Revolving Credit Facility

EXECUTION VERSION


AMENDED AND RESTATED
REVOLVING CREDIT AND SECURITY AGREEMENT


PNC BANK, NATIONAL ASSOCIATION (AGENT AND LENDER)


AND


LESCO, INC.
LESCO SERVICES, INC.
LESCO TECHNOLOGIES, LLC


AND


AIM LAWN & GARDEN PRODUCTS, INC.
(BORROWERS)


OCTOBER 7, 2005


TABLE OF CONTENTS


Page
---- I. DEFINITIONS............................................................... 1
1.1. Accounting Terms................................................ 1
1.2. General Terms................................................... 1
1.3. Uniform Commercial Code Terms................................... 17
1.4. Certain Matters of Construction................................. 17


II. ADVANCES, PAYMENTS....................................................... 17
2.1. (a) Revolving Advances.......................................... 17
2.2. Procedure for Borrowing Advances................................ 18
2.3. Disbursement of Advance Proceeds................................ 20
2.4. Intentionally Omitted........................................... 21
2.5. Maximum Advances................................................ 21
2.6. Repayment of Advances........................................... 21
2.7. Repayment of Excess Advances.................................... 21
2.8. Statement of Account............................................ 21
2.9. Letters of Credit............................................... 22
2.10. Issuance of Letters of Credit................................... 22
2.11. Requirements For Issuance of Letters of Credit.................. 23
2.12. Disbursements, Reimbursement.................................... 23
2.13. Repayment of Participation Advances............................. 24
2.14. Documentation................................................... 25
2.15. Determination to Honor Drawing Request.......................... 25
2.16. Nature of Participation and Reimbursement Obligations........... 25
2.17. Indemnity....................................................... 26
2.18. Liability for Acts and Omissions................................ 27
2.19. Additional Payments............................................. 28
2.20. Manner of Borrowing and Payment................................. 28
2.21. Use of Proceeds................................................. 30
2.22. Defaulting Lender............................................... 30


III. INTEREST AND FEES....................................................... 31
3.1. Interest........................................................ 31
3.2. Letter of Credit Fees........................................... 31
3.3. Facility Fee.................................................... 32
3.4. Intentionally Omitted........................................... 32
3.5. Computation of Interest and Fees................................ 32
3.6. Maximum Charges................................................. 33
3.7. Increased Costs................................................. 33
3.8. Basis For Determining Interest Rate Inadequate or Unfair........ 34
3.9. Capital Adequacy................................................ 34
3.10. Gross Up for Taxes.............................................. 35
3.11. Withholding Tax Exemption....................................... 35


IV. COLLATERAL: GENERAL TERMS................................................ 36
4.1. Security Interest in the Collateral............................. 36
4.2. Perfection of Security Interest................................. 36
4.3. Disposition of Collateral....................................... 37
4.4. Preservation of Collateral...................................... 37
4.5. Ownership of Collateral......................................... 38
4.6. Defense of Agent's and Lenders' Interests....................... 38
4.7. Books and Records............................................... 38
4.8. Financial Disclosure............................................ 39
4.9. Compliance with Laws............................................ 39
4.10. Inspection of Premises.......................................... 39
4.11. Insurance....................................................... 40
4.12. Failure to Pay Insurance........................................ 41
4.13. Payment of Taxes................................................ 41
4.14. Payment of Leasehold Obligations................................ 42
4.15. Receivables..................................................... 42
4.16. Inventory....................................................... 44
4.17. Maintenance of Equipment........................................ 44
4.18. Exculpation of Liability........................................ 45
4.19. Environmental Matters........................................... 45
4.20. Financing Statements............................................ 47


V. REPRESENTATIONS AND WARRANTIES............................................ 47
5.1. Authority....................................................... 47
5.2. Formation and Qualification..................................... 48
5.3. Survival of Representations and Warranties...................... 48
5.4. Tax Returns..................................................... 48
5.5. Financial Statements............................................ 48
5.6. Corporate Name.................................................. 49
5.7. O.S.H.A. and Environmental Compliance........................... 50
5.8. Solvency; No Litigation, Violation, Indebtedness or Default..... 50
5.9. Patents, Trademarks, Copyrights and Licenses.................... 51
5.10. Licenses and Permits............................................ 52
5.11. Default of Indebtedness......................................... 52
5.12. No Default...................................................... 52
5.13. No Burdensome Restrictions...................................... 52
5.14. No Labor Disputes............................................... 52
5.15. Margin Regulations.............................................. 53
5.16. Investment Company Act.......................................... 53
5.17. Disclosure...................................................... 53
5.18. Intentionally Omitted........................................... 53
5.19. Swaps........................................................... 53
5.20. Conflicting Agreements.......................................... 53
5.21. Application of Certain Laws and Regulations..................... 53
5.22. Business and Property of Borrowers.............................. 54
5.23. Section 20 Subsidiaries......................................... 54


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5.24. Anti-Terrorism Laws............................................. 54


VI. AFFIRMATIVE COVENANTS.................................................... 55
6.1. Payment of Fees................................................. 55
6.2. Conduct of Business and Maintenance of Existence and Assets..... 55
6.3. Violations...................................................... 55
6.4. Government Receivables.......................................... 55
6.5. Intentionally Omitted........................................... 56
6.6. Fixed Charge Coverage Ratio..................................... 56
6.7. [Intentionally Omitted]......................................... 56
6.8. Landlord's Waivers.............................................. 56
6.9. Execution of Supplemental Instruments........................... 56
6.10. Payment of Indebtedness, Including Taxes, Etc................... 56
6.11. Standards of Financial Statements............................... 57
6.12. Inventory Appraisals............................................ 57
6.13. Field Examinations.............................................. 57
6.14. Anti-Terrorism Laws............................................. 57


VII. NEGATIVE COVENANTS...................................................... 57
7.1. Merger, Consolidation, Acquisition and Sale of Assets........... 58
7.2. Creation of Liens............................................... 58
7.3. Guarantees...................................................... 58
7.4. Investments..................................................... 58
7.5. Loans........................................................... 58
7.6. Intentionally Omitted........................................... 58
7.7. Dividends....................................................... 58
7.8. Indebtedness.................................................... 59
7.9. Nature of Business.............................................. 59
7.10. Transactions with Affiliates.................................... 60
7.11. Leases.......................................................... 60
7.12. Subsidiaries.................................................... 60
7.13. Fiscal Year and Accounting Changes.............................. 60
7.14. Pledge of Credit................................................ 60
7.15. Amendment of Articles of Incorporation, By-Laws................. 60
7.16. Compliance with ERISA........................................... 60
7.17. Prepayment of Indebtedness...................................... 61
7.18. Other Agreements................................................ 61


VIII. CONDITIONS PRECEDENT................................................... 61
8.1. Conditions to Initial Advances.................................. 61
8.2. Conditions to Each Advance...................................... 64


IX. INFORMATION AS TO BORROWER............................................... 65
9.1. Disclosure of Material Matters.................................. 65
9.2. Borrowing Base; Schedules....................................... 65


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9.3. Consummation of Bank Products................................... 66
9.4. Litigation...................................................... 66
9.5. Material Occurrences............................................ 66
9.6. Government Receivables.......................................... 66
9.7. Annual Financial Statements..................................... 66
9.8. Quarterly Financial Statements.................................. 67
9.9. Intentionally Omitted........................................... 67
9.10. Other Reports................................................... 67
9.11. Additional Information.......................................... 67
9.12. Projected Operating Budget...................................... 68
9.13. Variances From Operating Budget................................. 68
9.14. Notice of Suits, Adverse Events................................. 68
9.15. ERISA Notices and Requests...................................... 68
9.16. Additional Documents............................................ 69


X. EVENTS OF DEFAULT......................................................... 69


XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT............................... 72
11.1. Rights and Remedies............................................. 72
11.2. Agent's Discretion.............................................. 73
11.3. Setoff.......................................................... 73
11.4. Rights and Remedies not Exclusive............................... 73
11.5. Allocation of Payments After Event of Default................... 73


XII. WAIVERS AND JUDICIAL PROCEEDINGS........................................ 74
12.1. Waiver of Notice................................................ 74
12.2. Delay........................................................... 74
12.3. Jury Waiver..................................................... 74


XIII. EFFECTIVE DATE AND TERMINATION......................................... 75
13.1. Term............................................................ 75
13.2. Termination..................................................... 75


XIV. REGARDING AGENT......................................................... 76
14.1. Appointment, Intercreditor Agreement............................ 76
14.2. Nature of Duties................................................ 76
14.3. Lack of Reliance on Agent and Resignation....................... 77
14.4. Certain Rights of Agent......................................... 77
14.5. Reliance........................................................ 77
14.6. Notice of Default............................................... 78
14.7. Indemnification................................................. 78
14.8. Agent in its Individual Capacity................................ 78
14.9. Delivery of Documents........................................... 78
14.10. Borrowers' Undertaking to Agent................................. 79
14.11. No Reliance on Agent's Customer Identification Program.......... 79


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XV. BORROWING AGENCY......................................................... 79
15.1. Borrowing Agency Provisions..................................... 79
15.2. Waiver of Subrogation........................................... 80


XVI. MISCELLANEOUS........................................................... 80
16.1. Governing Law................................................... 80
16.2. Entire Understanding............................................ 81
16.3. Successors and Assigns; Participations; New Lenders............. 83
16.4. Application of Payments, Overadvances for GE Capital Proceeds... 84
16.5. Indemnity....................................................... 85
16.6. Notice.......................................................... 85
16.7. Survival........................................................ 87
16.8. Severability.................................................... 88
16.9. Expenses........................................................ 88
16.10. Injunctive Relief............................................... 88
16.11. Consequential Damages........................................... 88
16.12. Captions........................................................ 88
16.13. Counterparts; Telecopied Signatures............................. 89
16.14. Construction.................................................... 89
16.15. Confidentiality; Sharing Information............................ 89
16.16. Publicity....................................................... 90


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AMENDED AND RESTATED
REVOLVING CREDIT AND SECURITY AGREEMENT


Amended and Restated Revolving Credit and Security Agreement (this "Agreement"), dated as of October 7, 2005, among LESCO, INC., a corporation organized under the laws of the State of Ohio ("LESCO"), LESCO SERVICES, INC., a corporation organized under the laws of the State of Ohio ("LSI"), LESCO TECHNOLOGIES, LLC, a limited liability company organized under the laws of the State of Nevada ("Technologies"), and AIM LAWN & GARDEN PRODUCTS, INC., a corporation organized under the laws of the State of Ohio ("AIM") (each a "Borrower" and collectively "Borrowers"), PNC BANK, NATIONAL ASSOCIATION, and the FINANCIAL INSTITUTIONS WHICH MAY HEREAFTER BECOME A PARTY HERETO (collectively, the "Lenders" and individually a "Lender"), and PNC BANK, NATIONAL ASSOCIATION ("PNC"), as agent for Lenders (PNC, in such capacity, the "Agent").


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


I. DEFINITIONS.


1.1. Accounting Terms.


As used in this Agreement, the Note, or any certificate, report or other document made or delivered pursuant to this Agreement, accounting terms not defined in Section 1.2 or elsewhere in this Agreement and accounting terms partly defined in Section 1.2 to the extent not defined, shall have the respective meanings given to them under GAAP; provided, however, whenever such accounting terms are used for the purposes of determining compliance with financial covenants in this Agreement, such accounting terms shall be defined in accordance with GAAP as applied in preparation of the audited financial statements of Borrowers for the fiscal year ended December 31, 2004.


1.2. General Terms.


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


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


"Accounts Sales Agreement" shall mean that certain Portfolio Purchase and Sale Agreement dated as of December 16, 2003 by and among Borrowers and GE Capital pursuant to which GE Capital is purchasing certain Receivables of LESCO.


"ACH Transactions" shall mean any cash management or related services including the automated clearing house transfer of funds by the Agent for the account of any Borrower pursuant to agreement or overdrafts.


"Advances" shall mean and include the Revolving Advances and Letters of Credit and GE Proceeds Advances.


"Affiliate" of any Person shall mean (a) any Person which, directly or indirectly, is in control of, is controlled by, or is under common control with such Person, or (b) any Person who is a director or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of any Person described in clause (a) above. For purposes of this definition, control of a Person shall mean the power, direct or indirect, (x) to vote 5% or more of the securities having ordinary voting power for the election of directors of such Person, or (y) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.


"Agent" shall have the meaning set forth in the preamble to this Agreement and shall include its successors and assigns.


"Alternate Base Rate" shall mean, for any day, a rate per annum equal to the higher of (i) the Base Rate in effect on such day and (ii) the Federal Funds Open Rate in effect on such day plus 1/2 of 1%.


"Anti-Terrorism Laws" shall mean any Applicable Law relating to terrorism or money laundering, including Executive Order No. 13224, the USA Patriot Act, the Laws comprising or implementing the Bank Secrecy Act, and the Laws administered by the United States Treasury Department's Office of Foreign Asset Control (as any of the foregoing Laws may from time to time be amended, renewed, extended, or replaced).


"Applicable Law" shall mean all laws, rules and regulations applicable to the person, conduct, transaction, covenant, Other Document or contract in question, including all applicable common law and equitable principles; all provisions of all applicable state, federal and foreign constitutions, statutes, rules, regulations and orders of any Governmental Body, and all orders, judgments and decrees of all courts and arbitrators.


"Assignment of Account" shall mean the existing pledge by LESCO of the BlackRock Account, together with all amendments, supplements, modifications, substitutions and replacements thereto and thereof.


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


"Bank Products" shall mean any one or more of the following types of services or facilities extended to any Borrower by the Agent or any Lender, or any Affiliate of the Agent or any Lender in reliance on the Agent's or such Lender's agreement, respectively, to indemnify such Affiliate: (a) credit cards, (b) ACH Transactions, (c) Interest Rate Protection Agreements, and (d) foreign exchange contracts.


"Bank Products Reserves" shall mean all reserves which the Agent from time to time establishes in its sole discretion for the Bank Products then provided or outstanding.


"Base Rate" shall mean the base commercial lending rate of PNC as publicly announced to be in effect from time to time, such rate to be adjusted automatically, without notice, on the effective date of any change in such rate. This rate of interest is determined from


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time to time by PNC as a means of pricing some loans to its customers and is neither tied to any external rate of interest or index nor does it necessarily reflect the lowest rate of interest actually charged by PNC to any particular class or category of customers of PNC.


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


"Blocked Person" shall have the meaning assigned to such term in Section 5.24.


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


"Borrowing Base Certificate" shall mean a certificate duly executed by an officer of Borrowing Agent appropriately completed and in substantially the form of Exhibit A hereto.


"Borrowers on a consolidated basis" shall mean LESCO, LSI, Technologies and AIM.


"Borrowers' Account" shall have the meaning set forth in Section 2.8.


"Borrowing Agent" shall mean LESCO.


"Business Day" shall mean any day other than Saturday or Sunday or a legal holiday on which commercial banks are authorized or required by law to be closed for business in East Brunswick, New Jersey and, if the applicable Business Day relates to any Eurodollar Rate Loans, such day must also be a day on which dealings are carried on in the London interbank market.


"Cash on Deposit" shall mean the aggregate amount of permitted investments under Section 7.4 and cash balances in LESCO's deposit accounts to the extent that such permitted investments and cash deposits (i) are assigned to the Agent to secure the Obligations pursuant to the Assignment of Account or other agreement acceptable to the Agent, and (ii) are subject to a first priority security interest in favor of the Agent.


"Cash on Deposit Advance Rate" shall have the meaning set forth in Section 2.1(a)(y)(ii) hereof.


"CERCLA" shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 et seq.


"Change of Control" shall mean (a) the occurrence of any event (whether in one or more transactions) which results in a transfer of control of any Borrower to a Person who is not an Original Owner or (b) any merger or consolidation of or with any Borrower or sale of all or substantially all of the property or assets of any Borrower. For purposes of this definition, "control of Borrower" shall mean the power, direct or indirect (x) to vote 50% or more of the securities having ordinary voting power for the election of directors of any Borrower or (y) to direct or cause the direction of the management and policies of any Borrower by contract or otherwise.


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"Change of Ownership" shall mean (a) 50% or more of the common stock or other ownership interests of any Borrower is no longer owned or controlled by (including for the purposes of the calculation of percentage ownership, any shares of common stock or other ownership interests into which any capital stock or other ownership interests of any Borrower held by any of the Original Owners is convertible or for which any such shares of the capital stock or other ownership interests of any Borrower or of any other Person may be exchanged and any shares of common stock or other ownership interests issuable to such Original Owners upon exercise of any warrants, options or similar rights which may at the time of calculation be held by such Original Owners) a Person who is an Original Owner or (b) any merger, consolidation or sale of substantially all of the property or assets of any Borrower.


"Charges" shall mean all taxes, charges, fees, imposts, levies or other assessments, including, without limitation, all net income, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation and property taxes, custom duties, fees, assessments, liens, claims and charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts, imposed by any taxing or other authority, domestic or foreign (including, without limitation, the Pension Benefit Guaranty Corporation or any environmental agency or superfund), upon the Collateral, or any of the Borrowers.


"Closing Date" shall mean October 7, 2005, or such other date as may be agreed to by the parties hereto.


"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time and the regulations promulgated thereunder.


"Collateral" shall mean and include:


(a) all Receivables;


(b) all Equipment;


(c) all General Intangibles;


(d) all Inventory;


(e) all Investment Property, including, without limitation, Account No. 25994 at BlackRock Provident Institutional Funds in the name of "PNC Bank National Association, Pledgee f/b/o Lesco Inc.", the "BlackRock Account";


(f) all of each Borrower's right, title and interest in and to (i) its respective goods and other property including, but not limited to, all merchandise returned or rejected by Customers, relating to or securing any of the Receivables; (ii) all of each ...