted by the Board.

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

     “Fair Market Value” means, on the Closing Date, the price the Investor pays to acquire the Common Stock after taking into account any additional capital contributions and as of any subsequent, specified date, the closing price of the Common Stock on any national securities exchange or any national market system (including, but not limited to, The NASDAQ National Market) on that date, or if no prices are reported on that date, on the last preceding date on which such prices of the Common Stock are so reported. If the Common Stock is not then listed on any

2

national securities exchange but is traded over the counter at the time determination of its Fair Market Value is required to be made, its Fair Market Value shall be deemed to be equal to the average between the reported high and low sales prices of Common Stock on the most recent date on which Common Stock was publicly traded. If the Common Stock is not publicly traded at the time a determination of its Fair Market Value is made, the Board shall determine its Fair Market Value in such manner as it deems appropriate (such determination will be made in the manner that satisfies Section 409A of the Code and in good-faith as required by Section 422(c)(1) of the Code, may be based on the advice of an independent investment banker or appraiser recognized to be an expert in making such valuations, will take into consideration the factors listed in 26 C.F.R. §20.2031-2, but will not take into account any reduction in value of the Common Stock because the Common Stock (x) represents a minority position; (y) is subject to restrictions on transfer and resale; or (z) lacks liquidity).

     “Good Reason” means with respect to a Termination of Relationship: (i) if such Participant is at the time of termination a party to an employment agreement with the Company or any of its Subsidiaries which was entered into after the adoption of this Plan and defines such term, the meaning given in the employment agreement; (ii) otherwise if such Participant is at the time of termination a party to an Award Agreement which was entered into under this Plan and defines such term, the meaning given in the Award Agreement; and (iii) in all other cases, a Termination of Relationship by the Participant following: (A) a reduction of greater than 10% in the Participant’s annual base salary or bonus potential under any bonus plan maintained by the Company or any of its Subsidiaries (but not including any diminution related to a broader compensation reduction that is not limited to any particular employee or executive); or (B) any material adverse change in the Participant’s title, authority, duties, or responsibilities or the assignment to the Participant of any duties or responsibilities inconsistent in any material respect with those customarily associated with the position of the Participant; provided, however, that none of the events described in the foregoing clauses (A) and (B) shall constitute Good Reason unless the Participant shall have notified the Company in writing describing the events which constitute Good Reason and then only if the Company shall have failed to cure such events within thirty (30) days after the Company’s receipt of such written notice.

     “Independent Third Party” means any Person which (i) did not own in excess of five percent (5%) of the Common Stock deemed outstanding (on a fully diluted basis) as of the first anniversary of the Effective Date; and (ii) is not an Affiliate of any such owner.

     “Investor” means, collectively, Apollo Investment Fund V, L.P. and each of its Affiliates and any other investment fund or vehicle managed by Apollo Management V, L.P. or any of its Affiliates (including any successors or assigns of any such manager).

     “Investor Investment” means direct or indirect investments in Shares or other Capital Stock of the Company made by the Investor on or after the Closing Date, but excluding any purchases or repurchases of Shares on any securities exchange or any national market system after an initial Public Offering.

     “Investor IRR” means the pretax compounded annual internal rate of return calculated on a quarterly basis realized by the Investor on the Investor Investment, based on the aggregate amount invested by the Investor for all Investor Investments and the aggregate amount of cash

3

received by the Investor in respect of all Investor Investments, assuming all Investor Investments were purchased by one Person and were held continuously by such Person. The Investor IRR shall be determined based on the actual time of each Investor Investment and actual cash received by the Investor in respect of all Investor Investments and including, as a return on each Investor Investment, any cash dividends, cash distributions, cash sales or cash interest made by the Company or any Subsidiary in respect of such Investor Investment during such period, but excluding any other amounts payable that are not directly attributable to an Investor Investment.

     “Investor Rights Agreement” means the Investor Rights Agreement, dated on or about May 17, 2005, among the Company and the holders party thereto, as it is amended, supplemented, restated or otherwise modified from time to time.

     “Notice” has the meaning set forth in Section 5.7 hereof.

     “NSOs” has the meaning set forth in Article I hereof.

     “Option” has the meaning set forth in Article I hereof.

     “Option Price” has the meaning set forth in Section 5.4 hereof.

     “Option Shares” has the meaning set forth in Section 5.7(b) hereof.

     “Participant” has the meaning set forth in Article IV hereof.

     “Person” shall be construed broadly and shall include, without limitation, an individual, a partnership, a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

     “Plan” has the meaning set forth in Article I hereof.

     “Public Offering” means the closing of a public offering of Common Stock pursuant to a registration statement declared effective under the Securities Act, except that a Public Offering shall not include (i) an offering made primarily pursuant to a registration statement on Form S-4 in connection with a business combination or on Form S-8 in connection with an employee benefit plan of the Company or made primarily to employees or consultants of the Company; or (ii) an offering of a de minimis number of Shares.

     “Purchase Price” has the meaning set forth in Section 6.2 hereof.

     “Realization Event” means (i) the consummation of a Sale of the Company; or (ii) any transaction or series of related transactions in which the Investor sells at least 50% of the Shares directly or indirectly acquired by it (from the Company or otherwise) and at least 50% of the aggregate of all Investor Investments.

     “Reorganization” has the meaning set forth in Section 7.1 hereof.

     “Reserved Shares” means, at any time, an aggregate of 1,000,000 Shares, as the same

4

may be adjusted at or prior to such time in accordance with Section 7.1.

     “Sale of the Company” means the sale of the Company to one or more Independent Third Parties, pursuant to which such party or parties acquire (i) Capital Stock of the Company possessing the voting power to elect a majority of the Board (whether by merger, consolidation, recapitalization or sale or transfer of the Company’s Capital Stock or otherwise); or (ii) all or substantially all of the Company’s assets determined on a consolidated basis.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Shares” means shares of Common Stock.

     “Stock Award” means an Award of the right to purchase Shares under Article VI of the Plan.

     “Subsidiary” means any corporation or other entity of which the Company owns securities or interests having a majority, directly or indirectly, of the ordinary voting power in electing the board of directors, managers, general partners or similar governing Persons thereof.

     “Termination Date” means the tenth anniversary of the Effective Date.

     “Termination of Relationship” means (i) if the Participant is an employee of the Company or any Subsidiary, the termination of the Participant’s employment with the Company and its Subsidiaries for any reason; (ii) if the Participant is a consultant to the Company or any Subsidiary, the termination of the Participant’s consulting relationship with the Company and its Subsidiaries for any reason; and (iii) if the Participant is a director of the Company or any Subsidiary, the termination of the Participant’s service as a director of the Company or such Subsidiary for any reason.

     “Vested Options” means Options that have vested in accordance with the applicable Award Agreement.

ARTICLE III

ADMINISTRATION OF THE PLAN; SHARES SUBJECT TO THE PLAN

3.1 Committee.

     The Plan shall be administered by the Board of Directors of the Company (the “Board”) or the Compensation Committee (the “Committee”) appointed from time to time by the Board, in consultation with the Chief Executive Officer of the Company, in the event the Chief Executive Officer is not a member of the Compensation Committee. The term “Committee” shall, for all purposes of the Plan other than this Article III, be deemed to refer to the Board if the Board is administering the Plan.

3.2 Procedures.

     The Committee shall adopt such rules and regulations as it shall deem appropriate

5

concerning the holding of meetings and the administration of the Plan. The entire Committee shall constitute a quorum and the actions of the entire Committee present at a meeting, or actions approved in writing by the entire Committee, shall be the actions of the Committee.

3.3 Interpretation; Powers of Committee.

     Except as may otherwise be expressly reserved to the Board as provided herein, and with respect to any Award, except as may otherwise be provided in the Award Agreement evidencing such Award or an Employment Agreement between the Participant and Company, the Committee shall have all powers with respect to the administration of the Plan, including the authority to:

(a)	determine eligibility and the particular persons who will receive Awards;
(b)	grant Awards to eligible persons, determine the price and number of securities to be offered or awarded to any of such persons, determine the other specific terms and conditions of Awards consistent with the express limits of the Plan, establish the installments (if any) in which such Awards will become exercisable or will vest and the respective consequences thereof (or determine that no delayed exercisability or vesting is required), and establish the events of termination or reversion of such Awards;
(c)	approve the forms of Award Agreements, which need not be identical either as to type of Award or among Participants;
(d)	construe and interpret the provisions of the Plan and any Award Agreement or other agreement defining the rights and obligations of the Company and Participants under the Plan, make factual determinations with respect to the administration of the Plan, further define the terms used in the Plan, and prescribe, amend and rescind rules and regulations relating to the administration of the Plan;
(e)	cancel, modify, or waive the Company’s rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding Awards held by Participants, subject to any required consent under Article X;
(f)	accelerate or extend the exercisability or extend the term of any or all outstanding Awards, subject to any consent required under Article X; and
(g)	make all other determinations and take such other action as contemplated by this Plan or as may be necessary or advisable for the administration of this Plan and the effectuation of its purposes.

     All decisions of the Board or the Committee, as the case may be, shall be reasonable and made in good faith and shall be conclusive and binding on all Participants in the Plan.

3.4 Compliance with Code Section 162(m).

     In the event the Company becomes a “publicly-held corporation” as defined in Code

6

§162(m)(2), the Company may establish a committee of outside directors meeting the requirements of Code §162(m)(2) to (i) approve Awards that might reasonably be anticipated to result in the payment of employee remuneration that would otherwise exceed the limit on employee remuneration deductible for income tax purposes by the Company pursuant to Code §162(m); and (ii) administer the Plan. In such event, the powers reserved to the Committee in the Plan shall be exercised by such compensation committee. In addition, Awards under the Plan shall be granted upon satisfaction of the conditions to such grants provided pursuant to Code §162(m) and any Treasury Regulations promulgated thereunder.

3.5 Number of Shares.

     Subject to the provisions of Article VII (relating to adjustments upon changes in capital structure and other corporate transactions), the aggregate number of Shares with respect to which Awards may be granted under the Plan shall not exceed the Reserved Shares. Shares that are subject to or underlie Options granted under the Plan that expire or for any reason are canceled or terminated without having been exercised (or Shares subject to or underlying the unexercised portion of any Options, in the case of Options that were partially exercised at the time of their expiration, cancellation or termination), as well as Shares that are subject to Stock Awards made under the Plan that are not actually purchased pursuant to such Stock Awards, will again, except to the extent prohibited by law or applicable listing or regulatory requirements, be available for subsequent Award grants under the Plan.

3.6 Reservation of Shares.

     The number of Shares reserved for issuance with respect to Awards granted under the Plan shall at no time be less than the maximum number of Shares which may be issued or delivered at any time pursuant to outstanding Awards.

ARTICLE IV

ELIGIBILITY

4.1 General.

     Awards may be granted under the Plan only to persons who are employees or directors of, or consultants to, the Company or any of its Subsidiaries on the date of the grant; provided that Awards may be granted under this Plan (i) to consultants, only with the prior consent of the President/CEO of Metals USA, Inc. or (ii) to directors. Each such person to whom an Award is granted under the Plan is referred to herein as a “Participant.”

ARTICLE V

STOCK OPTIONS

5.1 General.

     Options may be granted under the Plan at any time and from time to time on or prior to the Termination Date. Each Option granted under the Plan shall be designated as an NSO and

7

shall be subject to the terms and conditions applicable to NSOs set forth in the Plan. Each Option shall be evidenced by an Award Agreement incorporating the terms and provisions of the Plan that shall be executed by the Company and the Participant. The Award Agreement shall specify the number of Shares for which such Option shall be exercisable, the exercise price for such Shares and the other terms and conditions of the Option.

5.2 Vesting.

     The Committee, in its sole discretion, shall determine whether and to what extent any Options are subject to vesting based upon the Participant’s continued service to, or the Participant’s performance of duties for, the Company and its Subsidiaries, or upon any other basis.

5.3 Date of Grant.

     Except as may be otherwise provided in an Award Agreement, the date of grant of an Option under this Plan shall be the date as of which the Committee approves the grant.

5.4 Option Price.

     The price (the “Option Price”) at which each Share may be purchased shall be determined by the Committee and set forth in the Award Agreement. In no event, however, may the Committee determine an Option Price that is less than the Fair Market Value of the Share on the date of grant.

5.5 Automatic Termination of Options.

     Each Option granted under the Plan, to the extent not previously exercised, shall automatically terminate and shall become null and void and be of no further force or effect upon such date or dates as are set forth in the applicable Award Agreement, consistent with the terms of the Plan.

5.6 Payment of Option Price.

     The aggregate Option Price shall be paid in cash (by wire transfer of immediately available funds to a bank account of the Company designated by the Committee or by delivery of a personal or certified check payable to the Company); provided that at the time an Option is granted under this Plan, the Committee may, in its sole discretion, specify one or more of the following other forms of payment which may be used by a Participant (but only to the extent permitted by applicable law) upon exercise of his or her Option:

(a) by cancellation of indebtedness of the Company owed to the Participant;

     (b) by surrender of shares of Common Stock which either (i) have been owned by the Participant for more than six months and have been paid for within the meaning of Rule 144 under the Securities Act (and, if such shares of Common Stock were purchased from the Company or any Subsidiary thereof by means of a promissory note, such note has been fully paid

8

with respect to such shares); or (ii) were obtained by the Participant in the public market (but, subject in any case, to the applicable limitations of Rule 16b-3 under the Exchange Act);

     (c) by waiver of compensation due or accrued to the Participant for services rendered to the Company or any of its Subsidiaries;

     (d) if the Common Stock is a class of securities then listed or admitted to trading on any national securities exchange or traded on any national market system (including, but not limited to, The Nasdaq National Market), in compliance with any cashless exercise program authorized by the Board or the Committee for use in connection with the Plan at the time of such exercise (but, subject in any case, to the applicable limitations of Rule 16b-3 under the Exchange Act); or

     (e) a combination of the methods set forth in this Section 5.6.

5.7 Notice of Exercise.

     A Participant (or other person, as provided in Section 8.2) may exercise an Option (for the Shares represented thereby) granted under the Plan in whole or in part (but for the purchase of whole Shares only), as provided in the Award Agreement evidencing his or her Option, by delivering a written notice (the “Notice”) to the Secretary of the Company. The Notice shall state:

     (a) That the Participant elects to exercise the Option;

     (b) The number of Shares with respect to which the Option is being exercised (the “Option Shares”);

     (c) The method of payment for the Option Shares (which method must be available to the Participant under the terms of his or her Award Agreement);

     (d) The date upon which the Participant desires to consummate the purchase of the Option Shares (which date must be prior to the termination of such Option); and

     (e) Any additional provisions consistent with the Plan as the Committee may from time to time require.

     The exercise date of an Option shall be the date on which the Company receives the Notice from the Participant. Such Notice shall also contain, to the extent such Participant is not then a party to the Investor Rights Agreement (and the Investor Rights Agreement has not been terminated prior to such date), an Adoption Agreement, in form and substance satisfactory to the Board pursuant to which the Participant agrees to become a party to the Investor Rights Agreement.

5.8 Issuance of Certificates.

     The Company shall issue stock certificates in the name of the Participant (or other person exercising the applicable Option in accordance with the provisions of Section 8.2), representing

9

the Shares purchased upon exercise of the Option as soon as practicable after receipt of the Notice and payment of the aggregate Option Price for such Shares; provided that the Company, in its sole discretion, may elect to not issue any fractional Shares upon the exercise of an Option (determining the fractional Shares after aggregating all Shares issuable to a single holder as a result of an exercise of an Option for more than one Share) and, in lieu of issuing such fractional Shares, shall pay the Participant the Fair Market Value thereof as determined by the Board in good faith. Neither the Participant nor any person exercising an Option in accordance with the provisions of Section 8.2 shall have any privileges as a stockholder of the Company with respect to any Shares of stock issuable upon exercise of an Option granted under the Plan until the date of issuance of stock certificates representing such Shares pursuant to this Section 5.8.

ARTICLE VI

STOCK AWARDS

6.1 General.

     Stock Awards may be granted under the Plan at any time and from time to time on or prior to the Termination Date. Each Stock Award shall be evidenced by an Award Agreement that shall be executed by the Company and the Participant. The Award Agreement shall specify the terms and conditions of the Stock Award, including without limitation the number of Shares covered by the Stock Award, the purchase price for such Shares and the deadline for the purchase of such Shares.

6.2 Purchase Price; Payment.

     The price (the “Purchase Price”) at which each Share covered by the Stock Award may be purchased upon exercise of a Stock Award shall be determined by the Committee and set forth in the applicable Award Agreement. In no event, however, may the Committee determine a Purchase Price that is less than the Fair Market Value of the Share on the date of grant. The Company will not be obligated to issue certificates evidencing Shares purchased under this Article VI unless and until it receives full payment of the aggregate Purchase Price therefor and all other conditions to the purchase, as determined by the Committee, have been satisfied. The Purchase Price of any shares subject to a Stock Award must be paid in full at the time of the purchase.

ARTICLE VII

ADJUSTMENTS

7.1 Changes in Capital Structure.

     If the Common Stock is changed by reason of a stock split, reverse stock split, stock combination or stock dividend or reclassification, or converted into or exchanged for other securities or property as a result of a merger, consolidation, recapitalization or reorganization (a “Reorganization”), or if any extraordinary dividend or other distribution is paid on or in respect of Common Stock, the Board in its sole discretion shall make such adjustments in the number and class of shares of stock available under the Plan as (i) shall be reasonably necessary to

10

preserve to a Participant rights substantially proportionate to his rights existing immediately prior to such transaction or event (but subject to the limitations and restrictions on such existing rights), including, without limitation, a corresponding adjustment changing the number and class of shares of stock subject to, and the Option Price or Purchase Price applicable to, each Award or portion thereof outstanding at the time of such transaction or event; and (ii) complies with the provisions with Section 409A of the Code. The Company will not, in any event, permit the Option Price of any Option or the Purchase Price of any Stock Award to be less than the par value of the Common Stock.

7.2 Special Rules.

     The following rules shall apply in connection with Section 7.1 above:

     (a) No adjustment shall be made for cash dividends (except as described in Section 7.1) or the issuance to stockholders of rights to subscribe for additional Shares or other securities (except in connection with a Reorganization); and

     (b) Any adjustments referred to in Section 7.1 shall be made by the Board in its discretion and shall, absent manifest error, be conclusive and binding on all Persons holding any Awards granted under the Plan.

7.3 Right to Include Options upon a Realization Event.

     Upon a Realization Event, the Company may, but is not obligated to, purchase each outstanding Vested Option and unvested Option for a per share amount equal to (i) the amount per share received in respect of the Shares sold in such transaction constituting the Realization Event (ii) less the Option Price thereof. In the event the amount in (i) would not exceed the amount in (ii), Options may be cancelled for no payment. The provisions of this paragraph shall not be construed, however, to limit or reduce any rights of the Company or the Participant under the Investors Rights Agreement.

ARTICLE VIII

RESTRICTIONS ON AWARDS

8.1 Compliance With Securities Laws.

     No Awards shall be granted under the Plan, and no Shares shall be issued and delivered pursuant to Awards granted under the Plan, unless and until the Company and/or the Participant shall have complied with all applicable Federal or state registration, listing and/or qualification requirements and all other requirements of law or of any regulatory agencies having jurisdiction.

     The Committee in its discretion may, as a condition to the delivery of any Shares pursuant to any Award granted under the Plan, require the applicable Participant (i) to represent in writing that the Shares received pursuant to such Award are being acquired for investment and not with a view to distribution and (ii) to make such other representations and warranties as are deemed reasonably appropriate by the Committee. Stock certificates representing Shares acquired under the Plan that have not been registered under the Securities Act shall, if required

11

by the Committee, bear such legends as may be required by the Investor Rights Agreement and the applicable Award Agreement.

8.2 Nonassignability of Awards.

     No Award granted under this Plan shall be assignable or otherwise transferable by the Participant, except by designation of a beneficiary, by will or by the laws of descent and distribution. An Award may be exercised during the lifetime of the Participant only by the Participant, unless the Participant becomes subject to a Disability. If a Participant dies or becomes subject to a Disability, his or her Options shall thereafter be exercisable, during the period specified in the applicable Award Agreement (as the case may be), by his or her designated beneficiary or if no beneficiary has been designated in writing, by his or her executors or administrators to the full extent (but only to such extent) to which such Options were exercisable by the Participant at the time of (and after giving effect to any vesting that may occur in connection with) his or her death or Disability.

     Before issuing any Shares under the Plan to any person who is not already a party to the Investor Rights Agreement, the Company shall obtain an executed Adoption Agreement from such person, unless a Public Offering shall have already occurred.

8.3 No Right to an Award or Grant.

     Neither the adoption of the Plan nor any action of the Board or the Committee shall be deemed to give an employee, director or consultant any right to be granted an Option to purchase Common Stock, receive an Award under the Plan except as may be evidenced by an Award Agreement duly executed on behalf of the Company, and then only to the extent of and on the terms and conditions expressly set forth in the Award Agreement. The Plan will be unfunded. The Company will not be required to establish any special or separate fund or to make any other segregation of funds or assets to assure the payment of any Award.

8.4 No Evidence of Employment or Service.

     Nothing contained in the Plan or in any Award Agreement shall confer upon any Participant any right with respect to the continuation of his or her employment by or service with the Company or any of its Subsidiaries or interfere in any way with the right of the Company or any such Subsidiary, in its sole discretion (subject to the terms of any separate agreement to the contrary), at any time to terminate such employment or service or to increase or decrease the compensation of the Participant from the rate in existence at the time of the grant of an Award.

8.5 No Restriction of Corporate Action.

     Nothing contained in the Plan or in any Award Agreement will be construed to prevent the Company or any Subsidiary or Affiliate of the Company from taking any corporate action which is deemed by the Company or by its Subsidiaries and Affiliates to be appropriate or in its best interest, whether such action would have an adverse effect on the Plan or any Award made under the Plan. No Participant or beneficiary of a Participant will have any claim against the Company or any affiliate as a result of any corporate action.

12

8.6 Restrictions for Canada.

     For the purposes of the Plan, if a Participant is a resident of Canada, such Participant’s employment with the Company or a Subsidiary shall be considered to have terminated effective on the last day of the Participant’s actual and active employment with the Company or such Subsidiary, whether such day is selected by agreement with the Participant or unilaterally by the Company or such Subsidiary and whether with or without advance notice to the Participant. For the avoidance of doubt, no period of notice that is given or that ought to have been given under applicable law in respect of such termination of employment will be utilized in determining entitlement under the Plan.

ARTICLE IX

TERM OF THE PLAN

     This Plan shall become effective on the Effective Date and shall terminate on the Termination Date. No Awards may be granted after the Termination Date. Any Award outstanding as of the Termination Date shall remain in effect and the terms of the Plan will apply until such Award terminates as provided in the applicable Award Agreement.

ARTICLE X

AMENDMENT OF PLAN

     The Plan may be modified or amended in any respect by the Committee with the prior approval of the Board; provided, however, that the approval of the holders of a majority of the votes that may be cast by all of the holders of shares of common stock of the Company entitled to vote (voting together as a single class, with each such holder entitled to cast one vote per share held by such holder) shall be obtained prior to any such amendment becoming effective if such approval is required by law or is necessary to comply with regulations promulgated by the Securities and Exchange Commission under Section 16(b) of the Exchange Act. Notwithstanding the foregoing, the Plan may not be modified or amended as it pertains to any existing Award Agreement if such modification or amendment would materially impair the rights of the applicable Participant without the consent of such Participant.

ARTICLE XI

CAPTIONS

     The use of captions in the Plan is for convenience. The captions are not intended to provide substantive rights.

ARTICLE XII

WITHHOLDING TAXES

     The Awards granted to Participants under this Plan are subject to taxation in accordance with Section 83(a) of the Code. Accordingly, upon any exercise or payment of any Award, the

13

Company shall have the right at its option and in its sole discretion to (i) require the Participant to pay or provide for payment of the amount of any taxes which the Company may be required to withhold with respect to such exercise or payment; (ii) deduct from any amount payable to the Participant in cash or securities in respect of the Award the amount of any taxes which the Company may be required to withhold with respect to such exercise or payment; or (iii) reduce the number of Shares to be delivered to the Participant in connection with such exercise or payment by the appropriate number of Shares, valued at their then Fair Market Value, to satisfy the minimum withholding obligation. In no event will the value of Shares withheld under clause (iii) above exceed the minimum amount of required withholding under applicable law.

ARTICLE XIII

SECTION 83(B) ELECTION

     Each Participant of a Stock Award may, but is not obligated to, make an election under Section 83(b) of the Code to be taxed currently with respect to any Award issued under this Plan. The election permitted under this Article XIII shall comply in all respects with and shall be made within the period of time prescribed under Section 83(b) of the Code. Each Participant shall prepare such firms as are required to make an election under Section 83(b) of the Code. The Company shall have no liability to any grantee who fails to make a permitted Section 83(b) election in a timely manner.

ARTICLE XIV

CODE SECTION 409A COMPLIANCE

     This Plan is intended to provide for non-statutory stock option benefits that are not deemed to be deferred compensation and thus are not subject to the provisions of Code §409A. If the Plan is deemed to be subject to Code §409A, however, the Company may modify the Plan and any Awards granted under the Plan to comply with Code §409A guidance; provided, however, that the present value of Awards granted to Participants after such modification shall not be less than the present value of the Awards granted to Participant prior to the modification.

ARTICLE XV

SECTION 16 COMPLIANCE

     It is intended that the Plan and any Award made to a Participant subject to Section 16 of the Exchange Act meet all of the requirements of Rule 16b-3. If any provisions of the Plan or any Award would disqualify the Plan or the Award, or would otherwise not comply with Rule 16b-3, such provision or Award will be construed or deemed amended to conform to Rule 16b-3.

ARTICLE XVI

OTHER PROVISIONS

     Each Award granted under the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Committee, in its sole discretion.

14

ARTICLE XVII

NUMBER AND GENDER

     With respect to words used in the Plan, the singular form shall include the plural form, the masculine gender shall include the feminine gender, and vice versa, as the context requires.

ARTICLE XVIII

GOVERNING LAW

     All questions concerning the construction, interpretation and validity of the Plan and the instruments evidencing the Awards granted hereunder shall be governed by and construed and enforced in accordance with the domestic laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. In furtherance of the foregoing, the internal law of the State of Delaware will control the interpretation and construction of this Plan, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.

*     *     *     *     *     *

     As adopted by the Board of Directors of Flag Holdings Corporation on January 18, 2006.

15

EX-10.8

[EXECUTION VERSON]

Exhibit 10.8

     MANAGEMENT AGREEMENT, dated as of November 30, 2005, between METALS USA, INC., a Delaware corporation (the “Company”), Flag Holdings Corporation, a Delaware corporation (“Flag Holdings”), and APOLLO MANAGEMENT V, L.P., a Delaware limited partnership (“Apollo”).

     Each of Flag Holdings and the Company desires to avail itself of Apollo’s expertise and consequently has requested that Apollo make such expertise available from time to time in rendering certain management consulting and advisory services related to the business and affairs of the Company and its subsidiaries and affiliates and the review and analysis of certain financial and other transactions. Apollo, Flag Holdings and the Company agree that it is in their respective best interests to enter into this Agreement whereby, for the consideration specified herein, Apollo shall provide such services as independent consultant to the Company.

     NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the Company, Flag Holdings and Apollo agree as follows:

     Section 1. Retention of Apollo.

     The Company hereby retains Apollo, and Apollo accepts such retention, upon the terms and conditions set forth in this Agreement.

     Section 2. Term.

     This Agreement shall commence on the date hereof and, unless otherwise extended pursuant to the second sentence of this Section 2, shall terminate on December 31, 2012 (the “Term”). Upon December 31, 2012, and at the end of each year thereafter (each of December 31, 2012 and the end of each year thereafter being a “Year End”), the Term shall automatically be extended for an additional year unless notice to the contrary is given by either party at least 30, but no more than 60, days prior to such Year End, as applicable. Notwithstanding anything to the contrary in this Section 2, this Agreement may be terminated at any time upon written notice to the Company from Apollo. The provisions of Section 3(c), the last sentence of Section 4(a) Section 4(b), Section 4(c), Section 4(d), Section 5 and Sections 7 though 14 shall survive the termination of this Agreement.

     Section 3. Management Consulting Services.

          (a) Apollo shall advise the Company concerning such management matters that relate to proposed financial transactions, acquisitions and other senior management

matters related to the business, administration and policies of the Company and its subsidiaries and affiliates, in each case as the Company shall reasonably and specifically request by way of written notice to Apollo, which notice shall specify the services required of Apollo and shall include all background material necessary for Apollo to complete such services. If requested to provide such services, Apollo shall devote such time to any such written request as Apollo shall deem, in its sole discretion, necessary. Such consulting services, in Apollo’s sole discretion, shall be rendered in person or by telephone or other communication. Apollo shall have no obligation to the Company as to the manner and time of rendering its services hereunder, and the Company shall not have any right to dictate or direct the details of the services rendered hereunder.

          (b) Apollo shall perform all services to be provided hereunder as an independent contractor to the Company and not as an employee, agent or representative of the Company. Apollo shall have no authority to act for or to bind the Company without its prior written consent.

          (c) This Agreement shall in no way prohibit Apollo or any of its partners or Affiliates or any director, officer, partner, agent or employee of Apollo or any of its partners or Affiliates from engaging in other activities, whether or not competitive with any business of the Company or any of its respective subsidiaries or affiliates.

     Section 4. Compensation.

          (a) As consideration for Apollo’s agreement to render the services set forth in Section 3(a) of this Agreement and as compensation for any such services rendered by Apollo, the Company agrees to pay to Apollo an annual fee equal to $2 million, payable on March 15 of each year (it being understood and agreed that the first such payment shall be made to Apollo on March 15, 2006). If Apollo elects to terminate this Agreement upon written notice to the Company pursuant to Section 2 herein, as consideration for the termination of Apollo’s services under this Agreement and any additional compensation to be received hereunder, the Company agrees to pay, or cause its subsidiaries to pay, to Apollo the present value (as reasonably determined by Apollo) of (x) $14 million, less (y) any amounts Apollo has received from the Company prior to the termination date pursuant to the first sentence of this Section 4(a).

          (b) Upon presentation by Apollo to the Company of such documentation as may be reasonably requested by the Company, the Company shall reimburse Apollo for all out-of-pocket expenses, including, without limitation, legal fees and expenses, and other disbursements incurred by Apollo or any of its partners or Affiliates or any director, officer, partner, agent or employee of Apollo or any of its partners or Affiliates in the performance of Apollo’s obligations hereunder, whether incurred on or prior to the date hereof, including, without limitation, out-of-pocket expenses incurred in connection with the transactions contemplated by the Agreement and Plan of Merger by and among Flag Holdings Corporation, Flag Acquisition Corporation and the Company, dated May 18, 2005 (the “Merger Agreement”), and each of the documents referred to therein.

          (c) Nothing in this Agreement shall have the effect of prohibiting Apollo or any of its Affiliates from receiving from the Company or any of its subsidiaries or

2

affiliates any other fees, including any fee payable pursuant to Section 6 or the Transaction Fee Agreement dated as of the date hereof between Apollo and the Company.

          (d) Reference is made to (i) the Credit Agreement, to be entered into simultaneously with consummation of the transactions contemplated by the Merger Agreement (as amended, restated, modified or supplemented and in effect from time to time, the “Credit Agreement”), dated as of November 30, 2005 and entered into by and among the Company, Credit Suisse First Boston LLC and Bank of America, N.A., and (ii) the Indenture dated as of the date hereof among the Company, Flag Holdings, Flag Acquisition Corporation and Wells Fargo Bank, N.A., as trustee, and the other documents related thereto (the Indenture and such related documents collectively being the “Debt Instruments”). Any portion of the fees payable to Apollo under this Agreement which the Company is prohibited from paying to Apollo under the Credit Agreement or the Debt Instruments shall be deferred, shall accrue and shall be payable at the earliest time permitted under the Credit Agreement and the Debt Instruments or upon the payment in full of all obligations under the Credit Agreement and the Debt Instruments. The Company shall notify Apollo if the Company shall be unable to pay any fees pursuant to the Credit Agreement or the Debt Instruments on each date on which the Company would otherwise make a payment of fees under this Agreement to Apollo.

     Section 5. Indemnification.

     The Company agrees that it shall indemnify and hold harmless Apollo, its partners and Affiliates and any director, officer, partner, agent or employee of Apollo or any of its partners or Affiliates (collectively, the “Indemnified Persons”) on demand from and against any and all liabilities, costs, expenses and disbursements (including reasonable fees and expenses of counsel and other advisors) (collectively, “Claims”) of any kind with respect to or arising from this Agreement or the performance by any Indemnified Person of any services in connection herewith. Notwithstanding the foregoing provision, the Company shall not be liable for any Claim under this Section 5 arising from the willful misconduct of any Indemnified Person.

     Section 6. Other Services.

     If Flag Holdings, the Company or any of their respective subsidiaries or affiliates (other than Apollo) shall determine that it is advisable for any such entity to hire a financial advisor, consultant, investment banker or any similar agent in connection with any merger, acquisition, disposition, recapitalization, issuance of securities, financing or any similar transaction, it shall notify Apollo of such determination in writing. Promptly thereafter, upon the request of Apollo, the parties shall negotiate in good faith to agree upon appropriate services, compensation and indemnification for such entity to hire Apollo or its Affiliates for such services. Such entity may not hire any person, other than Apollo or its Affiliates, for any services, unless (a) the parties are unable to agree after 30 days following receipt by Apollo of such written notice, (b) such other person has a reputation that is at least equal to the reputation of Apollo in respect of such services, (c) ten business days shall have elapsed after such entity provides a written notice to Apollo of its intention to hire such other person, which notice shall identify such other person and shall describe in reasonable detail the nature of the services to be

3

provided, the compensation to be paid and the indemnification to be provided, (d) the compensation to be paid is not more than Apollo was willing to accept in the negotiations described above, and (e) the indemnification to be provided is not more favorable to such other person than the indemnification that Apollo was willing to accept in the negotiations described above. In the absence of an express agreement to the contrary, at the closing of any merger, acquisition, financing or similar transaction with an aggregate value (as reasonably determined by Apollo) of $25 million or more, Apollo shall receive a fee equal to 1% of the aggregate transaction enterprise value paid to or provided by such entity or its shareholders (including the aggregate value of (x) equity securities, warrants, rights and options acquired or retained, (y) indebtedness acquired, assumed or refinanced and (z) any other consideration or compensation paid in connection with such transaction).

     Section 7. Notices.

     All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed sufficient if personally delivered, sent by nationally-recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:

if to Apollo, to:
	Apollo Management V, L.P.
	9 West 57th Street
	New York, New York 10019
	Attention:	Marc Becker
	Telecopier:	(212) 515-3251
if to the Company or Flag Holdings, to it at:
	Metals USA, Inc.
	One Riverway, Suite 1100
	Houston, Texas 77056
	Attention:	John A. Hageman
		Senior Vice President, Chief Legal Officer and Secretary
	Telecopier:	(713) 585-6404

or to such other address as the party to whom notice is to be given may have furnished to each other party in writing in accordance herewith. Any such notice or communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of nationally-recognized overnight courier, on the next business day after the date when sent, (c) in the case of telecopy transmission, when received, and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted.

4

     Section 8. Benefits of Agreement.

     This Agreement shall bind and inure to the benefit of Apollo, the Company, the Indemnified Persons and any successors to or assigns of Apollo and the Company; provided, however, that this Agreement may not be assigned by either party hereto without the prior written consent of the other party, which consent will not be unreasonably withheld in the case of any assignment by Apollo.

     Section 9. Governing Law.

     This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York (without giving effect to principles of conflicts of laws).

     Section 10. Headings.

     Section headings are used for convenience only and shall in no way affect the construction of this Agreement.

     Section 11. Entire Agreement; Amendments.

     This Agreement contains the entire understanding of the parties with respect to its subject matter and supersedes any and all prior agreements, and neither it nor any part of it may in any way be altered, amended, extended, waived, discharged or terminated except by a written agreement signed by each of the parties hereto.

     Section 12. Counterparts.

     This Agreement may be executed in counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.

     Section 13. Waivers.

     Any party to this Agreement may, by written notice to the other party, waive any provision of this Agreement. The waiver by any party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.

     Section 14. Affiliates.

     For purposes of this Agreement, the term “Affiliate,” with respect to Apollo, shall include, without limitation, Apollo Investment Fund V, L.P., L.P., Apollo Netherlands Partners V(A), L.P., Apollo Netherlands Partners V(B), L.P., Apollo German Partners V GMBH & Co., Apollo Overseas Partners V, L.P. and Apollo Advisors V, L.P. (collectively, the “Funds”), the general partner of Apollo, the general partner of each of the Funds and each person controlling, controlled by or under common control with any of the foregoing persons.

5

     IN WITNESS WHEREOF, the parties have duly executed this Management Agreement as of the date first above written.

METALS USA, INC.
By:
	Name:
	Title:
FLAG HOLDINGS CORPORATION
By:
	Name:
	Title:
APOLLO MANAGEMENT V, L.P.
By: Apollo Management V, LP, its Manager
By: AIF V Management, Inc., its General Partner
By:
	Name:
	Title:

EX-10.9

Exhibit 10.9

$50,000	Annual retainer for director
$  2,000	Director’s fee for attendance in person or by phone at a Board Meeting
$10,000	Annual fee for Chairman of Audit Committee
$  2,000	Director’s fee for attendance in person or by phone at a Committee meeting (unless on same day as Board meeting)

All reasonable out of pocket expenses, including, without limitation, travel expenses will be reimbursed upon submission of support documentation.

Any annual retainer or annual fee is to be payable in four equal installments, quarterly in advance, on or before the first day of each calendar quarter and shall accrue and be fully earned for any calendar quarter upon the director serving any portion of such calendar quarter as a director, chairman, committee member or committee chairman, as applicable.

Any committee member attending two committee meetings on the same day shall be entitled to receive only one attendance or telephone participation fee for both meetings, together with any additional amount that may be approved by the Board of Directors upon request of the Chairman in appropriate circumstances.

EX-12.1

Exhibit 12.1

Computation of Ratio of Earnings to
Fixed Charges

	Predecessor Company (1)																		Successor Company
				Period from			Period from									Period from			Period from
	Year ended			January 1, 2002			November 1, 2002			Year ended			Year ended			January 1, 2005			December 1, 2005
	December 31,			to			to			December 31,			December 31,			to			to
	2001			October 31, 2002			December 31, 2002			2003			2004			November 30, 2005			December 31, 2005
COMPUTATION OF EARNINGS
Income (loss) before taxes	$	(461.3	)	$	35.3		$	(2.3	)	$	12.7		$	167.8		$	70.2		$	(3.2	)
Net interest expense		49.6			15.8			1.3			5.7			8.4			12.0			4.1
Interest portion of operating lease expense		7.6			5.5			0.9			4.8			5.4			5.2			0.5
Earnings	$	(404.1	)	$	56.6		$	(0.1	)	$	23.2		$	181.6		$	87.4		$	1.4
COMPUTATION OF FIXED CHARGES
Net interest expense	$	49.6		$	15.8		$	1.3		$	5.7		$	8.4		$	12.0		$	4.1
Capitalized interest		—			—			—			—			—			—			—
Interest portion of operating lease expense		7.6			5.5			0.9			4.8			5.4			5.2			0.5
Fixed Charges	$	57.2		$	21.3		$	2.2		$	10.5		$	13.8		$	17.2		$	4.6
RATIO OF EARNINGS TO FIXED CHARGES		(7.1	) x		2.7	x		(0.0	) x		2.2	x		13.3	x		5.1	x		0.3	x
DEFICIENCY OF EARNINGS TO FIXED CHARGES	$	461.3		$	—		$	2.3		$	—		$	—		$	—		$	3.2

(1) We applied “Fresh-Start Reporting” to our consolidated balance sheet as of October 31, 2002 in accordance with SOP 90-7. Under “Fresh-Start Reporting,” a new reporting entity is considered to be created and the recorded amounts of assets and liabilities are adjusted to reflect their estimated fair values at the date “Fresh-Start Reporting” is applied. Company. On October 31, 2002, we emerged from bankruptcy. As a result of the application of “Fresh-Start Reporting,” our financial information of any date or for periods after November 1, 2002 is not comparable to our historical financial information before November 1, 2002. As a result of the emergence from bankruptcy and for the purpose of presentation, activities subsequent to October 31, 2002 relate to our Successor Company and activities prior to November 1, 2002 relate to our Predecessor

EX-21.1

Exhibit 21.1

List of Subsidiaries of Flag Intermediate Holdings Corporation

Allmet GP, Inc.
Allmet LP, Inc.
Interstate Steel Supply Co. of Maryland
Intsel GP, Inc.
Intsel LP, Inc.
I-Solutions Direct, Inc.
Jeffreys Real Estate CORP
Jeffreys Steel Holdings, L.L.C.
Levinson Steel GP, Inc.
Levinson Steel LP, Inc.
Metals Receivables CORP
Metals USA Building Products, L.P.
Metals USA Carbon Flat Rolled Inc.
Metals USA Contract Manufacturing, Inc.
Metals USA Finance Corp.
Metals USA Flat Rolled Central Inc.
Metals USA Management Co., L.P.
Metals USA Plates & Shapes Northeast, L.P.
Metals USA Plates & Shapes Southcentral, Inc.
Metals USA Plates & Shapes Southeast, Inc.
Metals USA Plates & Shapes Southwest, Limited Partnership
Metals USA Realty CO
Metals USA Specialty Metals Northcentral, Inc.
MUSA GP, INC.
MUSA LP, Inc.
MUSA Newark, L.L.C.
Wilkof-Morris Steel CORP
Queensboro, L.L.C.

EX-23.2

EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Registration Statement of Flag Intermediate Holdings Corporation and subsidiary (the “Successor Company”) on Form S-4 of our report dated February 28, 2006 (which report expresses an unqualified opinion and includes an explanatory paragraph referring to the Successor Company’s acquisition of Metals USA, Inc. and subsidiaries on December 1, 2005, in a transaction accounted for in accordance with Statement of Financial Accounting Standards No. 141, “Business Combinations” and the lack of comparability of financial information between reporting periods), appearing in the Prospectus, which is part of this Registration Statement.

We also consent to the reference to us under the heading “Experts” in such Prospectus.

/s/ DELOITTE & TOUCHE LLP

Houston, Texas
March 31, 2006

EX-25.1

Exhibit 25.1

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE

o CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b) (2)

WELLS FARGO BANK, NATIONAL ASSOCIATION

(Exact name of trustee as specified in its charter)

A National Banking Association	94-1347393
(Jurisdiction of incorporation or	(I.R.S. Employer
organization if not a U.S. national	Identification No.)
bank)
101 North Phillips Avenue
Sioux Falls, South Dakota	57104
(Address of principal executive offices)	(Zip code)

Wells Fargo & Company
Law Department, Trust Section
MAC N9305-175
Sixth Street and Marquette Avenue, 17^th Floor
Minneapolis, Minnesota 55479
(612) 667-4608
(Name, address and telephone number of agent for service)

METALS USA, INC.¹

(Exact name of obligor as specified in its charter)

Delaware	76-0533626
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
One Riverway, Suite 1100
Houston, Texas	77056
(Address of principal executive offices)	(Zip code)

11.125% Senior Secured Notes due 2015

(Title of the indenture securities)

¹ See Table 1 – List of additional obligors

Table 1

The address for each Guarantor listed below is One Riverway, Suite 1100, Houtson, Texas 77056.

	Guarantor	State of Incorporation	Federal EIN
1.	Allmet GP, Inc.	Delaware	75-2858998
2.	Allmet LP, Inc.	Delaware	75-2859000
3.	Flag Intermediate Holdings Corporation	Delaware	20-3779375
4.	Interstate Steel Supply Co. of Maryland, Inc.	Maryland	52-1684672
5.	Intsel GP, Inc.	Delaware	98-0165917
6.	Intsel LP, Inc.	Delaware	98-0165916
7.	I-Solutions Direct, Inc.	Delaware	23-3026655
8.	Jeffreys Real Estate Corporation	Delaware	72-1396636
9.	Jeffreys Steel Holdings, L.L.C.	Alabama	None
10.	Levinson Steel GP, Inc.	Delaware	25-1862440
11.	Levinson Steel LP, Inc.	Delaware	25-1862437
12.	Metals Receivables Corporation	Delaware	76-0593300
13.	Metals USA Building Products, L.P.	Texas	75-2585164
14.	Metals USA Carbon Flat Rolled, Inc.	Ohio	34-0891223
15.	Metals USA Finance Corp.	Delaware	76-0549340
16.	Metals USA Flat Rolled Central, Inc.	Missouri	43-1186503
17.	Metals USA Management Co., L.P.	Delaware	76-0541394
18.	Metals USA Plates and Shapes Northeast, L.P.	Delaware	25-1807253
19.	Metals USA Plates and Shapes Southcentral, Inc.	Oklahoma	73-1309371
20.	Metals USA Plates and Shapes Southeast, Inc.	Alabama	63-0518679
21.	Metals USA Plates and Shapes Southwest, Limited Partnership	Connecticut	98-0166286
22.	Metals USA Realty Company	Delaware	76-0655830
23.	Metals USA Specialty Metals Northcentral, Inc.	Delaware	36-4219582
24.	Musa GP, Inc.	Delaware	76-0541470
25.	Musa LP, Inc.	Delaware	76-0541471
26.	Musa Newark, LLC	Delaware	30-0345285
27.	Queensboro, L.L.C.	North Carolina	56-2186693

Item 1. General Information. Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority to which it is subject.

Comptroller of the Currency
Treasury Department
Washington, D.C.

Federal Deposit Insurance Corporation
Washington, D.C.

Federal Reserve Bank of San Francisco
San Francisco, California 94120

(b) Whether it is authorized to exercise corporate trust powers.

              The trustee is authorized to exercise corporate trust powers.

Item 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation.

None with respect to the trustee.

No responses are included for Items 3-14 of this Form T-1 because the obligor is not in default as provided under Item 13.

Item 15. Foreign Trustee.      Not applicable.

Item 16. List of Exhibits.      List below all exhibits filed as a part of this Statement of Eligibility.

Exhibit 1.	A copy of the Articles of Association of the trustee now in effect.*
Exhibit 2.	A copy of the Comptroller of the Currency Certificate of Corporate Existence and Fiduciary Powers for Wells Fargo Bank, National Association, dated February 4, 2004.**
Exhibit 3.	See Exhibit 2
Exhibit 4.	Copy of By-laws of the trustee as now in effect.***
Exhibit 5.	Not applicable.
Exhibit 6.	The consent of the trustee required by Section 321(b) of the Act.
Exhibit 7.	A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority.
Exhibit 8.	Not applicable.
Exhibit 9.	Not applicable.

*	Incorporated by reference to the exhibit of the same number to the trustee’s Form T-1 filed as exhibit 25 to the Form S-4 dated December 30, 2005 of Hornbeck Offshore Services LLC file number 333-130784-06.
**	Incorporated by reference to the exhibit of the same number to the trustee’s Form T-1 filed as exhibit 25 to the Form T-3 dated March 3, 2004 of Trans-Lux Corporation file number 022-28721.
***	Incorporated by reference to the exhibit of the same number to the trustee’s Form T-1 filed as exhibit 25 to the Form S-4 dated May 26, 2005 of Penn National Gaming Inc file number 333-125274.

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, Wells Fargo Bank, National Association, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Minneapolis and State of Minnesota on the 31^st day of March 2006.

WELLS FARGO BANK, NATIONAL ASSOCIATION

/s/ Jane Schweiger  

Jane Schweiger 

Vice President 

EXHIBIT 6

March 31, 2006

Securities and Exchange Commission
Washington, D.C. 20549

Gentlemen:

In accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended, the undersigned hereby consents that reports of examination of the undersigned made by Federal, State, Territorial, or District authorities authorized to make such examination may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor.

Very truly yours,

WELLS FARGO BANK, NATIONAL ASSOCIATION

/s/ Jane Schweiger  

Jane Schweiger 

Vice President 

EXHIBIT 7

Consolidated Report of Condition of

Wells Fargo Bank National Association
of 101 North Phillips Avenue, Sioux Falls, SD 57104
And Foreign and Domestic Subsidiaries,
at the close of business December 31, 2005, filed in accordance with 12 U.S.C. §161 for National Banks.

		Dollar Amounts
		In Millions
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin		$	15,347
Interest-bearing balances			1,496
Securities:
Held-to-maturity securities			0
Available-for-sale securities			37,327
Federal funds sold and securities purchased under agreements to resell:
Federal funds sold in domestic offices			2,394
Securities purchased under agreements to resell			950
Loans and lease financing receivables:
Loans and leases held for sale			37,316
Loans and leases, net of unearned income	255,460
LESS: Allowance for loan and lease losses	2,122
Loans and leases, net of unearned income and allowance			253,338
Trading Assets			6,375
Premises and fixed assets (including capitalized leases)			3,846
Other real estate owned			173
Investments in unconsolidated subsidiaries and associated companies			377
Customers’ liability to this bank on acceptances outstanding			70
Intangible assets
Goodwill			8,735
Other intangible assets			13,074
Other assets			22,440
Total assets		$	403,258
LIABILITIES
Deposits:
In domestic offices		$	295,315
Noninterest-bearing	82,045
Interest-bearing	213,270
In foreign offices, Edge and Agreement subsidiaries, and IBFs			24,081
Noninterest-bearing	5
Interest-bearing	24,076
Federal funds purchased and securities sold under agreements to repurchase:
Federal funds purchased in domestic offices			12,959
Securities sold under agreements to repurchase			4,684

	Dollar Amounts
	In Millions
Trading liabilities		5,276
Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases)		5,267
Bank’s liability on acceptances executed and outstanding		70
Subordinated notes and debentures		7,830
Other liabilities		11,951
Total liabilities	$	367,433
Minority interest in consolidated subsidiaries		54
EQUITY CAPITAL
Perpetual preferred stock and related surplus		0
Common stock		520
Surplus (exclude all surplus related to preferred stock)		24,671
Retained earnings		10,249
Accumulated other comprehensive income		331
Other equity capital components		0
Total equity capital		35,771
Total liabilities, minority interest, and equity capital	$	403,258

I, Karen B. Martin, Vice President of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief.

Karen B. Martin
Vice President

We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct.

Dave Munio
John Stumpf                         Directors
Avid Modjtabai

EX-99.1

Exhibit 99.1

LETTER OF TRANSMITTAL

To Tender for Exchange
11¹/₈ % Senior Secured Notes due 2015

of

METALS USA, INC.

Pursuant to the Prospectus Dated [                    ], 2006

THIS OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [                    ], 2006 UNLESS EXTENDED BY METALS USA, INC. IN ITS SOLE DISCRETION (THE “EXPIRATION DATE”). TENDERS OF NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.

The Exchange Agent for the Exchange Offer is:
WELLS FARGO BANK, N.A.

By Registered or	By Overnight Delivery or
Certified Mail:	Regular Mail:
Wells Fargo Bank, N.A.	Wells Fargo Bank, N.A.
Corporate Trust Operations	Corporate Trust Operations
MAC N9303-121	MAC N9303-121
P.O. Box 1517	6th & Marquette Avenue
Minneapolis, MN 55480	Minneapolis, MN 55479
Attn: Reorg	Attn: Reorg

By Facsimile:
(612) 667-6282
Attn: Bondholder Communications

Confirm by Telephone:
(800) 344-5128; or
(612) 667-9764
Attn: Bondholder Communications

     DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

     HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE EXCHANGE NOTES PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR OLD NOTES TO THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.

     This Letter of Transmittal is to be used by holders (“Holders”) of 11¹/₈% Senior Secured Notes due 2015 (the “Old Notes”) of Metals USA, Inc. (the “Issuer”) to receive 11¹/₈% Senior Secured Notes due 2015 (the “Exchange Notes”) if: (i) certificates representing Old Notes are to be physically delivered to the Exchange Agent herewith by such Holders; (ii) tender of Old Notes is to be made by book-entry transfer to the Exchange Agent’s account at The Depository Trust Company (“DTC”) pursuant to the procedures set forth under the caption “The Exchange Offer — Book-Entry Transfer” in the Prospectus dated [                    ], 2006 (the “Prospectus”); or (iii) tender of Old Notes is to be made according to the guaranteed delivery procedures set forth under the caption “The Exchange Offer — Guaranteed Delivery Procedures” in the Prospectus, and, in each case, instructions are not being transmitted through the DTC Automated Tender Offer Program (“ATOP”). The undersigned hereby acknowledges receipt of the Prospectus. All capitalized terms used herein and not defined shall have the meanings ascribed to them in the Prospectus.

     Holders of Old Notes that are tendering by book-entry transfer to the Exchange Agent’s account at DTC can execute the tender through ATOP, for which the transaction will be eligible. DTC participants that are accepting the exchange offer as set forth in the Prospectus and this Letter of Transmittal (together, the “Exchange Offer”) must transmit their acceptance to DTC which will edit and verify the acceptance and execute a book-entry delivery to the Exchange Agent’s account at DTC. DTC will then send an Agent’s Message to the Exchange Agent for its acceptance. Delivery of the Agent’s Message by DTC will satisfy the terms of the Offer as to execution and delivery of a Letter of Transmittal by the participant identified in the Agent’s Message. DTC participants may also accept the Exchange Offer by submitting a notice of guaranteed delivery through ATOP.

     DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

     If a Holder desires to tender Old Notes pursuant to the Exchange Offer and time will not permit this Letter of Transmittal, certificates representing such Old Notes and all other required documents to reach the Exchange Agent, or the procedures for book-entry transfer cannot be completed, on or prior to the Expiration Date, then such Holder must tender such Old Notes according to the guaranteed delivery procedures set forth under the caption “The Exchange Offer — Guaranteed Delivery Procedures” in the Prospectus. See Instruction 2.

     The undersigned should complete, execute and deliver this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer.

TENDER OF OLD NOTES

o CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.

o CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING:

Name of Tendering Institution:

Account Number:

Transaction Code Number:

o CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:

Name(s) of Registered Holder(s):

Window Ticker Number (if any):

Date of Execution of Notice of Guaranteed Delivery:

Name of Eligible Institution that Guaranteed Delivery:

     CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

Name:

Address:

     List below the Old Notes to which this Letter of Transmittal relates. The name(s) and address(es) of the registered Holder(s) should be printed, if not already printed below, exactly as they appear on the Old Notes tendered hereby. The Old Notes and the principal amount of Old Notes that the undersigned wishes to tender would be indicated in the appropriate boxes. If the space provided is inadequate, list the certificate number(s) and principal amount(s) on a separately executed schedule and affix the schedule to this Letter of Transmittal.

DESCRIPTION OF OLD NOTES
Name(s) and address(es) of		Aggregate		Total
registered holder(s)		Principal	Principal	Principal
(Please fill in if blank)	Certificate	Amount	Amount	Amount of
See Instruction 3.	Number(s)*	Represented**	Tendered**	Old Notes

*	Need not be completed by Holders tendering by book-entry transfer.
**	Unless otherwise specified, the entire aggregate principal amount represented by the Old Notes described above will be deemed to be tendered. See Instruction 4.

NOTE: SIGNATURES MUST BE PROVIDED BELOW.

PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.

Ladies and Gentlemen:

     The undersigned hereby tenders to Metals USA, Inc. (the “Issuer”), upon the terms and subject to the conditions set forth in the Prospectus dated [                    ], 2006 (the “Prospectus”), receipt of which is hereby acknowledged, and in accordance with this Letter of Transmittal (which together constitute the “Exchange Offer”), the principal amount of Old Notes indicated in the foregoing table entitled “Description of Old Notes” under the column heading “Principal Amount Tendered.” The undersigned represents that it is duly authorized to tender all of the Old Notes tendered hereby which it holds for the account of beneficial owners of such Old Notes (“Beneficial Owner(s)”) and to make the representations and statements set forth herein on behalf of such Beneficial Owner(s).

     Subject to, and effective upon, the acceptance for purchase of the principal amount of Old Notes tendered herewith in accordance with the terms and subject to the conditions of the Exchange Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Issuer, all right, title and interest in and to all of the Old Notes tendered hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent the true and lawful agent and attorney-in-fact of the undersigned (with full knowledge that the Exchange Agent also acts as the agent of the Issuer) with respect to such Old Notes, with full powers of substitution and revocation (such power of attorney being deemed to be an irrevocable power coupled with an interest) to (i) present such Old Notes and all evidences of transfer and authenticity to, or transfer ownership of, such Old Notes on the account books maintained by DTC to, or upon the order of, the Issuer, (ii) present such Old Notes for transfer of ownership on the books of the Issuer, and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Old Notes, all in accordance with the terms and conditions of the Exchange Offer as described in the Prospectus.

     By accepting the Exchange Offer, the undersigned hereby represents and warrants that:

(1)	the Exchange Notes to be acquired by the undersigned and any Beneficial Owner(s) in connection with the Exchange Offer are being acquired by the undersigned and any Beneficial Owner(s) in the ordinary course of business of the undersigned and any Beneficial Owner(s),
(2)	the undersigned and each Beneficial Owner are not participating, do not intend to participate, and have no arrangement or understanding with any person or entity, including any of the Issuer’s affiliates, to participate in the distribution of the Exchange Notes in violation of the Securities Act of 1933, as amended (together with the rules and regulations promulgated thereunder, the “Securities Act”),
(3)	the undersigned and each Beneficial Owner, if not a broker-dealer, are not engaged in, and do not intend to engage in, the distribution of the Exchange Notes, and

(5) the undersigned and each Beneficial Owner is not an “affiliate,” as defined in Rule 405 under the Securities Act, of the Issuer, or, if the undersigned or any Beneficial Owner is an affiliate, such affiliate will comply with any applicable registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale of the Exchange Notes acquired by such affiliate with a registration statement containing the selling securityholder information required by Item 507 of Regulation S-K of the Securities and Exchange Commission (the “SEC”) and cannot rely on the interpretation of the Staff of the SEC set forth in the no-action letters that are noted in the section of the Prospectus entitled “The Exchange Offer — Resale of Exchange Notes.”

     If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Old Notes that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes. By so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

     The undersigned understands that tenders of Old Notes may be withdrawn by written notice of withdrawal received by the Exchange Agent at any time prior to the Expiration Date in accordance with the Prospectus. In the event of a termination of the Exchange Offer, the Old Notes tendered pursuant to the Exchange Offer will be returned to the tendering Holders promptly (or, in the case of Old Notes tendered by book-entry transfer, such Old Notes will be credited to the account maintained at DTC from which such Old Notes were delivered). If the Issuer makes a material change in the terms of the Exchange Offer or the information concerning the Exchange Offer or waives a material condition of such Exchange Offer, the Issuer will disseminate additional Exchange Offer materials and extend such Exchange Offer, if and to the extent required by law.

     The undersigned understands that the tender of Old Notes pursuant to any of the procedures set forth in the Prospectus and in the instructions hereto will constitute the undersigned’s acceptance of the terms and conditions of the Exchange Offer. The Issuer’s acceptance for exchange of Old Notes tendered pursuant to any of the procedures described in the Prospectus will constitute a binding agreement between the undersigned and the Issuer in accordance with the terms and subject to the conditions of the Exchange Offer. For purposes of the Exchange Offer, the undersigned understands that validly tendered Old Notes (or defectively tendered Old Notes with respect to which the Issuer has, or has caused to be, waived such defect) will be deemed to have been accepted by the Issuer if, as and when the Issuer gives oral or written notice thereof to the Exchange Agent.

     The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Old Notes tendered hereby, and that when such tendered Old Notes are accepted for purchase by the Issuer, the Issuer will acquire good title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim or right. The undersigned and each Beneficial Owner will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or by the Issuer to be necessary or desirable to complete the sale, assignment and transfer of the Old Notes tendered hereby.

     All authority conferred or agreed to be conferred by this Letter of Transmittal shall not be affected by, and shall survive the death or incapacity of the undersigned and any Beneficial Owner(s), and any obligation of the undersigned or any Beneficial Owner(s) hereunder shall be binding upon the heirs, executors, administrators, trustees in bankruptcy, personal and legal representatives, successors and assigns of the undersigned and such Beneficial Owner(s).

     The undersigned understands that the delivery and surrender of any Old Notes is not effective, and the risk of loss of the Old Notes does not pass to the Exchange Agent or the Issuer, until receipt by the Exchange Agent of this Letter of Transmittal, or a manually signed facsimile hereof, properly completed and duly executed, together with all accompanying evidences of authority and any other required documents in form satisfactory to the Issuer. All questions as to form of all documents and the validity (including time of receipt) and acceptance of tenders and withdrawals of Old Notes will be determined by the Issuer, in its discretion, which determination shall be final and binding.

     Unless otherwise indicated herein under “Special Issuance Instructions,” the undersigned hereby requests that any Old Notes representing principal amounts not tendered or not accepted for exchange be issued in the name(s) of the undersigned (and in the case of Old Notes tendered by book-entry transfer, by credit to the account of DTC), and Exchange Notes issued in exchange for Old Notes pursuant to the Exchange Offer be issued to the undersigned. Similarly, unless otherwise indicated herein under “Special Delivery Instructions,” the undersigned hereby requests that any Old Notes representing principal amounts not tendered or not accepted for exchange and Exchange Notes issued in exchange for Old Notes pursuant to the Exchange Offer be delivered to the undersigned at the address shown below the undersigned’s signature(s). In the event that the “Special Issuance Instructions” box or the “Special Delivery Instructions” box is, or both are, completed, the undersigned hereby requests that any Old Notes representing principal amounts not tendered or not accepted for purchase be issued in the name(s) of, certificates for such Old Notes be delivered to, and Exchange Notes issued in exchange for Old Notes pursuant to the Exchange Offer be issued in the name(s) of, and be delivered to, the person(s) at the address(es) so indicated, as applicable. The undersigned recognizes that the Issuer has no obligation pursuant to the “Special Issuance Instructions” box or “Special Delivery Instructions” box to transfer any Old Notes from the name of the registered Holder(s) thereof if the Issuer does not accept for exchange any of the principal amount of such Old Notes so tendered.

SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)

     To be completed ONLY if Old Notes in a principal amount not tendered or not accepted for exchange are to be issued in the name of, or Exchange Notes are to be issued in the name of, someone other than the person(s) whose signature(s) appear(s) within this Letter of Transmittal or issued to an address different from that shown in the box entitled ‘Description of Old Notes’ within this Letter of Transmittal.

Issue: o Old Notes o Exchange Notes 
(check as applicable)

Name

(Please Print)

Address

(Zip Code)

(Tax Identification or Social Security Number)
(See Substitute Form W-9 Herein)

SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)

     To be completed ONLY if Old Notes in a principal amount not tendered or not accepted for exchange or Exchange Notes are to be sent to someone other than the person(s) whose signature(s) appear(s) within this Letter of Transmittal or to an address different from that shown in the box entitled ‘Description of Old Notes’ within this Letter of Transmittal.

Issue: o Old Notes o Exchange Notes 
(check as applicable)

Name

(Please Print)

Address

(Zip Code)

(Tax Identification or Social Security Number)
(See Substitute Form W-9 Herein)

PLEASE SIGN HERE

(TO BE COMPLETED BY ALL TENDERING HOLDERS OF OLD NOTES
REGARDLESS OF WHETHER OLD NOTES ARE BEING
PHYSICALLY DELIVERED HEREWITH)

     This Letter of Transmittal must be signed by the registered Holder(s) exactly as name(s) appear(s) on certificate(s) for Old Notes or, if tendered by a participant in DTC, exactly as such participant’s name appears on a security position listing as owner of Old Notes, or by the person(s) authorized to become registered Holder(s) by endorsements and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, please set forth full title and see Instruction 5.

Signature(s) of Registered Holder(s) or Authorized Signatory

(See guarantee requirement below)

Dated:

Name(s):

(Please Print)

Capacity (Full Title):

Address:

(Including Zip Code)

Area Code and Telephone No.:

Tax Identification or Social Security Number:

COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9

SIGNATURE GUARANTEE
(IF REQUIRED — SEE INSTRUCTIONS 1 AND 5)

(Authorized Signature)

(Name of Firm)

[PLACE SEAL HERE]

INSTRUCTIONS

FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER

     1. Signature Guarantees. Signatures of this Letter of Transmittal must be guaranteed by a recognized member of the Medallion Signature Guarantee Program or by any other “eligible guarantor institution,” as such term is defined in Rule 17Ad-15 promulgated under the Exchange Act (each of the foregoing, an “Eligible Institution”), unless the Old Notes tendered hereby are tendered (i) by a registered Holder of Old Notes (or by a participant in DTC whose name appears on a security position listing as the owner of such Old Notes) that has not completed either the box entitled “Special Issuance Instructions” or the box entitled “Special Delivery Instructions” on this Letter of Transmittal, or (ii) for the account of an Eligible Institution. If the Old Notes are registered in the name of a person other than the signer of this Letter of Transmittal, if Old Notes not accepted for exchange or not tendered are to be returned to a person other than the registered Holder or if Exchange Notes are to be issued in the name of or sent to a person other than the registered Holder, then the signatures on this Letter of Transmittal accompanying the tendered Old Notes must be guaranteed by an Eligible Institution as described above. See Instruction 5.

     2. Delivery of Letter of Transmittal and Old Notes. This Letter of Transmittal is to be completed by Holders if (i) certificates representing Old Notes are to be physically delivered to the Exchange Agent herewith by such Holders; (ii) tender of Old Notes is to be made by book-entry transfer to the Exchange Agent’s account at DTC pursuant to the procedures set forth under the caption “The Exchange Offer — Book-Entry Transfer” in the Prospectus; or (iii) tender of Old Notes is to be made according to the guaranteed delivery procedures set forth under the caption “The Exchange Offer — Guaranteed Delivery Procedures” in the Prospectus. All physically delivered Old Notes, or a confirmation of a book-entry transfer into the Exchange Agent’s account at DTC of all Old Notes delivered electronically, as well as a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof), any required signature guarantees and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at one of its addresses set forth on the cover page hereto on or prior to the Expiration Date, or the tendering Holder must comply with the guaranteed delivery procedures set forth below. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.

     If a Holder desires to tender Old Notes pursuant to the Exchange Offer and (i) certificates representing the Old Notes to be exchanged are not lost but are not immediately available, (ii) time will not permit delivery of the Old Notes, this Letter of Transmittal and any other required documents to the Exchange Agent prior to the Expiration Date, or (iii) time will not permit compliance with the applicable procedures under the Depository Trust Company’s Automated Tender Offer Program prior to the Expiration Date, such Holder must tender such Old Notes pursuant to the guaranteed delivery procedures set forth under the caption “The Exchange Offer — Guaranteed Delivery Procedures” in the Prospectus. Pursuant to such procedures, (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Issuer, or an Agent’s Message with respect to guaranteed delivery that is accepted by the Issuer, must be received by the Exchange Agent, either by hand delivery, mail, telegram, or facsimile transmission, on or prior to the Expiration Date; and (iii) the certificates for all tendered Old Notes, in proper form for transfer (or confirmation of a book-entry transfer or all Old Notes

delivered electronically into the Exchange Agent’s account at DTC pursuant to the procedures for such transfer set forth in the Prospectus), together with a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) and any other documents required by this Letter of Transmittal, or in the case of a book-entry transfer, a properly transmitted Agent’s Message, must be received by the Exchange Agent within three New York Stock Exchange trading days after the Expiration Date.

     THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OLD NOTES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC AND ANY ACCEPTANCE OR AGENT’S MESSAGE DELIVERED THROUGH ATOP, IS AT THE ELECTION AND RISK OF THE TENDERING HOLDER AND, EXCEPT AS OTHERWISE PROVIDED IN THIS INSTRUCTION 2, DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT PRIOR TO SUCH DATE.

     No alternative, conditional or contingent tenders will be accepted. All tendering Holders, by execution of this Letter of Transmittal (or a facsimile thereof), waive any right to receive any notice of the acceptance of their Old Notes for exchange.

     3. Inadequate Space. If the space provided herein is inadequate, the certificate numbers and/or the principal amount represented by Old Notes should be listed on separate signed schedule attached hereto.

     4. Partial Tenders. (Not applicable to Holders who tender by book-entry transfer). If Holders wish to tender less than the entire principal amount evidenced by a Series A Note submitted, such Holders must fill in the principal amount that is to be tendered in the column entitled “Principal Amount Tendered.” The minimum permitted tender is $1,000 in principal amount of Old Notes. All other tenders must be in integral multiples of $1,000 in principal amount. In the case of a partial tender of Old Notes, as soon as practicable after the Expiration Date, new certificates for the remainder of the Old Notes that were evidenced by such Holder’s old certificates will be sent to such Holder, unless otherwise provided in the appropriate box on this Letter of Transmittal. The entire principal amount that is represented by Old Notes delivered to the Exchange Agent will be deemed to have been tendered, unless otherwise indicated.

     5. Signatures on Letter of Transmittal, Instruments of Transfer and Endorsements. If this Letter of Transmittal is signed by the registered Holder(s) of the Old Notes tendered hereby, the signatures must correspond with the name(s) as written on the face of the certificate(s) without alteration, enlargement or any change whatsoever. If this Letter of Transmittal is signed by a participant in DTC whose name is shown as the owner of the Old Notes tendered hereby, the signature must correspond with the name shown on the security position listing as the owner of the Old Notes.

     If any of the Old Notes tendered hereby are registered in the name of two or more Holders, all such Holders must sign this Letter of Transmittal. If any of the Old Notes tendered

hereby are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates.

     If this Letter of Transmittal or any Series A Note or instrument of transfer is signed by a trustee, executor, administrator, guardian, attorney-in-fact, agent, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to the Issuer of such person’s authority to so act must be submitted.

     When this Letter of Transmittal is signed by the registered Holder(s) of the Old Notes listed herein and transmitted hereby, no endorsements of Old Notes or separate instruments of transfer are required unless Exchange Notes are to be issued, or Old Notes not tendered or exchanged are to be issued, to a person other than the registered Holder(s), in which case signatures on such Old Notes or instruments of transfer must be guaranteed by an Eligible Institution.

     IF THIS LETTER OF TRANSMITTAL IS SIGNED OTHER THAN BY THE REGISTERED HOLDER(s) OF THE OLD NOTES LISTED HEREIN, THE OLD NOTES MUST BE ENDORSED OR ACCOMPANIED BY APPROPRIATE INSTRUMENTS OF TRANSFER, IN EITHER CASE SIGNED EXACTLY AS THE NAME(s) OF THE REGISTERED HOLDER(s) APPEAR ON THE OLD NOTES AND SIGNATURES ON SUCH OLD NOTES OR INSTRUMENTS OF TRANSFER ARE REQUIRED AND MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION, UNLESS THE SIGNATURE IS THAT OF AN ELIGIBLE INSTITUTION.

     6. Special Issuance and Delivery Instructions. If certificates for Exchange Notes or unexchanged or untendered Old Notes are to be issued in the name of a person other than the signer of this Letter of Transmittal, or if Exchange Notes or such Old Notes are to be sent to someone other than the signer of this Letter of Transmittal or to an address other than that shown herein, the appropriate boxes on this Letter of Transmittal should be completed. All Old Notes tendered by book-entry transfer and not accepted for payment will be returned by crediting the account at DTC designated herein as the account for which such Old Notes were delivered.

     7. Transfer Taxes. Except as set forth in this Instruction 7, the Issuer will pay or cause to be paid any transfer taxes with respect to the transfer and sale of Old Notes to it, or to its order, pursuant to the Exchange Offer. If Exchange Notes, or Old Notes not tendered or exchanged are to be registered in the name of any persons other than the registered owners, or if tendered Old Notes are registered in the name of any persons other than the persons signing this Letter of Transmittal, the amount of any transfer taxes (whether imposed on the registered Holder or such other person) payable on account of the transfer to such other person must be paid to the Issuer or the Exchange Agent (unless satisfactory evidence of the payment of such taxes or exemption therefrom is submitted) before the Exchange Notes will be issued.

     8. Waiver of Conditions. The conditions of the Exchange Offer may be amended or waived by the Issuer, in whole or in part, at any time and from time to time in the Issuer’s discretion, in the case of any Old Notes tendered.

     9. Substitute Form W-9. Each tendering owner of a Note (or other payee) is required to provide the Exchange Agent with a correct taxpayer identification number (“TIN”), generally the owner’s social security or federal employer identification number, and with certain other information, on Substitute Form W-9, which is provided hereafter under “Important Tax Information,” and to certify that the owner (or other payee) is not subject to backup withholding. Failure to provide the information on the Substitute Form W-9 may subject the tendering owner (or other payee) to a $50 penalty imposed by the Internal Revenue Service and 31 percent federal income tax withholding. The box in Part 3 of the Substitute Form W-9 may be checked if the tendering owner (or other payee) has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked and the Exchange Agent is not provided with a TIN within 60 days of the date on the Substitute Form W-9, the Exchange Agent will withhold 31 percent until a TIN is provided to the Exchange Agent.

     10. Broker-dealers Participating in the Exchange Offer. If no broker-dealer checks the last box on page 6 of this Letter of Transmittal, the Issuer have no obligation under the Registration Rights Agreement to allow the use of the Prospectus for resales of the Exchange Notes by broker-dealers or to maintain the effectiveness of the Registration Statement of which the Prospectus is a part after the consummation of the Exchange Offer.

     11. Requests for Assistance or Additional Copies. Any questions or requests for assistance or additional copies of the Prospectus, this Letter of Transmittal or the Notice of Guaranteed Delivery may be directed to the Exchange Agent at the telephone numbers and location listed above. A Holder or owner may also contact such Holder’s or owner’s broker, dealer, commercial bank or trust company or nominee for assistance concerning the Exchange Offer.

     IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER WITH CERTIFICATES REPRESENTING THE OLD NOTES AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.

IMPORTANT TAX INFORMATION

     Under federal income tax law, an owner of Old Notes whose tendered Old Notes are accepted for exchange is required to provide the Exchange Agent with such owner’s current TIN on Substitute Form W-9 below. If such owner is an individual, the TIN is his or her social security number. If the Exchange Agent is not provided with the correct TIN, the owner or other recipient of Exchange Notes may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, any interest on Exchange Notes paid to such owner or other recipient may be subject to 30 percent backup withholding tax.

     Certain owners of Notes (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, that owner must submit to the Exchange Agent a properly completed Internal Revenue Service Forms W-8ECI, W-8BEN, W-8EXP or W-8IMY (collectively, a “Form W-8”), signed under penalties of perjury, attesting to that individual’s exempt status. A Form W-8 can be obtained from the Exchange Agent. See the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9” for additional instructions.

     Backup withholding is not an additional tax. Rather, the federal income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service.

Purpose of Substitute Form W-9

     To prevent backup withholding the owner is required to notify the Exchange Agent of the owner’s current TIN (or the TIN of any other payee) by completing the following form, certifying that the TIN provided on Substitute Form W-9 is correct (or that such owner is awaiting a TIN), and that (i) the owner is exempt from withholding, (ii) the owner has not been notified by the Internal Revenue Service that the owner is subject to backup withholding as a result of failure to report all interest or dividends or (iii) the Internal Revenue Service has notified the owner that the owner is no longer subject to backup withholding.

What Number to give the Exchange Agent

     The Holder is required to give the Exchange Agent the TIN (e.g., social security number or employer identification number) of the owner of the Old Notes. If the Old Notes are registered in more than one name or are not registered in the name of the actual owner, consult the enclosed “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9,” for additional guidance on which number to report.

SUBSTITUTE FORM W-9	Part 1 — PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW.	Social Security Number or Employer Identification Number
Department of the Treasury Internal Revenue Service	Part 2 — Certification — Under penalties of perjury, I certify that:
	Part 3 — Awaiting TIN [ ]
Payer’s Request for Taxpayer Identification No. (“TIN”)	(1) The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and
	(2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (“IRS”) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.
	Certification Instructions — You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of under-reporting interest or dividends on your tax return.

Signature:                                                                                                                         Date:                              &nb sp;         

NOTE:	FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY IMPOSED BY THE INTERNAL REVENUE SERVICE AND BACKUP WITHHOLDING OF 31 PERCENT. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
	YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.

CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER

           I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within 60 days of the date in this form, 31 percent of all reportable cash payments made to me will be withheld until I provide a taxpayer identification number.

Signature:                                                                                                                         Date:                              &nb sp;         

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

     Guidelines for Determining the Proper Identification Number to Give the Payer — Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer.

		Give the SOCIAL SECURITY
For this Type of Account:		Number of —
1.	An individual’s account	The individual
2.	Two or more individuals (joint account	The actual owner of the account or, if combined funds, the first individual on the account(1)
3.	Husband and wife (joint account)	The actual owner of the account or, if joint funds, either person(1)
4.	Custodian account of a minor (Uniform Gift to Minors Act)	The minor(2)
5.	Adult and minor (joint account)	The adult or, if the minor is the only contributor, the minor(1)
6.	Account in the name of guardian or committee for a designated ward, minor or incompetent person	The ward, minor, or incompetent person(3)
7.	a. A revocable savings trust account (in which grantor is also trustee)	The grantor trustee(1)
	b. Any “trust” account that is not a legal or valid trust under State law	The actual owner(1)
8.	Sole proprietorship account	The owner(4)
9.	A valid trust, estate, or pension	The legal entity (do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title)(5)
10.	Corporate account	The corporation
11.	Religious, charitable or educational organization account	The organization
12.	Partnership account held in	The partnership
13.	Association, club, or other	The organization
14.	A broker or registered nominee	The broker or nominee
15.	Account with the Department of Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments	The public entity

(1)	List first and circle the name of the person whose number you furnish.
(2)	Circle the minor’s name and furnish the minor’s Social Security number.
(3)	Circle the ward’s, minor’s or incompetent person’s name and furnish such person’s social security number.
(4)	Show the name of the owner. If the owner does not have an employer identification number, furnish the owner’s social security number.
(5)	List first and circle the name of the legal trust, estate, or pension trust.

NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed.

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9

Page 2

Obtaining a Number

If you do not have a taxpayer identification number or you do not know your number, obtain Form SS-5, Application for a Social Security Number Card (for resident individuals), Form SS-4, Application for Employer Identification Number (for businesses and all other entities), or Form W-7 for International Taxpayer Identification Number (for alien individuals required to file U.S. tax returns), at an office of the Social Security Administration or the Internal Revenue Service.

To complete Substitute Form W-9, if you do not have a taxpayer identification number, write “Applied For” in the space for the taxpayer identification number in Part 1, sign and date the Form, and give it to the requester. Generally, you will then have 60 days to obtain a taxpayer identification number and furnish it to the requester. If the requester does not receive your taxpayer identification number within 60 days, backup withholding, if applicable, will begin and will continue until you furnish your taxpayer identification number to the requester.

Payees Exempt from Backup Withholding

Payees specifically exempted from backup withholding on ALL payments include the following:

• A corporation

• A financial institution.

• An organization exempt from tax under section 501(a), or an individual retirement plan, or a custodial account under section 403(b)(7).

• The United States or any agency or instrumentality thereof.

• A state, the District of Columbia, a possession of the United States, or any political subdivision or instrumentality thereof.

• A foreign government or a political subdivision, agency or instrumentality thereof.

• An international organization or any agency or instrumentality thereof.

• A registered dealer in securities or commodities registered in the United States or a possession of the United States.

• A real estate investment trust.

• A common trust fund operated by a bank under section 584(a).

• An exempt charitable remainder trust, or a non-exempt trust described in section 4947(a)(1).

• An entity registered at all times during the tax year under the Investment Company Act of 1940.

• A foreign central bank issue.

• Unless otherwise noted herein, all reference below to section numbers or to regulations are references to the Internal Revenue Code and the regulations promulgated thereunder.

Payments of dividends and patronage dividends not generally subject to backup withholding include the following.

• Payments to nonresident aliens subject to withholding under section 1441.

• Payments to partnerships not engaged in a trade or business in the United States and which have at least one nonresident partner.

• Payments of patronage dividends where the amount received is not paid in money.

• Payments made by certain foreign organizations.

• Payments made to a nominee

Payments of interest not generally subject to backup withholding include the following.

• Payments of interest on obligations issued by individuals. NOTE: You may be subject to backup withholding if (i) this interest is $600 or more, and (ii) the interest is paid in the course of the payer’s trade or business and (iii) you have not provided your correct taxpayer identification number to the payer.

• Payments of tax-exempt interest (including exempt-interest dividends under section 852).

• Payments described in section 6049(b)(5) to non-resident aliens.

• Payments on tax-free covenant bonds under section 1451.

• Payments made by certain foreign organizations.

• Payments made to a nominee.

EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE SUBSTITUTE FORM W-9 TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE “EXEMPT” ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER.

Certain payments other than interest, dividends, and patronage dividends that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041(a), 6045 and 6050A.

Privacy Act Notice. Section 6109 requires most recipients of dividends, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. Payers must be given the numbers whether or not recipient are required to file tax returns. Payers must generally withhold 31 percent of taxable interest, dividends, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply.

Penalties

(1) Penalty for Failure to Furnish Taxpayer Identification Number. — If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect.

(2) Failure to Report Certain Dividend and Interest Payments. — If you fail to include any portion of an includible payment for interest, dividends, or patronage dividends in gross income and such failure is due to negligence, a penalty of 20 percent is imposed on any portion of an underpayment attributable to the failure.

(3) Civil Penalty for False Statements with Respect to Withholding. — If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500.

(4) Criminal Penalty for Falsifying Information. — If you falsify certifications or affirmations, you are subject to criminal penalties including fines and/or imprisonment.

FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE.

EX-99.2

Exhibit 99.2

NOTICE OF GUARANTEED DELIVERY

METALS USA, INC.

OFFER TO EXCHANGE

11 1/8% SENIOR SECURED NOTES DUE 2015 FOR ANY AND ALL
OUTSTANDING 11 1/8% SENIOR SECURED NOTES DUE 2015

     As set forth in the Prospectus, dated [___], 2006 (as the same may be amended from time to time, the “Prospectus”), of Metals USA, Inc. (the “Issuer”), under the caption of “The Exchange Offer — Guaranteed Delivery Procedures,” this form or one substantially equivalent hereto must be used to accept the Issuer’s offer (the “Exchange Offer”) to exchange its 11 1/8% Senior Secured Notes due 2015 (the “Exchange Notes”), which have been registered under the Securities Act of 1933, as amended (the “Securities Act”), for an equal principal amount of its 11 1/8% Senior Secured Notes due 2015 (the “Old Notes”), if (i) certificates representing the Old Notes to be exchanged are not lost but are not immediately available, (ii) time will not permit delivery of the Old Notes, the letter of transmittal and any other required documents to the Exchange Agent prior to the Expiration Date, or (iii) time will not permit compliance with the applicable procedures under the Depository Trust Company’s Automated Tender Offer Program prior to the Expiration Date. This form may be delivered by an eligible institution by mail or hand delivery or transmittal, via facsimile, to the Exchange Agent at its address set forth below not later than 5:00 p.m., New York City time, on [___], 2006. All capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Prospectus.

The Exchange Agent for the Exchange Offer is:

WELLS FARGO BANK, N.A.

By Registered or Certified Mail:
Wells Fargo Bank, N.A.
Corporate Trust Operations
MAC N9303-121
P.O. Box 1517
Minneapolis, MN 55480
Attn: Reorg

By Facsimile:
(612) 667-6282
Attn: Bondholder Communications

Confirm by Telephone:
(800) 344-5128 or
(612) 667-9764
Attn: Bondholder Communications

By Overnight Delivery or Regular Mail:
Wells Fargo Bank, N.A.
Corporate Trust Operations
MAC N9303-121
6^th & Marquette Avenue
Minneapolis, MN 55479
Attn: Reorg

     DELIVERY OR TRANSMISSION VIA FACSIMILE OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

Ladies and Gentlemen:

     The undersigned hereby tender(s) for exchange to the Issuer, upon the terms and subject to the conditions set forth in the Prospectus and the Letter of Transmittal, receipt of which is hereby acknowledged, the principal amount of the Old Notes as set forth below pursuant to the guaranteed delivery procedures set forth in the Prospectus under the caption of “The Exchange Offer — Guaranteed Delivery Procedures.”

     The undersigned understands and acknowledges that the Exchange Offer will expire at 5:00 p.m., New York City time, on [___], 2006, unless extended by the Issuer. With respect to the Exchange Offer, “Expiration Date” means such time and date, or if the Exchange Offer is extended, the latest time and date to which the Exchange Offer is so extended by the Issuer.

     All authority herein conferred or agreed to be conferred by the Notice of Guaranteed Delivery shall survive the death or incapacity of the undersigned and every obligation of the undersigned under this Notice of Guaranteed Delivery shall be binding upon the heirs, personal representatives, executors, administrators, successors and assigns, trustees in bankruptcy and other legal representatives of the undersigned.

SIGNATURES

	Principal Amount of Old Notes Exchanged:
	$
Signature of Owner
	Certificate Nos. of Old Notes (if available):
Signature of Owner (if more than one)

Dated:		,	2006
Name(s):
	(Please Print)

Address:
	(Include Zip Code)

Area Code and Telephone No.:

Capacity (full title), if signing in a representative capacity:

Taxpayer Identification or Social Security No.:

GUARANTEE

(NOT TO BE USED FOR SIGNATURE GUARANTEE)

     The undersigned, a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or a correspondent in the United States, or is otherwise an “eligible guarantor institution” within the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended, hereby guarantees that, within three New York Stock Exchange trading days after the Expiration Date, a properly completed and duly executed Letter of Transmittal (or a facsimile thereof), together with certificates representing the Old Notes tendered hereby in proper form for transfer (or confirmation of the book-entry transfer of such Old Notes into the account of Wells Fargo Bank, N.A. (the “Trust Company”) at a Book-Entry Transfer Facility, pursuant to the Trust Company’s account at a Book-Entry Transfer Facility, pursuant to the procedure for book-entry transfer set forth in the Prospectus under the caption “The Exchange Offer — Book-Entry Transfer”), and any other required documents will be deposited by the undersigned with the Trust Company.

Name of Firm

Address

Name

Title

Area Code and Telephone No.:

Date:

DO NOT SEND OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF OLD NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, THE LETTER OF TRANSMITTAL.