Exhibit 10.2.1

 

 

 

EXIM GUARANTIED CREDIT AGREEMENT

by and among

STANADYNE INTERMEDIATE HOLDING CORP.

as Parent,

STANADYNE CORPORATION

as Borrower,

THE LENDERS THAT ARE SIGNATORIES HERETO

as the Lenders,

and

WELLS FARGO FOOTHILL, LLC

as the Arranger and Administrative Agent

Dated as of August 13, 2009

 

 

 

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TABLE OF CONTENTS

 

     Page 1.    DEFINITIONS AND CONSTRUCTION    1   

1.1      Definitions

   1   

1.2      Accounting Terms

   1   

1.3      Code

   1   

1.4      Construction

   1   

1.5      Schedules and Exhibits

   2 2.    LOAN AND TERMS OF PAYMENT    2   

2.1      Revolver Advances

   2   

2.2      Intentionally Omitted

   2   

2.3      Borrowing Procedures and Settlements

   3   

2.4      Payments; Reductions of Commitments; Prepayments

   7   

2.5      Overadvances

   11   

2.6      Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations

   11   

2.7      Crediting Payments

   12   

2.8      Designated Account

   12   

2.9      Maintenance of Loan Account; Statements of Obligations

   12   

2.10    Fees

   13   

2.11    Letters of Credit

   13   

2.12    LIBOR Option

   16   

2.13    Capital Requirements

   17 3.    CONDITIONS; TERM OF AGREEMENT    18   

3.1      Conditions Precedent to the Initial Extension of Credit

   18   

3.2      Conditions Precedent to all Extensions of Credit

   19   

3.3      Maturity

   19   

3.4      Effect of Maturity

   19   

3.5      Early Termination by Borrower

   19 4.    REPRESENTATIONS AND WARRANTIES    19   

4.1      Due Organization and Qualification; Subsidiaries

   19   

4.2      Due Authorization; No Conflict

   20   

4.3      Governmental Consents

   20   

4.4      Binding Obligations; Perfected Liens

   21   

4.5      Title to Assets; No Encumbrances

   21   

4.6      Jurisdiction of Organization; Location of Chief Executive Office;
Organizational Identification Number; Commercial Tort Claims

   21

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TABLE OF CONTENTS

(continued)

 

     Page   

4.7      Litigation

   21   

4.8      Compliance with Laws

   22   

4.9      No Material Adverse Change

   22   

4.10    Fraudulent Transfer

   22   

4.11    Employee Benefits

   22   

4.12    Environmental Condition

   22   

4.13    Intellectual Property

   23   

4.14    Leases

   23   

4.15    Deposit Accounts and Securities Accounts

   23   

4.16    Complete Disclosure

   23   

4.17    Material Contracts

   23   

4.18    Patriot Act

   23   

4.19    Indebtedness

   24   

4.20    Payment of Taxes

   24   

4.21    Margin Stock

   24   

4.22    Governmental Regulation

   24   

4.23    OFAC

   24   

4.24    Employee and Labor Matters

   25   

4.25    Parent as a Holding Company

   25   

4.26    Intentionally Omitted

   25   

4.27    Intentionally Omitted

   25   

4.28    Eligible Accounts

   25   

4.29    Intentionally Omitted

   25   

4.30    Locations of Inventory and Equipment

   25   

4.31    Inventory Records

   25   

4.32    Borrower Agreement

   25 5.    AFFIRMATIVE COVENANTS    26   

5.1      Financial Statements, Reports, Certificates

   26   

5.2      Collateral Reporting

   26   

5.3      Existence

   26   

5.4      Maintenance of Properties

   26   

5.5      Taxes

   26   

5.6      Insurance

   26

 

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TABLE OF CONTENTS

(continued)

 

     Page   

5.7      Inspection

   27   

5.8      Compliance with Laws

   27   

5.9      Environmental

   27   

5.10    Disclosure Updates

   28   

5.11    Formation of Subsidiaries

   28   

5.12    Further Assurances

   28   

5.13    Lender Meetings

   28   

5.14    Material Contracts

   29   

5.15    Location of Inventory and Equipment

   29   

5.16    Assignable Material Contracts

   29 6.    NEGATIVE COVENANTS    29   

6.1      Indebtedness

   29   

6.2      Liens

   29   

6.3      Restrictions on Fundamental Changes

   29   

6.4      Disposal of Assets

   30   

6.5      Change Name

   30   

6.6      Nature of Business

   30   

6.7      Prepayments and Amendments

   30   

6.8      Change of Control

   30   

6.9      Distributions

   31   

6.10    Accounting Methods

   31   

6.11    Investments

   31   

6.12    Transactions with Affiliates

   32   

6.13    Use of Proceeds

   32   

6.14    Parent as a Holding Company

   33   

6.15    Consignments

   33   

6.16    Inventory and Equipment with Bailees

   33 7.    FINANCIAL COVENANTS    34 8.    EVENTS OF DEFAULT    36 9.    RIGHTS
AND REMEDIES    37   

9.1      Rights and Remedies

   37   

9.2      Remedies Cumulative

   38 10.    WAIVERS; INDEMNIFICATION    38

 

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TABLE OF CONTENTS

(continued)

 

     Page   

10.1    Demand; Protest; etc

   38   

10.2    The Lender Group’s Liability for Collateral

   38   

10.3    Indemnification

   38 11.    NOTICES    39 12.    CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER   
40 13.    ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS    40   

13.1    Assignments and Participations

   40   

13.2    Successors

   43 14.    AMENDMENTS; WAIVERS    43   

14.1    Amendments and Waivers

   43   

14.2    Replacement of Holdout Lender

   44   

14.3    No Waivers; Cumulative Remedies

   45 15.    AGENT; THE LENDER GROUP    45   

15.1    Appointment and Authorization of Agent

   45   

15.2    Delegation of Duties

   45   

15.3    Liability of Agent

   45   

15.4    Reliance by Agent

   46   

15.5    Notice of Default or Event of Default

   46   

15.6    Credit Decision

   46   

15.7    Costs and Expenses; Indemnification

   47   

15.8    Agent in Individual Capacity

   47   

15.9    Successor Agent

   48   

15.10 Lender in Individual Capacity

   48   

15.11 Collateral Matters

   48   

15.12 Restrictions on Actions by Lenders; Sharing of Payments

   49   

15.13 Agency for Perfection

   50   

15.14 Payments by Agent to the Lenders

   50   

15.15 Concerning the Collateral and Related Loan Documents

   50   

15.16 Audits and Examination Reports; Confidentiality; Disclaimers by Lenders;
Other Reports and Information

   50   

15.17 Several Obligations; No Liability

   51 16.    WITHHOLDING TAXES    51 17.    GENERAL PROVISIONS    54   

17.1    Effectiveness

   54

 

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TABLE OF CONTENTS

(continued)

 

     Page   

17.2    Section Headings

   54   

17.3    Interpretation

   54   

17.4    Severability of Provisions

   54   

17.5    Intentionally Omitted

   54   

17.6    Debtor-Creditor Relationship

   54   

17.7    Counterparts; Electronic Execution

   54   

17.8    Revival and Reinstatement of Obligations

   54   

17.9    Confidentiality

   55   

17.10 Lender Group Expenses

   55   

17.11 USA PATRIOT Act

   55   

17.12 Integration

   55

 

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EXHIBITS AND SCHEDULES

 

Exhibit A-1

   Form of Assignment and Acceptance

Exhibit B-1

   Form of Borrowing Base Certificate

Exhibit C-1

   Form of Compliance Certificate

Exhibit L-1

   Form of LIBOR Notice

Schedule A-1

   Agent’s Account

Schedule A-2

   Authorized Persons

Schedule C-1

   Commitments

Schedule D-1

   Designated Account

Schedule E-2

   Existing Letters of Credit

Schedule P-1

   Permitted Investments

Schedule P-2

   Permitted Liens

Schedule P-3

   Permitted Joint Venture Acquisition

Schedule R-1

   Real Property Collateral

Schedule 1.1

   Definitions

Schedule 3.1

   Conditions Precedent

Schedule 3.6

   Conditions Subsequent

Schedule 4.1(b)

   Capitalization of Borrower

Schedule 4.1(c)

   Capitalization of Borrower’s Subsidiaries

Schedule 4.6(a)

   States of Organization

Schedule 4.6(b)

   Chief Executive Offices

Schedule 4.6(c)

   Organizational Identification Numbers

Schedule 4.6(d)

   Commercial Tort Claims

Schedule 4.7

   Litigation

Schedule 4.11

   Benefit Plans

Schedule 4.12

   Environmental Matters

Schedule 4.13

   Intellectual Property

Schedule 4.15

   Deposit Accounts and Securities Accounts

Schedule 4.17

   Material Contracts

Schedule 4.19

   Permitted Indebtedness

Schedule 4.30

   Locations of Inventory and Equipment

Schedule 5.1

   Financial Statements, Reports, Certificates

Schedule 5.2

   Collateral Reporting

Schedule 6.6

   Nature of Business

The registrants agree to furnish supplementally a copy of any omitted exhibit or
schedule to the Securities and Exchange Commission upon request.

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EXIM GUARANTIED CREDIT AGREEMENT

THIS EXIM GUARANTIED CREDIT AGREEMENT (this “Agreement”), is entered into as of
August 13, 2009, by and among the lenders identified on the signature pages
hereof (such lenders, together with their respective successors and permitted
assigns, are referred to hereinafter each individually as a “Lender” and
collectively as the “Lenders”), WELLS FARGO FOOTHILL, LLC, a Delaware limited
liability company, as the arranger and administrative agent for the Lenders (in
such capacity, together with its successors and assigns in such capacity,
“Agent”), STANADYNE INTERMEDIATE HOLDING CORP., a Delaware corporation
(“Parent”), and STANADYNE CORPORATION, a Delaware corporation (“Borrower”).

The parties agree as follows:

 

1. DEFINITIONS AND CONSTRUCTION.

1.1 Definitions. Capitalized terms used in this Agreement shall have the
meanings specified therefor on Schedule 1.1.

1.2 Accounting Terms. All accounting terms not specifically defined herein shall
be construed in accordance with GAAP; provided, however, that if Borrower
notifies Agent that Borrower requests an amendment to any provision hereof to
eliminate the effect of any Accounting Change occurring after the Closing Date
or in the application thereof on the operation of such provision (or if Agent
notifies Borrower that the Required Lenders request an amendment to any
provision hereof for such purpose), regardless of whether any such notice is
given before or after such Accounting Change or in the application thereof, then
Agent and Borrower agree that they will negotiate in good faith amendments to
the provisions of this Agreement that are directly affected by such Accounting
Change with the intent of having the respective positions of the Lenders and
Borrower after such Accounting Change conform as nearly as possible to their
respective positions as of the date of this Agreement and, until any such
amendments have been agreed upon, the provisions in this Agreement shall be
calculated as if no such Accounting Change had occurred. When used herein, the
term “financial statements” shall include the notes and schedules thereto.

1.3 Code. Any terms used in this Agreement that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein;
provided, however, that to the extent that the Code is used to define any term
herein and such term is defined differently in different Articles of the Code,
the definition of such term contained in Article 9 of the Code shall govern.

1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes”
and “including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in any other Loan
Document to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). The words “asset” and “property”
shall be construed to have the same meaning and effect and to refer to any and
all tangible and intangible assets and properties, including cash, securities,
accounts, and contract rights. Any reference herein or in any other Loan
Document to the satisfaction or repayment in full of the Obligations shall

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mean the repayment in full in cash (or, in the case of Letters of Credit,
providing Letter of Credit Collateralization) of all Obligations other than
unasserted contingent indemnification Obligations. Any reference herein to any
Person shall be construed to include such Person’s successors and assigns. Any
requirement of a writing contained herein or in any other Loan Document shall be
satisfied by the transmission of a Record.

1.5 Schedules and Exhibits. All of the schedules and exhibits attached to this
Agreement shall be deemed incorporated herein by reference.

 

2. LOAN AND TERMS OF PAYMENT.

2.1 Revolver Advances.

(a) Subject to the terms and conditions of this Agreement, and during the term
of this Agreement, each Lender with a Revolver Commitment agrees (severally, not
jointly or jointly and severally) to make advances (“Advances”) to Borrower in
an amount at any one time outstanding not to exceed such Lender’s Pro Rata Share
of an amount equal to the lesser of (i) the Maximum Revolver Amount less the
Letter of Credit Usage at such time, and (ii) the Borrowing Base at such time
less the Letter of Credit Usage at such time.

(b) Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to
the terms and conditions of this Agreement, reborrowed at any time during the
term of this Agreement. The outstanding principal amount of the Advances,
together with interest accrued thereon, shall be due and payable on the Maturity
Date or, if earlier, on the date on which they are declared due and payable
pursuant to the terms of this Agreement.

(c) Anything to the contrary in this Section 2.1 notwithstanding, Agent shall
have the right in its Permitted Discretion to establish reserves against the
Borrowing Base, and with respect to such matters, as Agent in its Permitted
Discretion shall deem necessary or appropriate, including reserves with respect
to (i) sums that Parent or its Subsidiaries are required to pay under any
Section of this Agreement or any other Loan Document (such as taxes,
assessments, insurance premiums, or, in the case of leased assets, rents or
other amounts payable under such leases) and has failed to pay, and (ii) amounts
owing by Parent or its Subsidiaries to any Person to the extent secured by a
Lien on, or trust over, any of the Collateral (other than a Permitted Lien),
which Lien or trust, in the Permitted Discretion of Agent likely would have a
priority superior to Agent’s Liens (such as Liens or trusts in favor of
landlords, warehousemen, carriers, mechanics, materialmen, laborers, or
suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes
where given priority under applicable law) in and to such item of the
Collateral. Agent may maintain all or any portion of a reserve under this
Agreement or under the Domestic Credit Agreement (or any combination thereof) as
Agent may elect from time to time in its Permitted Discretion.

(d) Anything to the contrary in this Section 2.1 or Section 2.3 notwithstanding,
to the extent that Availability is greater than zero, Agent shall have the right
to transfer and reallocate loans (the “Transferred Loans”) made under the
Domestic Credit Agreement to this Agreement in an amount such that after giving
effect to such transfer, all then outstanding Obligations shall not exceed the
then existing Availability, and upon such transfer and reallocation, Borrower
shall be deemed to have (a) made a prepayment under the Domestic Credit
Agreement in an amount equal to the amount of such Transferred Loans, and
(b) requested an Advance under this Agreement in an amount equal to the amount
of such Transferred Loans. Notwithstanding the foregoing, Borrower is entitled
to make a request for an Advance in accordance with Section 2.3.

2.2 Intentionally Omitted.

 

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2.3 Borrowing Procedures and Settlements.

(a) Procedure for Borrowing. Each Borrowing shall be made by a written request
by an Authorized Person delivered to Agent. Unless Swing Lender is not obligated
to make a Swing Loan pursuant to Section 2.3(b) below, such notice must be
received by Agent no later than 1:00 p.m. (Massachusetts time) on the Business
Day that is the requested Funding Date specifying (i) the amount of such
Borrowing, and (ii) the requested Funding Date, which shall be a Business Day;
provided, however, that if Swing Lender is not obligated to make a Swing Loan as
to a requested Borrowing, such notice must be received by Agent no later than
1:00 p.m. (Massachusetts time) on the Business Day prior to the date that is the
requested Funding Date. At Agent’s election, in lieu of delivering the
above-described written request, any Authorized Person may give Agent telephonic
notice of such request by the required time. In such circumstances, Borrower
agrees that any such telephonic notice will be confirmed in writing within 24
hours of the giving of such telephonic notice, but the failure to provide such
written confirmation shall not affect the validity of the request.

(b) Making of Swing Loans. In the case of a request for an Advance and so long
as either (i) the aggregate amount of Swing Loans made since the last Settlement
Date, minus the amount of Collections or payments applied to Swing Loans since
the last Settlement Date, plus the amount of the requested Advance does not
exceed $5,000,000, or (ii) Swing Lender, in its sole discretion, shall agree to
make a Swing Loan notwithstanding the foregoing limitation, Swing Lender shall
make an Advance in the amount of such Borrowing (any such Advance made solely by
Swing Lender pursuant to this Section 2.3(b) being referred to as a “Swing Loan”
and such Advances being referred to collectively as “Swing Loans”) available to
Borrower on the Funding Date applicable thereto by transferring immediately
available funds to the Designated Account. Each Swing Loan shall be deemed to be
an Advance hereunder and shall be subject to all the terms and conditions
applicable to other Advances, except that all payments on any Swing Loan shall
be payable to Swing Lender solely for its own account. Subject to the provisions
of Section 2.3(d)(ii), Swing Lender shall not make and shall not be obligated to
make any Swing Loan if Swing Lender has actual knowledge that (i) one or more of
the applicable conditions precedent set forth in Section 3 will not be satisfied
on the requested Funding Date for the applicable Borrowing, or (ii) the
requested Borrowing would exceed the Availability on such Funding Date. Swing
Lender shall not otherwise be required to determine whether the applicable
conditions precedent set forth in Section 3 have been satisfied on the Funding
Date applicable thereto prior to making any Swing Loan. The Swing Loans shall be
secured by Agent’s Liens, constitute Obligations hereunder, and bear interest at
the rate applicable from time to time to Advances that are Base Rate Loans.

(c) Making of Loans.

(i) In the event that Swing Lender is not obligated to make a Swing Loan, then
promptly after receipt of a request for a Borrowing pursuant to Section 2.3(a),
Agent shall notify the Lenders, not later than 4:00 p.m. (Massachusetts time) on
the Business Day immediately preceding the Funding Date applicable thereto, 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 to Agent in immediately available funds, to
Agent’s Account, not later than 1:00 p.m. (Massachusetts time) on the Funding
Date applicable thereto. After Agent’s receipt of the proceeds of such Advances,
Agent shall make the proceeds thereof available to Borrower on the applicable
Funding Date by transferring immediately available funds equal to such proceeds
received by Agent to the Designated Account; provided, however, that, subject to
the provisions of Section 2.3(d)(ii), Agent shall not request any Lender to
make, and no Lender shall have the obligation to make, any Advance if (1) one or
more of the applicable conditions precedent set forth in Section 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing unless such
condition has been waived, or (2) the requested Borrowing would exceed the
Availability on such Funding Date.

 

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(ii) Unless Agent receives notice from a Lender prior to 12:00 p.m.
(Massachusetts time) on the date of a Borrowing, that such Lender will not make
available as and when required hereunder to Agent for the account of Borrower
the amount of that Lender’s Pro Rata Share of the Borrowing, Agent may assume
that each Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but shall not be
so required), in reliance upon such assumption, make available to Borrower on
such date a corresponding amount. If any Lender shall not have made its full
amount available to Agent in immediately available funds and if Agent in such
circumstances has made available to Borrower such amount, that Lender shall on
the Business Day following such Funding Date make such amount available to
Agent, together with interest at the Defaulting Lender Rate for each day during
such period. A notice submitted by Agent to any Lender with respect to amounts
owing under this Section 2.3(c)(ii) shall be conclusive, absent manifest error.
If such amount is so made available, such payment to Agent shall constitute such
Lender’s Advance on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to Agent on the Business Day following the
Funding Date, Agent will notify Borrower of such failure to fund and, upon
demand by Agent, Borrower shall pay such amount to Agent for 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 Advances composing such Borrowing. The failure of any Lender to make any
Advance on any Funding Date shall not relieve any other Lender of any obligation
hereunder to make an Advance on such Funding Date, but no Lender shall be
responsible for the failure of any other Lender to make the Advance to be made
by such other Lender on any Funding Date.

(iii) Agent shall not be obligated to transfer to a Defaulting Lender any
payments made by Borrower to Agent for the Defaulting Lender’s benefit, and, in
the absence of such transfer to the Defaulting Lender, Agent shall transfer any
such payments to each other non-Defaulting Lender member of the Lender Group
ratably in accordance with their Commitments (but only to the extent that such
Defaulting Lender’s Advance was funded by the other members of the Lender Group)
or, if so directed by Borrower and if no Default or Event of Default has
occurred and is continuing (and to the extent such Defaulting Lender’s Advance
was not funded by the Lender Group), retain same to be re-advanced to Borrower
as if such Defaulting Lender had made Advances to Borrower. Subject to the
foregoing, Agent may hold and, in its Permitted Discretion, re-lend to Borrower
for the account of such Defaulting Lender the amount of all such payments
received and retained by Agent for the account of such Defaulting Lender. Solely
for the purposes of voting or consenting to matters with respect to the Loan
Documents, such Defaulting Lender shall be deemed not to be a “Lender” and such
Lender’s Commitment shall be deemed to be zero. This Section shall remain
effective with respect to such Lender until (x) the Obligations under this
Agreement shall have been declared or shall have become immediately due and
payable, (y) the non-Defaulting Lenders, Agent, and Borrower shall have waived
such Defaulting Lender’s default in writing, or (z) the Defaulting Lender makes
its Pro Rata Share of the applicable Advance and pays to Agent all amounts owing
by Defaulting Lender in respect thereof. The operation of this Section shall not
be construed to increase or otherwise affect the Commitment of any Lender, to
relieve or excuse the performance by such Defaulting Lender or any other Lender
of its duties and obligations hereunder, or to relieve or excuse the performance
by Borrower of its duties and obligations hereunder to Agent or to the Lenders
other than such Defaulting Lender. Any such failure to fund by any Defaulting
Lender shall constitute a material breach by such Defaulting Lender of this
Agreement and shall entitle Borrower at its option, upon written notice to
Agent, to arrange for a substitute Lender to assume the Commitment of such
Defaulting Lender, such substitute Lender to be reasonably acceptable to Agent.
In connection with the arrangement of such a substitute Lender, the Defaulting
Lender shall have no right to refuse to be replaced hereunder, and agrees to
execute and deliver a completed form of Assignment and Acceptance in favor of
the substitute Lender (and agrees that it shall be deemed to have executed and
delivered such document if it fails to do so) subject only to being repaid its
share of the outstanding Obligations (including an assumption of its Pro Rata
Share of the Letters of Credit) without any premium or penalty of any kind
whatsoever; provided, however, that any such assumption of the Commitment of
such Defaulting Lender shall not be deemed to constitute a waiver of any of the
Lender Groups’ or Borrower’s rights or remedies against any such Defaulting
Lender arising out of or in relation to such failure to fund.

 

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(d) Protective Advances and Optional Overadvances.

(i) Any contrary provision of this Agreement notwithstanding, Agent hereby is
authorized by Borrower and the Lenders, from time to time in Agent’s sole
discretion, (A) after the occurrence and during the continuance of a Default or
an Event of Default, or (B) at any time that any of the other applicable
conditions precedent set forth in Section 3 are not satisfied, to make Advances
to, or for the benefit of, Borrower on behalf of the Lenders that Agent, in its
Permitted Discretion deems necessary or desirable (1) to preserve or protect the
Collateral, or any portion thereof, or (2) to enhance the likelihood of
repayment of the Obligations (any of the Advances described in this
Section 2.3(d)(i) shall be referred to as “Protective Advances”).

(ii) Any contrary provision of this Agreement notwithstanding, the Lenders
hereby authorize Agent or Swing Lender, as applicable, and either Agent or Swing
Lender, as applicable, may, but is not obligated to, knowingly and
intentionally, continue to make Advances (including Swing Loans) to Borrower
notwithstanding that an Overadvance exists or thereby would be created, so long
as (A) after giving effect to such Advances, the outstanding Revolver Usage does
not exceed the Borrowing Base by more than $2,500,000, and (B) after giving
effect to such Advances, the outstanding Revolver Usage (except for and
excluding amounts charged to the Loan Account for interest, fees, or Lender
Group Expenses) does not exceed the Maximum Revolver Amount. In the event Agent
obtains actual knowledge that the Revolver Usage exceeds the amounts permitted
by the immediately foregoing provisions, regardless of the amount of, or reason
for, such excess, Agent shall notify the Lenders as soon as practicable (and
prior to making any (or any additional) intentional Overadvances (except for and
excluding amounts charged to the Loan Account for interest, fees, or Lender
Group Expenses) unless Agent determines that prior notice would result in
imminent harm to the Collateral or its value), and the Lenders with Revolver
Commitments thereupon shall, together with Agent, jointly determine the terms of
arrangements that shall be implemented with Borrower intended to reduce, within
a reasonable time, the outstanding principal amount of the Advances to Borrower
to an amount permitted by the preceding sentence. In such circumstances, if any
Lender with a Revolver Commitment objects to the proposed terms of reduction or
repayment of any Overadvance, the terms of reduction or repayment thereof shall
be implemented according to the determination of the Required Lenders. The
foregoing provisions are meant for the benefit of the Lenders and Agent and are
not meant for the benefit of Borrower, which shall continue to be bound by the
provisions of Section 2.5. Each Lender with a Revolver Commitment shall be
obligated to settle with Agent as provided in Section 2.3(e) for the amount of
such Lender’s Pro Rata Share of any unintentional Overadvances by Agent reported
to such Lender, any intentional Overadvances made as permitted under this
Section 2.3(d)(ii), and any Overadvances resulting from the charging to the Loan
Account of interest, fees, or Lender Group Expenses.

(iii) Each Protective Advance and each Overadvance shall be deemed to be an
Advance hereunder, except that no Protective Advance or Overadvance shall be
eligible to be a LIBOR Rate Loan and, prior to Settlement therefor, all payments
on the Protective Advances shall be payable to Agent solely for its own account.
The Protective Advances and Overadvances shall be repayable on demand, secured
by Agent’s Liens, constitute Obligations hereunder, and bear interest at the
rate applicable from time to time to Advances that are Base Rate Loans. The
ability of Agent to make Protective Advances is separate and distinct from its
ability to make Overadvances and its ability to make Overadvances is separate
and distinct from its ability to make Protective Advances; for the avoidance of
doubt, the limitations on Agent’s ability to make Protective Advances do not
apply to Overadvances and the limitations on Agent’s ability to make
Overadvances do not apply to Protective Advances. The provisions of this
Section 2.3(d) are for the exclusive benefit of Agent, Swing Lender, and the
Lenders and are not intended to benefit Borrower in any way.

 

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(e) Settlement. It is agreed that each Lender’s funded portion of the Advances
is intended by the Lenders to equal, at all times, such Lender’s Pro Rata Share
of the outstanding Advances. Such agreement notwithstanding, Agent, Swing
Lender, and the other Lenders agree (which agreement shall not be for the
benefit of Borrower) that in order to facilitate the administration of this
Agreement and the other Loan Documents, settlement among the Lenders as to the
Advances, the Swing Loans, and the Protective Advances shall take place on a
periodic basis in accordance with the following provisions:

(i) Agent shall request settlement (“Settlement”) with the Lenders on a weekly
basis, or on a more frequent basis if so determined by Agent (1) on behalf of
Swing Lender, with respect to the outstanding Swing Loans, (2) for itself, with
respect to the outstanding Protective Advances, and (3) with respect to
Borrower’s or its Subsidiaries’ Collections or payments received, as to each by
notifying the Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 5:00 p.m.
(Massachusetts time) on the Business Day immediately prior to the date of such
requested Settlement (the date of such requested Settlement being the
“Settlement Date”). Such notice of a Settlement Date shall include a summary
statement of the amount of outstanding Advances, Swing Loans, and Protective
Advances for the period since the prior Settlement Date. Subject to the terms
and conditions contained herein (including Section 2.3(c)(iii)): (y) if a
Lender’s balance of the Advances (including Swing Loans and Protective Advances)
exceeds such Lender’s Pro Rata Share of the Advances (including Swing Loans and
Protective Advances) as of a Settlement Date, then Agent shall, by no later than
3:00 p.m. (Massachusetts time) on the Settlement Date, transfer in immediately
available funds to a Deposit Account of such Lender (as such Lender may
designate), an amount such that each such Lender shall, upon receipt of such
amount, have as of the Settlement Date, its Pro Rata Share of the Advances
(including Swing Loans and Protective Advances), and (z) if a Lender’s balance
of the Advances (including Swing Loans and Protective Advances) is less than
such Lender’s Pro Rata Share of the Advances (including Swing Loans and
Protective Advances) as of a Settlement Date, such Lender shall no later than
3:00 p.m. (Massachusetts time) on the Settlement Date transfer in immediately
available funds to Agent’s Account, an amount such that each such Lender shall,
upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share
of the Advances (including Swing Loans and Protective Advances). Such amounts
made available to Agent under clause (z) of the immediately preceding sentence
shall be applied against the amounts of the applicable Swing Loans or Protective
Advances and, together with the portion of such Swing Loans or Protective
Advances representing Swing Lender’s Pro Rata Share thereof, shall constitute
Advances of such Lenders. If any such amount is not made available to Agent by
any Lender on the Settlement Date applicable thereto to the extent required by
the terms hereof, Agent shall be entitled to recover for its account such amount
on demand from such Lender together with interest thereon at the Defaulting
Lender Rate.

(ii) In determining whether a Lender’s balance of the Advances, Swing Loans, and
Protective Advances is less than, equal to, or greater than such Lender’s Pro
Rata Share of the Advances, Swing Loans, and Protective Advances as of a
Settlement Date, Agent shall, as part of the relevant Settlement, apply to such
balance the portion of payments actually received in good funds by Agent with
respect to principal, interest, fees payable by Borrower and allocable to the
Lenders hereunder, and proceeds of Collateral.

(iii) Between Settlement Dates, Agent, to the extent Protective Advances or
Swing Loans are outstanding, may pay over to Agent or Swing Lender, as
applicable, any Collections or payments received by Agent, that in accordance
with the terms of this Agreement would be applied to the reduction of the
Advances, for application to the Protective Advances or Swing Loans. Between
Settlement Dates, Agent, to the extent no Protective Advances or Swing Loans are
outstanding, may pay over to Swing Lender any Collections or payments received
by Agent, that in accordance with the terms of this Agreement would be applied
to the reduction of the Advances, for application to Swing Lender’s Pro Rata
Share of the Advances. If, as of any Settlement Date, Collections or payments of
Parent or its Subsidiaries received since the then immediately preceding
Settlement Date have been applied to Swing Lender’s Pro Rata Share of the
Advances other than to Swing Loans, as provided for in the previous sentence,
Swing Lender shall pay to Agent for the accounts of the Lenders, and Agent shall
pay to the Lenders, to be applied to the outstanding Advances 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 Advances. During the period
between Settlement Dates, Swing Lender with respect to Swing Loans, Agent with
respect to Protective Advances, and each Lender (subject to the effect of
agreements between Agent and individual Lenders) with respect to the Advances
other than Swing Loans and Protective Advances, shall be entitled to interest at
the applicable rate or rates payable under this Agreement on the daily amount of
funds employed by Swing Lender, Agent, or the Lenders, as applicable.

 

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(f) Notation. Agent, as a non-fiduciary agent for Borrower, shall maintain a
register showing the principal amount of the Advances owing to each Lender,
including the Swing Loans owing to Swing Lender, and Protective Advances owing
to Agent, and the interests therein of each Lender, from time to time and such
register shall, absent manifest error, conclusively be presumed to be correct
and accurate.

(g) Lenders’ Failure to Perform. All Advances (other than Swing Loans and
Protective Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Advance (or other extension of credit) 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 obligations hereunder, and (ii) no failure by
any Lender to perform its obligations hereunder shall excuse any other Lender
from its obligations hereunder.

 

2.4 Payments; Reductions of Commitments; Prepayments.

(a) Payments by Borrower.

(i) Except as otherwise expressly provided herein, all payments by Borrower
shall be made to Agent’s Account for the account of the Lender Group and shall
be made in immediately available funds, no later than 2:00 p.m. (Massachusetts
time) on the date specified herein. Any payment received by Agent later than
2:00 p.m. (Massachusetts time) shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to
accrue until such following Business Day.

(ii) Unless Agent receives notice from Borrower prior to the date on which any
payment is due to the Lenders that Borrower will not make such payment in full
as and when required, Agent may assume that Borrower has made (or will make)
such payment in full to Agent on such date in immediately available funds and
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 Borrower does not make such payment in
full to Agent on the date when due, each Lender severally shall repay to Agent
on demand such amount distributed to such Lender, together with interest thereon
at the Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.

(b) Apportionment and Application.

(i) All payments shall be remitted to Agent in its capacity as agent under this
Agreement and as agent under the Domestic Credit Agreement. So long as no
Application Event has occurred and is continuing and except as otherwise
provided with respect to Defaulting Lenders, and unless otherwise required by
Wells Fargo’s or WFF’s agreements with EXIM Bank, all principal and interest
payments shall be apportioned ratably among the Lenders (according to the unpaid
principal balance of the Obligations to which such payments relate held by each
Lender) and all payments of fees and expenses (other than fees or expenses that
are for Agent’s separate account) shall be apportioned ratably among the Lenders
having a Pro Rata Share of the type of Commitment or Obligation to which a
particular fee or expense relates. Unless otherwise required by Wells Fargo’s or
WFF’s agreements with EXIM Bank, all payments to be made hereunder by Borrower
shall be remitted to Agent and all (subject to Section 2.4(b)(iv) and
Section 2.4(e)) such payments, and all proceeds of Collateral received by Agent,
shall be applied, so long as no Application Event has occurred and is
continuing, first, to reduce the balance of the Domestic Obligations in
accordance with the Domestic Credit Agreement, second,to reduce the balance of
the Advances outstanding and, thereafter, to Borrower (to be wired to the
Designated Account) or such other Person entitled thereto under applicable law.

 

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(ii) At any time that an Application Event has occurred and is continuing and
except as otherwise provided with respect to Defaulting Lenders, all payments
remitted to Agent and all proceeds of Collateral received by Agent shall be
applied as follows unless otherwise required by Wells Fargo’s or WFF’s
agreements with EXIM Bank:

(A) first, to pay any Domestic Obligations in accordance with the Domestic
Credit Agreement, until paid in full,

(B) second, to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to Agent under the Loan Documents, until
paid in full,

(C) third, to pay any fees or premiums then due to Agent under the Loan
Documents until paid in full,

(D) fourth, to pay interest due in respect of all Protective Advances until paid
in full,

(E) fifth, to pay the principal of all Protective Advances until paid in full,

(F) sixth, ratably to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to any of the Lenders under the Loan
Documents, until paid in full,

(G) seventh, ratably to pay any fees or premiums then due to any of the Lenders
under the Loan Documents until paid in full,

(H) eighth, ratably to pay interest due in respect of the Advances (other than
Protective Advances), and the Swing Loans until paid in full,

(I) ninth, ratably (i) to pay the principal of all Swing Loans until paid in
full, (ii) to pay the principal of all other Advances until paid in full, and
(iii) to Agent, to be held by Agent, for the benefit of Issuing Lender (and for
the ratable benefit of each of the Lenders that have an obligation to pay to
Agent, for the account of the Issuing Lender, a share of each Letter of Credit
Disbursement), as cash collateral in an amount up to 105% of the Letter of
Credit Usage,

(J) tenth, to pay any other Obligations, and

(K) eleventh, to Borrower (to be wired to the Designated Account) or such other
Person entitled thereto under applicable law.

(iii) Agent promptly shall distribute to each Lender, pursuant to the applicable
wire instructions received from each Lender in writing, such funds as it may be
entitled to receive, subject to a Settlement delay as provided in
Section 2.3(e).

(iv) In each instance, so long as no Application Event has occurred and is
continuing, Section 2.4(b)(i) shall not apply to any payment made by Borrower to
Agent and specified by Borrower to be for the payment of specific Obligations
then due and payable (or prepayable) under any provision of this Agreement or
any other Loan Document.

(v) For purposes of Section 2.4(b)(ii), “paid in full” means payment in cash of
all amounts owing under the Loan Documents, including loan fees, service fees,
professional fees, interest (and specifically including interest accrued after
the commencement of any Insolvency Proceeding), default interest, interest on
interest, and expense reimbursements, whether or not any of the foregoing would
be or is allowed or disallowed in whole or in part in any Insolvency Proceeding.

 

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(vi) In the event of a direct conflict between the priority provisions of this
Section 2.4 and any other provision contained in any other Loan Document, it is
the intention of the parties hereto that such provisions be read together and
construed, to the fullest extent possible, to be in concert with each other. In
the event of any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 2.4 shall control and
govern.

(vii) It is hereby understood and agreed that, notwithstanding anything
contained herein or in the Domestic Credit Agreement to the contrary, the
proceeds of Collateral constituting Export-Related Accounts Receivable (as
defined in the Borrower Agreement) shall be applied first to the Advances in
accordance with the Borrower Agreement and the agreements between Wells Fargo or
WFF and EXIM Bank.

(c) Reduction of Commitments. The Revolver Commitments shall terminate on the
Maturity Date. Borrower may reduce the Revolver Commitments to an amount (which
may be zero) not less than the sum of (A) the Revolver Usage as of such date,
plus (B) the principal amount of all Advances not yet made as to which a request
has been given by Borrower under Section 2.3(a), plus (C) the amount of all
Letters of Credit not yet issued as to which a request has been given by
Borrower pursuant to Section 2.11(a). Each such reduction shall be in an amount
which is not less than $1,000,000 (unless the Revolver Commitments are being
reduced to zero and the amount of the Revolver Commitments in effect immediately
prior to such reduction are less than $1,000,000), shall be made by providing
not less than 10 Business Days prior written notice to Agent and shall be
irrevocable. Once reduced pursuant to this Section 2.4(c), the Revolver
Commitments may not be increased. Each such reduction of the Revolver
Commitments shall reduce the Revolver Commitments of each Lender proportionately
in accordance with its Pro Rata Share thereof.

(d) Optional Prepayments. Borrower may prepay the principal of any Advance at
any time in whole or in part.

(e) Mandatory Prepayments.

(i) Borrowing Base. If, at any time, (A) the Revolver Usage on such date exceeds
(B) the Borrowing Base (such excess being referred to as the “Borrowing Base
Excess”), then Borrower shall promptly, but in any event, within 1 Business Day,
prepay the Obligations in accordance with Section 2.4(f)(i) in an aggregate
amount equal to the Borrowing Base Excess.

(ii) Dispositions. Within 1 Business Day of the date of receipt by any Loan
Party of the Net Cash Proceeds exceeding $250,000 per year of any voluntary or
involuntary sale or disposition by any Loan Party of assets (including casualty
losses or condemnations but excluding sales or dispositions which qualify as
Permitted Dispositions under clauses (a), (b), (c), (d), (f), (i), or (j) of the
definition of Permitted Dispositions), Borrower shall prepay the outstanding
principal amount of the Domestic Obligations and the Obligations in accordance
with Section 2.4(f)(ii) in an amount equal to 100% of such Net Cash Proceeds
(including condemnation awards and payments in lieu thereof) received by such
Person in connection with such sales or dispositions; provided that, so long as
(A) no Default or Event of Default shall have occurred and is continuing or
would result therefrom, (B) Borrower shall have given Agent prior written notice
of Borrower’s intention to apply such monies to the costs of replacement of the
properties or assets that are the subject of such sale or disposition or the
cost of purchase or construction of other assets useful in the business of
Parent or its Subsidiaries, (C) the monies are held in a Deposit Account in
which Agent has a perfected first-priority security interest or are applied to
repay the Advances (without a corresponding reduction in the Commitments), and
(D) Parent or its Subsidiaries, as applicable, complete such replacement,
purchase, or construction within 180 days after the initial receipt of such
monies, then the Loan Party whose assets were the subject of such disposition
shall have the option to apply such monies to the costs of replacement of the
assets that are the subject of such sale or disposition or the costs of purchase
or construction

 

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of other assets useful in the business of Parent or such Subsidiary unless and
to the extent that such applicable period shall have expired without such
replacement, purchase, or construction being made or completed, in which case,
any amounts remaining in the cash collateral account shall be paid to Agent and
applied against the outstanding principal amount of the Domestic Obligations and
the Obligations in accordance with Section 2.4(f)(ii); provided, however, that
Borrower and its Subsidiaries shall not have the right to use such Net Cash
Proceeds to make such replacements, purchases, or construction in excess of
$2,000,000 in any given fiscal year. Nothing contained in this
Section 2.4(e)(ii) shall permit Parent or any of its Subsidiaries to sell or
otherwise dispose of any assets other than in accordance with Section 6.4.

(iii) Extraordinary Receipts. Within 1 Business Day of the date of receipt by
any Loan Party of any Extraordinary Receipts, Borrower shall prepay the
outstanding principal amount of the Domestic Obligations and the Obligations in
accordance with Section 2.4(f)(ii) in an amount equal to 100% of such
Extraordinary Receipts, net of any reasonable expenses incurred in collecting
such Extraordinary Receipts.

(iv) Indebtedness. Within 1 Business Day of the date of incurrence by any Loan
Party of any Indebtedness (other than Permitted Indebtedness), Borrower shall
prepay the outstanding principal amount of the Domestic Obligations and the
Obligations in accordance with Section 2.4(f)(ii) in an amount equal to 100% of
the Net Cash Proceeds received by such Person in connection with such
incurrence. The provisions of this Section 2.4(e)(iv) shall not be deemed to be
implied consent to any such incurrence otherwise prohibited by the terms and
conditions of this Agreement.

(v) Equity. Within 1 Business Day of the date of the issuance by any Loan Party
of any shares of its or their Stock (other than (A) in the event that Borrower
or any of its Subsidiaries forms any Subsidiary in accordance with the terms
hereof, the issuance by such Subsidiary of Stock to Borrower or such Subsidiary,
as applicable, (B) so long as no Event of Default has occurred and is
continuing, the issuance of Stock by Parent to Holdings, (C) the issuance of
Stock of Parent to directors, officers and employees of Parent and its
Subsidiaries pursuant to employee stock option plans (or other employee
incentive plans or other compensation arrangements) approved by the Board of
Directors, and (D) the issuance of Stock of Parent to Holdings in order to
finance the making of Capital Expenditures or Permitted Acquisitions), Borrower
shall prepay the outstanding principal amount of the Domestic Obligations and
the Obligations in accordance with Section 2.4(f)(ii) in an amount equal to 100%
of the Net Cash Proceeds received by such Person in connection with such
issuance. The provisions of this Section 2.4(e)(v) shall not be deemed to be
implied consent to any such issuance otherwise prohibited by the terms and
conditions of this Agreement.

(f) Application of Payments.

(i) Each prepayment pursuant to Section 2.4(e)(i) shall, (A) so long as no
Application Event shall have occurred and be continuing, be applied, first, to
the outstanding principal amount of the Advances until paid in full, and second,
to cash collateralize the Letters of Credit in an amount equal to 105% of the
then extant Letter of Credit Usage, and (B) if an Application Event shall have
occurred and be continuing, be applied in the manner set forth in
Section 2.4(b)(ii).

(ii) Each prepayment pursuant to Section 2.4(e)(ii), 2.4(e)(iii), 2.4(e)(iv), or
2.4(e)(v) above shall (A) prior to the payment in full of the Domestic
Obligations, be applied to the Domestic Obligations in accordance with the
Domestic Credit Agreement, unless otherwise required by Wells Fargo’s or WFF’s
agreements with EXIM Bank, and (B) after the Domestic Obligations have been paid
in full, (I) so long as no Application Event shall have occurred and be
continuing, be applied, first, to the outstanding principal amount of the
Advances (without a corresponding reduction in the Maximum Revolver Amount),
until paid in full, and second, to cash collateralize the Letters of Credit in
an amount equal to 105% of the then extant Letter of Credit Usage (without a
corresponding reduction in the Maximum Revolver Amount), and (II) if an
Application Event shall have occurred and be continuing, be applied in the
manner set forth in Section 2.4(b)(ii). It is hereby understood and agreed that,
notwithstanding anything contained in this

 

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Agreement or in the Domestic Credit Agreement to the contrary, the proceeds of
Collateral constituting Export-Related Accounts Receivable (as defined in the
Borrower Agreement) shall be applied first to the Obligations, in accordance
with the Borrower Agreement and the agreements between Wells Fargo or WFF and
EXIM Bank.

 

2.5 Overadvances. If, at any time or for any reason, the amount of Obligations
owed by Borrower to the Lender Group pursuant to Section 2.1 or Section 2.11 is
greater than any of the limitations set forth in Section 2.1 or Section 2.11, as
applicable (an “Overadvance”), Borrower shall promptly, but in any event, within
1 Business Day of the initial occurrence of an Overadvance pay to Agent, in
cash, the amount of such excess, which amount shall be used by Agent to reduce
the Obligations in accordance with the priorities set forth in Section 2.4(b).
Borrower promises to pay the Obligations (including principal, interest, fees,
costs, and expenses) in Dollars in full on the Maturity Date or, if earlier, on
the date on which the Obligations are declared due and payable pursuant to the
terms of this Agreement.

 

2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.

(a) Interest Rates. Except as provided in Section 2.6(c), all Obligations
(except for undrawn Letters of Credit) that have been charged to the Loan
Account pursuant to the terms hereof shall bear interest on the Daily Balance
thereof as follows:

(i) if the relevant Obligation is a LIBOR Rate Loan, at a per annum rate equal
to the LIBOR Rate plus the LIBOR Rate Margin, and

(ii) otherwise, at a per annum rate equal to the Base Rate plus the Base Rate
Margin.

(b) Letter of Credit Fee. Borrower shall pay Agent (for the ratable benefit of
the Lenders with a Revolver Commitment, subject to any agreements between Agent
and individual Lenders), a Letter of Credit fee (in addition to the charges,
commissions, fees, and costs set forth in Section 2.11(e)) which shall accrue at
a per annum rate equal to the LIBOR Rate Margin times the Daily Balance of the
undrawn amount of all outstanding Letters of Credit.

(c) Default Rate. Upon the occurrence and during the continuation of an Event of
Default and at the election of the Required Lenders,

(i) all Obligations (except for undrawn Letters of Credit) that have been
charged to the Loan Account pursuant to the terms hereof shall bear interest on
the Daily Balance thereof at a per annum rate equal to 2 percentage points above
the per annum rate otherwise applicable hereunder, and

(ii) the Letter of Credit fee provided for in Section 2.6(b) shall be increased
to 2 percentage points above the per annum rate otherwise applicable hereunder.

(d) Payment. Except to the extent provided to the contrary in Section 2.10 or
Section 2.12(a), interest, Letter of Credit fees, all other fees payable
hereunder or under any of the other Loan Documents, and all costs, expenses, and
Lender Group Expenses payable hereunder or under any of the other Loan Documents
shall be due and payable, in arrears, on the first day of each month at any time
that Obligations or Commitments are outstanding. Borrower hereby authorizes
Agent, from time to time without prior notice to Borrower, to charge all
interest, Letter of Credit fees, and all other fees payable hereunder or under
any of the other Loan Documents (in each case, as and when due and payable), all
costs, expenses, and Lender Group Expenses payable hereunder or under any of the
other Loan Documents (in each case, as and when incurred), all charges,
commissions, fees, and costs provided for in Section 2.11(e) (as and when
accrued or incurred), all fees and costs provided for in Section 2.10 (as and
when accrued or incurred), and all other payments as and when due and payable
under any Loan Document to the Loan Account, which amounts thereafter shall
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances

 

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that are Base Rate Loans. Any interest, fees, costs, expenses, Lender Group
Expenses, or other amounts payable hereunder or under any other Loan Document
not paid when due shall be compounded by being charged to the Loan Account and
shall thereafter constitute Advances hereunder and shall accrue interest at the
rate then applicable to Advances that are Base Rate Loans.

(e) Computation. All interest and fees chargeable under the Loan Documents shall
be computed on the basis of a 360 day year, in each case, for the actual number
of days elapsed in the period during which the interest or fees accrue. In the
event the Base Rate is changed from time to time hereafter, the rates of
interest hereunder based upon the Base Rate automatically and immediately shall
be increased or decreased by an amount equal to such change in the Base Rate.

(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrower and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrower is and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrower in
excess of such legal maximum, whenever received, shall be applied to reduce the
principal balance of the Obligations to the extent of such excess.

 

2.7 Crediting Payments. The receipt of any payment item by Agent shall not be
considered a payment on account unless such payment item is a wire transfer of
immediately available federal funds made to Agent’s Account or unless and until
such payment item is honored when presented for payment. Should any payment item
not be honored when presented for payment, then Borrower shall be deemed not to
have made such payment and interest shall be calculated accordingly. Anything to
the contrary contained herein notwithstanding, any payment item shall be deemed
received by Agent only if it is received into Agent’s Account on a Business Day
on or before 2:00 p.m. (Massachusetts time). If any payment item is received
into Agent’s Account on a non-Business Day or after 2:00 p.m. (Massachusetts
time) on a Business Day, it shall be deemed to have been received by Agent as of
the opening of business on the immediately following Business Day.

 

2.8 Designated Account. Agent is authorized to make the Advances, and Issuing
Lender is authorized to issue the Letters of Credit, under this Agreement based
upon telephonic or other instructions received from anyone purporting to be an
Authorized Person or, without instructions, if pursuant to Section 2.6(d).
Borrower agrees to establish and maintain the Designated Account with the
Designated Account Bank for the purpose of receiving the proceeds of the
Advances requested by Borrower and made by Agent or the Lenders hereunder.
Unless otherwise agreed by Agent and Borrower, any Advance or Swing Loan
requested by Borrower and made by Agent or the Lenders hereunder shall be made
to the Designated Account.

 

2.9 Maintenance of Loan Account; Statements of Obligations. Agent shall maintain
an account on its books in the name of Borrower (the “Loan Account”) on which
Borrower will be charged with all Advances (including Protective Advances and
Swing Loans) made by Agent, Swing Lender, or the Lenders to Borrower or for
Borrower’s account, the Letters of Credit issued or made by Issuing Lender for
Borrower’s account, and with all other payment Obligations hereunder or under
the other Loan Documents, including, accrued interest, fees and expenses, and
Lender Group Expenses. In accordance with Section 2.7, the Loan Account will be
credited with all payments received by Agent from Borrower or for Borrower’s
account. Agent shall render statements regarding the Loan Account to Borrower,
including principal, interest, fees, and including an itemization of all charges
and expenses constituting Lender Group Expenses owing, and such statements,
absent manifest error, shall be conclusively presumed to be correct and accurate
and constitute an account stated between Borrower and the Lender Group unless,
within 30 days after receipt thereof by Borrower, Borrower shall deliver to
Agent written objection thereto describing the error or errors contained in any
such statements.

 

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2.10 Fees. Borrower shall pay to Agent,

(a) as and when due and payable under the terms of the Fee Letter, the fees set
forth in the Fee Letter.

(b) for the ratable account of those Lenders with Revolver Commitments (other
than Defaulting Lenders), on the first day of each month from and after the
Closing Date up to the first day of the month prior to the Payoff Date and on
the Payoff Date, an unused line fee in an amount equal to 0.50% per annum times
the result of (i) the Maximum Revolver Amount, less (ii) the average Daily
Balance of the Revolver Usage during the immediately preceding month (or portion
thereof).

 

2.11 Letters of Credit.

(a) Subject to the terms and conditions of this Agreement, upon the request of
Borrower made in accordance herewith, the Issuing Lender agrees to issue, or to
cause an Underlying Issuer, as Issuing Lender’s agent, to issue, a requested
Letter of Credit. If Issuing Lender, at its option, elects to cause an
Underlying Issuer to issue a requested Letter of Credit, then Issuing Lender
agrees that it will obligate itself to reimburse such Underlying Issuer (which
may include, among, other means, by becoming an applicant with respect to such
Letter of Credit or entering into undertakings which provide for reimbursements
of such Underlying Issuer with respect to such Letter of Credit; each such
obligation or undertaking, irrespective of whether in writing, a “Reimbursement
Undertaking”) with respect to Letters of Credit issued by such Underlying
Issuer. By submitting a request to Issuing Lender for the issuance of a Letter
of Credit, Borrower shall be deemed to have requested that Issuing Lender issue
or that an Underlying Issuer issue the requested Letter of Credit and to have
requested Issuing Lender to issue a Reimbursement Undertaking with respect to
such requested Letter of Credit if it is to be issued by an Underlying Issuer
(it being expressly acknowledged and agreed by Borrower that Borrower is and
shall be deemed to be an applicant (within the meaning of Section 5-102(a)(2) of
the Code) with respect to each Underlying Letter of Credit). Each request for
the issuance of a Letter of Credit, or the amendment, renewal, or extension of
any outstanding Letter of Credit, shall be made in writing by an Authorized
Person and delivered to the Issuing Lender via hand delivery, telefacsimile, or
other electronic method of transmission reasonably in advance of the requested
date of issuance, amendment, renewal, or extension. Each such request shall be
in form and substance reasonably satisfactory to the Issuing Lender and shall
specify (i) the amount of such Letter of Credit, (ii) the date of issuance,
amendment, renewal, or extension of such Letter of Credit, (iii) the expiration
date of such Letter of Credit, (iv) the name and address of the beneficiary of
the Letter of Credit, and (v) such other information (including, in the case of
an amendment, renewal, or extension, identification of the Letter of Credit to
be so amended, renewed, or extended) as shall be necessary to prepare, amend,
renew, or extend such Letter of Credit. Anything contained herein to the
contrary notwithstanding, the Issuing Lender may, but shall not be obligated to,
issue or cause the issuance of a Letter of Credit or to issue a Reimbursement
Undertaking in respect of an Underlying Letter of Credit, in either case, that
supports the obligations of Borrower or its Subsidiaries in respect of (1) a
lease of real property, or (2) an employment contract. Borrower agrees that this
Agreement (along with the terms of the applicable application) will govern each
Letter of Credit and its issuance. The Issuing Lender shall have no obligation
to issue a Letter of Credit or a Reimbursement Undertaking in respect of an
Underlying Letter of Credit, in either case, if any of the following would
result after giving effect to the requested issuance:

(i) the Letter of Credit Usage would exceed the Borrowing Base less the
outstanding amount of Advances, or

(ii) the Letter of Credit Usage would exceed zero, or

 

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(iii) the Letter of Credit Usage would exceed the Maximum Revolver Amount less
the outstanding amount of Advances.

Borrower and the Lender Group acknowledge and agree that certain Letters of
Credit may be issued to support letters of credit that already are outstanding
as of the Closing Date. Each Letter of Credit shall be in form and substance
reasonably acceptable to the Issuing Lender, including the requirement that the
amounts payable thereunder must be payable in Dollars. If Issuing Lender makes a
payment under a Letter of Credit or an Underlying Issuer makes a payment under
an Underlying Letter of Credit, Borrower shall pay to Agent an amount equal to
the applicable Letter of Credit Disbursement not later than 2:00 p.m.,
Massachusetts time, on the date that Borrower receives written or telephonic
notice of such Letter of Credit Disbursement if such notice is received prior to
1:00 p.m., Massachusetts time, or not later than 2:00 p.m., Massachusetts time,
on the following Business Day, if such notice is received after 1:00 p.m.,
Massachusetts time, and, in the absence of such payment, the amount of the
Letter of Credit Disbursement immediately and automatically shall be deemed to
be an Advance hereunder and, initially, shall bear interest at the rate then
applicable to Advances that are Base Rate Loans. If a Letter of Credit
Disbursement is deemed to be an Advance hereunder, Borrower’s obligation to pay
the amount of such Letter of Credit Disbursement to Issuing Lender shall be
discharged and replaced by the resulting Advance. Promptly following receipt by
Agent of any payment from Borrower pursuant to this paragraph, Agent shall
distribute such payment to the Issuing Lender or, to the extent that Lenders
have made payments pursuant to Section 2.11(b) to reimburse the Issuing Lender,
then to such Lenders and the Issuing Lender as their interests may appear.

(b) Promptly following receipt of a notice of a Letter of Credit Disbursement
pursuant to Section 2.11(a), each Lender with a Revolver Commitment agrees to
fund its Pro Rata Share of any Advance deemed made pursuant to Section 2.11(a)
on the same terms and conditions as if Borrower had requested the amount thereof
as an Advance and Agent shall promptly pay to Issuing Lender the amounts so
received by it from the Lenders. By the issuance of a Letter of Credit or a
Reimbursement Undertaking (or an amendment to a Letter of Credit or a
Reimbursement Undertaking increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the Lenders with Revolver
Commitments, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit issued by
Issuing Lender and each Reimbursement Undertaking, in an amount equal to its Pro
Rata Share of such Letter of Credit or Reimbursement Undertaking, and each such
Lender agrees to pay to Agent, for the account of the Issuing Lender, such
Lender’s Pro Rata Share of any Letter of Credit Disbursement made by Issuing
Lender or an Underlying Issuer under the applicable Letter of Credit. In
consideration and in furtherance of the foregoing, each Lender with a Revolver
Commitment hereby absolutely and unconditionally agrees to pay to Agent, for the
account of the Issuing Lender, such Lender’s Pro Rata Share of each Letter of
Credit Disbursement made by Issuing Lender or an Underlying Issuer and not
reimbursed by Borrower on the date due as provided in Section 2.11(a), or of any
reimbursement payment required to be refunded to Borrower for any reason. Each
Lender with a Revolver Commitment acknowledges and agrees that its obligation to
deliver to Agent, for the account of the Issuing Lender, an amount equal to its
respective Pro Rata Share of each Letter of Credit Disbursement pursuant to this
Section 2.11(b) shall be absolute and unconditional and such remittance shall be
made notwithstanding the occurrence or continuation of an Event of Default or
Default or the failure to satisfy any condition set forth in Section 3. If any
such Lender fails to make available to Agent the amount of such Lender’s Pro
Rata Share of a Letter of Credit Disbursement as provided in this Section, such
Lender shall be deemed to be a Defaulting Lender and Agent (for the account of
the Issuing Lender) shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Defaulting Lender Rate until paid
in full.

(c) Borrower hereby agrees to indemnify, save, defend, and hold the Lender Group
and each Underlying Issuer harmless from any loss, cost, expense, or liability,
and reasonable attorneys fees incurred by Issuing Lender, any other member of
the Lender Group, or any Underlying Issuer arising out of or in connection with
any Reimbursement Undertaking or any Letter of Credit; provided, however, that
Borrower shall not be obligated hereunder to indemnify for any loss, cost,
expense, or liability that a court of competent

 

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jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of the Issuing Lender, any other member of the Lender Group,
or any Underlying Issuer. Borrower agrees to be bound by the Underlying Issuer’s
regulations and interpretations of any Letter of Credit or by Issuing Lender’s
interpretations of any Reimbursement Undertaking even though this interpretation
may be different from Borrower’s own, and Borrower understands and agrees that
none of the Issuing Lender, the Lender Group, or any Underlying Issuer shall be
liable for any error, negligence, or mistake, whether of omission or commission,
in following Borrower’s instructions or those contained in the Letter of Credit
or any modifications, amendments, or supplements thereto. Borrower understands
that the Reimbursement Undertakings may require Issuing Lender to indemnify the
Underlying Issuer for certain costs or liabilities arising out of claims by
Borrower against such Underlying Issuer. Borrower hereby agrees to indemnify,
save, defend, and hold Issuing Lender and the other members of the Lender Group
harmless with respect to any loss, cost, expense (including reasonable attorneys
fees), or liability incurred by them as a result of the Issuing Lender’s
indemnification of an Underlying Issuer; provided, however, that Borrower shall
not be obligated hereunder to indemnify for any such loss, cost, expense, or
liability to the extent that it is caused by the gross negligence or willful
misconduct of the Issuing Lender or any other member of the Lender Group.
Borrower hereby acknowledges and agrees that none of the Issuing Lender, any
other member of the Lender Group, or any Underlying Issuer shall be responsible
for delays, errors, or omissions resulting from the malfunction of equipment in
connection with any Letter of Credit.

(d) Borrower hereby authorizes and directs any Underlying Issuer to deliver to
the Issuing Lender all instruments, documents, and other writings and property
received by such Underlying Issuer pursuant to such Underlying Letter of Credit
and to accept and rely upon the Issuing Lender’s instructions with respect to
all matters arising in connection with such Underlying Letter of Credit and the
related application.

(e) Any and all issuance charges, usage charges, commissions, fees, and costs
incurred by the Issuing Lender relating to Underlying Letters of Credit shall be
Lender Group Expenses for purposes of this Agreement and shall be reimbursable
promptly, but in any event, within 1 Business Day by Borrower to Agent for the
account of the Issuing Lender; it being acknowledged and agreed by Borrower
that, as of the Closing Date, the usage charge imposed by the Underlying Issuer
is .825% per annum times the undrawn amount of each Underlying Letter of Credit,
that such usage charge may be changed from time to time, and that the Underlying
Issuer also imposes a schedule of charges for amendments, extensions, drawings,
and renewals.

(f) If by reason of (i) any change after the Closing Date in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by the Issuing Lender,
any other member of the Lender Group, or Underlying Issuer with any direction,
request, or requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):

(i) any reserve, deposit, or similar requirement is or shall be imposed or
modified in respect of any Letter of Credit issued or caused to be issued
hereunder or hereby, or

(ii) there shall be imposed on the Issuing Lender, any other member of the
Lender Group, or Underlying Issuer any other condition regarding any Letter of
Credit or Reimbursement Undertaking,

and the result of the foregoing is to increase, directly or indirectly, the cost
to the Issuing Lender, any other member of the Lender Group, or an Underlying
Issuer of issuing, making, guaranteeing, or maintaining any Reimbursement
Undertaking or Letter of Credit or to reduce the amount receivable in respect
thereof, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Borrower, and Borrower shall pay within 30 days after demand therefor,
such amounts as Agent may specify to be necessary to compensate the Issuing
Lender, any other member of the Lender Group, or an Underlying Issuer for such
additional cost or reduced receipt, together with interest on

 

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such amount from the date of such demand until payment in full thereof at the
rate then applicable to Base Rate Loans hereunder; provided, however, that
Borrower shall not be required to provide any compensation pursuant to this
Section 2.12(f) for any such amounts incurred more than 180 days prior to the
date on which the demand for payment is first made to Borrower; provided
further, however, that if an event or circumstance giving rise to such amounts
is retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof. The determination by Agent of
any amount due pursuant to this Section 2.12(f), as set forth in a certificate
setting forth the calculation thereof in reasonable detail, shall, in the
absence of manifest or demonstrable error, be final and conclusive and binding
on all of the parties hereto.

Notwithstanding the foregoing or anything contained in this Agreement to the
contrary, the parties hereto understand and agree that no Letters of Credit may
be issued pursuant to this Agreement, and Borrower shall request Letters of
Credit only under the Domestic Credit Agreement.

2.12 LIBOR Option.

(a) Interest and Interest Payment Dates. In lieu of having interest charged at
the rate based upon the Base Rate, Borrower shall have the option (the “LIBOR
Option”) to have interest on all or a portion of the Advances be charged
(whether at the time when made (unless otherwise provided herein), upon
conversion from a Base Rate Loan to a LIBOR Rate Loan, or upon continuation of a
LIBOR Rate Loan as a LIBOR Rate Loan) at a rate of interest based upon the LIBOR
Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the
last day of the Interest Period applicable thereto; (ii) the date on which all
or any portion of the Obligations are accelerated pursuant to the terms hereof,
or (iii) the date on which this Agreement is terminated pursuant to the terms
hereof. On the last day of each applicable Interest Period, unless Borrower
properly has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Base Rate Loans of the same type hereunder. At any
time that an Event of Default has occurred and is continuing, Borrower no longer
shall have the option to request that Advances bear interest at a rate based
upon the LIBOR Rate.

(b) LIBOR Election.

(i) Borrower may, at any time and from time to time, so long as no Event of
Default has occurred and is continuing, elect to exercise the LIBOR Option by
notifying Agent prior to 2:00 p.m. (Massachusetts time) at least 3 Business Days
prior to the commencement of the proposed Interest Period (the “LIBOR
Deadline”). Notice of Borrower’s election of the LIBOR Option for a permitted
portion of the Advances and an Interest Period pursuant to this Section shall be
made by delivery to Agent of a LIBOR Notice received by Agent before the LIBOR
Deadline, or by telephonic notice received by Agent before the LIBOR Deadline
(to be confirmed by delivery to Agent of a LIBOR Notice received by Agent prior
to 5:00 p.m. (Massachusetts time) on the same day). Promptly upon its receipt of
each such LIBOR Notice, Agent shall provide a copy thereof to each of the
affected Lenders.

(ii) Each LIBOR Notice shall be irrevocable and binding on Borrower. In
connection with each LIBOR Rate Loan, Borrower shall indemnify, defend, and hold
Agent and the Lenders harmless against any loss, cost, or expense actually
incurred by Agent or any Lender as a result of (A) the payment of any principal
of any LIBOR Rate Loan other than on the last day of an Interest Period
applicable thereto (including as a result of an Event of Default), (B) the
conversion of any LIBOR Rate Loan other than on the last day of the Interest
Period applicable thereto, or (C) the failure to borrow, convert, continue or
prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice delivered
pursuant hereto (such losses, costs, or expenses, “Funding Losses”). A
certificate of Agent or a Lender delivered to Borrower setting forth in
reasonable detail any amount or amounts that Agent or such Lender is entitled to
receive pursuant to this Section 2.12 shall be conclusive absent manifest error.
Borrower shall pay such amount to Agent or the Lender, as applicable, within 30
days of the date of its receipt of such certificate.

 

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(iii) Borrower shall have not more than 5 LIBOR Rate Loans in effect at any
given time. Borrower only may exercise the LIBOR Option for proposed LIBOR Rate
Loans of at least $1,000,000.

(c) Conversion. Borrower may convert LIBOR Rate Loans to Base Rate Loans at any
time; provided, however, that in the event that LIBOR Rate Loans are converted
or prepaid on any date that is not the last day of the Interest Period
applicable thereto, including as a result of any automatic prepayment through
the required application by Agent of proceeds of Borrower’s and its
Subsidiaries’ Collections in accordance with Section 2.4(b) or for any other
reason, including early termination of the term of this Agreement or
acceleration of all or any portion of the Obligations pursuant to the terms
hereof, Borrower shall indemnify, defend, and hold Agent and the Lenders and
their Participants harmless against any and all Funding Losses in accordance
with Section 2.12 (b)(ii).

(d) Special Provisions Applicable to LIBOR Rate.

(i) The LIBOR Rate may be adjusted by Agent with respect to any Lender on a
prospective basis to take into account any additional or increased costs to such
Lender of maintaining or obtaining any eurodollar deposits or increased costs,
in each case, due to changes in applicable law occurring subsequent to the
commencement of the then applicable Interest Period, including changes in tax
laws (except changes of general applicability in corporate income tax laws) and
changes in the reserve requirements imposed by the Board of Governors of the
Federal Reserve System (or any successor), excluding the Reserve Percentage,
which additional or increased costs would increase the cost of funding or
maintaining loans bearing interest at the LIBOR Rate. In any such event, the
affected Lender shall give Borrower and Agent notice of such a determination and
adjustment and Agent promptly shall transmit the notice to each other Lender
and, upon its receipt of the notice from the affected Lender, Borrower may, by
notice to such affected Lender (y) require such Lender to furnish to Borrower a
statement setting forth the basis for adjusting such LIBOR Rate and the method
for determining the amount of such adjustment, or (z) repay the LIBOR Rate Loans
with respect to which such adjustment is made (together with any amounts due
under Section 2.12(b)(ii)).

(ii) In the event that any change in market conditions or any law, regulation,
treaty, or directive, or any change therein or in the interpretation or
application thereof, shall at any time after the date hereof, in the reasonable
opinion of any Lender, make it unlawful or impractical for such Lender to fund
or maintain LIBOR Rate Loans or to continue such funding or maintaining, or to
determine or charge interest rates at the LIBOR Rate, such Lender shall give
notice of such changed circumstances to Agent and Borrower and Agent promptly
shall transmit the notice to each other Lender and (y) in the case of any LIBOR
Rate Loans of such Lender that are outstanding, the date specified in such
Lender’s notice shall be deemed to be the last day of the Interest Period of
such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender
thereafter shall accrue interest at the rate then applicable to Base Rate Loans,
and (z) Borrower shall not be entitled to elect the LIBOR Option until such
Lender determines that it would no longer be unlawful or impractical to do so.

(e) No Requirement of Matched Funding. Anything to the contrary contained herein
notwithstanding, neither Agent, nor any Lender, nor any of their Participants,
is required actually to acquire eurodollar deposits to fund or otherwise match
fund any Obligation as to which interest accrues at the LIBOR Rate.

 

2.13 Capital Requirements.

(a) If, after the date hereof, any Lender reasonably determines that (i) the
adoption of or change in any law, rule, regulation or guideline regarding
capital requirements for banks or bank holding companies, or any change in the
interpretation or application thereof by any Governmental Authority charged with
the administration thereof, or (ii) compliance by such Lender or its parent bank
holding company with

 

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any guideline, request or directive of any such entity regarding capital
adequacy (whether or not having the force of law), has the effect of reducing
the return on such Lender’s or such holding company’s capital as a consequence
of such Lender’s Commitments hereunder to a level below that which such Lender
or such holding company could have achieved but for such adoption, change, or
compliance (taking into consideration such Lender’s or such holding company’s
then existing policies with respect to capital adequacy and assuming the full
utilization of such entity’s capital) by any amount deemed by such Lender to be
material, then such Lender may notify Borrower and Agent thereof. Following
receipt of such notice, Borrower agrees to pay such Lender on demand the amount
of such reduction of return of capital as and when such reduction is determined,
payable within 30 days after presentation by such Lender of a statement in the
amount and setting forth in reasonable detail such Lender’s calculation thereof
and the assumptions upon which such calculation was based (which statement shall
be deemed true and correct absent manifest error). In determining such amount,
such Lender may use any reasonable averaging and attribution methods. Failure or
delay on the part of any Lender to demand compensation pursuant to this Section
shall not constitute a waiver of such Lender’s right to demand such
compensation; provided that Borrower shall not be required to compensate a
Lender pursuant to this Section for any reductions in return incurred more than
180 days prior to the date that such Lender notifies Borrower of such law, rule,
regulation or guideline giving rise to such reductions and of such Lender’s
intention to claim compensation therefor; provided further that if such claim
arises by reason of the adoption of or change in any law, rule, regulation or
guideline that is retroactive, then the 180-day period referred to above shall
be extended to include the period of retroactive effect thereof.

(b) If any Lender requests additional or increased costs referred to in
Section 2.12(d) or amounts under Section 2.13(a) (any such Lender, an “Affected
Lender”), then such Affected Lender shall use reasonable efforts to promptly
designate a different one of its lending offices or to assign its rights and
obligations hereunder to another of its offices or branches, if (i) in the
reasonable judgment of such Affected Lender, such designation or assignment
would eliminate or reduce amounts payable pursuant to Section 2.12(d) or
Section 2.13(a), as applicable, and (ii) in the reasonable judgment of such
Affected Lender, such designation or assignment would not subject it to any
material unreimbursed cost or expense and would not otherwise be materially
disadvantageous to it. Borrower agrees to pay all reasonable out-of-pocket costs
and expenses incurred by such Affected Lender in connection with any such
designation or assignment. If, after such reasonable efforts, such Affected
Lender does not so designate a different one of its lending offices or assign
its rights to another of its offices or branches so as to eliminate Borrower’s
obligation to pay any future amounts to such Affected Lender pursuant to
Section 2.12(d) or Section 2.13(a), as applicable, then Borrower (without
prejudice to any amounts then due to such Affected Lender under Section 2.12(d)
or Section 2.13(a), as applicable) may, unless prior to the effective date of
any such assignment the Affected Lender withdraws its request for such
additional amounts under Section 2.12(d) or Section 2.13(a), as applicable, may
seek a substitute Lender reasonably acceptable to Agent to purchase the
Obligations owed to such Affected Lender and such Affected Lender’s Commitments
hereunder (a “Replacement Lender”), and if such Replacement Lender agrees to
such purchase, such Affected Lender shall assign to the Replacement Lender its
Obligations and Commitments, pursuant to an Assignment and Acceptance Agreement,
and upon such purchase by the Replacement Lender, such Replacement Lender shall
be deemed to be a “Lender” for purposes of this Agreement and such Affected
Lender shall cease to be a “Lender” for purposes of this Agreement.

 

3. CONDITIONS; TERM OF AGREEMENT.

3.1 Conditions Precedent to the Initial Extension of Credit. The obligation of
each Lender to make its initial extension of credit provided for hereunder, is
subject to the fulfillment, to the satisfaction of Agent and each Lender of each
of the conditions precedent set forth on Schedule 3.1 (the making of such
initial extension of credit by a Lender being conclusively deemed to be its
satisfaction or waiver of the conditions precedent).

 

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3.2 Conditions Precedent to all Extensions of Credit. The obligation of the
Lender Group (or any member thereof) to make any Advances hereunder (or to
extend any other credit hereunder) at any time shall be subject to the following
conditions precedent:

(a) the representations and warranties of Parent or its Subsidiaries contained
in this Agreement or in the other Loan Documents shall be true and correct in
all material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof) on and as of the date of such
extension of credit, as though made on and as of such date (except to the extent
that such representations and warranties relate solely to an earlier date); and

(b) no Default or Event of Default shall have occurred and be continuing on the
date of such extension of credit, nor shall either result from the making
thereof.

 

3.3 Maturity. This Agreement shall continue in full force and effect for a term
ending on the date (the “Maturity Date”) that is the earlier of (a) August 13,
2012, and (b) the date on which the Domestic Commitments are terminated in
accordance with the Domestic Credit Agreement. The foregoing notwithstanding,
the Lender Group, upon the election of the Required Lenders, shall have the
right to terminate its obligations under this Agreement immediately and without
notice upon the occurrence and during the continuation of an Event of Default.

 

3.4 Effect of Maturity. On the Maturity Date, all commitments to provide
additional credit hereunder shall automatically be terminated and all
Obligations (including contingent reimbursement obligations of Borrower with
respect to outstanding Letters of Credit) immediately shall become due and
payable without notice or demand (including the requirement that Borrower
provide Letter of Credit Collateralization). No termination of the obligations
of the Lender Group shall relieve or discharge any Loan Party of its duties,
Obligations, or covenants hereunder or under any other Loan Document and Agent’s
Liens in the Collateral shall remain in effect until all Obligations have been
paid in full. When all of the Obligations have been paid in full and the Lender
Group’s obligations to provide additional credit under the Loan Documents have
been terminated irrevocably, Agent will, at Borrower’s sole expense, execute and
deliver any termination statements, lien releases, discharges of security
interests, and other similar discharge or release documents (and, if applicable,
in recordable form) as are reasonably necessary to release, as of record,
Agent’s Liens and all notices of security interests and liens previously filed
by Agent with respect to the Obligations.

 

3.5 Early Termination by Borrower. Borrower has the option, at any time upon 10
Business Days prior written notice to Agent, to terminate this Agreement and
terminate the Commitments hereunder by paying to Agent the Obligations
(including providing Letter of Credit Collateralization with respect to the then
existing Letter of Credit Usage), in full.

 

 

 

4. REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender Group to enter into this Agreement, each of Parent
and Borrower makes the following representations and warranties to the Lender
Group which shall be true, correct, and complete, in all material respects
(except that such materiality qualifier shall not be applicable to any
representations and warranties that already are qualified or modified by
materiality in the text thereof), as of the Closing Date, and shall be true,
correct, and complete, in all material respects (except that such materiality
qualifier shall not be applicable to any representations and warranties that
already are qualified or modified by materiality in the text thereof), as of the
date of the making of each Advance (or other extension of credit) made
thereafter, as though made on and as of the date of such Advance (or other
extension of credit) (except to the extent that such representations and
warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:

4.1 Due Organization and Qualification; Subsidiaries.

(a) Each Loan Party (i) is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization, (ii) qualified to do
business in any state where the failure to be so qualified reasonably could be
expected to result in a Material Adverse Change, and (iii) has all requisite
power and authority to own and operate its properties, to carry on its business
as now conducted and as proposed to be conducted, to enter into the Loan
Documents to which it is a party and to carry out the transactions contemplated
thereby.

 

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(b) Set forth on Schedule 4.1(b) is a complete and accurate description of the
authorized capital Stock of Borrower, by class, and, as of the Closing Date, a
description of the number of shares of each such class that are issued and
outstanding. Other than as described on Schedule 4.1(b), there are no
subscriptions, options, warrants, or calls relating to any shares of Borrower’s
capital Stock, including any right of conversion or exchange under any
outstanding security or other instrument. Borrower is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.

(c) Set forth on Schedule 4.1(c) (as such Schedule may be updated from time to
time to reflect changes permitted to be made under Section 5.11), is a complete
and accurate list of the Loan Parties’ direct and indirect Subsidiaries,
showing: (i) the number of shares of each class of common and preferred Stock
authorized for each of such Subsidiaries, and (ii) the number and the percentage
of the outstanding shares of each such class owned directly or indirectly by
Parent. All of the outstanding capital Stock of each such Subsidiary has been
validly issued and is fully paid and non-assessable.

(d) Except as set forth on Schedule 4.1(c), there are no subscriptions, options,
warrants, or calls relating to any shares of Parent’s Subsidiaries’ capital
Stock, including any right of conversion or exchange under any outstanding
security or other instrument. Neither Parent nor any of its Subsidiaries is
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of Parent’s Subsidiaries’ capital Stock or any
security convertible into or exchangeable for any such capital Stock.

 

4.2 Due Authorization; No Conflict.

(a) As to each Loan Party, the execution, delivery, and performance by such Loan
Party of the Loan Documents to which it is a party have been duly authorized by
all necessary action on the part of such Loan Party.

(b) As to each Loan Party, the execution, delivery, and performance by such Loan
Party of the Loan Documents to which it is a party do not and will not
(i) violate any material provision of federal, state, or local law or regulation
applicable to any Loan Party or its Subsidiaries, the Governing Documents of any
Loan Party or its Subsidiaries, or any order, judgment, or decree of any court
or other Governmental Authority binding on any Loan Party or its Subsidiaries,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any Material Contract of any Loan Party
or its Subsidiaries except to the extent that any such conflict, breach or
default could not individually or in the aggregate reasonably be expected to
have a Material Adverse Change, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any assets of any Loan
Party, other than Permitted Liens, or (iv) require any approval of any Loan
Party’s interestholders or any approval or consent of any Person under any
Material Contract of any Loan Party, other than consents or approvals that have
been obtained and that are still in force and effect and except, in the case of
Material Contracts, for consents or approvals, the failure to obtain could not
individually or in the aggregate reasonably be expected to cause a Material
Adverse Change.

4.3 Governmental Consents. The execution, delivery, and performance by each Loan
Party of the Loan Documents to which such Loan Party is a party and the
consummation of the transactions contemplated by the Loan Documents do not and
will not require any registration with, consent, or approval

 

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of, or notice to, or other action with or by, any Governmental Authority, other
than registrations, consents, approvals, notices, or other actions that have
been obtained and that are still in force and effect and except for filings and
recordings with respect to the Collateral to be made, or otherwise delivered to
Agent for filing or recordation, as of the Closing Date.

 

4.4 Binding Obligations; Perfected Liens.

(a) Each Loan Document has been duly executed and delivered by each Loan Party
that is a party thereto and is the legally valid and binding obligation of such
Loan Party, enforceable against such Loan Party in accordance with its
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors’ rights generally.

(b) Agent’s Liens are validly created, perfected (other than (i) in respect of
motor vehicles and (ii) any Deposit Accounts and Securities Accounts not subject
to a Control Agreement as permitted by Section 6.11, and subject only to the
filing of financing statements, the recordation of the Copyright Security
Agreement, and the recordation of the Mortgages, in each case, in the
appropriate filing offices), and first priority Liens, subject only to Permitted
Liens.

 

4.5 Title to Assets; No Encumbrances. Each of the Loan Parties and its
Subsidiaries has (i) good, sufficient and legal title to (in the case of fee
interests in Real Property), (ii) valid leasehold interests in (in the case of
leasehold interests in real or personal property), and (iii) good and marketable
title to (in the case of all other personal property), all of their respective
assets reflected in their most recent financial statements delivered pursuant to
Section 5.1, in each case except for assets disposed of since the date of such
financial statements to the extent permitted hereby. All of such assets owned by
Loan Parties are free and clear of Liens except for Permitted Liens.

4.6 Jurisdiction of Organization; Location of Chief Executive Office;
Organizational Identification Number; Commercial Tort Claims.

(a) The name of (within the meaning of Section 9-503 of the Code) and
jurisdiction of organization of each Loan Party and each of its Subsidiaries is
set forth on Schedule 4.6(a) (as such Schedule may be updated from time to time
to reflect changes permitted to be made under Section 6.5).

(b) The chief executive office of each Loan Party is located at the address
indicated on Schedule 4.6(b) (as such Schedule may be updated from time to time
to reflect changes permitted to be made under Section 5.15).

(c) Each Loan Party’s tax identification numbers and organizational
identification numbers, if any, are identified on Schedule 4.6(c) (as such
Schedule may be updated from time to time to reflect changes permitted to be
made under Section 6.5).

(d) As of the Closing Date, no Loan Party holds any commercial tort claims
except as set forth on Schedule 4.6(d).

 

4.7 Litigation.

(a) There are no actions, suits, or proceedings pending or, to the best
knowledge of Borrower, threatened in writing against a Loan Party or any of its
Subsidiaries that either individually or in the aggregate could reasonably be
expected to result in a Material Adverse Change.

(b) Schedule 4.7(b) sets forth a complete and accurate description, with respect
to each of the actions, suits, or proceedings that, as of the Closing Date, is
pending or, to the best knowledge of Borrower, threatened against a Loan Party
or any of its Subsidiaries, of (i) the parties to such actions, suits, or

 

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proceedings, (ii) the nature of the dispute that is the subject of such actions,
suits, or proceedings, (iii) Borrower’s good faith estimate of the maximum
amount of the liability of Loan Parties and their Subsidiaries in connection
with such actions, suits, or proceedings, (iv) the status, as of the Closing
Date, with respect to such actions, suits, or proceedings, and (v) whether any
liability of the Loan Parties’ and their Subsidiaries in connection with such
actions, suits, or proceedings is covered by insurance.

 

4.8 Compliance with Laws. No Loan Party nor any of its Subsidiaries (a) is in
violation of any applicable laws, rules, regulations, executive orders, or codes
(including Environmental Laws) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Change, or (b) is subject
to or in default with respect to any final judgments, writs, injunctions,
decrees, rules or regulations of any court or any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Change.

 

4.9 No Material Adverse Change. All historical financial statements relating to
the Loan Parties that have been delivered by Borrower to Agent have been
prepared in accordance with GAAP (except, in the case of unaudited financial
statements, for the lack of footnotes and being subject to year-end audit
adjustments) and present fairly in all material respects, the Loan Parties’ and
their Subsidiaries’ consolidated financial condition as of the date thereof and
results of operations for the period then ended. Since December 31, 2008, no
event, circumstance, or change has occurred that has or could reasonably be
expected to result in a Material Adverse Change.

4.10 Fraudulent Transfer.

(a) Each Loan Party is Solvent.

(b) No transfer of property is being made by any Loan Party and no obligation is
being incurred by any Loan Party in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of such Loan Party.

 

4.11 Employee Benefits. No Loan Party, none of their Subsidiaries, nor any of
their ERISA Affiliates maintains, sponsors or is required to contribute to any
Benefit Plan except as set forth on Schedule 4.11. No ERISA Event has occurred
in the past six years that, when taken together with all other such ERISA Events
that have occurred in the past six years, resulted in, or could reasonably be
expected to result in, a Material Adverse Effect. No ERISA Event is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect.

 

4.12 Environmental Condition. Except as set forth on Schedule 4.12, or that
individually or in the aggregate could not reasonably be expected to result in a
Material Adverse Change, (a) to Borrower’s knowledge, no Loan Party’s or its
Subsidiaries’ properties or assets has ever been used by a Loan Party, its
Subsidiaries, or by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials,
where such disposal, production, storage, handling, treatment, release or
transport was in violation, in any material respect, of any applicable
Environmental Law, (b) to Borrower’s knowledge, no Loan Party’s or its
Subsidiaries’ properties or assets has ever been designated or identified in any
manner pursuant to any Environmental Law as a Hazardous Materials disposal site,
(c) no Loan Party nor any of its Subsidiaries has received notice that a Lien
arising under any Environmental Law has attached to any revenues or to any Real
Property owned or operated by a Loan Party or its Subsidiaries, and (d) no Loan
Party nor any of its Subsidiaries nor any of their respective facilities or
operations is subject to any outstanding written order, consent decree, or
settlement agreement with any Person relating to any Environmental Law or
Environmental Liability.

 

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4.13 Intellectual Property. Each Loan Party and its Domestic Subsidiaries own,
or hold licenses in, all trademarks, trade names, copyrights, patents, and
licenses that are necessary to the conduct of its business as currently
conducted, and attached hereto as Schedule 4.13 (as updated from time to time)
is a true, correct, and complete listing of all material trademarks, trade
names, copyrights, patents, and licenses as to which Parent or one of its
Domestic Subsidiaries is the owner or is an exclusive licensee; provided,
however, that Borrower may amend Schedule 4.13 to add additional intellectual
property so long as such amendment occurs by written notice to Agent not less
than 30 days after the date on which the applicable Loan Party or its Domestic
Subsidiary acquires any such property after the Closing Date.

4.14 Leases. Each Loan Party and its Domestic Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to their business and to which
they are parties or under which they are operating, and, subject to Permitted
Protests, all of such material leases are valid and subsisting and no material
default by the applicable Loan Party or its Subsidiaries exists under any of
them.

4.15 Deposit Accounts and Securities Accounts. Set forth on Schedule 4.15 (as
updated pursuant to the provisions of the Security Agreement from time to time)
is a listing of all of the Loan Parties’ and their Domestic Subsidiaries’
Deposit Accounts and Securities Accounts, including, with respect to each bank
or securities intermediary (a) the name and address of such Person, and (b) the
account numbers of the Deposit Accounts or Securities Accounts maintained with
such Person.

4.16 Complete Disclosure. All factual information (taken as a whole) furnished
by or on behalf of a Loan Party or its Subsidiaries in writing to Agent or any
Lender (including all information contained in the Schedules hereto or in the
other Loan Documents) for purposes of or in connection with this Agreement, the
other Loan Documents, or any transaction contemplated herein or therein is, and
all other such factual information (taken as a whole) hereafter furnished by or
on behalf of a Loan Party or its Subsidiaries in writing to Agent or any Lender
will be, true and accurate, in all material respects, on the date as of which
such information is dated or certified and not incomplete by omitting to state
any fact necessary to make such information (taken as a whole) not misleading in
any material respect at such time in light of the circumstances under which such
information was provided. On the Closing Date, the Projections that were most
recently delivered to Agent (and were accepted by Agent) represent, and as of
the date on which any other Projections are delivered to Agent, such additional
Projections represent Borrower’s good faith estimate of the Loan Parties’ and
their Domestic Subsidiaries future performance for the periods covered thereby
based upon assumptions believed by Borrower to be reasonable at the time of the
delivery thereof to Agent (it being understood that such Projections are subject
to uncertainties and contingencies, many of which are beyond the control of the
Loan Parties and their Subsidiaries and no assurances can be given that such
Projections will be realized).

4.17 Material Contracts. Set forth on Schedule 4.17 (as updated from time to
time) is a reasonably detailed description of the Material Contracts of each
Loan Party and its Domestic Subsidiaries; provided, however, that Borrower may
amend Schedule 4.17 to add additional Material Contracts so long as such
amendment occurs by written notice to Agent at the time that Parent provides its
quarterly financial statements pursuant to Section 5.1. Except for matters
which, either individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Change, each Material Contract (other than those
that have expired at the end of their normal terms) (a) is in full force and
effect and is binding upon and enforceable against the applicable Loan Party or
its Domestic Subsidiary and, to the best of Borrower’s knowledge, each other
Person that is a party thereto in accordance with its terms, (b) has not been
otherwise amended or modified (other than amendments or modifications permitted
by Section 6.7(b)), and (c) is not in default due to the action or inaction of
the applicable Loan Party or its Domestic Subsidiary.

4.18 Patriot Act. To the extent applicable, each Loan Party is in compliance, in
all material respects, with the (a) Trading with the Enemy Act, as amended, and
each of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling
legislation or executive order relating thereto, and (b) Uniting and
Strengthening America by

 

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Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA
Patriot Act of 2001) (the “Patriot Act”). No part of the proceeds of the loans
made hereunder will be used, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.

4.19 Indebtedness. Set forth on Schedule 4.19 is a true and complete list of all
Indebtedness of each Loan Party and each of its Subsidiaries outstanding
immediately prior to the Closing Date that is to remain outstanding after the
Closing Date and such Schedule accurately sets forth the aggregate principal
amount of such Indebtedness as of the Closing Date.

4.20 Payment of Taxes. Except as otherwise permitted under Section 5.5, all tax
returns and reports of each Loan Party and its Domestic Subsidiaries required to
be filed by any of them have been timely filed, and all taxes shown on such tax
returns to be due and payable and all assessments, fees and other governmental
charges upon a Loan Party and its Domestic Subsidiaries and upon their
respective assets, income, businesses and franchises that are due and payable
have been paid when due and payable. Each Loan Party and each of its Domestic
Subsidiaries have made adequate provision in accordance with GAAP for all taxes
not yet due and payable. Borrower knows of no proposed tax assessment against a
Loan Party or any of its Domestic Subsidiaries that is not being actively
contested by such Loan Party or such Subsidiary diligently, in good faith, and
by appropriate proceedings; provided such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been
made or provided therefor. No Loan Party nor any of its Domestic Subsidiaries
has ever been a party to any understanding or arrangement constituting a “tax
shelter” within the meaning of Section 6662(d)(2)(C)(iii) of the IRC or within
the meaning of Section 6111(c) or Section 6111(d) of the IRC as in effect
immediately prior to the enactment of the American Jobs Creation Act of 2004, or
has ever “participated” in a “reportable transaction” within the meaning of
Treasury Regulation Section 1.6011-4, except as would not be reasonably expected
to, individually or in the aggregate, result in a Material Adverse Change.

4.21 Margin Stock. No Loan Party nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. No part of
the proceeds of the loans made to Borrower will be used to purchase or carry any
such Margin Stock or to extend credit to others for the purpose of purchasing or
carrying any such margin stock or for any purpose, in each case that violates,
or is inconsistent with, the provisions of Regulation T, U or X of said Board of
Governors.

4.22 Governmental Regulation. No Loan Party nor any of its Subsidiaries is
subject to regulation under the Federal Power Act or the Investment Company Act
of 1940 or under any other federal or state statute or regulation which may
limit its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable. No Loan Party nor any of its
Subsidiaries is a “registered investment company” or a company “controlled” by a
“registered investment company” or a “principal underwriter” of a “registered
investment company” as such terms are defined in the Investment Company Act of
1940.

4.23 OFAC. No Loan Party nor any of its Subsidiaries is in violation of any of
the country or list based economic and trade sanctions administered and enforced
by OFAC. No Loan Party nor any of its Subsidiaries (a) is a Sanctioned Person or
a Sanctioned Entity, (b) has more than 10% of its assets located in Sanctioned
Entities, or (c) derives more than 10% of its revenues from investments in, or
transactions with Sanctioned Persons or Sanctioned Entities. The proceeds of any
Advance will not be used to fund any operations in, finance any investments or
activities in, or make any payments to, a Sanctioned Person or a Sanctioned
Entity.

 

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4.24 Employee and Labor Matters. Except as set forth in Schedule 4.7(b), there
is (i) no unfair labor practice complaint pending or, to the knowledge of Parent
and Borrower, threatened against Parent or its Domestic Subsidiaries before any
Governmental Authority and no grievance or arbitration proceeding pending or
threatened against Parent or its Domestic Subsidiaries which arises out of or
under any collective bargaining agreement, (ii) no strike, labor dispute,
slowdown, stoppage or similar action or grievance pending or threatened against
Parent or its Domestic Subsidiaries, or (iii) to the knowledge of Parent and
Borrower, no union representation question existing with respect to the
employees of Parent or its Domestic Subsidiaries and no union organizing
activity taking place with respect to any of the employees of Parent or its
Domestic Subsidiaries. None of Parent or its Subsidiaries has incurred any
liability or obligation under the Worker Adjustment and Retraining Notification
Act or similar state law, which remains unpaid or unsatisfied. The hours worked
and payments made to employees of Parent and its Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable legal
requirements, except to the extent such violations could not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect.
All material payments due from Parent or its Subsidiaries on account of wages
and employee health and welfare insurance and other benefits have been paid or
accrued as a liability on the books of Parent and its Subsidiaries, except where
the failure to do so could not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.

4.25 Parent as a Holding Company. Parent is a holding company and does not have
any material liabilities (other than (i) liabilities arising under the Loan
Documents and the Domestic Loan Documents, and (ii) liabilities on account of
any Indebtedness permitted under clause (n) of the definition of Permitted
Indebtedness), own any material assets (other than the Stock of Borrower) or
engage in any operations or business (other than the ownership of Borrower and
its rights and obligations under the Loan Documents, the Domestic Loan Documents
and any documents evidencing any Indebtedness permitted under clause (n) of the
definition of Permitted Indebtedness).

4.26 Intentionally Omitted.

4.27 Intentionally Omitted.

4.28 Eligible Accounts. As to each Account that is identified by Borrower as an
Eligible Account in a Borrowing Base Certificate submitted to Agent, such
Account is (a) a bona fide existing payment obligation of the applicable Account
Debtor credited by the sale and delivery of Inventory or the rendition of
services to such Account Debtor in the ordinary course of Borrower’s business,
(b) owed to Borrower without any known defenses, disputes, offsets,
counterclaims, or rights of return or cancellation, and (c) not excluded as
ineligible by virtue of one or more of the excluding criteria set forth in the
definition of Eligible Accounts.

4.29 Intentionally Omitted.

4.30 Locations of Inventory and Equipment. The Inventory and Equipment (other
than vehicles or Equipment out for repair) of the Loan Parties are not stored
with a bailee, warehouseman, or similar party and are located only at, or
in-transit between, the locations identified on Schedule 4.30 (as such Schedule
may be updated pursuant to Section 5.15).

4.31 Inventory Records. Each Loan Party keeps correct and accurate records
itemizing and describing the type, quality, and quantity of its Inventory and
the book value thereof.

4.32 Borrower Agreement. The representations and warranties of Borrower under
the Borrower Agreement are true and correct.

 

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5. AFFIRMATIVE COVENANTS.

Each of Parent and Borrower covenants and agrees that, until termination of all
of the Commitments and payment in full of the Obligations, the Loan Parties
shall and shall cause each of their Domestic Subsidiaries to comply with each of
the following:

5.1 Financial Statements, Reports, Certificates. Deliver to Agent, with copies
to each Lender, each of the financial statements, reports, and other items set
forth on Schedule 5.1 at the times specified therein. In addition, each of
Parent and Borrower agrees that no Loan Party will have a fiscal year different
from that of Parent. In addition, Parent and Borrower agree to maintain a system
of accounting that enables Parent and Borrower to produce financial statements
in accordance with GAAP. Each Loan Party shall also (a) keep a reporting system
that shows all additions, sales, claims, returns, and allowances with respect to
its and its Domestic Subsidiaries’ sales, and (b) maintain its billing
systems/practices as approved by Agent prior to the Closing Date and shall only
make material modifications thereto with notice to, and with the reasonable
consent of, Agent.

5.2 Collateral Reporting. Provide Agent (and if so requested by Agent, with
copies for each Lender) with each of the reports set forth on Schedule 5.2 at
the times specified therein. In addition, Borrower agrees to use commercially
reasonable efforts in cooperation with Agent to facilitate and implement a
system of electronic collateral reporting in order to provide electronic
reporting of each of the items set forth on such Schedule.

5.3 Existence. Except as otherwise permitted under Section 6.3, at all times
maintain and preserve in full force and effect its existence (including being in
good standing in its jurisdiction of organization) and all rights and
franchises, licenses and permits material to its business; provided, however,
that no Loan Party or any of its Subsidiaries shall be required to preserve any
such right or franchise, licenses or permits if such Person’s board of directors
(or similar governing body) shall determine that the preservation thereof is no
longer desirable in the conduct of the business of such Person, and that the
loss thereof is not disadvantageous in any material respect to such Person or to
the Lenders.

5.4 Maintenance of Properties. Maintain and preserve all of its assets that are
necessary or useful in the proper conduct of its business in good working order
and condition, ordinary wear, tear, and casualty excepted and Permitted
Dispositions excepted, and comply with the material provisions of all material
leases to which it is a party as lessee, so as to prevent the loss or forfeiture
thereof, unless such provisions are the subject of a Permitted Protest.

5.5 Taxes. Cause all assessments and taxes imposed, levied, or assessed against
any Loan Party or its Subsidiaries, or any of their respective assets or in
respect of any of its income, businesses, or franchises to be paid in full,
before delinquency or before the expiration of any extension period, except to
the extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest and so long as, in the case of an assessment or tax that has
or may become a Lien against any of the Collateral, such contest proceedings
conclusively operate to stay the sale of any portion of the Collateral to
satisfy such assessment or tax. Parent and Borrower will and will cause each of
their Subsidiaries to make timely payment or deposit of all tax payments and
withholding taxes required of it and them by applicable laws, including those
laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and
federal income taxes, and will, upon request, furnish Agent with proof
reasonably satisfactory to Agent indicating that Parent, Borrower and their
Subsidiaries have made such payments or deposits.

5.6 Insurance. At Borrower’s expense, maintain insurance respecting each of the
Loan Parties’ and their Domestic Subsidiaries’ assets wherever located, covering
loss or damage by fire, theft, explosion, and all other hazards and risks as
ordinarily are insured against by other Persons engaged in the same or similar
businesses. Borrower also shall maintain (with respect to each of the Loan
Parties and their Domestic Subsidiaries) business interruption, general
liability, product liability insurance, director’s and officer’s liability
insurance, fiduciary liability insurance, and employment practices liability
insurance, as well as insurance against larceny, embezzlement, and criminal
misappropriation. All such policies of insurance shall

 

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be with responsible and reputable insurance companies reasonably acceptable to
Agent and in such amounts as is carried generally in accordance with sound
business practice by companies in similar businesses similarly situated and
located and in any event in amount, adequacy and scope reasonably satisfactory
to Agent. All property insurance policies covering the Collateral are to be made
payable to Agent for the benefit of Agent and the Lenders, as their interests
may appear, in case of loss, pursuant to a standard loss payable endorsement
with a standard non contributory “lender” or “secured party” clause and are to
contain such other provisions as Agent may reasonably require to fully protect
the Lenders’ interest in the Collateral and to any payments to be made under
such policies. All certificates of property and general liability insurance are
to be delivered to Agent, with the loss payable (but only in respect of
Collateral) and additional insured endorsements in favor of Agent and shall
provide for not less than 30 days (10 days in the case of non-payment) prior
written notice to Agent of the exercise of any right of cancellation. If
Borrower fails to maintain such insurance, Agent may arrange for such insurance,
but at Borrower’s expense and without any responsibility on Agent’s part for
obtaining the insurance, the solvency of the insurance companies, the adequacy
of the coverage, or the collection of claims. Borrower shall give Agent prompt
notice of any loss exceeding $250,000 per occurrence covered by its casualty or
business interruption insurance. Upon the occurrence and during the continuance
of an Event of Default, Agent shall have the sole right to file claims under any
property and general liability insurance policies in respect of the Collateral,
to receive, receipt and give acquittance for any payments that may be payable
thereunder, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any claims under any such insurance
policies.

5.7 Inspection. Permit Agent and each of its duly authorized representatives or
agents to visit any of its properties and inspect any of its assets or books and
records, to conduct appraisals and valuations, to examine and make copies of its
books and records, and to discuss its affairs, finances, and accounts with, and
to be advised as to the same by, its officers and employees at such reasonable
times and intervals as Agent may designate and, so long as no Default or Event
of Default exists, with reasonable prior notice to Borrower.

5.8 Compliance with Laws. Comply with the requirements of all applicable laws,
rules, regulations, and orders of any Governmental Authority, other than laws,
rules, regulations, and orders the non-compliance with which, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Change.

5.9 Environmental.

(a) Keep any property either owned or operated by Parent or its Domestic
Subsidiaries free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens,

(b) comply, in all material respects, with Environmental Laws and provide to
Agent documentation of such compliance which Agent reasonably requests,

(c) promptly notify Agent of any release of which Borrower has knowledge of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by Parent or its Domestic Subsidiaries and take any Remedial Actions
required to abate said release or otherwise to come into compliance, in all
material respects, with applicable Environmental Law, and

(d) promptly, but in any event within 5 Business Days of its receipt thereof,
provide Agent with written notice of any of the following: (i) notice that an
Environmental Lien has been filed against any of the real or personal property
of Parent or its Domestic Subsidiaries, (ii) commencement of any Environmental
Action or notice that an Environmental Action will be filed against Parent or
its Domestic Subsidiaries, and (iii) notice of a violation, citation, or other
administrative order which could reasonably be expected to result in a Material
Adverse Change.

 

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5.10 Disclosure Updates. Promptly and in no event later than 5 Business Days
after obtaining knowledge thereof, notify Agent if any written information,
exhibit, or report furnished to the Lender Group contained, at the time it was
furnished, any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which made. The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not
cure or remedy the effect of the prior untrue statement of a material fact or
omission of any material fact nor shall any such notification have the effect of
amending or modifying this Agreement or any of the Schedules hereto.

5.11 Formation of Subsidiaries. At the time that any Loan Party forms any direct
or indirect Subsidiary or acquires any direct or indirect Subsidiary after the
Closing Date, such Loan Party shall (a) within 10 days of such formation or
acquisition cause any such new Subsidiary to provide to Agent a joinder to the
Guaranty and the Security Agreement, together with such other security documents
(including mortgages with respect to any Real Property owned in fee of such new
Subsidiary), as well as appropriate financing statements (and with respect to
all property subject to a mortgage, fixture filings), all in form and substance
reasonably satisfactory to Agent (including being sufficient to grant Agent a
first priority Lien (subject to Permitted Liens) in and to the assets of such
newly formed or acquired Subsidiary); provided that the Guaranty, the Security
Agreement, and such other security documents shall not be required to be
provided to Agent with respect to any Subsidiary of Parent that is a CFC,
(b) within 10 days of such formation or acquisition (or such later date as
permitted by Agent in its sole discretion) provide to Agent a pledge agreement
and appropriate certificates and powers or financing statements, hypothecating
all of the direct or beneficial ownership interest in such new Subsidiary
reasonably satisfactory to Agent; provided that only 65% of the total
outstanding voting Stock of any first tier Subsidiary of any Loan Party that is
a CFC and none of the total outstanding voting Stock of any other Subsidiary of
such CFC shall be required to be pledged; and (c) within 10 days of such
formation or acquisition (or such later date as permitted by Agent in its sole
discretion) provide to Agent all other documentation, including one or more
opinions of counsel reasonably satisfactory to Agent, which in its opinion is
appropriate with respect to the execution and delivery of the applicable
documentation referred to above (including policies of title insurance or other
documentation with respect to all Real Property owned in fee and subject to a
mortgage). Any document, agreement, or instrument executed or issued pursuant to
this Section 5.11 shall be a Loan Document.

5.12 Further Assurances. At any time upon the reasonable request of Agent,
execute or deliver to Agent any and all financing statements, fixture filings,
security agreements, pledges, assignments, endorsements of certificates of
title, mortgages, deeds of trust, opinions of counsel, and all other documents
(collectively, the “Additional Documents”) that Agent may reasonably request in
form and substance reasonably satisfactory to Agent, to create, perfect, and
continue perfected or to better perfect Agent’s Liens in all of the assets of
Parent and its Subsidiaries (whether now owned or hereafter arising or acquired,
tangible or intangible, real or personal), to create and perfect Liens in favor
of Agent in any Real Property acquired by Parent or its Subsidiaries after the
Closing Date, and in order to fully consummate all of the transactions
contemplated hereby and under the other Loan Documents; provided that the
foregoing shall not apply to any Subsidiary of Parent that is a CFC. To the
maximum extent permitted by applicable law, each of Parent and Borrower
authorizes Agent to execute any such Additional Documents in the applicable Loan
Party’s or its Subsidiary’s name, as applicable, and authorizes Agent to file
such executed Additional Documents in any appropriate filing office. In
furtherance and not in limitation of the foregoing, each Loan Party shall take
such actions as Agent may reasonably request from time to time to ensure that
the Obligations are guarantied by the Guarantors and are secured by
substantially all of the assets of Parent and its Subsidiaries and all of the
outstanding capital Stock of Borrower and Borrower’s Subsidiaries (subject to
limitations contained in the Loan Documents with respect to CFCs).

5.13 Lender Meetings. Within 90 days after the close of each fiscal year of
Parent, at the request of Agent or of the Required Lenders and upon reasonable
prior notice, hold a meeting (at a mutually agreeable location and time or, at
the option of Agent, by conference call) with all Lenders who choose to attend
such meeting at which meeting shall be reviewed the financial results of the
previous fiscal year and the financial condition of Parent and its Subsidiaries
and the projections presented for the current fiscal year of Parent.

 

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5.14 Material Contracts. Contemporaneously with the delivery of each Compliance
Certificate pursuant hereto, provide Agent with copies of (a) each Material
Contract entered into by a Loan Party or its Domestic Subsidiaries since the
delivery of the previous Compliance Certificate, and (b) each material amendment
or modification of any Material Contract entered into since the delivery of the
previous Compliance Certificate.

5.15 Location of Inventory and Equipment. Keep each Loan Parties’ and its
Domestic Subsidiaries’ Inventory and Equipment (other than vehicles and
Equipment out for repair) only at the locations identified on Schedule 4.30 and
their chief executive offices only at the locations identified on Schedule
4.6(b); provided, however, that Borrower may amend Schedule 4.30 or Schedule
4.6(b) so long as such amendment occurs by written notice to Agent not less than
10 days prior to the date on which such Inventory or Equipment is moved to such
new location or such chief executive office is relocated and so long as such new
location is within the continental United States, and so long as Borrower uses
commercially reasonable efforts to provide Agent a Collateral Access Agreement
with respect thereto within 20 days of such written notification.

5.16 Assignable Material Contracts. Use commercially reasonable efforts to
ensure that any Material Contract entered into after the Closing Date by Parent
or one of its Domestic Subsidiaries that generates or, by its terms, will
generate revenue, permits the assignment of such agreement (and all rights of
Parent or such Subsidiary, as applicable, thereunder) to Parent’s or such
Subsidiary’s lenders or an agent for any lenders (and any transferees of such
lenders or such agent, as applicable).

 

6. NEGATIVE COVENANTS.

Each of Parent and Borrower covenants and agrees that, until termination of all
of the Commitments and payment in full of the Obligations, the Loan Parties will
not and will not permit any of their Domestic Subsidiaries (and all Subsidiaries
in the case only of Section 6.1) to do any of the following:

6.1 Indebtedness. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except for Permitted Indebtedness.

6.2 Liens. Create, incur, assume, or suffer to exist, directly or indirectly,
any Lien on or with respect to any of its assets, of any kind, whether now owned
or hereafter acquired, or any income or profits therefrom, except for Permitted
Liens.

6.3 Restrictions on Fundamental Changes.

(a) Other than in order to consummate a Permitted Acquisition, enter into any
merger, consolidation, reorganization, or recapitalization, or reclassify its
Stock, except for (i) any merger between Loan Parties and Subsidiaries of Parent
that are not Loan Parties so long as such Loan Party is the surviving entity of
any such merger, and (ii) any merger between Subsidiaries of Parent that are not
Loan Parties,

(b) Liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution), except for (i) the liquidation or dissolution of non-operating
Subsidiaries of Borrower with nominal assets and nominal liabilities, (ii) the
liquidation or dissolution of a Loan Party (other than Parent or Borrower) or
any of its wholly-owned Subsidiaries so long as all of the assets (including any
interest in any Stock) of such liquidating or dissolving Loan Party or
Subsidiary are transferred to a Loan Party that is not liquidating or
dissolving, (iii) the liquidation or dissolution of a Subsidiary of Borrower
that is not a Loan Party (other than any such Subsidiary the Stock of which (or
any portion thereof) is subject to a Lien in favor of Agent) so long as all of
the assets of such liquidating or dissolving Subsidiary are transferred to
Borrower or a Subsidiary of

 

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Borrower that is not liquidating or dissolving, or (iv) the liquidation or
dissolution of a Subsidiary of Borrower that is not a Loan Party, the Stock of
which (or any portion thereof) is subject to a Lien in favor of Agent, so long
as all of the assets of such liquidating or dissolving Subsidiary are
transferred to Borrower or a Subsidiary of Borrower that is not liquidating or
dissolving and the Stock of which (or any portion thereof) is also subject to a
Lien in favor of Agent, or

(c) Suspend or go out of a substantial portion of its or their business, except
as permitted pursuant to clauses (a) or (b) above or in connection with the
transactions permitted pursuant to Section 6.4.

 

6.4 Disposal of Assets. Other than Permitted Dispositions, Permitted
Investments, or transactions expressly permitted by Sections 6.3 and 6.11,
convey, sell, lease, license, assign, transfer, or otherwise dispose of (or
enter into an agreement to convey, sell, lease, license, assign, transfer, or
otherwise dispose of) any of Parent’s or its Subsidiaries assets.

 

6.5 Change Name. Change any Loan Party’s name, organizational identification
number, state of organization or organizational identity; provided, however,
that Parent or any of its Subsidiaries may change their names upon at least 10
days prior written notice to Agent of such change.

 

6.6 Nature of Business. Make any change in the nature of its or their business
as described in Schedule 6.6 or acquire any properties or assets that are not
reasonably related to the conduct of such business activities; provided that
Borrower and its Subsidiaries may engage in any business that is reasonably
related or ancillary to its or their business.

 

6.7 Prepayments and Amendments.

(a) Except in connection with Refinancing Indebtedness permitted by Section 6.1,

(i) optionally prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of any Loan Party, other than (A) the Obligations in accordance
with this Agreement, (B) the Domestic Obligations in accordance with the
Domestic Credit Agreement, and (C) Permitted Intercompany Investments,

(ii) make any payment on account of Indebtedness that has been contractually
subordinated in right of payment (including, without limitation, Indebtedness
arising in connection with the Senior Subordinated Note Indenture) if such
payment is not permitted at such time under the subordination terms and
conditions, or

(b) Directly or indirectly, amend, modify, or change any of the terms or
provisions of

(i) any agreement, instrument, document, indenture, or other writing evidencing
or concerning Permitted Indebtedness other than (A) the Obligations in
accordance with this Agreement, (B) Permitted Intercompany Investments, and
(C) Indebtedness permitted under clauses (c), (f), (h), and (i) of the
definition of Permitted Indebtedness,

(ii) any Material Contract except to the extent that such amendment,
modification, alteration, increase, or change could not, individually or in the
aggregate, reasonably be expected to be materially adverse to the interests of
the Lenders, or

(iii) the Governing Documents of any Loan Party or any of its Subsidiaries if
the effect thereof, either individually or in the aggregate, could reasonably be
expected to be materially adverse to the interests of the Lenders.

 

6.8 Change of Control. Cause, permit, or suffer, directly or indirectly, any
Change of Control.

 

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6.9 Distributions. Make any distribution or declare or pay any dividends (in
cash or other property, other than common Stock) on, or purchase, acquire,
redeem, or retire any of Parent’s or Borrower’s Stock, of any class, whether now
or hereafter outstanding; provided, however, that, so long as it is permitted by
law:

(a) so long as no Default or Event of Default shall have occurred and be
continuing or would result therefrom, Parent and its Subsidiaries may make
distributions to Holdings for the sole purpose of allowing Holdings to, and
Holdings shall use the proceeds thereof solely to, make distributions to former
employees, officers, or directors (or any spouses, ex-spouses, or estates of any
of the foregoing) on account of redemptions of Stock of Holdings held by such
Persons, provided, however, that the aggregate amount of such distributions made
by Parent and its Subsidiaries to Holdings during any fiscal year of Parent does
not exceed $2,000,000 per year and $5,000,000 in the aggregate;

(b) so long as no Default or Event of Default shall have occurred and be
continuing or would result therefrom, Parent and its Subsidiaries may make
distributions to Holdings for the sole purpose of allowing Holdings to, and
Holdings shall use the proceeds thereof solely to, pay mandatory interest
payments on the Holdings 12% Senior Discount Notes due 2015 (and any Refinancing
Indebtedness in respect of such Indebtedness); provided, however, that (i) the
aggregate amount of such distributions made by Parent and its Subsidiaries to
Holdings during any fiscal year of Parent shall not exceed $12,000,000, and
(ii) while any Advances are outstanding, no such distributions may be made by
Parent and its Subsidiaries to Holdings unless both before and after giving
effect to any such distribution, Excess Availability is greater than $8,000,000;

(c) Parent and its Subsidiaries may make distributions to Holdings for the sole
purpose of allowing Holdings to, and Holdings shall use the proceeds thereof
solely to, pay federal and state income taxes and franchise taxes solely arising
out of the consolidated operations of Holdings and its Subsidiaries, after
taking into account all available credits and deductions (provided that neither
Borrower nor any of its Subsidiaries shall make any distribution to Parent or
Holdings in any amount greater than the share of such taxes arising out of
Borrower’s consolidated net income);

(d) so long as no Default or Event of Default shall have occurred and be
continuing or would result therefrom, Parent and its Subsidiaries may make
distributions to Holdings for the sole purpose of allowing Holdings to, and
Holdings shall use the proceeds thereof solely to, pay other reasonable
administrative and maintenance expenses arising solely out of the consolidated
operations (including maintenance of existence) of Holdings and its
Subsidiaries, in an aggregate amount not to exceed $200,000 in any fiscal year
of Parent; and

(e) so long as no Default or Event of Default shall have occurred and be
continuing or would result therefrom and so long as Parent and its Subsidiaries
are permitted to make the payments permitted by Section 6.12(c) and (e),
Borrower or any of its Subsidiaries may make dividends or distributions to
Parent for the purpose of permitting Parent to make such payments permitted by
Section 6.12(c) and (e) and Parent agrees to use the proceeds of such dividends
or distributions solely for such purpose.

6.10 Accounting Methods. Modify or change its fiscal year or its method of
accounting (other than as may be required to conform to GAAP).

6.11 Investments. Except for Permitted Investments, directly or indirectly, make
or acquire any Investment or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however, that
(other than (a) an aggregate amount of not more than $250,000 at any one time,
in the case of Parent and its Domestic Subsidiaries, and (b) amounts deposited
into Deposit Accounts specially and exclusively used for payroll, payroll taxes
and other employee wage and benefit payments to or for Parent’s or its
Subsidiaries’ employees) Parent and its Domestic Subsidiaries shall not have
Permitted Investments

 

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consisting of cash, Cash Equivalents, or amounts credited to Deposit Accounts or
Securities Accounts unless Parent or its Subsidiary, as applicable, and the
applicable bank or securities intermediary have entered into Control Agreements
with Agent governing such Permitted Investments in order to perfect (and further
establish) Agent’s Liens in such Permitted Investments. Subject to the foregoing
proviso, Parent shall not and shall not permit its Domestic Subsidiaries to
establish or maintain any Deposit Account or Securities Account unless Agent
shall have received a Control Agreement in respect of such Deposit Account or
Securities Account.

6.12 Transactions with Affiliates. Directly or indirectly enter into or permit
to exist any transaction with any Affiliate of Parent or any of its Subsidiaries
except for:

(a) transactions (other than the payment of management, consulting, monitoring,
or advisory fees) between Parent or its Subsidiaries, on the one hand, and any
Affiliate of Parent or its Subsidiaries, on the other hand, so long as such
transactions (i) are fully disclosed to Agent prior to the consummation thereof,
if they involve one or more payments by Parent or its Subsidiaries in excess of
$100,000 for any single transaction or series of related transactions, and
(ii) are no less favorable, taken as a whole, to Parent or its Subsidiaries, as
applicable, than would be obtained in an arm’s length transaction with a
non-Affiliate,

(b) so long as it has been approved by Parent’s Board of Directors in accordance
with applicable law, any indemnity provided for the benefit of directors of
Parent,

(c) so long as it has been approved by Parent’s Board of Directors, the payment
of reasonable fees, compensation, or employee benefit arrangements to employees,
officers, and outside directors of Parent in the ordinary course of business and
consistent with industry practice,

(d) transactions permitted by Section 6.3 or Section 6.9, or any Permitted
Intercompany Investment,

(e) the payment, pursuant to the Management Agreement, of (i) management,
consulting, monitoring, and advisory fees to Kohlberg & Company, L.L.C., so long
as (x) no Event of Default has occurred and is continuing or would result
therefrom, and (y) after taking into account all such payments to be made on any
date, Borrower and its Subsidiaries would have Excess Availability plus
Qualified Cash of at least $10,000,000; and (ii) reasonable out-of-pocket
expenses pursuant to any financial advisory, financing, underwriting, or
placement agreement or in respect of other investment banking activities,
including in connection with acquisitions or divestitures that are permitted by
this Agreement; provided, however, that the aggregate amount of all fees and
expenses paid under this Section 6.12(e) shall not exceed $850,000 in any fiscal
year of Parent, and

(f) transactions permitted under clause (n) of the definition of Permitted
Indebtedness.

6.13 Use of Proceeds. Use any proceeds of the Advances:

(a) for the purpose of:

(i) servicing or repaying any of Borrower’s pre-existing or future Indebtedness
unrelated to this Agreement unless approved by EXIM Bank in writing;

(ii) acquiring fixed assets or capital assets for use in Borrower’s business;

(iii) acquiring, equipping or renting commercial space outside of the United
States;

 

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(iv) paying the salaries of non-U.S. citizens or non-U.S. permanent residents
who are located in offices outside of the United States;

(v) in connection with a Retainage or Warranty (as such terms are defined in the
Borrower Agreement) unless approved by EXIM Bank in writing; or

(vi) any other purpose, other than to finance the cost of manufacturing,
producing, purchasing or selling the Items; or

(b) to finance the manufacture, purchase or sale of any of the following:

(i) Items to be sold to a Buyer (as defined in the Borrower Agreement) located
in a country as to which EXIM Bank is prohibited from doing business as
designated in the Country Limitation Schedule;

(ii) that part of the cost of the Items which is not U.S. Content (as defined in
the Borrower Agreement) unless such part is not greater than fifty percent
(50%) of the cost of the Items (as defined in the Borrower Agreement) and is
incorporated into the Items in the United States;

(iii) defense articles or defense services;

(iv) Capital Goods (as defined in the Borrower Agreement) unless in accordance
with Section 2.14 of the Borrower Agreement; or

(v) without EXIM Bank’s prior written consent, any Items to be used in the
construction, alteration, operation, or maintenance of nuclear power,
enrichment, reprocessing, research or heavy water production facilities.

6.14 Parent as a Holding Company. Permit Parent to incur any liabilities (other
than (i) liabilities arising under the Loan Documents and the Domestic Loan
Documents, and (ii) liabilities on account of any Indebtedness permitted under
clause (n) of the definition of Permitted Indebtedness), own or acquire any
assets (other than the Stock of Borrower) or engage itself in any operations or
business, except in connection with its ownership of Borrower, and its rights
and obligations under the Loan Documents, the Dometic Loan Documents and any
documents evidencing any Indebtedness permitted under clause (n) of the
definition of Permitted Indebtedness.

6.15 Consignments. Consign any of its or their Inventory or sell any of its or
their Inventory on bill and hold, sale or return, sale on approval, or other
conditional terms of sale; provided, however, that Borrower and its Domestic
Subsidiaries may consign their Inventory so long as the value of all such
consigned Inventory (valued at the higher of cost or market) along with the
value of all Inventory (valued at the higher of cost or market) stored by
Borrower and its Domestic Subsidiaries with a bailee, warehouseman or similar
party, does not exceed $1,000,000 in the aggregate at any one time.

6.16 Inventory and Equipment with Bailees. Store the Inventory or Equipment of
Parent or its Subsidiaries at any time now or hereafter with a bailee,
warehouseman, or similar party; provided, however, that Borrower and its
Domestic Subsidiaries may store Inventory with a bailee, warehouseman, or
similar party so long as the value of all such Inventory (valued at the higher
of cost or market) along with the value of all Inventory (valued at the higher
of cost or market) consigned by Borrower and its Domestic Subsidiaries, does not
exceed $1,000,000 in the aggregate at any one time.

 

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7. FINANCIAL COVENANTS.

Each of Parent and Borrower covenants and agrees that, until termination of all
of the Commitments and payment in full of the Obligations, Borrower will comply
with the following financial covenant:

(a) Fixed Charge Coverage Ratio. Have a Fixed Charge Coverage Ratio, measured
for any month (on a month-end basis) where Borrower’s Excess Availability is
less than four million Dollars ($4,000,000) at any time during such month, of at
least the required amount set forth in the following table for the applicable
period set forth opposite thereto:

 

Applicable Ratio

  

Applicable Period

0.85:1.0          

   For the 1 month period
ending July 31, 2009

0.85:1.0          

   For the 2 month period
ending August 31, 2009

0.85:1.0          

   For the 3 month period
ending September 30, 2009

0.85:1.0          

   For the 4 month period
ending October 31, 2009

0.85:1.0          

   For the 5 month period
ending November 30, 2009

0.85:1.0          

   For the 6 month period
ending December 31, 2009

0.9:1.0          

   For the 7 month period
ending January 31, 2010

0.9:1.0          

   For the 8 month period
ending February 28, 2010

0.9:1.0          

   For the 9 month period
ending March 31, 2010

0.9:1.0          

   For the 10 month period
ending April 30, 2010

0.9:1.0          

   For the 11 month period
ending May 31, 2010

0.9:1.0          

   For the 12 month period
ending June 30, 2010

0.9:1.0          

   For the 12 month period
ending July 31, 2010

0.9:1.0          

   For the 12 month period
ending August 31, 2010

 

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0.9:1.0          

   For the 12 month period
ending September 30, 2010

0.9:1.0          

   For the 12 month period
ending October 31, 2010

0.9:1.0          

   For the 12 month period
ending November 30, 2010

0.9:1.0          

   For the 12 month period
ending December 31, 2010

1.0:1.0          

   For the 12 month period
ending January 31, 2011

1.0:1.0          

   For the 12 month period
ending February 28, 2011

1.0:1.0          

   For the 12 month period
ending March 31, 2011

1.0:1.0          

   For the 12 month period
ending April 30, 2011

1.0:1.0          

   For the 12 month period
ending May 31, 2011

1.0:1.0          

   For the 12 month period
ending June 30, 2011

1.0:1.0          

   For the 12 month period
ending July 31, 2011

1.0:1.0          

   For the 12 month period
ending August 31, 2011

1.0:1.0          

   For the 12 month period
ending September 30, 2011

1.0:1.0          

   For the 12 month period
ending October 31, 2011

1.0:1.0          

   For the 12 month period
ending November 30, 2011

1.0:1.0          

   For the 12 month period
ending December 31, 2011

1.1:1.0          

   For the 12 month period ending January 31, 2012, and for the 12 month period
ending at the end of each month thereafter

 

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8. EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default
(each, an “Event of Default”) under this Agreement:

8.1 If Borrower fails to pay when due and payable, or when declared due and
payable, (a) all or any portion of the Obligations consisting of interest, fees,
or charges due the Lender Group, reimbursement of Lender Group Expenses, or
other amounts (other than any portion thereof constituting principal)
constituting Obligations (including any portion thereof that accrues after the
commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding), and
such failure continues for a period of 3 Business Days, or (b) all or any
portion of the principal of the Obligations;

8.2 If any Loan Party or any of its Subsidiaries:

(a) fails to perform or observe any covenant or other agreement contained in any
of (i) Sections 5.1, 5.2, 5.3 (solely if Borrower is not in good standing in its
jurisdiction of organization), 5.6, 5.7 (solely if Borrower refuses to allow
Agent or its representatives or agents to visit Borrower’s properties, inspect
its assets or books or records, examine and make copies of its books and
records, or discuss Borrower’s affairs, finances, and accounts with officers and
employees of Borrower), 5.10, 5.11, 5.13, or 5.14 of this Agreement,
(ii) Sections 6.1 through 6.16 of this Agreement, (iii) Section 7 of this
Agreement, or (iv) Section 6 of the Security Agreement;

(b) fails to perform or observe any covenant or other agreement contained in any
of Sections 5.3 (other than if Borrower is not in good standing in its
jurisdiction of organization), 5.4, 5.5, 5.8, 5.12, and 5.15 of this Agreement
and such failure continues for a period of 10 days after the earlier of (i) the
date on which such failure shall first become known to any officer of Borrower
or (ii) the date on which written notice thereof is given to Borrower by Agent;
or

(c) fails to perform or observe any covenant or other agreement contained in
this Agreement, or in any of the other Loan Documents, in each case, other than
any such covenant or agreement that is the subject of another provision of this
Section 8 (in which event such other provision of this Section 8 shall govern),
and such failure continues for a period of 30 days after the earlier of (i) the
date on which such failure shall first become known to any officer of Borrower
or (ii) the date on which written notice thereof is given to Borrower by Agent;

8.3 If one or more judgments, orders, or awards for the payment of money
involving an aggregate amount of $1,000,000 or more (except to the extent fully
covered by insurance pursuant to which the insurer has accepted liability
therefor in writing) is entered or filed against a Loan Party or any of its
Domestic Subsidiaries, or with respect to any of their respective assets, and
either (a) there is a period of 30 consecutive days at any time after the entry
of any such judgment, order, or award during which (1) the same is not
discharged, or (2) a stay of enforcement thereof is not in effect, or
(b) enforcement proceedings are commenced upon such judgment, order, or award;

8.4 If an Insolvency Proceeding is commenced by a Loan Party or any of its
Domestic Subsidiaries;

8.5 If an Insolvency Proceeding is commenced against a Loan Party or any of its
Domestic Subsidiaries and any of the following events occur: (a) such Loan Party
or such Subsidiary consents to the institution of such Insolvency Proceeding
against it, (b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 60 calendar days of the date of the filing thereof, (d) an
interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, such Loan Party or its Subsidiary, or (e) an order
for relief shall have been issued or entered therein;

 

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8.6 If any Loan Party is enjoined, restrained, or in any way prevented by court
order from continuing to conduct all or any material part of its business
affairs;

8.7 If there is a default in one or more agreements to which a Loan Party or any
of its Domestic Subsidiaries is a party with one or more third Persons relative
to a Loan Party’s or any of its Domestic Subsidiaries’ Indebtedness involving an
aggregate amount of $1,000,000 or more, and such default (i) occurs at the final
maturity of the obligations thereunder, or (ii) results in a right by such third
Person, irrespective of whether exercised, to accelerate the maturity of such
Loan Party’s or its Domestic Subsidiary’s obligations thereunder (other than a
non-payment default under the Borrower Agreement);

8.8 If any warranty, representation, statement, or Record made herein or in any
other Loan Document or delivered in writing to Agent or any Lender in connection
with this Agreement or any other Loan Document proves to be untrue in any
material respect (except that such materiality qualifier shall not be applicable
to any representations and warranties that already are qualified or modified by
materiality in the text thereof) as of the date of issuance or making or deemed
making thereof;

8.9 If the obligation of any Guarantor under the Guaranty is limited or
terminated by operation of law or by such Guarantor;

8.10 If the Security Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on the Collateral covered thereby, except as a result of a
disposition of the applicable Collateral in a transaction permitted under this
Agreement;

8.11 The validity or enforceability of any Loan Document shall at any time for
any reason be declared to be null and void, or a proceeding shall be commenced
by a Loan Party or its Subsidiaries, or by any Governmental Authority having
jurisdiction over a Loan Party, seeking to establish the invalidity or
unenforceability thereof, or a Loan Party or its Subsidiaries shall deny that
such Loan Party has any liability or obligation purported to be created under
any Loan Document;

8.12 If there shall occur and be continuing any “Event of Default” under and as
defined in the Domestic Credit Agreement or any other Domestic Loan Document;

8.13 If the guaranty of EXIM Bank of the Obligations shall at any time become
invalid or unenforceable or otherwise cease to be effective to guarantee at
least 90% of the Obligations; or

8.14 If an ERISA Event shall have occurred that, when taken together with all
other ERISA Events that have occurred, could reasonably be expected to result in
liability of Parent and its Domestic Subsidiaries in an aggregate amount
exceeding $1,000,000 for all periods.

 

9. RIGHTS AND REMEDIES.

9.1 Rights and Remedies. Upon the occurrence and during the continuation of an
Event of Default, Agent may, and, at the instruction of the Required Lenders,
shall, in each case by written notice to Borrower and in addition to any other
rights or remedies provided for hereunder or under any other Loan Document or by
applicable law, do any one or more of the following on behalf of the Lender
Group:

(a) declare the Obligations, whether evidenced by this Agreement or by any of
the other Loan Documents immediately due and payable, whereupon the same shall
become and be immediately due and payable, without presentment, demand, protest,
or further notice or other requirements of any kind, all of which are hereby
expressly waived by Borrower; and

 

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(b) declare the Revolver Commitments terminated, whereupon the Revolver
Commitments shall immediately be terminated together with any obligation of any
Lender hereunder to make Advances and the obligation of the Issuing Lender to
issue Letters of Credit.

The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.4 or Section 8.5, in addition to the remedies
set forth above, without any notice to Borrower or any other Person or any act
by the Lender Group, the Commitments shall automatically terminate and the
Obligations then outstanding, together with all accrued and unpaid interest
thereon and all fees and all other amounts due under this Agreement and the
other Loan Documents, shall automatically and immediately become due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are expressly waived by Parent and Borrower.

9.2 Remedies Cumulative. The rights and remedies of the Lender Group under this
Agreement, the other Loan Documents, the Domestic Credit Agreement, the Domestic
Loan Documents and all other agreements shall be cumulative. The Lender Group
shall have all other rights and remedies not inconsistent herewith as provided
under the Code, by law, or in equity. No exercise by the Lender Group of one
right or remedy shall be deemed an election, and no waiver by the Lender Group
of any Event of Default shall be deemed a continuing waiver. No delay by the
Lender Group shall constitute a waiver, election, or acquiescence by it.

 

10. WAIVERS; INDEMNIFICATION.

10.1 Demand; Protest; etc. Borrower waives demand, protest, notice of protest,
notice of default or dishonor, notice of payment and nonpayment, nonpayment at
maturity, release, compromise, settlement, extension, or renewal of documents,
instruments, chattel paper, and guarantees at any time held by the Lender Group
on which Borrower may in any way be liable.

10.2 The Lender Group’s Liability for Collateral. Borrower hereby agrees that:
(a) so long as Agent complies with its obligations, if any, under the Code, the
Lender Group shall not in any way or manner be liable or responsible for:
(i) the safekeeping of the Collateral, (ii) any loss or damage thereto occurring
or arising in any manner or fashion from any cause, (iii) any diminution in the
value thereof, or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other Person, and (b) all risk of loss, damage, or
destruction of the Collateral shall be borne by Borrower.

10.3 Indemnification. Borrower shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons, and each Participant (each,
an “Indemnified Person”) harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, liabilities, fines, costs, penalties, and damages, and all
reasonable fees and disbursements of attorneys, experts, or consultants and all
other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution and delivery (provided that Borrower shall
not be liable for costs and expenses (including attorneys fees) of any Lender
(other than WFF) incurred in advising, structuring, drafting, reviewing,
administering or syndicating the Loan Documents), enforcement, performance, or
administration (including any restructuring or workout with respect hereto) of
this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby or the monitoring of Parent’s and its
Subsidiaries’ compliance with the terms of the Loan Documents (other than
disputes solely between the Lenders), (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto, and (c) in connection with or
arising out of any presence or release of Hazardous Materials at, on, under, to
or from any assets or properties owned, leased or operated by Borrower or any of
its Subsidiaries or any Environmental Actions, Environmental Liabilities or
Remedial Actions related in any way to any such

 

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assets or properties of Borrower or any of its Subsidiaries (each and all of the
foregoing, the “Indemnified Liabilities”). The foregoing to the contrary
notwithstanding, Borrower shall have no obligation to any Indemnified Person
under this Section 10.3 with respect to any Indemnified Liability that a court
of competent jurisdiction finally determines to have resulted from the gross
negligence or willful misconduct of such Indemnified Person or its officers,
directors, employees, attorneys, or agents. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrower was required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrower
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

 

11. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands relating to
this Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or certified mail (postage prepaid, return receipt requested),
overnight courier, electronic mail (at such email addresses as a party may
designate in accordance herewith), or telefacsimile. In the case of notices or
demands to Parent, Borrower or Agent, as the case may be, they shall be sent to
the respective address set forth below:

 

If to Parent or Borrower:    STANADYNE CORPORATION    92 Deerfield Road   
Windsor, CT 06095    Attn: Chief Financial Officer    Fax No. 860-683-4500 with
copies to:    KOHLBERG & COMPANY    111 Radio Circle    Mt. Kisco, NY 01549   
Attn: Seth Hollander    Fax No.: 914-241-7476 If to Agent:    WELLS FARGO
FOOTHILL, LLC    One Boston Place, 18th Floor    Boston, Massachusetts 02108   
Attn: Business Finance Division Manager    Fax No.: 617-523-1697 with copies to:
   DEWEY & LEBOEUF LLP    1301 Avenue of the Americas    New York, New York
10019    Attn: Marshall C. Stoddard, Jr., Esq.    Fax No.: 212-259-6333

Any party hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party. All notices or demands sent in accordance with this Section 11, shall be
deemed received on the earlier of the date of actual receipt or 3 Business Days

 

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after the deposit thereof in the mail; provided, that (a) notices sent by
overnight courier service shall be deemed to have been given when received,
(b) notices by facsimile shall be deemed to have been given when sent (except
that, if not given during normal business hours for the recipient, shall be
deemed to have been given at the opening of business on the next Business Day
for the recipient) and (c) notices by electronic mail shall be deemed received
upon the sender’s receipt of an acknowledgment from the intended recipient (such
as by the “return receipt requested” function, as available, return email or
other written acknowledgment).

 

12. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF
AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL
BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.

(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN
THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED
IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING
SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF
PARENT AND BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b).

(c) TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF PARENT AND
BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH OF PARENT AND BORROWER AND EACH MEMBER OF
THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY
AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

13. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

13.1 Assignments and Participations.

(a) With the prior written consent of Borrower, which consent of Borrower shall
not be unreasonably withheld, delayed or conditioned, and shall not be required
(1) if an Event of Default has occurred and is continuing, and (2) in connection
with an assignment to a Person that is a Lender or an Affiliate (other than
individuals) of a Lender and with the prior written consent of Agent, which
consent of Agent shall not be unreasonably withheld, delayed or conditioned, and
shall not be required in connection with an assignment to a Person that is a
Lender or an Affiliate (other than individuals) of a

 

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Lender, any Lender may assign and delegate to one or more assignees (each, an
“Assignee”; provided, however, that no Loan Party, Affiliate of a Loan Party,
Equity Sponsor, or Affiliate of Equity Sponsor shall be permitted to become an
Assignee) all or any portion of the Obligations, the Commitments and the other
rights and obligations of such Lender hereunder and under the other Loan
Documents, in a minimum amount (unless waived by Agent) of $5,000,000 (except
such minimum amount shall not apply to (x) an assignment or delegation by any
Lender to any other Lender or an Affiliate of any Lender or (y) a group of new
Lenders, each of which is an Affiliate of each other or a Related Fund of such
new Lender to the extent that the aggregate amount to be assigned to all such
new Lenders is at least $5,000,000); provided, however, that Borrower and Agent
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, have been given to Borrower and Agent by such Lender
and the Assignee, (ii) such Lender and its Assignee have delivered to Borrower
and Agent an Assignment and Acceptance and Agent has notified the assigning
Lender of its receipt thereof in accordance with Section 13.1(b), and
(iii) unless waived by Agent, the assigning Lender or Assignee has paid to Agent
for Agent’s separate account a processing fee in the amount of $3,500.
Notwithstanding anything herein to the contrary, no Lender may assign any of its
Commitments unless substantially contemporaneously with such assignment, such
Lender assigns its Domestic Commitments to the same Assignee to which such
Lender assigns its Commitments hereunder such that after giving effect to all
such assignments, the percentages of such Lender’s and such Assignee’s
Commitments to the aggregate amount of all Commitments equal the percentages of
such Lender’s and such Assignee’s Domestic Commitments to the aggregate amount
of all Domestic Commitments, respectively.

(b) From and after the date that Agent notifies the assigning Lender (with a
copy to Borrower) that it has received an executed Assignment and Acceptance
and, if applicable, payment of the required processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assigning Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to Section 10.3) and be released from any future 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 and the other Loan Documents, such Lender shall cease to be a party
hereto and thereto); provided, however, that nothing contained herein shall
release any assigning Lender from obligations that survive the termination of
this Agreement, including such assigning Lender’s obligations under Section 15
and Section 17.9(a).

(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,
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or the
performance or observance by 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 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 Agent to take such actions and to exercise such
powers under this Agreement and the other Loan Documents as are delegated to
Agent, by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto, and (vi) such Assignee agrees that it will
perform all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.

 

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(d) Immediately upon Agent’s receipt of the required processing fee, if
applicable, and delivery of notice to the assigning Lender pursuant to
Section 13.1(b), this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Lender
pro tanto.

(e) Any Lender may at any time sell to one or more commercial banks, financial
institutions, or other Persons (a “Participant”) participating interests in all
or any portion of its Obligations, its Commitment, and the other rights and
interests of that Lender (the “Originating Lender”) hereunder and under the
other Loan Documents; provided, however, that (i) the Originating Lender shall
remain a “Lender” for all purposes of this Agreement and the other Loan
Documents and the Participant receiving the participating interest in the
Obligations, the Commitments, and the other rights and interests of the
Originating Lender hereunder shall not constitute a “Lender” hereunder or under
the other Loan Documents and 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) Borrower,
Agent, and the Lenders 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, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the right to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender, or (E) reduce
the amount or postpone due dates of scheduled principal repayments or
prepayments or premiums, and (v) all amounts payable by Borrower 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 as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement. The rights of any Participant
only shall be derivative through the Originating Lender with whom such
Participant participates and no Participant shall have any rights under this
Agreement or the other Loan Documents or any direct rights as to the other
Lenders, Agent, Borrower, the Collections of Borrower or its Subsidiaries, the
Collateral, or otherwise in respect of the Obligations. No Participant shall
have the right to participate directly in the making of decisions by the Lenders
among themselves.

(f) In connection with any such assignment or participation or proposed
assignment or participation or any grant of a security interest in, or pledge
of, its rights under and interest in this Agreement, a Lender may, subject to
the provisions of Section 17.9, disclose on a confidential basis all documents
and information which it now or hereafter may have relating to Parent and its
Subsidiaries and their respective businesses.

(g) Any other provision in this Agreement notwithstanding, any Lender may at any
time create a security interest in, or pledge, all or any portion of its rights
under and interest in this Agreement in favor of any Federal Reserve Bank in
accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce such pledge
or security interest in any manner permitted under applicable law.

 

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13.2 Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Parent and Borrower may not assign this Agreement or any rights or duties
hereunder without the Lenders’ prior written consent and any prohibited
assignment shall be absolutely void ab initio. No consent to assignment by the
Lenders shall release Borrower from its Obligations. A Lender may assign this
Agreement and the other Loan Documents and its rights and duties hereunder and
thereunder pursuant to Section 13.1 and, except as expressly required pursuant
to Section 13.1, no consent or approval by Parent or Borrower is required in
connection with any such assignment.

 

14. AMENDMENTS; WAIVERS.

14.1 Amendments and Waivers.

(a) No amendment, waiver or other modification of any provision of this
Agreement or any other Loan Document (other than the Fee Letter), and no consent
with respect to any departure by Parent or Borrower therefrom, shall be
effective unless the same shall be in writing and signed by the Required Lenders
(or by Agent at the written request of the Required Lenders) and Parent and
Borrower and then any such waiver or consent shall be effective, but 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 of the Lenders directly affected thereby and Parent and Borrower,
do any of the following:

(i) increase the amount of or extend the expiration date of any Commitment 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
hereunder or under any other Loan Document,

(iii) reduce the principal of, or the rate of interest on, any loan or other
extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document (except (y) in connection with the
waiver of applicability of Section 2.6(c) (which waiver shall be effective with
the written consent of the Required Lenders), and (z) that any amendment or
modification of defined terms used in the financial covenants in this Agreement
shall not constitute a reduction in the rate of interest or a reduction of fees
for purposes of this clause (iii)),

(iv) amend or modify this Section or any provision of this Agreement providing
for consent or other action by all Lenders,

(v) other than as permitted by Section 15.11, release Agent’s Lien in and to any
of the Collateral,

(vi) change the definition of “Required Lenders” or “Pro Rata Share”,

(vii) contractually subordinate any of Agent’s Liens,

(viii) other than in connection with a merger, liquidation, dissolution or sale
of such Person expressly permitted by the terms hereof or the other Loan
Documents, release Borrower or any Guarantor from any obligation for the payment
of money or consent to the assignment or transfer by Borrower or any Guarantor
of any of its rights or duties under this Agreement or the other Loan Documents,

(ix) amend any of the provisions of Section 2.4(b)(i) or (ii) or Section 2.4(e)
or (f),

(x) amend Section 13.1(a) to permit a Loan Party, an Affiliate of a Loan Party,
Equity Sponsor, or an Affiliate of Equity Sponsor to be permitted to become an
Assignee, or

 

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(xi) change the definition of Borrowing Base or any of the defined terms
(including the definition of Eligible Accounts) that are used in such definition
to the extent that any such change results in more credit being made available
to Borrower based upon the Borrowing Base, but not otherwise, or the definition
of Maximum Revolver Amount, or change Section 2.1(c).

(b) No amendment, waiver, modification, or consent shall amend, modify, or waive
(i) the definition of, or any of the terms or provisions of, the Fee Letter,
without the written consent of Agent and Borrower (and shall not require the
written consent of any of the Lenders), and (ii) any provision of Section 15
pertaining to Agent, or any other rights or duties of Agent under this Agreement
or the other Loan Documents, without the written consent of Agent, Borrower, and
the Required Lenders,

(c) No amendment, waiver, modification, or consent shall amend, modify, or waive
any provision of this Agreement or the other Loan Documents pertaining to
Issuing Lender, or any other rights or duties of Issuing Lender under this
Agreement or the other Loan Documents, without the written consent of Issuing
Lender, Agent, Borrower, and the Required Lenders,

(d) No amendment, waiver, modification, or consent shall amend, modify, or waive
any provision of this Agreement or the other Loan Documents pertaining to Swing
Lender, or any other rights or duties of Swing Lender under this Agreement or
the other Loan Documents, without the written consent of Swing Lender, Agent,
Borrower, and the Required Lenders,

(e) Anything in this Section 14.1 to the contrary notwithstanding, any
amendment, modification, waiver, consent, termination, or release of, or with
respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Parent or Borrower, shall not
require consent by or the agreement of Parent or Borrower.

14.2 Replacement of Certain Lenders.

(a) If (i) any action to be taken by the Lender Group or Agent hereunder
requires the unanimous consent, authorization, or agreement of all Lenders and
if such action has received the consent, authorization, or agreement of the
Required Lenders but not all of the Lenders or (ii) any Lender makes a claim for
compensation under Section 16, then Borrower or Agent, upon at least 5 Business
Days prior irrevocable notice, may permanently replace any Lender (a “Holdout
Lender”) that failed to give its consent, authorization, or agreement or made a
claim for compensation (a “Tax Lender”) with one or more Replacement Lenders,
and the Holdout Lender or Tax Lender, as applicable, shall have no right to
refuse to be replaced hereunder. Such notice to replace the Holdout Lender or
Tax Lender, as applicable, shall specify an effective date for such replacement,
which date shall not be later than 15 Business Days after the date such notice
is given.

(b) Prior to the effective date of such replacement, the Holdout Lender and each
Replacement Lender shall execute and deliver an Assignment and Acceptance,
subject only to the Holdout Lender being repaid its share of the outstanding
Obligations (including an assumption of its Pro Rata Share of the Letters of
Credit) without any premium or penalty of any kind whatsoever. If the Holdout
Lender shall refuse or fail to execute and deliver any such Assignment and
Acceptance prior to the effective date of such replacement, the Holdout Lender
shall be deemed to have executed and delivered such Assignment and Acceptance.
The replacement of any Holdout Lender shall be made in accordance with the terms
of Section 13.1. Until such time as the Replacement Lenders shall have acquired
all of the Obligations, the Commitments, and the other rights and obligations of
the Holdout Lender hereunder and under the other Loan Documents, the Holdout
Lender shall remain obligated to make the Holdout Lender’s Pro Rata Share of
Advances and to purchase a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of such Letters of Credit.

 

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14.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent’s and each
Lender’s rights thereafter to require strict performance by Parent and Borrower
of any provision of this Agreement. Agent’s and each Lender’s rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.

 

15. AGENT; THE LENDER GROUP.

15.1 Appointment and Authorization of Agent. Each Lender hereby designates and
appoints WFF as its representative under this Agreement and the other Loan
Documents and each Lender hereby irrevocably authorizes Agent to execute and
deliver each of the other Loan Documents on its behalf and to take such other
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 Agent by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Agent agrees to
act as such on the express conditions contained in this Section 15. Any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document notwithstanding, Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall Agent have
or be deemed to have any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against Agent; it being expressly understood and agreed that the use of the word
“Agent” is for convenience only, that WFF is merely the representative of the
Lenders, and only has the contractual duties set forth herein. Except as
expressly otherwise provided in this Agreement, 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 that Agent
expressly is entitled to take or assert under or pursuant to this Agreement and
the other Loan Documents. Without limiting the generality of the foregoing, or
of any other provision of the Loan Documents that provides rights or powers to
Agent, Lenders agree that Agent shall have the right to exercise the following
powers as long as this Agreement remains in effect: (a) maintain, in accordance
with its customary business practices, ledgers and records reflecting the status
of the Obligations, the Collateral, the Collections of Parent and its
Subsidiaries, and related matters, (b) execute or file any and all financing or
similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders, as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections of Parent and its Subsidiaries as provided in the Loan
Documents, (e) open and maintain such bank accounts and cash management
arrangements as Agent deems necessary and appropriate in accordance with the
Loan Documents for the foregoing purposes with respect to the Collateral and the
Collections of Parent and its Subsidiaries, (f) perform, exercise, and enforce
any and all other rights and remedies of the Lender Group with respect to Parent
or its Subsidiaries, the Obligations, the Collateral, the Collections of Parent
and its Subsidiaries, or otherwise related to any of same as provided in the
Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent may
deem necessary or appropriate for the performance and fulfillment of its
functions and powers pursuant to the Loan Documents.

15.2 Delegation of Duties. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.

15.3 Liability of Agent. None of the Agent-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),

 

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or (b) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by Parent or any of its Subsidiaries
or Affiliates, or any officer or director 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 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 Parent or its Subsidiaries or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
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 books and records or properties of Parent or its
Subsidiaries.

15.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, 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 counsel to Borrower or counsel to any
Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the requisite Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.

15.5 Notice of Default or Event of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Borrower referring to
this Agreement, describing such Default or Event of Default, and stating that
such notice is a “notice of default.” Agent promptly will notify the Lenders of
its receipt of any such notice or of any Event of Default of which Agent has
actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Agent of such
Event of Default. Each Lender shall be solely responsible for giving any notices
to its Participants, if any. Subject to Section 15.4, Agent shall take such
action with respect to such Default or Event of Default as may be requested by
the Required Lenders in accordance with Section 9; provided, however, that
unless and until Agent has received any such request, 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.

15.6 Credit Decision. Each Lender acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it, and that no act by Agent
hereinafter taken, including any review of the affairs of Parent and its
Subsidiaries or Affiliates, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender represents to
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such due diligence, 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 Borrower or any other Person party to a Loan Document, 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 Borrower. Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other

 

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Loan Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other
condition and creditworthiness of Borrower or any other Person party to a Loan
Document. Except for notices, reports, and other documents expressly herein
required to be furnished to the Lenders by Agent, Agent shall not have any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Borrower or any other Person party to a Loan
Document that may come into the possession of any of the Agent-Related Persons.
Each Lender acknowledges that Agent does not have any duty or responsibility,
either initially or on a continuing basis (except to the extent, if any, that is
expressly specified herein) to provide such Lender with any credit or other
information with respect to Borrower, its Affiliates or any of their respective
business, legal, financial or other affairs, and irrespective of whether such
information came into Agent’s or its Affiliates’ or representatives’ possession
before or after the date on which such Lender became a party to this Agreement.

15.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender Group
Expenses to the extent Agent reasonably deems necessary or appropriate for the
performance and fulfillment of its functions, powers, and obligations pursuant
to the Loan Documents, including court costs, attorneys fees and expenses, fees
and expenses of financial accountants, advisors, consultants, and appraisers,
costs of collection by outside collection agencies, auctioneer fees and
expenses, and costs of security guards or insurance premiums paid to maintain
the Collateral, whether or not Borrower is obligated to reimburse Agent or
Lenders for such expenses pursuant to this Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from the
Collections of Parent and its Subsidiaries received by Agent to reimburse Agent
for such out-of-pocket costs and expenses prior to the distribution of any
amounts to Lenders. In the event Agent is not reimbursed for such costs and
expenses by Parent or its Subsidiaries, each Lender hereby agrees that it is and
shall be obligated to pay to Agent such Lender’s Pro Rata Share thereof. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of Borrower and without limiting the obligation of Borrower to do
so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; provided, however, that no Lender shall be liable for
the payment to any Agent-Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person’s gross negligence or willful
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make an Advance or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender’s Pro Rata Share of any costs or out of pocket expenses
(including attorneys, accountants, advisors, and consultants fees and expenses)
incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment, or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that Agent is
not reimbursed for such expenses by or on behalf of Borrower. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.

15.8 Agent in Individual Capacity. WFF and its Affiliates may make loans to,
issue letters of credit for the account of, accept deposits from, acquire equity
interests in, and generally engage in any kind of banking, trust, financial
advisory, underwriting, or other business with Parent and its Subsidiaries and
Affiliates and any other Person party to any Loan Document as though WFF were
not Agent hereunder, and, in each case, without notice to or consent of the
other members of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, WFF or its Affiliates may receive
information regarding Parent or its Affiliates or any other Person party to any
Loan Documents that is subject to confidentiality obligations in favor of Parent
or such other Person and that prohibit the disclosure of such information to the
Lenders, and the Lenders acknowledge that, in such circumstances (and in the
absence of a waiver of such confidentiality obligations, which waiver Agent will
use its reasonable best efforts to obtain), Agent shall not be under any
obligation to provide such information to them. The terms “Lender” and “Lenders”
include WFF in its individual capacity.

 

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15.9 Successor Agent. Agent may resign as Agent upon 30 days prior written
notice to the Lenders (unless such notice is waived by the Required Lenders) and
Borrower (unless such notice is waived by Borrower). If Agent resigns under this
Agreement, the Required Lenders shall be entitled, with (so long as no Event of
Default has occurred and is continuing) the consent of Borrower (such consent
not to be unreasonably withheld, delayed, or conditioned), appoint a successor
Agent for the Lenders. If, at the time that Agent’s resignation is effective, it
is acting as the Issuing Lender or the Swing Lender, such resignation shall also
operate to effectuate its resignation as the Issuing Lender or the Swing Lender,
as applicable, and it shall automatically be relieved of any further obligation
to issue Letters of Credit or make Swing Loans. If no successor Agent is
appointed prior to the effective date of the resignation of Agent, Agent may
appoint, after consulting with the Lenders and Borrower, a successor Agent. If
Agent has materially breached or failed to perform any material provision of
this Agreement or of applicable law, the Required Lenders may agree in writing
to remove and replace Agent with a successor Agent from among the Lenders with
(so long as no Event of Default has occurred and is continuing) the consent of
Borrower (such consent not to be unreasonably withheld, delayed, or
conditioned). In any such event, 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 “Agent” shall mean such
successor Agent and the retiring Agent’s appointment, powers, and duties as
Agent shall be terminated. After any retiring Agent’s resignation hereunder as
Agent, the provisions of this Section 15 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement. If no successor Agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent’s notice of resignation, the
retiring Agent’s resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of Agent hereunder until such time,
if any, as the Lenders appoint a successor Agent as provided for above.

15.10 Lender in Individual Capacity. Any Lender 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 Parent and its
Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though such Lender were not a Lender hereunder without notice to or consent of
the other members of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, such Lender and its respective
Affiliates may receive information regarding Parent or its Affiliates or any
other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Parent or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender shall not be under any obligation to provide such
information to them.

15.11 Collateral Matters.

(a) The Lenders hereby irrevocably authorize Agent, at its option and in its
sole discretion, to release any Lien on any Collateral (i) upon the termination
of the Commitments and payment and satisfaction in full by Borrower of all
Obligations, (ii) constituting property being sold or disposed of if a release
is required or desirable in connection therewith and if Borrower certifies to
Agent that the sale or disposition is permitted under Section 6.4 or the other
Loan Documents (and Agent may rely conclusively on any such certificate, without
further inquiry), (iii) constituting property in which Parent or its
Subsidiaries owned no interest at the time Agent’s Lien was granted nor at any
time thereafter, or (iv) constituting property leased to Parent or its
Subsidiaries under a lease that has expired or is terminated in a transaction
permitted under this Agreement. The Lenders hereby irrevocably authorize Agent,
based upon the instruction of the Required Lenders, to credit bid and purchase
(either directly or through one or more acquisition vehicles) all or any portion
of the Collateral at any sale thereof conducted by Agent under the provisions of
the Code, including pursuant to Sections 9-610 or 9-620 of the Code, at any sale
thereof conducted under the provisions of the Bankruptcy Code, including
Section 363 of the Bankruptcy Code, or at any other sale or foreclosure
conducted by Agent (whether by judicial action or otherwise) in accordance with
applicable law. Except as provided above, Agent will not execute and deliver a
release of any Lien on any Collateral without

 

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the prior written authorization of (y) if the release is of all or substantially
all of the Collateral, all of the Lenders, or (z) otherwise, the Required
Lenders. Upon request by Agent or Borrower at any time, the Lenders will confirm
in writing Agent’s authority to release any such Liens on particular types or
items of Collateral pursuant to this Section 15.11; provided, however, that
(1) Agent shall not be required to execute any document necessary to evidence
such release on terms that, in Agent’s opinion, would expose Agent to liability
or create any obligation or entail any consequence other than the release of
such Lien without recourse, representation, or warranty, and (2) 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
Borrower in respect of) all interests retained by Borrower, including, the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral. The Lenders further hereby irrevocably authorize Agent, at its
option and in its sole discretion, to subordinate any Lien granted to or held by
Agent under any Loan Document to the holder of any Permitted Lien on such
property if such Permitted Lien secures Permitted Purchase Money Indebtedness.

(b) Agent shall have no obligation whatsoever to any of the Lenders to assure
that the Collateral exists or is owned by Parent or its Subsidiaries or is cared
for, protected, or insured or has been encumbered, or that 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 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, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent’s
own interest in the Collateral in its capacity as one of the Lenders and that
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing, except as otherwise provided herein.

15.12 Restrictions on Actions by Lenders; Sharing of Payments.

(a) Each of the Lenders agrees that it shall not, without the express written
consent of Agent, and that it shall, to the extent it is lawfully entitled to do
so, upon the written request of Agent, set off against the Obligations, any
amounts owing by such Lender to Parent or its Subsidiaries or any deposit
accounts of Parent or its Subsidiaries now or hereafter maintained with such
Lender. Each of the Lenders further agrees that it shall not, unless
specifically requested to do so in writing by Agent, take or cause to be taken
any action, including, the commencement of any legal or equitable proceedings to
enforce any Loan Document against Borrower or any Guarantor or 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, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender’s Pro Rata Share of all such
distributions by Agent, such Lender promptly shall (A) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available 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 to the extent that 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.

 

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15.13 Agency for Perfection. Agent hereby appoints each other Lender as its
agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting Agent’s Liens in assets which, in accordance with Article 8 or
Article 9, as applicable, of the Code can be perfected by possession or control.
Should any Lender obtain possession or control of any such Collateral, such
Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor
shall deliver possession or control of such Collateral to Agent or in accordance
with Agent’s instructions.

15.14 Payments by Agent to the Lenders. All payments to be made by Agent to the
Lenders shall be made by bank wire transfer of immediately available funds
pursuant to such wire transfer instructions as each party may designate for
itself by written notice to Agent. Concurrently with each such payment, Agent
shall identify whether such payment (or any portion thereof) represents
principal, premium, fees, or interest of the Obligations.

15.15 Concerning the Collateral and Related Loan Documents. Each member of the
Lender Group authorizes and directs Agent to enter into this Agreement and the
other Loan Documents. Each member of the Lender Group agrees that any action
taken by Agent in accordance with the terms of this Agreement or the other Loan
Documents relating to the Collateral and the exercise by Agent of its powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.

15.16 Audits and Examination Reports; Confidentiality; Disclaimers by Lenders;
Other Reports and Information. By becoming a party to this Agreement, each
Lender:

(a) is deemed to have requested that Agent furnish such Lender, promptly after
it becomes available, a copy of each field audit or examination report
respecting Parent or its Subsidiaries (each a “Report” and collectively,
“Reports”) prepared by or at the request of Agent, and Agent shall so furnish
each Lender with such Reports,

(b) expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report,

(c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or other party performing any audit or
examination will inspect only specific information regarding Parent and its
Subsidiaries and will rely significantly upon Parent’s and its Subsidiaries’
books and records, as well as on representations of Borrower’s personnel,

(d) agrees to keep all Reports and other material, non-public information
regarding Parent and its Subsidiaries and their operations, assets, and existing
and contemplated business plans in a confidential manner in accordance with
Section 17.9, and

(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold Agent and any other Lender
preparing a Report harmless from any action the indemnifying Lender may take or
fail to take or any 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 Borrower, or the indemnifying
Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or
loans of Borrower, and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent 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.

In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Parent or its Subsidiaries to Agent that has not been
contemporaneously provided by Parent or such Subsidiary to such Lender, and,
upon receipt of such request, Agent promptly shall provide a copy of same to
such Lender, (y) to the extent that Agent is

 

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entitled, under any provision of the Loan Documents, to request additional
reports or information from Parent or its Subsidiaries, any Lender may, from
time to time, reasonably request Agent to exercise such right as specified in
such Lender’s notice to Agent, whereupon Agent promptly shall request of
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Parent or such Subsidiary, Agent promptly
shall provide a copy of same to such Lender, and (z) any time that Agent renders
to Borrower a statement regarding the Loan Account, Agent shall send a copy of
such statement to each Lender.

15.17 Several Obligations; No Liability. Notwithstanding that certain of the
Loan Documents now or hereafter may have been or will be executed only by or in
favor of Agent in its capacity as such, and not by or in favor of the Lenders,
any and all obligations on the part of Agent (if any) to make any credit
available hereunder shall constitute the several (and not joint) obligations of
the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.
Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in Section 15.7, no member of the Lender Group shall have any
liability for the acts of any other member of the Lender Group. No Lender shall
be responsible to Borrower or any other Person for any failure by any other
Lender to fulfill its obligations to make credit available hereunder, nor to
advance for it or on its behalf in connection with its Commitment, nor to take
any other action on its behalf hereunder or in connection with the financing
contemplated herein.

 

16. WITHHOLDING TAXES.

(a) All payments made by Borrower hereunder or under any note or other Loan
Document will be made without setoff, counterclaim, or other defense. In
addition, all such payments will be made free and clear of, and without
deduction or withholding for, any present or future Taxes, and in the event any
deduction or withholding of Taxes is required, Borrower shall comply with the
next sentence of this Section 16(a). If any Taxes are so levied or imposed,
Borrower agrees to pay the full amount of such Taxes and such additional amounts
as may be necessary so that every payment of all amounts due under this
Agreement, any note, or Loan Document, including any amount paid pursuant to
this Section 16(a) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided, however,
that Borrower shall not be required to increase any such amounts if the increase
in such amount payable results from Agent’s or such Lender’s own willful
misconduct or gross negligence (as finally determined by a court of competent
jurisdiction). Borrower will furnish to Agent as promptly as possible after the
date the payment of any Tax is due pursuant to applicable law, certified copies
of tax receipts evidencing such payment by Borrower.

(b) Borrower agrees to pay any present or future stamp, value added or
documentary taxes or any other excise or property taxes, charges, or similar
levies that arise from any payment made hereunder or from the execution,
delivery, performance, recordation, or filing of, or otherwise with respect to
this Agreement or any other Loan Document.

(c) If a Lender or Participant is entitled to claim an exemption or reduction
from United States withholding tax, such Lender or Participant agrees with and
in favor of Agent, to deliver to Agent (or, in the case of a Participant, to the
Lender granting the participation only) one of the following before receiving
its first payment under this Agreement:

(i) if such Lender or Participant is entitled to claim an exemption from United
States withholding tax pursuant to the portfolio interest exception, (A) a
statement of the Lender or Participant, signed under penalty of perjury, that it
is not a (I) a “bank” as described in Section 881(c)(3)(A) of the IRC, (II) a
10% shareholder of Borrower (within the meaning of Section 871(h)(3)(B) of the
IRC), or (III) a controlled foreign corporation related to Borrower within the
meaning of Section 864(d)(4) of the IRC, and (B) a properly completed and
executed IRS Form W-8BEN or Form W-8IMY (with proper attachments);

 

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(ii) if such Lender or Participant is entitled to claim an exemption from, or a
reduction of, withholding tax under a United States tax treaty, a properly
completed and executed copy of IRS Form W-8BEN;

(iii) if such Lender or Participant is entitled to claim 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 Lender, a
properly completed and executed copy of IRS Form W-8ECI;

(iv) if such Lender or Participant is entitled to claim that interest paid under
this Agreement is exempt from United States withholding tax because such Lender
or Participant serves as an intermediary, a properly completed and executed copy
of IRS Form W-8IMY (with proper attachments); or

(v) a properly completed and executed copy of any other form or forms, including
IRS Form W-9, as may be required under the IRC or other laws of the United
States as a condition to exemption from, or reduction of, United States
withholding or backup withholding tax.

(vi) Each Lender or Participant shall provide new forms (or successor forms)
upon the expiration or obsolescence of any previously delivered forms and to
promptly notify Agent (or, in the case of a Participant, to the Lender granting
the participation only) of any change in circumstances which would modify or
render invalid any claimed exemption or reduction.

(d) If a Lender or Participant claims an exemption from withholding tax in a
jurisdiction other than the United States, such Lender or such Participant
agrees with and in favor of Agent, to deliver to Agent (or, in the case of a
Participant, to the Lender granting the participation only) any such form or
forms, as may be required under the laws of such jurisdiction as a condition to
exemption from, or reduction of, foreign withholding or backup withholding tax
before receiving its first payment under this Agreement, but only if such Lender
or such Participant is legally able to deliver such forms, provided, however,
that nothing in this Section 16(d) shall require a Lender or Participant to
disclose any information that it deems to be confidential (including without
limitation, its tax returns). Each Lender and each Participant shall provide new
forms (or successor forms) upon the expiration or obsolescence of any previously
delivered forms and to promptly notify Agent (or, in the case of a Participant,
to the Lender granting the participation only) of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.

(e) If a Lender or Participant claims exemption from, or reduction of,
withholding tax and such Lender or Participant sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of
Borrower to such Lender or Participant, such Lender or Participant agrees to
notify Agent (or, in the case of a sale of a participation interest, to the
Lender granting the participation only) of the percentage amount in which it is
no longer the beneficial owner of Obligations of Borrower to such Lender or
Participant. To the extent of such percentage amount, Agent will treat such
Lender’s or such Participant’s documentation provided pursuant to Section 16(c)
or 16(d) as no longer valid. With respect to such percentage amount, such
Participant or Assignee may provide new documentation, pursuant to Section 16(c)
or 16(d), if applicable. Borrower agrees that each Participant shall be entitled
to the benefits of this Section 16 with respect to its participation in any
portion of the Commitments and the Obligations so long as such Participant
complies with the obligations set forth in this Section 16 with respect thereto.

(f) If a Lender or a Participant is entitled to a reduction in the applicable
withholding tax, Agent (or, in the case of a Participant, to the Lender granting
the participation) may withhold from any interest payment to such Lender or such
Participant an amount equivalent to the applicable withholding tax

 

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after taking into account such reduction. If the forms or other documentation
required by Section 16(c) or 16(d) are not delivered to Agent (or, in the case
of a Participant, to the Lender granting the participation), then Agent (or, in
the case of a Participant, to the Lender granting the participation) may
withhold from any interest payment to such Lender or such Participant not
providing such forms or other documentation an amount equivalent to the
applicable withholding tax.

(g) If the IRS or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that Agent (or, in the case of a Participant, to
the Lender granting the participation) did not properly withhold tax from
amounts paid to or for the account of any Lender or any Participant due to a
failure on the part of the Lender or any Participant (because the appropriate
form was not delivered, was not properly executed, or because such Lender failed
to notify Agent (or such Participant failed to notify the Lender granting the
participation) of a change in circumstances which rendered the exemption from,
or reduction of, withholding tax ineffective, or for any other reason) such
Lender shall indemnify and hold Agent harmless (or, in the case of a
Participant, such Participant shall indemnify and hold the Lender granting the
participation harmless) for all amounts paid, directly or indirectly, by Agent
(or, in the case of a Participant, to the Lender granting the participation), as
tax or otherwise, including penalties and interest, and including any taxes
imposed by any jurisdiction on the amounts payable to Agent (or, in the case of
a Participant, to the Lender granting the participation only) under this
Section 16, together with all costs and expenses (including attorneys fees and
expenses). The obligation of the Lenders and the Participants under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of Agent.

(h) If Agent or a Lender determines, in its sole discretion, that it has
received a refund of any Taxes as to which it has been indemnified by Borrower
or with respect to which Borrower has paid additional amounts pursuant to this
Section 16, so long as no Default or Event of Default has occurred and is
continuing, it shall pay over such refund to Borrower (but only to the extent of
payments made, or additional amounts paid, by Borrower under this Section 16
with respect to Taxes giving rise to such a refund), net of all out-of-pocket
expenses of Agent or such Lender and without interest (other than any interest
paid by the relevant Governmental Authority with respect to such a refund);
provided, that Borrower, upon the request of Agent or such Lender, agrees to
repay the amount paid over to Borrower (plus any penalties, interest or other
charges, imposed by the relevant Governmental Authority, other than such
penalties, interest or other charges imposed as a result of the willful
misconduct or gross negligence of Agent hereunder) to Agent or such Lender in
the event Agent or such Lender is required to repay such refund to such
Governmental Authority. Notwithstanding anything in this Agreement to the
contrary, this Section 16 shall not be construed to require Agent or any Lender
to make available its tax returns (or any other information which it deems
confidential) to Borrower or any other Person.

(i) If Borrower is required to pay any additional amount to any Lender, or to
the IRS or any other Governmental Authority for the account of any Lender,
pursuant to Section 16(a), then such Lender shall, as applicable, use reasonable
efforts to promptly designate a different one of its lending offices or to
assign its rights and obligations hereunder to another of its offices or
branches, if (i) in the reasonable judgment of such Lender, such designation or
assignment would eliminate or reduce amounts payable pursuant to Section 16(a),
and (ii) in the reasonable judgment of such Lender, such designation or
assignment would not subject it to any material unreimbursed cost or expense and
would not otherwise be materially disadvantageous to it. Borrower agrees to pay
all reasonable, documented out-of-pocket costs and expenses incurred by such
Lender in connection with any such designation or assignment. If, after such
reasonable efforts, such Lender does not so designate a different one of its
lending offices or assign its rights to another of its offices or branches so as
to eliminate Borrower’s obligation to pay any future amounts to such Lender
pursuant to Section 16(a), then Borrower (without prejudice to any amounts then
due to such Lender under Section 16(a)) may, unless prior to the effective date
of any such assignment the Lender withdraws its request for such additional
amounts under Section 16(a), designate a Replacement Lender reasonably
acceptable to Agent to purchase the Obligations owed to such Lender and such
Lender’s Commitments hereunder, such Lender shall assign to the Replacement
Lender its Obligations and Commitments, pursuant to an Assignment and Acceptance
Agreement, and upon such purchase by the Replacement Lender, such Replacement
Lender shall be deemed to be a “Lender” for purposes of this Agreement and such
Lender shall cease to be a “Lender” for purposes of this Agreement.

 

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17. GENERAL PROVISIONS.

17.1 Effectiveness. This Agreement shall be binding and deemed effective when
executed by Parent, Borrower, Agent, and each Lender whose signature is provided
for on the signature pages hereof.

17.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.

17.3 Interpretation. Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed against the Lender Group or Parent or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.

17.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

17.5 Intentionally Omitted.

17.6 Debtor-Creditor Relationship. The relationship between the Lenders and
Agent, on the one hand, and the Loan Parties, on the other hand, is solely that
of creditor and debtor. No member of the Lender Group has (or shall be deemed to
have) any fiduciary relationship or duty to any Loan Party arising out of or in
connection with the Loan Documents or the transactions contemplated thereby, and
there is no agency or joint venture relationship between the members of the
Lender Group, on the one hand, and the Loan Parties, on the other hand, by
virtue of any Loan Document or any transaction contemplated therein.

17.7 Counterparts; Electronic Execution. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.

17.8 Revival and Reinstatement of Obligations. If the incurrence or payment of
the Obligations by Borrower or Guarantor or the transfer to the Lender Group of
any property should for any reason subsequently be asserted, or declared, to be
void or voidable under any state or federal law relating to creditors’ rights,
including provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (each, a “Voidable Transfer”), and if the Lender Group is required to
repay or restore, in whole or in part, any such Voidable Transfer, or elects to
do so upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that the Lender Group is required or elects to
repay or restore, and as to all reasonable costs, expenses, and attorneys fees
of the Lender Group related thereto, the liability of Borrower or Guarantor
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.

 

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17.9 Confidentiality.

(a) Agent and Lenders each individually (and not jointly or jointly and
severally) agree that material, non-public information regarding Parent and its
Subsidiaries, their operations, assets, and existing and contemplated business
plans (“Confidential Information”) shall be treated by Agent and the Lenders in
a confidential manner, and shall not be disclosed by Agent and the Lenders to
Persons who are not parties to this Agreement, except: (i) on a confidential
basis to attorneys for and other advisors, accountants, auditors, and
consultants to any member of the Lender Group (“Lender Group Representatives”),
(ii) to Subsidiaries and Affiliates of any member of the Lender Group, provided
that any such Subsidiary or Affiliate shall have agreed to receive such
information hereunder subject to the terms of this Section 17.9, (iii) as may be
required by regulatory authorities so long as such authorities are informed of
the confidential nature of such information, (iv) as may be required by statute,
decision, or judicial or administrative order, rule, or regulation; provided
that (x) prior to any disclosure under this clause (iv), the disclosing party
agrees to provide Borrower with prior notice thereof, to the extent that it is
practicable to do so and to the extent that the disclosing party is permitted to
provide such prior notice to Borrower pursuant to the terms of the applicable
statute, decision, or judicial or administrative order, rule, or regulation and
(y) any disclosure under this clause (iv) shall be limited to the portion of the
Confidential Information as may be required by such statute, decision, or
judicial or administrative order, rule, or regulation, (v) as may be agreed to
in advance by Borrower or as requested or required by any Governmental Authority
pursuant to any subpoena or other legal process, provided, that, (x) prior to
any disclosure under this clause (v) the disclosing party agrees to provide
Borrower with prior notice thereof, to the extent that it is practicable to do
so and to the extent that the disclosing party is permitted to provide such
prior notice to Borrower pursuant to the terms of the subpoena or other legal
process and (y) any disclosure under this clause (v) shall be limited to the
portion of the Confidential Information as may be required by such governmental
authority pursuant to such subpoena or other legal process, (vi) as to any such
information that is or becomes generally available to the public (other than as
a result of prohibited disclosure by Agent or the Lenders or the Lender Group
Representatives), (vii) in connection with any assignment, participation or
pledge of any Lender’s interest under this Agreement, provided that any such
assignee, participant, or pledgee shall have agreed in writing to receive such
information hereunder subject to the terms of this Section, (viii) in connection
with any litigation or other adversary proceeding involving parties hereto which
such litigation or adversary proceeding involves claims related to the rights or
duties of such parties under this Agreement or the other Loan Documents;
provided, that, prior to any disclosure to any Person (other than any Loan
Party, Agent, any Lender, any of their respective Affiliates, or their
respective counsel) under this clause (viii) with respect to litigation
involving any Person (other than Borrower, Agent, any Lender, any of their
respective Affiliates, or their respective counsel), the disclosing party agrees
to provide Borrower with prior notice thereof, and (ix) in connection with, and
to the extent reasonably necessary for, the exercise of any secured creditor
remedy under this Agreement or under any other Loan Document.

(b) Anything in this Agreement to the contrary notwithstanding, Agent may
provide information concerning the terms and conditions of this Agreement and
the other Loan Documents to loan syndication and pricing reporting services.

17.10 Lender Group Expenses. Borrower agrees to pay any and all Lender Group
Expenses promptly after demand therefor by Agent and agrees that its obligations
contained in this Section 17.10 shall survive payment or satisfaction in full of
all other Obligations. Agent agrees to act reasonably in incurring third party
costs and expenses.

17.11 USA PATRIOT Act. Each Lender that is subject to the requirements of the
Patriot Act hereby notifies Borrower that pursuant to the requirements of the
Act, it is required to obtain, verify and record information that identifies
Borrower, which information includes the name and address of Borrower and other
information that will allow such Lender to identify Borrower in accordance with
the Patriot Act.

17.12 Integration. This Agreement, together with the other Loan Documents, the
Domestic Credit Agreement and the Domestic Loan Documents reflects the entire
understanding of the parties with respect to the transactions contemplated
hereby and shall not be contradicted or qualified by any other agreement, oral
or written, before the date hereof.

[Signature pages to follow.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date first above written.

 

STANADYNE INTERMEDIATE HOLDING CORP.,

a Delaware corporation

By:   /s/ Stephen S. Langin Name:     Stephen S. Langin Title:   Vice President,
Chief Financial Officer and Secretary

STANADYNE CORPORATION,

a Delaware corporation

By:   /s/ Stephen S. Langin Name:     Stephen S. Langin Title:   Vice President,
Chief Financial Officer and Secretary

WELLS FARGO FOOTHILL, LLC,

a Delaware limited liability company, as Agent and as a Lender

By:   /s/ Samantha Alexander Name:     Samantha Alexander Title:   Vice
President

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Schedule 1.1

As used in the Agreement, the following terms shall have the following
definitions:

“Account” means an account (as that term is defined in the Code).

“Account Debtor” means any Person who is obligated on an Account, chattel paper,
or a general intangible.

“Accounting Changes” means changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants (or successor thereto or any agency with similar functions).

“Acquisition” means (a) the purchase or other acquisition by a Person of all or
substantially all of the assets of (or any division or business line of) any
other Person, or (b) the purchase or other acquisition (whether by means of a
merger, consolidation, or otherwise) by a Person of all or substantially all of
the Stock of any other Person.

“Additional Documents” has the meaning specified therefor in Section 5.12 of the
Agreement.

“Advances” has the meaning specified therefor in Section 2.1(a) of the
Agreement.

“Affected Lender” has the meaning specified therefor in Section 2.13(b) of the
Agreement.

“Affiliate” means, as applied to any Person, any other Person who controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, “control” means the possession, directly or indirectly through
one or more intermediaries, of the power to direct the management and policies
of a Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, for purposes of the definition of Eligible Accounts and
Section 6.12 of the Agreement: (a) any Person which owns directly or indirectly
10% or more of the Stock having ordinary voting power for the election of
directors or other members of the governing body of a Person or 10% or more of
the partnership or other ownership interests of a Person (other than as a
limited partner of such Person) shall be deemed an Affiliate of such Person,
(b) each director (or comparable manager) of a Person shall be deemed to be an
Affiliate of such Person, and (c) each partnership in which a Person is a
general partner shall be deemed an Affiliate of such Person.

“Agent” has the meaning specified therefor in the preamble to the Agreement.

“Agent-Related Persons” means Agent, together with its Affiliates, officers,
directors, employees, attorneys, and agents.

“Agent’s Account” means the Deposit Account of Agent identified on Schedule A-1.

“Agent’s Liens” means the Liens granted by Parent or its Domestic Subsidiaries
to Agent under the Loan Documents.

“Agreement” means the Credit Agreement to which this Schedule 1.1 is attached.

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“Application Event” means the occurrence of (a) a failure by Borrower to repay
all of the Obligations on the Maturity Date, or (b) an Event of Default and the
election by Agent or the Required Lenders to require that payments and proceeds
of Collateral be applied pursuant to Section 2.4(b)(ii) of the Agreement.

“Assignee” has the meaning specified therefor in Section 13.1(a) of the
Agreement.

“Assignment and Acceptance” means an Assignment and Acceptance Agreement
substantially in the form of Exhibit A-1.

“Authorized Person” means any one of the individuals identified on Schedule A-2,
as such schedule is updated from time to time by written notice from Borrower to
Agent.

“Availability” means, as of any date of determination, the amount that Borrower
is entitled to borrow as Advances under Section 2.1 of the Agreement (after
giving effect to all then outstanding Obligations).

“Average Excess Availability” means, for any fiscal quarter of the Borrower, the
average of the amount of Excess Availability as of the end of each day for the
last thirty (30) days of such fiscal quarter.

“Average Excess Availability Calculation” has the meaning specified therefor in
the definition of Base Rate Margin.

“Bankruptcy Code” means title 11 of the United States Code, as in effect from
time to time.

“Base LIBOR Rate” means the rate per annum, determined by Agent in accordance
with its customary procedures, and utilizing such electronic or other quotation
sources as it considers appropriate, to be the rate at which Dollar deposits
(for delivery on the first day of the requested Interest Period) are offered to
major banks in the London interbank market 2 Business Days prior to the
commencement of the requested Interest Period, for a term and in an amount
comparable to the Interest Period and the amount of the LIBOR Rate Loan
requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR
Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by
Borrower in accordance with the Agreement, which determination shall be
conclusive in the absence of manifest error.

“Base Rate” means the greatest of (a) 3.25 percent per annum, (b) the Federal
Funds Rate plus  1/2%, (c) the Base LIBOR Rate (which rate shall be calculated
based upon an Interest Period of 3 months and shall be determined on a daily
basis), plus 1%, and (d) the rate of interest announced, from time to time,
within Wells Fargo at its principal office in San Francisco as its “prime rate”,
with the understanding that the “prime rate” is one of Wells Fargo’s base rates
(not necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publications as Wells Fargo may designate.

“Base Rate Loan” means each portion of the Advances that bears interest at a
rate determined by reference to the Base Rate.

“Base Rate Margin” means, as of any date of determination (with respect to any
portion of the outstanding Advances on such date that is a Base Rate Loan), the
applicable margin set forth in the following table that corresponds to the most
recent Average Excess Availability calculation delivered to Agent pursuant to
Section 5.1 of the Agreement (the “Average Excess

 

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Availability Calculation”); provided, however, that for the period from the
Closing Date through the date Agent receives the Average Excess Availability
Calculation in respect of the testing period ending September 30, 2009, the Base
Rate Margin shall be at the margin in the row styled “Level III”:

 

Level

  

Borrower’s Average Excess Availability

  

Base Rate Margin

I    Less than $8,500,000    4.25 percentage points II    Greater than or equal
to $8,500,000
but less than $11,000,000    4.00 percentage points III    Greater than or equal
to $11,000,000    3.75 percentage points

Except as set forth in the foregoing proviso, the Base Rate Margin shall be
based upon the most recent Average Excess Availability Calculation, which will
be calculated as of the end of each fiscal quarter. The Base Rate Margin shall
be re-determined quarterly on the first day of the month following the date of
delivery to Agent of the certified Average Excess Availability Calculation
pursuant to Section 5.1 of the Agreement; provided, however, that if Borrower
fails to provide such certification when such certification is due, the Base
Rate Margin shall be set at the margin in the row styled “Level I” as of the
first day of the month following the date on which the certification was
required to be delivered until the date on which such certification is delivered
(on which date (but not retroactively), without constituting a waiver of any
Default or Event of Default occasioned by the failure to timely deliver such
certification, the Base Rate Margin shall be set at the margin based upon the
calculations disclosed by such certification). In the event that the information
regarding the Average Excess Availability Calculation contained in any
certificate delivered pursuant to Section 5.1 of the Agreement is shown to be
inaccurate, and such inaccuracy, if corrected, would have led to the application
of a higher Base Rate Margin for any period (a “Base Rate Period”) than the Base
Rate Margin actually applied for such Base Rate Period, then (i) Borrower shall
immediately deliver to Agent a correct certificate for such Base Rate Period,
(ii) the Base Rate Margin shall be determined as if the correct Base Rate Margin
(as set forth in the table above) were applicable for such Base Rate Period, and
(iii) Borrower shall immediately deliver to Agent full payment in respect of the
accrued additional interest as a result of such increased Base Rate Margin for
such Base Rate Period, which payment shall be promptly applied by Agent to the
affected Obligations; provided, that Borrower’s obligations pursuant to this
sentence shall not survive payment in full of the Obligations and termination of
this Agreement.

“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of
ERISA) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which Parent or any of its
Subsidiaries or ERISA Affiliates has been an “employer” (as defined in
Section 3(5) of ERISA) within the past six years.

“Board of Directors” means, with respect to any Person, the board of directors
(or comparable managers) of such Person or any committee thereof duly authorized
to act on behalf of the board of directors (or comparable managers).

“Borrower” has the meaning specified therefor in the preamble to the Agreement.

“Borrower Agreement” means that certain Export-Import Bank of the United States
Working Capital Guarantee Program Borrower Agreement, dated as of the date
hereof, by and among Borrower and EXIM Bank.

 

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“Borrowing” means a borrowing hereunder consisting of Advances made on the same
day by the Lenders (or Agent on behalf thereof), or by Swing Lender in the case
of a Swing Loan, or by Agent in the case of a Protective Advance.

“Borrowing Base” means, as of any date of determination, the result of:

(a) 85% of the amount of Eligible Accounts, less the amount, if any, of the
Dilution Reserve, minus

(b) the aggregate amount of reserves, if any, established by Agent under
Section 2.1(c) of the Agreement.

“Borrowing Base Certificate” means a certificate in the form of Exhibit B-1.

“Borrowing Base Excess Amount” has the meaning set forth in Section 2.4(e)(i).

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks are authorized or required to close in the state of New York, except
that, if a determination of a Business Day shall relate to a LIBOR Rate Loan,
the term “Business Day” also shall exclude any day on which banks are closed for
dealings in Dollar deposits in the London interbank market.

“Capital Expenditures” means, with respect to any Person for any period, the
aggregate of all expenditures by such Person and its Domestic Subsidiaries
during such period that are capital expenditures as determined in accordance
with GAAP, whether such expenditures are paid in cash or financed.
Notwithstanding the foregoing, Capital Expenditures shall not include
(a) expenditures that would otherwise constitute a Permitted Acquisition,
(b) expenditures made in connection with the replacement, substitution or
restoration of property (i) to the extent reimbursable from insurance proceeds
payable on account of the loss of or damage to the property being replaced,
substituted or restored, or (ii) with proceeds or awards on account of any
taking of the property being replaced, and (c) expenditures to the extent funded
by the Net Cash Proceeds from asset sales as contemplated by, and in accordance
with Section 2.4(e)(ii).

“Capitalized Lease Obligation” means that portion of the obligations under a
Capital Lease that is required to be capitalized in accordance with GAAP.

“Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

“Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued or fully guaranteed by any state of the United States
or any political subdivision of any such state or any public instrumentality
thereof maturing within 1 year from the date of acquisition thereof and, at the
time of acquisition, having one of the two highest ratings obtainable from
either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc.
(“Moody’s”), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit, time
deposits, overnight bank deposits or bankers’ acceptances maturing within 1 year
from the date of acquisition thereof issued by any bank organized under the laws
of the United States or any state thereof or the District of Columbia or any
United States branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $250,000,000, (e) Deposit Accounts
maintained with (i) any bank that satisfies the criteria described in clause
(d) above, or (ii) any other bank organized under the laws of

 

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the United States or any state thereof so long as the full amount maintained
with any such other bank is insured by the Federal Deposit Insurance
Corporation, (f) repurchase obligations of any commercial bank satisfying the
requirements of clause (d) of this definition or recognized securities dealer
having combined capital and surplus of not less than $250,000,000, having a term
of not more than seven days, with respect to securities satisfying the criteria
in clauses (a) or (d) above, (g) debt securities with maturities of six months
or less from the date of acquisition backed by standby letters of credit issued
by any commercial bank satisfying the criteria described in clause (d) above,
and (h) Investments in money market funds substantially all of whose assets are
invested in the types of assets described in clauses (a) through (g) above.

“CFC” means a controlled foreign corporation (as that term is defined in the
IRC).

“Change of Control” means that (a) Equity Sponsor fails to own and control,
directly or indirectly, 51%, or more, of the Stock of Holdings having the right
to vote for the election of members of the Board of Directors of Holdings,
(b) any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of
the Exchange Act), other than Equity Sponsor, becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 35%,
or more, of the Stock of Holdings having the right to vote for the election of
members of the Board of Directors of Holdings, (c) a majority of the members of
the Board of Directors of Holdings do not constitute Continuing Directors,
(d) Holdings fails to own and control directly 100% of the Stock of Parent, or
(e) Parent fails to own and control, directly or indirectly, 100% of the Stock
of each other Loan Party.

“Closing Date” means the date of the making of the initial Advance (or other
extension of credit) hereunder.

“Code” means the New York Uniform Commercial Code, as in effect from time to
time.

“Collateral” means all assets and interests in assets and proceeds thereof now
owned or hereafter acquired by Parent or its Domestic Subsidiaries in or upon
which a Lien is granted by such Person in favor of Agent or the Lenders under
any of the Loan Documents.

“Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in Parent’s or its Domestic Subsidiaries’ books and records, Equipment, or
Inventory, in each case, in form and substance reasonably satisfactory to Agent.

“Collections” means all cash, checks, notes, instruments, and other items of
payment (including insurance proceeds, cash proceeds of asset sales, rental
proceeds, and tax refunds).

“Commitment” means, with respect to each Lender, its Revolver Commitment, and,
with respect to all Lenders, their Revolver Commitments, in each case as such
Dollar amounts are set forth beside such Lender’s name under the applicable
heading on Schedule C-1 or in the Assignment and Acceptance pursuant to which
such Lender became a Lender hereunder, as such amounts may be reduced or
increased from time to time pursuant to assignments made in accordance with the
provisions of Section 13.1 of the Agreement. Notwithstanding anything to the
contrary in this Agreement or on Schedule C-1, (A) the aggregate amount of the
Commitments of the Lenders hereunder, as of any date of determination, shall not
exceed the lesser of (i) the Maximum Revolver Amount as of such date and
(ii) the Borrowing Base as of such date, and the Commitment of each Lender
hereunder shall be deemed to be temporarily reduced proportionate to such
Lender’s Pro Rata Share to the extent either the Maximum Revolver Amount or the
Borrowing Base is less than the aggregate amount of the Commitments, and (B) the
aggregate amount of the Commitments under this agreement combined with the
aggregate amount “Commitments” (as defined in the Domestic Credit Agreement)
shall not exceed $30,000,000.

 

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“Compliance Certificate” means a certificate substantially in the form of
Exhibit C-1 delivered by the chief financial officer of Borrower to Agent.

“Confidential Information” has the meaning specified therefor in Section 17.9(a)
of the Agreement.

“Continuing Director” means (a) any member of the Board of Directors who was a
director (or comparable manager) of Holdings on the Closing Date, and (b) any
individual who becomes a member of the Board of Directors of Holdings after the
Closing Date if such individual was approved, appointed or nominated for
election to the Board of Directors by either the Equity Sponsor or a majority of
the Continuing Directors, but excluding any such individual originally proposed
for election in opposition to the Board of Directors of Holdings in office at
the Closing Date in an actual or threatened election contest relating to the
election of the directors (or comparable managers) of Holdings and whose initial
assumption of office resulted from such contest or the settlement thereof.

“Control Agreement” means a control agreement, in form and substance reasonably
satisfactory to Agent, executed and delivered by Parent or one of its Domestic
Subsidiaries, Agent, and the applicable securities intermediary (with respect to
a Securities Account) or bank (with respect to a Deposit Account).

“Controlled Account Agreement” has the meaning specified therefor in the
Security Agreement.

“Copyright Security Agreement” has the meaning specified therefor in the
Security Agreement.

“Country Limitation Schedule” has the meaning specified therefor in the Borrower
Agreement.

“Daily Balance” means, as of any date of determination and with respect to any
Obligation, the amount of such Obligation owed at the end of such day.

“Default” means an event, condition, or default that, with the giving of notice,
the passage of time, or both, would be an Event of Default.

“Defaulting Lender” means any Lender that fails to make any Advance (or other
extension of credit) that it is required to make hereunder on the date that it
is required to do so hereunder.

“Defaulting Lender Rate” means (a) for the first 3 days from and after the date
the relevant payment is due, the Base Rate, and (b) thereafter, the interest
rate then applicable to Advances that are Base Rate Loans (inclusive of the Base
Rate Margin applicable thereto).

“Deposit Account” means any deposit account (as that term is defined in the
Code).

“Designated Account” means the Deposit Account of Borrower identified on
Schedule D-1.

“Designated Account Bank” has the meaning specified therefor in Schedule D-1.

 

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“Dilution” means, as of any date of determination, a percentage, based upon the
experience of the immediately prior 3 calendar months, that is the result of
dividing the Dollar amount of (a) bad debt write-downs, discounts, advertising
allowances, credits, or other dilutive items with respect to Borrower’s Accounts
during such period, by (b) Borrower’s billings with respect to Accounts during
such period.

“Dilution Reserve” means, as of any date of determination, an amount sufficient
to reduce the advance rate against Eligible Accounts by 1 percentage point for
each percentage point by which Dilution is in excess of 5.0%.

“Dollars” or “$” means United States dollars.

“Domestic Accounts” means “Eligible Accounts” under and as defined in the
Domestic Credit Agreement.

“Domestic Advances” means “Advances” under and as defined in the Domestic Credit
Agreement.

“Domestic Availability” means “Availability” under and as defined in the
Domestic Credit Agreement.

“Domestic Borrowing Base” means the “Borrowing Base” under and as defined in the
Domestic Credit Agreement.

“Domestic Commitment” means the aggregate amount of the “Commitments” under and
as defined in the Domestic Credit Agreement.

“Domestic Credit Agreement” means the Credit Agreement, dated as of the date
hereof, by and among the Parent, the Borrower, WFF, as agent, and the lenders
from time to time party thereto.

“Domestic Loan Documents” means the “Loan Documents” under and as defined in the
Domestic Credit Agreement.

“Domestic Obligations” means the “Obligations” under and as defined in the
Domestic Credit Agreement.

“Domestic Subsidiary” shall mean a Subsidiary organized under the laws of the
United States of America, any State thereof or the District of Columbia.

“EBITDA” means, with respect to any fiscal period, Borrower’s unconsolidated net
earnings (or loss), minus, to the extent included in the calculation of
Borrower’s unconsolidated net earnings (or loss), extraordinary gains and
interest income, plus, to the extent deducted in the calculation of Borrower’s
unconsolidated net earnings (or loss): (i) non-cash extraordinary losses,
(ii) interest expense (including debt extinguishment charges), (iii) income
taxes, (iv) depreciation and amortization, (v) management fees and expenses paid
by Parent and its Subsidiaries in accordance with Section 6.12(e) of the
Agreement in an amount not to exceed $850,000 in any fiscal year of Parent,
(vi) restructuring charges in an aggregate amount not to exceed (A) $2,000,000
for the fiscal year of Borrower ending December 31, 2009, (B) $8,700,000 for the
fiscal year of Borrower ending December 31, 2010, (C) $8,700,000 for the fiscal
year of Borrower ending December 31, 2011, (D) $14,000,000 for the combined
fiscal years of Borrower ending December 31, 2010 and December 31, 2011, and
(E) $3,000,000 for the fiscal year of Borrower ending December 31, 2012,
(vii) non-cash

 

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stock compensation expenses, (viii) to the extent incurred in the fiscal year of
Borrower ending December 31, 2009, employee severance expenses in an aggregate
amount not to exceed $635,000, (ix) to the extent incurred within thirty
(30) days of the Closing Date, transaction costs relating to this Agreement in
an aggregate amount not to exceed $1,000,000; and (x) other non-cash charges; in
each case, determined on an unconsolidated basis in accordance with GAAP. For
the purposes of calculating EBITDA for any period of 4 consecutive fiscal
quarters (each, a “Reference Period”), if at any time during such Reference
Period (and after the Closing Date), Borrower shall have made a Permitted
Acquisition, EBITDA for such Reference Period shall be calculated after giving
pro forma effect thereto (including pro forma adjustments arising out of events
which are directly attributable to such Permitted Acquisition, are factually
supportable, and are expected to have a continuing impact, in each case to be
mutually and reasonably agreed upon by Borrower and Agent) or in such other
manner acceptable to Agent as if any such Permitted Acquisition or adjustment
occurred on the first day of such Reference Period.

“Eligible Accounts” means those Accounts created by Borrower in the ordinary
course of its business, that arise out of Borrower’s sale of goods or rendition
of services, that comply with each of the representations and warranties
respecting Eligible Accounts made in the Loan Documents, that are Export-Related
Accounts Receivable (as defined in the Borrower Agreement), and that are not
excluded as ineligible by virtue of one or more of the excluding criteria set
forth below; provided, however, that such criteria may be revised from time to
time by Agent in Agent’s Permitted Discretion to address the results of any
audit performed by Agent from time to time after the Closing Date. In
determining the amount to be included, Eligible Accounts shall be calculated net
of customer deposits and unapplied cash. Eligible Accounts shall not include the
following:

(a) Accounts that the Account Debtor has failed to pay within 150 days of the
original invoice date, or Accounts that are more than 60 days past due,

(b) Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of
all Accounts owed by that Account Debtor (or its Affiliates) are deemed
ineligible under clause (a) above,

(c) Accounts with respect to which the Account Debtor is an Affiliate of
Borrower or an employee or agent of Borrower or any Affiliate of Borrower,

(d) Accounts arising in a transaction wherein goods are placed on consignment or
are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a
bill and hold, or any other terms by reason of which the payment by the Account
Debtor may be conditional,

(e) Accounts that are not payable in Dollars,

(f) Accounts with respect to which the Account Debtor either (i) maintains its
chief executive office in the United States or in a country with which EXIM Bank
is prohibited from doing business as described in the Country Limitation
Schedule, (ii) is organized under the laws of the United States or a country
with which EXIM Bank is prohibited from doing business as described in the
Country Limitation Schedule or any state, territory, province, municipality, or
other political subdivision thereof, or (iii) is the government of any foreign
country or sovereign state, or of any state, territory, province, municipality,
or other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof,

(g) Intentionally Omitted,

 

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(h) Accounts with respect to which the Account Debtor is a creditor of Borrower,
has or has asserted a right of setoff, or has disputed its obligation to pay all
or any portion of the Account, to the extent of such claim, right of setoff, or
dispute,

(i) (1) Accounts with respect to an Account Debtor (other than Deere & Company,
Daimler AG, and General Engine Products, Inc.) whose total obligations owing to
Borrower exceed 10% (such percentage, as applied to a particular Account Debtor,
being subject to reduction by Agent in its Permitted Discretion if the
creditworthiness of such Account Debtor deteriorates) of all Eligible Accounts,
to the extent of the obligations owing by such Account Debtor in excess of such
percentage; (2) Accounts with respect to Daimler AG whose total obligations
owing to Borrower exceed 15% (such percentage being subject to reduction by
Agent in its Permitted Discretion if the creditworthiness of such Account Debtor
deteriorates) of all Eligible Accounts, to the extent of the obligations owing
by such Account Debtor in excess of such percentage, (3) Accounts with respect
to Deere & Company whose total obligations owing to Borrower exceed 35% (such
percentage being subject to reduction by Agent in its Permitted Discretion if
the creditworthiness of such Account Debtor deteriorates) of all Eligible
Accounts, to the extent of the obligations owing by such Account Debtor in
excess of such percentage; and (4) Accounts with respect to General Engine
Products, Inc. whose total obligations owing to Borrower exceed 15% (such
percentage being subject to reduction by Agent in its Permitted Discretion if
the creditworthiness of such Account Debtor deteriorates) of all Eligible
Accounts, to the extent of the obligations owing by such Account Debtor in
excess of such percentage; provided, however, that, in each case, the amount of
Eligible Accounts that are excluded because they exceed the foregoing
percentages shall be determined by Agent based on all of the otherwise Eligible
Accounts prior to giving effect to any eliminations based upon the foregoing
concentration limits,

(j) Accounts with respect to which the Account Debtor is subject to an
Insolvency Proceeding, is not Solvent, has gone out of business, or as to which
Borrower has received notice of an imminent Insolvency Proceeding or a material
impairment of the financial condition of such Account Debtor,

(k) Accounts, the collection of which, Agent, in its Permitted Discretion,
believes to be doubtful by reason of the Account Debtor’s financial condition,

(l) Accounts that are not subject to a valid and perfected first priority
Agent’s Lien,

(m) Accounts with respect to which (i) the goods giving rise to such Account
have not been shipped and billed to the Account Debtor, or (ii) the services
giving rise to such Account have not been performed and billed to the Account
Debtor,

(n) Accounts with respect to which the Account Debtor is a Sanctioned Person or
Sanctioned Entity,

(o) Domestic Accounts,

(p) Accounts that represent the right to receive progress payments or other
advance billings that are due prior to the completion of performance by Borrower
of the subject contract for goods or services, or

(q) Accounts that do not meet all criteria of Eligible Export-Related Accounts
Receivable (as defined in the Borrower Agreement), as such criteria may be
modified by written notice from EXIM Bank to Wells Fargo, WFF, or Agent;
provided, that to the extent any criteria set forth in the Borrower Agreement
(as modified by any written notice from EXIM Bank to Wells Fargo,

 

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WFF, or Agent) are less restrictive than the criteria set forth herein, the
criteria set forth herein shall control and to the extent any criteria set forth
in the Borrower Agreement (as modified by any written notice from EXIM Bank to
Wells Fargo, WFF, or Agent) are more restrictive that the criteria set forth
herein, the criteria set forth in the Borrower Agreement (as modified by any
written notice from EXIM Bank to Wells Fargo, WFF, or Agent) shall control.

“Environmental Action” means any written complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other written communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials (a) from any assets, properties, or
businesses of Parent, any Domestic Subsidiary of Parent, or any of their
predecessors in interest, (b) from adjoining properties or businesses, or
(c) from or onto any facilities which received Hazardous Materials generated by
Parent, any Subsidiary of Parent, or any of their predecessors in interest.

“Environmental Law” means any applicable federal, state, provincial, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy, or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on Parent
or its Subsidiaries, relating to the environment, the effect of the environment
on employee health, or Hazardous Materials, in each case as amended from time to
time.

“Environmental Liabilities” means all liabilities, monetary obligations, losses,
damages, punitive damages, consequential damages, treble damages, costs and
expenses (including all reasonable fees, disbursements and expenses of counsel,
experts, or consultants, and costs of investigation and feasibility studies),
fines, penalties, sanctions, and interest incurred as a result of any claim or
demand, or Remedial Action required, by any Governmental Authority or any third
party, and which relate to any Environmental Action.

“Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities.

“Equipment” means equipment (as that term is defined in the Code).

“Equity Sponsor” means investment funds managed by Kohlberg & Company, L.L.C.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto.

“ERISA Affiliate” means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of Parent or its
Subsidiaries under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of Parent or its Subsidiaries under IRC Section 414(c), (c) solely for
purposes of Section 302 of ERISA and Section 412 of the IRC, any organization
subject to ERISA that is a member of an affiliated service group of which Parent
or any of its Subsidiaries is a member under IRC Section 414(m), or (d) solely
for purposes of Section 302 of ERISA and Section 412 of the IRC, any Person
subject to ERISA that is a party to an arrangement with Parent or any of its
Subsidiaries and whose employees are aggregated with the employees of Parent or
its Subsidiaries under IRC Section 414(o).

 

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“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) a violation of
Section 436 of the Code or the imposition of a lien under Section 430(k) of the
Code or Section 302 or Section 4068 of ERISA; (c) the filing pursuant to
Section 412(c) of the Code of an application for a waiver of the minimum funding
standard with respect to any Plan; (d) the incurrence by the Borrower or any of
its ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (e) the receipt by the Borrower or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of
any liability with respect to the withdrawal or partial withdrawal from any Plan
or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate
of any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.

“Event of Default” has the meaning specified therefor in Section 8 of the
Agreement.

“Excess Availability” means, as of any date of determination, the amount equal
to Availability plus Domestic Availability minus the aggregate amount, if any,
of all trade payables of Parent and its Domestic Subsidiaries aged in excess of
historical levels with respect thereto and all book overdrafts of Parent and its
Domestic Subsidiaries in excess of historical practices with respect thereto, in
each case as determined by Agent in its Permitted Discretion.

“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time
to time.

“EXIM Bank” means the Export-Import Bank of the United States.

“Existing Letters of Credit” means the letters of credit set forth on Schedule
E-2.

“Extraordinary Receipts” means any cash received by Parent or any of its
Domestic Subsidiaries not in the ordinary course of business (and not consisting
of proceeds described in Section 2.4(e)(ii) of the Agreement) consisting of
(a) proceeds of judgments, proceeds of settlements or other consideration of any
kind in connection with any cause of action, (b) indemnity payments (other than
to the extent such indemnity payments are (i) immediately payable to a Person
that is not an Affiliate of Parent or any of its Subsidiaries, or (ii) received
by Parent or any of its Domestic Subsidiaries as reimbursement for any payment
previously made to such Person), (c) any purchase price adjustment (other than a
working capital adjustment) received in connection with any purchase agreement,
and (d) only after a Triggering Event (as defined in the Security Agreement) and
prior to any Rescission (as defined in the Security Agreement) related to such
Triggering Event, tax refunds that are paid to Parent or any of its Domestic
Subsidiaries.

“Fee Letter” means that certain fee letter between Borrower and Agent, in form
and substance reasonably satisfactory to Agent.

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal to, for each day during such period, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by Agent from three
Federal funds brokers of recognized standing selected by it.

 

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“Fixed Charges” means, with respect to any fiscal period and with respect to
Borrower determined on an unconsolidated basis in accordance with GAAP, the sum,
without duplication, of (a) cash Interest Expense paid or payable during such
period, (b) principal payments in respect of Indebtedness that are required to
be paid during such period (other than any contingent mandatory prepayments due
under this Agreement), (c) all federal, state, and local income taxes required
to be paid in cash during such period, (d) all cash restructuring charges,
(e) all management fees paid by Borrower in accordance with Section 6.12(e) of
the Agreement, (f) all dividends made by Borrower (whether in cash or other
property, other than common Stock), (g) all cash payments made by Borrower on
account of any of their pension plans, and (h) any net investments by Borrower
in any of its Subsidiaries (whether in cash or other property) made during such
period.

“Fixed Charge Coverage Ratio” means, with respect to Borrower for any period,
the ratio of (i) EBITDA for such period minus Capital Expenditures made in cash
during such period, to (ii) Fixed Charges for such period.

“Foreign Lender” means any Lender or Participant that is not a United States
person within the meaning of IRC section 7701(a)(30).

“Funding Date” means the date on which a Borrowing occurs.

“Funding Losses” has the meaning specified therefor in Section 2.12(b)(ii) of
the Agreement.

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied.

“Governing Documents” means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.

“Governmental Authority” means any federal, state, local, or other governmental
or administrative body, instrumentality, board, department, or agency or any
court, tribunal, administrative hearing body, arbitration panel, commission, or
other similar dispute-resolving panel or body.

“Guarantors” means (a) each Subsidiary of Parent (other than Borrower and other
than any CFC), (b) Parent, and (c) each other Person that becomes a guarantor
after the Closing Date pursuant to Section 5.11 of the Agreement, and
“Guarantor” means any one of them.

“Guaranty” means that certain general continuing guaranty executed and delivered
by each Guarantor in favor of Agent, for the benefit of the Lender Group and the
Bank Product Providers (as defined in the Domestic Credit Agreement), in form
and substance reasonably satisfactory to Agent.

“Hazardous Materials” means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

 

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“Hedge Agreement” means any and all agreements or documents now existing or
hereafter entered into by Parent or any of its Domestic Subsidiaries that
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 Parent’s or any of its
Subsidiaries’ exposure to fluctuations in interest or exchange rates, loan,
credit exchange, security, or currency valuations or commodity prices.

“Holdings” means Stanadyne Holdings, Inc., a Delaware corporation.

“Holdout Lender” has the meaning specified therefor in Section 14.2(a) of the
Agreement.

“Indebtedness” means (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations in respect of letters of credit, bankers
acceptances, or similar financial products, (c) all obligations as a lessee
under Capital Leases, (d) all obligations or liabilities of others secured by a
Lien on any asset of a Person, irrespective of whether such obligation or
liability is assumed, (e) all obligations to pay the deferred purchase price of
assets (other than trade payables incurred in the ordinary course of business
and repayable in accordance with customary trade practices), (f) all obligations
owing under Hedge Agreements (which amount shall be calculated based on the
amount that would be payable by such Person if the Hedge Agreement were
terminated on the date of determination), (g) any Prohibited Preferred Stock,
and (h) any obligation guaranteeing or intended to guarantee (whether directly
or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse)
any obligation of any other Person that constitutes Indebtedness under any of
clauses (a) through (g) above. For purposes of this definition, (i) the amount
of any Indebtedness represented by a guaranty or other similar instrument shall
be the lesser of the principal amount of the obligations guaranteed and still
outstanding and the maximum amount for which the guaranteeing Person may be
liable pursuant to the terms of the instrument embodying such Indebtedness, and
(ii) the amount of any Indebtedness described in clause (d) above shall be the
lower of the amount of the obligation and the fair market value of the assets
securing such obligation.

“Indemnified Liabilities” has the meaning specified therefor in Section 10.3 of
the Agreement.

“Indemnified Person” has the meaning specified therefor in Section 10.3 of the
Agreement.

“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.

“Intercompany Subordination Agreement” means a subordination agreement executed
and delivered by Parent, each of its Subsidiaries, and Agent, the form and
substance of which is reasonably satisfactory to Agent.

“Interest Expense” means, for any period, the aggregate of the interest expense
of Borrower for such period, determined on an unconsolidated basis in accordance
with GAAP.

 

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“Interest Period” means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 3 months thereafter; provided, however, that
(a) interest shall accrue at the applicable rate based upon the LIBOR Rate from
and including the first day of each Interest Period to, but excluding, the day
on which any Interest Period expires, (b) any Interest Period that would end on
a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (c) with
respect to an Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 3 months after the
date on which the Interest Period began, as applicable, and (d) Borrower may not
elect an Interest Period which will end after the Maturity Date.

“Inventory” means inventory (as that term is defined in the Code).

“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, capital contributions (excluding (a) commission, travel, and similar
advances to officers and employees of such Person made in the ordinary course of
business, and (b) bona fide Accounts arising in the ordinary course of business
consistent with past practice), or acquisitions of Indebtedness, Stock, or all
or substantially all of the assets of such other Person (or of any division or
business line of such other Person), and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.

“IRC” means the Internal Revenue Code of 1986, as in effect from time to time.

“Issuing Lender” means WFF or any other Lender that, at the request of Borrower
and with the consent of Agent, agrees, in such Lender’s sole discretion, to
become an Issuing Lender for the purpose of issuing Letters of Credit or
Reimbursement Undertakings pursuant to Section 2.11 of the Agreement.

“Items” has the meaning specified therefor in the Borrower Agreement.

“Lender” and “Lenders” have the respective meanings set forth in the preamble to
the Agreement, and shall include any other Person made a party to the Agreement
in accordance with the provisions of Section 13.1 of the Agreement.

“Lender Group” means each of the Lenders (including the Issuing Lender) and
Agent, or any one or more of them.

“Lender Group Expenses” means all (a) costs or expenses (including taxes, and
insurance premiums) required to be paid by Parent or its Subsidiaries under any
of the Loan Documents that are paid, advanced, or incurred by the Lender Group
in accordance with the terms thereof, (b) out-of-pocket fees or charges paid or
incurred by Agent in connection with the Lender Group’s transactions with Parent
or its Subsidiaries under any of the Loan Documents, including, fees or charges
for photocopying, notarization, couriers and messengers, telecommunication,
public record searches (including tax lien, litigation, and UCC searches and
including searches with the patent and trademark office, the copyright office,
or the department of motor vehicles), filing, recording, publication, appraisal
(including periodic collateral appraisals or business valuations to the extent
of the fees and charges (and up to the amount of any limitation) contained in
the Agreement or the Fee Letter), real estate surveys, real estate title
policies and endorsements, and environmental audits, (c) out-of-pocket costs and
expenses incurred by Agent in the disbursement of funds to Borrower or other
members of the Lender Group (by wire transfer or otherwise), (d) out-of-pocket
charges paid or incurred by Agent resulting from the dishonor of checks payable
by or to any Loan Party,

 

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(e) reasonable out-of-pocket costs and expenses paid or incurred by the Lender
Group to correct any default or enforce any provision of the Loan Documents, or
during the continuance of an Event of Default, in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion thereof,
irrespective of whether a sale is consummated, (f) reasonable out-of-pocket
audit fees and expenses (including travel, meals, and lodging) of Agent related
to any inspections or audits to the extent of the fees and charges (and up to
the amount of any limitation) contained in the Agreement or the Fee Letter,
(g) reasonable out-of-pocket costs and expenses of third party claims or any
other suit paid or incurred by the Lender Group in enforcing or defending the
Loan Documents or in connection with the transactions contemplated by the Loan
Documents or the Lender Group’s relationship with Parent or any of its
Subsidiaries, (h) Agent’s reasonable costs and expenses (including reasonable
attorneys fees) incurred in advising, structuring, drafting, reviewing,
administering (including travel, meals, and lodging), syndicating, or amending
the Loan Documents, and (i) Agent’s and each Lender’s reasonable costs and
expenses (including reasonable attorneys, accountants, consultants, and other
advisors fees and expenses) incurred in terminating, enforcing (including
attorneys, accountants, consultants, and other advisors fees and expenses
incurred in connection with a “workout,” a “restructuring,” or an Insolvency
Proceeding concerning Parent or any of its Subsidiaries or in exercising rights
or remedies under the Loan Documents), or defending the Loan Documents,
irrespective of whether suit is brought, or in taking any Remedial Action
concerning the Collateral.

“Lender Group Representatives” has the meaning specified therefor in
Section 17.9 of the Agreement.

“Lender-Related Person” means, with respect to any Lender, such Lender, together
with such Lender’s Affiliates, officers, directors, employees, attorneys, and
agents.

“Letter of Credit” means a letter of credit issued by Issuing Lender or a letter
of credit issued by Underlying Issuer, as the context requires.

“Letter of Credit Collateralization” means either (a) providing cash collateral
(pursuant to documentation reasonably satisfactory to Agent, including
provisions that specify that the Letter of Credit fee and all usage charges set
forth in the Agreement will continue to accrue while the Letters of Credit are
outstanding) to be held by Agent for the benefit of those Lenders with a
Revolver Commitment in an amount equal to 105% of the then existing Letter of
Credit Usage, (b) causing the Letters of Credit to be returned to the Issuing
Lender, or (c) providing Agent with a standby letter of credit, in form and
substance reasonably satisfactory to Agent, from a commercial bank acceptable to
Agent (in its sole discretion) in an amount equal to 105% of the then existing
Letter of Credit Usage (it being understood that the Letter of Credit fee and
all usage charges set forth in the Agreement will continue to accrue while the
Letters of Credit are outstanding and that any such fees that accrue must be an
amount that can be drawn under any such standby letter of credit).

“Letter of Credit Disbursement” means a payment made by Issuing Lender or
Underlying Issuer pursuant to a Letter of Credit.

“Letter of Credit Usage” means, as of any date of determination, the aggregate
undrawn amount of all outstanding Letters of Credit.

“LIBOR Deadline” has the meaning specified therefor in Section 2.12(b)(i) of the
Agreement.

“LIBOR Notice” means a written notice in the form of Exhibit L-1.

 

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“LIBOR Option” has the meaning specified therefor in Section 2.12(a) of the
Agreement.

“LIBOR Rate” means, for each Interest Period for each LIBOR Rate Loan, the rate
per annum determined by Agent by dividing (a) the Base LIBOR Rate for such
Interest Period, by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall
be adjusted on and as of the effective day of any change in the Reserve
Percentage.

“LIBOR Rate Loan” means each portion of an Advance that bears interest at a rate
determined by reference to the LIBOR Rate.

“LIBOR Rate Margin” means, as of any date of determination (with respect to any
portion of the outstanding Advances on such date that is a LIBOR Rate Loan), the
applicable margin set forth in the following table that corresponds to the most
recent Average Excess Availability calculation delivered to Agent pursuant to
Section 5.1 of the Agreement (the “Average Excess Availability Calculation”);
provided, however, that for the period from the Closing Date through the date
Agent receives the Average Excess Availability Calculation in respect of the
testing period ending September 30, 2009, the LIBOR Rate Margin shall be at the
margin in the row styled “Level III”:

 

Level

  

Borrower’s Average Excess
Availability

  

LIBOR Rate Margin

I

   Less than $8,500,000    4.25 percentage points

II

   Greater than or equal to $8,500,000 but
less than $11,000,000    4.00 percentage points

III

   Greater than or equal to $11,000,000    3.75 percentage points

Except as set forth in the foregoing proviso, the LIBOR Rate Margin shall be
based upon the most recent Average Excess Availability Calculation, which will
be calculated as of the end of each fiscal quarter. The LIBOR Rate Margin shall
be re-determined quarterly on the first day of the month following the date of
delivery to Agent of the certified Average Excess Availability Calculation
pursuant to Section 5.1 of the Agreement; provided, however, that if Borrower
fails to provide such certification when such certification is due, the LIBOR
Rate Margin shall be set at the margin in the row styled “Level I” as of the
first day of the month following the date on which the certification was
required to be delivered until the date on which such certification is delivered
(on which date (but not retroactively), without constituting a waiver of any
Default or Event of Default occasioned by the failure to timely deliver such
certification, the LIBOR Rate Margin shall be set at the margin based upon the
calculations disclosed by such certification). In the event that the information
regarding the Average Excess Availability Calculation contained in any
certificate delivered pursuant to Section 5.1 of the Agreement is shown to be
inaccurate, and such inaccuracy, if corrected, would have led to the application
of a higher LIBOR Rate Margin for any period (a “LIBOR Rate Period”) than the
LIBOR Rate Margin actually applied for such LIBOR Rate Period, then (i) Borrower
shall immediately deliver to Agent a correct certificate for such LIBOR Rate
Period, (ii) the LIBOR Rate Margin shall be determined as if the correct LIBOR
Rate Margin (as set forth in the table above) were applicable for such LIBOR
Rate Period, and (iii) Borrower shall immediately deliver to Agent full payment
in respect of the accrued additional interest as a result of such increased
LIBOR Rate Margin for such LIBOR Rate Period, which payment shall be promptly
applied by Agent to the affected Obligations; provided, that Borrower’s
obligations pursuant to this sentence shall not survive payment in full of the
Obligations and termination of this Agreement.

 

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“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge, deposit arrangement, encumbrance, easement, lien (statutory or other),
security interest, or other security arrangement and any other preference,
priority, or preferential arrangement of any kind or nature whatsoever,
including any conditional sale contract or other title retention agreement, the
interest of a lessor under a Capital Lease and any synthetic or other financing
lease having substantially the same economic effect as any of the foregoing.

“Loan Account” has the meaning specified therefor in Section 2.9 of the
Agreement.

“Loan Documents” means the Agreement, the Borrower Agreement, any Borrowing Base
Certificate, the Controlled Account Agreements, the Control Agreements, the
Copyright Security Agreement, the Fee Letter, the Guaranty, the Intercompany
Subordination Agreement, the Letters of Credit, the Mortgages, the Patent
Security Agreement, the Security Agreement, the Trademark Security Agreement,
any note or notes executed by Borrower in connection with the Agreement and
payable to any member of the Lender Group, any letter of credit application
entered into by Borrower in connection with the Agreement, and any other
agreement entered into, now or in the future, by Parent or any of its
Subsidiaries and any member of the Lender Group in connection with the
Agreement.

“Loan Party” means Borrower or any Guarantor.

“Management Agreement” means the Management Agreement, dated as of August 6,
2004, by and between Borrower and Kohlberg & Company, L.L.C.

“Margin Stock” as defined in Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.

“Material Adverse Change” means (a) a material adverse change in the business,
operations, results of operations, assets, liabilities or condition (financial
or otherwise) of Parent and its Domestic Subsidiaries, taken as a whole, (b) a
material impairment of Parent’s and its Domestic Subsidiaries ability to perform
their obligations under the Loan Documents to which they are parties or of the
Lender Group’s ability to enforce the Obligations or realize upon the
Collateral, or (c) a material impairment of the enforceability or priority of
Agent’s Liens with respect to the Collateral as a result of an action or failure
to act on the part of Parent or its Domestic Subsidiaries.

“Material Contract” means, with respect to any Person, (i) each contract or
agreement to which such Person or any of its Domestic Subsidiaries is a party
involving aggregate consideration payable to or by such Person or such Domestic
Subsidiary of $5,000,000 or more (other than purchase orders in the ordinary
course of the business of such Person or such Domestic Subsidiary and other than
contracts that by their terms may be terminated by such Person or Domestic
Subsidiary in the ordinary course of its business upon less than 60 days notice
without penalty or premium), (ii) the Management Agreement, and (iii) all other
contracts or agreements, the loss of which could reasonably be expected to
result in a Material Adverse Change.

“Maturity Date” has the meaning specified therefor in Section 3.3 of the
Agreement.

“Maximum Revolver Amount” means, as of any date of determination, $7,500,000,
decreased by the amount of reductions in the Revolver Commitments made in
accordance with Section 2.4(c) of the Agreement.

“Moody’s” has the meaning specified therefor in the definition of Cash
Equivalents.

“Mortgage Policy” has the meaning specified therefor in Schedule 3.1.

 

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“Mortgages” means, individually and collectively, one or more mortgages, deeds
of trust, or deeds to secure debt, executed and delivered by Parent or its
Subsidiaries in favor of Agent, in form and substance reasonably satisfactory to
Agent, that encumber the Real Property Collateral.

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3)
of ERISA.

“Net Cash Proceeds” means:

(a) with respect to any sale or disposition by Parent or any of its Domestic
Subsidiaries of assets, the amount of cash proceeds received (directly or
indirectly) from time to time (whether as initial consideration or through the
payment of deferred consideration) by or on behalf of Parent or its Domestic
Subsidiaries, in connection therewith after deducting therefrom only (i) the
amount of any Indebtedness secured by any Permitted Lien on any asset (other
than (A) Indebtedness owing to Agent or any Lender under the Agreement or the
other Loan Documents and (B) Indebtedness assumed by the purchaser of such
asset) which is required to be, and is, repaid in connection with such sale or
disposition, (ii) reasonable fees, commissions, and expenses related thereto and
required to be paid by Parent or such Subsidiary in connection with such sale or
disposition and (iii) taxes paid or payable to any taxing authorities by Parent
or such Subsidiary in connection with such sale or disposition, in each case to
the extent, but only to the extent, that the amounts so deducted are, at the
time of receipt of such cash, actually paid or payable to a Person that is not
an Affiliate of Parent or any of its Subsidiaries, and are properly attributable
to such transaction; and

(b) with respect to the issuance or incurrence of any Indebtedness by Parent or
any of its Domestic Subsidiaries, or the issuance by Parent or any of its
Domestic Subsidiaries of any shares of its Stock, the aggregate amount of cash
received (directly or indirectly) from time to time (whether as initial
consideration or through the payment or disposition of deferred consideration)
by or on behalf of Parent or such Subsidiary in connection with such issuance or
incurrence, after deducting therefrom only (i) reasonable fees, commissions, and
expenses related thereto and required to be paid by Parent or such Subsidiary in
connection with such issuance or incurrence, (ii) taxes paid or payable to any
taxing authorities by Parent or such Subsidiary in connection with such issuance
or incurrence, in each case to the extent, but only to the extent, that the
amounts so deducted are, at the time of receipt of such cash, actually paid or
payable to a Person that is not an Affiliate of Parent or any of its
Subsidiaries, and are properly attributable to such transaction.

“Non-Loan Party” means any Subsidiary of Parent which is not a Loan Party.

“Obligations” means all loans, Advances, debts, principal, interest (including
any interest that accrues after the commencement of an Insolvency Proceeding,
regardless of whether allowed or allowable in whole or in part as a claim in any
such Insolvency Proceeding), contingent reimbursement or indemnification
obligations with respect to Reimbursement or with respect to Letters of Credit,
premiums, liabilities (including all amounts charged to the Loan Account
pursuant to the Agreement), obligations (including indemnification obligations),
fees (including the fees provided for in the Fee Letter), Lender Group Expenses
(including any fees or expenses that accrue after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any such Insolvency Proceeding), guaranties, covenants, and
duties of any kind and description owing by Borrower to the Lender Group
pursuant to or evidenced by the Loan Documents and irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, and including all interest not
paid when due and all other expenses or other amounts that Borrower is required
to pay or reimburse by the Loan Documents or by law or otherwise in connection
with the Loan Documents. Any reference in the Agreement or in the Loan Documents
to the Obligations shall include all or any portion thereof and any extensions,
modifications, renewals, or alterations thereof, both prior and subsequent to
any Insolvency Proceeding.

 

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“OFAC” means the Office of Foreign Assets Control of the U.S. Department of the
Treasury.

“Originating Lender” has the meaning specified therefor in Section 13.1(e) of
the Agreement.

“Overadvance” has the meaning specified therefor in Section 2.5 of the
Agreement.

“Parent” has the meaning specified therefor in the preamble to the Agreement.

“Participant” has the meaning specified therefor in Section 13.1(e) of the
Agreement.

“Patent Security Agreement” has the meaning specified therefor in the Security
Agreement.

“Patriot Act” has the meaning specified therefor in Section 4.18 of the
Agreement.

“Payoff Date” means the first date on which all of the Obligations are paid in
full and the Commitments of the Lenders are terminated.

“Participant” has the meaning specified therefore in Section 13.1(e) of the
Agreement.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA and any successor entity performing similar functions.

“Permitted Acquisition” means any Acquisition so long as:

(a) no Default or Event of Default shall have occurred and be continuing or
would result from the consummation of the proposed Acquisition and the proposed
Acquisition is consensual,

(b) no Indebtedness will be incurred, assumed, or would exist with respect to
Parent or its Subsidiaries as a result of such Acquisition other than Permitted
Indebtedness, and no Liens will be incurred, assumed, or would exist with
respect to the assets of Parent or its Subsidiaries as a result or such
Acquisition other than Permitted Liens,

(c) Borrower has provided Agent with written confirmation, supported by
reasonably detailed calculations, that on a pro forma basis (including pro forma
adjustments arising out of events which are directly attributable to such
proposed Acquisition, are factually supportable, and are expected to have a
continuing impact, in each case, determined as if the combination had been
accomplished at the beginning of the relevant period; such eliminations and
inclusions to be mutually and reasonably agreed upon by Borrower and Agent)
created by adding the historical combined financial statements of Borrower
(including the combined financial statements of any other Person or assets that
were the subject of a prior Permitted Acquisition during the relevant period) to
the historical consolidated financial statements of the Person to be acquired
(or the historical financial statements related to the assets to be acquired)
pursuant to the proposed Acquisition, Borrower (i) would have been in compliance
with the financial covenants in Section 7 of the Agreement for the 4 fiscal
quarter period ended immediately prior to the proposed date of consummation of
such proposed Acquisition, and (ii) is projected to be in compliance with the
financial covenants in Section 7 for the 4 fiscal quarter period ended one year
after the proposed date of consummation of such proposed Acquisition,

 

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(d) Borrower has provided Agent with its due diligence package relative to the
proposed Acquisition, including forecasted balance sheets, profit and loss
statements, and cash flow statements of the Person to be acquired, all prepared
on a basis consistent with such Person’s historical financial statements,
together with appropriate supporting details and a statement of underlying
assumptions for the 1 year period following the date of the proposed
Acquisition, on a quarter by quarter basis), in form and substance (including as
to scope and underlying assumptions) reasonably satisfactory to Agent,

(e) Borrower shall have Excess Availability and Qualified Cash in an aggregate
amount equal to or greater than $30,000,000 immediately after giving effect to
the consummation of the proposed Acquisition,

(f) the assets being acquired or the Person whose Stock is being acquired did
not have negative EBITDA during the 12 consecutive month period most recently
concluded prior to the date of the proposed Acquisition,

(g) Borrower has provided Agent with written notice of the proposed Acquisition
at least 15 Business Days prior to the anticipated closing date of the proposed
Acquisition and, not later than 5 Business Days prior to the anticipated closing
date of the proposed Acquisition, copies of the acquisition agreement and other
material documents relative to the proposed Acquisition, which agreement and
documents must be reasonably acceptable to Agent,

(h) the assets being acquired (other than non-material amounts of assets in
relation to Borrower’s total assets), or the Person whose Stock is being
acquired, are useful in or engaged in, as applicable, the business of Borrower
or a business reasonably related thereto,

(i) the assets being acquired (other than non-material amounts of assets in
relation to the assets being acquired) are located within the United States, or
the Person whose Stock is being acquired is organized in a jurisdiction located
within the United States,

(j) the subject assets or Stock, as applicable, are being acquired directly by
Borrower, and, in connection therewith, Borrower shall have complied with
Section 5.11 or 5.12, as applicable, of the Agreement, and

(k) the purchase consideration payable in respect of all Permitted Acquisitions
(including the proposed Acquisition and including deferred payment obligations)
shall not exceed $30,000,000 in the aggregate.

“Permitted Discretion” means a determination made in the exercise of reasonable
(from the perspective of a secured lender) business judgment.

“Permitted Dispositions” means:

(a) sales, abandonment, or other dispositions of Equipment (other than Eligible
Equipment, as defined in the Domestic Credit Agreement) that is substantially
worn, damaged, or obsolete in the ordinary course of business,

(b) sales of Inventory to buyers in the ordinary course of business,

 

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(c) the use or transfer of money or Cash Equivalents in a manner that is not
prohibited by the terms of the Agreement or the other Loan Documents,

(d) the licensing, on a non-exclusive basis, of patents, trademarks, copyrights,
and other intellectual property rights in the ordinary course of business,

(e) the granting of Permitted Liens,

(f) the sale or discount, in each case without recourse, of Accounts arising in
the ordinary course of business, but only in connection with the compromise or
collection thereof,

(g) any involuntary loss, damage or destruction of property,

(h) any involuntary condemnation, seizure or taking, by exercise of the power of
eminent domain or otherwise, or confiscation or requisition of use of property,

(i) the leasing or subleasing of assets of Parent or its Subsidiaries in the
ordinary course of business,

(j) so long as not otherwise prohibited hereunder, the sale or issuance of Stock
(i) of Parent (other than Prohibited Preferred Stock), and (ii) of any of
Parent’s Subsidiaries to Parent or another Subsidiary of Parent,

(k) the lapse of registered patents, trademarks and other intellectual property
of Parent and its Subsidiaries to the extent not economically desirable in the
conduct of their business and so long as such lapse is not materially adverse to
the interests of the Lenders,

(l) transfers from one Non-Loan Party to another Non-Loan Party, and

(m) sales of Equipment from Borrower and the other Loan Parties to Non-Loan
Parties so long as (i) no Default or Event of Default shall have occurred and be
continuing or would result therefrom; (ii) such sales are for fair value and are
no less favorable to Borrower or such Loan Party than would be obtained in an
arm’s length transaction, (iii) to the extent such Equipment is Eligible
Equipment (as defined under the Domestic Credit Agreement) immediately prior to
the consummation of such sales, the proceeds of such sales are remitted to Agent
for application to the Obligations (as defined under the Domestic Credit
Agreement), and (iv) the aggregate fair market value of all such Equipment
disposed of in all such dispositions since the Closing Date would not exceed
$4,500,000,

(n) with the prior written consent of Agent (which Agent agrees to exercise
reasonable discretion in giving), the sale of the Real Property and excess
Equipment owned by Borrower in Windsor Connecticut, and

(o) dispositions of assets (other than Accounts, intellectual property,
licenses, Stock of Subsidiaries of Parent, or Material Contracts) not otherwise
permitted in clauses (a) through (n) above so long as made at fair market value
and the aggregate fair market value of all assets disposed of in all such
dispositions since the Closing Date (including the proposed disposition) would
not exceed $1,000,000.

 

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“Permitted Indebtedness” means:

(a) Indebtedness evidenced by (i) this Agreement and the other Loan Documents,
together with Indebtedness owed to Underlying Issuers with respect to Underlying
Letters of Credit, and (ii) the Domestic Loan Documents, together with
Indebtedness owed to Underlying Issuers (as defined in the Domestic Credit
Agreement) with respect to Underlying Letters of Credit (as defined in the
Domestic Credit Agreement),

(b) Indebtedness set forth on Schedule 4.19 and any Refinancing Indebtedness in
respect of such Indebtedness,

(c) Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in
respect of such Indebtedness,

(d) endorsement of instruments or other payment items for deposit,

(e) Indebtedness consisting of (i) unsecured guarantees incurred in the ordinary
course of business with respect to surety and appeal bonds, performance bonds,
bid bonds, appeal bonds, completion guarantee and similar obligations;
(ii) unsecured guarantees arising with respect to customary indemnification
obligations to purchasers in connection with Permitted Dispositions; and
(iii) unsecured guarantees with respect to Indebtedness of Parent or one of its
Subsidiaries, to the extent that the Person that is obligated under such
guaranty could have incurred such underlying Indebtedness,

(f) Indebtedness incurred in the ordinary course of business under performance,
surety, statutory, and appeal bonds,

(g) Indebtedness owed to any Person providing property, casualty, liability, or
other insurance to Parent or any of its Subsidiaries, so long as the amount of
such Indebtedness is not in excess of the amount of the unpaid cost of, and
shall be incurred only to defer the cost of, such insurance for the year in
which such Indebtedness is incurred and such Indebtedness is outstanding only
during such year,

(h) the incurrence by Parent or its Subsidiaries of Indebtedness under Hedge
Agreements that are incurred for the bona fide purpose of hedging the interest
rate or foreign currency risk associated with Parent’s and its Subsidiaries’
operations and not for speculative purposes,

(i) unsecured Indebtedness incurred in respect of netting services, overdraft
protection, and other like services, in each case, incurred in the ordinary
course of business,

(j) unsecured Indebtedness of Borrower evidenced by the Senior Subordinated Note
Indenture and any Refinancing Indebtedness in respect of such Indebtedness,

(k) Indebtedness incurred by Non-Loan Parties, provided that (i) any such
Indebtedness is non-recourse to Borrower or any other Loan Party, and (ii) the
aggregate principal amount of such Indebtedness of all such Non-Loan Parties
shall not exceed $33,000,000 outstanding at any time outstanding,

(l) contingent liabilities in respect of any indemnification obligation,
adjustment of purchase price, non-compete, or similar obligation of Borrower
incurred in connection with the consummation of one or more Permitted
Acquisitions, and

(m) Indebtedness composing Permitted Investments,

(n) Indebtedness consisting of (x) secured guarantees of Parent and its
Subsidiaries under which Parent and its Subsidiaries guarantee Indebtedness
owing by Holdings or (y) other Indebtedness of Parent and its Subsidiaries, in
each case so long as: (i) the aggregate amount of such

 

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Indebtedness (including the underlying Indebtedness which is guaranteed by
Parent and its Subsidiaries) does not exceed $65,000,000, (ii) the underlying
Indebtedness which is guaranteed by Parent and its Subsidiaries is incurred by
Holdings solely to refinance all or a portion of the Indebtedness evidenced by
the Senior Discount Note Indenture, and any other Indebtedness incurred directly
by Parent and its Subsidiaries is used solely to refinance all or a portion of
the Indebtedness evidenced by the Senior Discount Note Indenture or the Senior
Subordinated Note Indenture, (iii) no Default or Event of Default has occurred
and is continuing at the time such Indebtedness is incurred, and (iv) such
Indebtedness is subordinated to the Obligations on terms and conditions
acceptable to Agent in its sole discretion,

(o) unsecured Indebtedness owing to sellers of assets or Stock to a Loan Party
that is incurred by the applicable Loan Party in connection with the
consummation of one or more Permitted Acquisitions so long as (i) the aggregate
principal amount for all such unsecured Indebtedness does not exceed $5,000,000
at any one time outstanding, (ii) such Indebtedness is subordinated to the
Obligations on terms and conditions acceptable to Agent in its sole discretion,
and (iii) such Indebtedness is otherwise on terms and conditions (including all
economic terms and the absence of covenants) reasonably acceptable to Agent,

(p) Indebtedness consisting of the Existing Letters of Credit so long as within
30 days of the Closing Date the Existing Letters of Credit shall have been
terminated, and

(q) other Indebtedness of Borrower and its Subsidiaries not to exceed $3,000,000
in the aggregate at any one time outstanding.

“Permitted Intercompany Investments” means (a) loans made by (i) a Loan Party to
another Loan Party other than Parent or, (ii) a Non-Loan Party to another
Non-Loan Party, (iii) a Non-Loan Party to a Loan Party, so long as the parties
thereto are party to the Intercompany Subordination Agreement, and (iv) a Loan
Party to a Non-Loan Party so long as (1) no Default or Event of Default has
occurred and is continuing at the time of such loan, and (2) the amount of
outstanding loans made by all Loan Parties to all Non-Loan Parties, when
aggregated with Investments constituting contributions to capital made by all
Loan Parties to all Non-Loan Parties does not exceed $8,000,000 (in each case
other than Investments permitted by clause (e) of “Permitted Investments”); and
(b) Investments constituting contributions to capital made by a Loan Party in a
Non-Loan Party, so long as (i) no Default or Event of Default has occurred and
is continuing at the time of such Investment, and (ii) the amount of Investments
constituting contributions to capital made by all Loan Parties in all Non-Loan
Parties, when aggregated with all outstanding loans made by all Loan Parties to
all Non-Loan Parties, does not exceed $8,000,000 (in each case other than
Investments permitted by clause (e) of “Permitted Investments”).

“Permitted Investments” means:

(a) Investments in cash and Cash Equivalents,

(b) Investments in negotiable instruments deposited or to be deposited for
collection in the ordinary course of business,

(c) advances made in connection with purchases of goods or services in the
ordinary course of business,

(d) Investments received in settlement of amounts due to any Loan Party or any
of its Subsidiaries effected in the ordinary course of business or owing to any
Loan Party or any of its Subsidiaries as a result of Insolvency Proceedings
involving an Account Debtor or upon the foreclosure or enforcement of any Lien
in favor of a Loan Party or its Subsidiaries,

 

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(e) Investments owned by any Loan Party or any of its Subsidiaries on the
Closing Date and set forth on Schedule P-1,

(f) guarantees permitted under the definition of Permitted Indebtedness,

(g) Permitted Intercompany Investments,

(h) Stock or other securities acquired in connection with the satisfaction or
enforcement of Indebtedness or claims due or owing to a Loan Party or its
Subsidiaries (in bankruptcy of customers or suppliers or otherwise outside the
ordinary course of business) or as security for any such Indebtedness or claims,

(i) deposits of cash made in the ordinary course of business to secure
performance of operating leases,

(j) loans to employees in an aggregate amount not to exceed $250,000 at any one
time outstanding,

(k) equity investments by: (i) Parent in Borrower, and (ii) any Non-Loan Party
in any other Non-Loan Party,

(l) Permitted Acquisitions,

(m) the acquisition by Borrower of the remaining equity interests of Stanadyne
Amalgamations Private Limited, a company organized under the laws of India, so
long as the aggregate purchase consideration payable in respect of such
acquisition does not exceed the amount set forth on Schedule P-3,

(n) investments in the form of notes received in connection with Permitted
Dispositions so long as: (i) the fair market value of all such investments does
not exceed $500,000 in the aggregate, and (ii) the applicable Permitted
Disposition was made for fair value and for at least 80% cash consideration, and

(o) so long as no Event of Default has occurred and is continuing or would
result therefrom, any other Investments in an aggregate amount not to exceed
$1,000,000 during the term of the Agreement.

“Permitted Liens” means

(a) Liens held by: (i) Agent to secure the Obligations, and (ii) WFF as agent
with respect to the Domestic Obligations,

(b) Liens for unpaid taxes, assessments, or other governmental charges or levies
that either (i) are not yet delinquent, or (ii) do not have priority over
Agent’s Liens and the underlying taxes, assessments, or charges or levies are
the subject of Permitted Protests,

(c) judgment Liens arising solely as a result of the existence of judgments,
orders, or awards that do not constitute an Event of Default under Section 8.3
of the Agreement,

(d) Liens set forth on Schedule P-2; provided, however, that to qualify as a
Permitted Lien, any such Lien described on Schedule P-2 shall only secure the
Indebtedness that it secures on the Closing Date and any Refinancing
Indebtedness in respect thereof,

 

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(e) the interests of lessors under operating leases and non-exclusive licensors
under license agreements,

(f) purchase money Liens or the interests of lessors under Capital Leases to the
extent that such Liens or interests secure Permitted Purchase Money Indebtedness
and so long as (i) such Lien attaches only to the asset purchased or acquired
and the proceeds thereof, and (ii) such Lien only secures the Indebtedness that
was incurred to acquire the asset purchased or acquired or any Refinancing
Indebtedness in respect thereof,

(g) Liens arising by operation of law in favor of warehousemen, landlords,
carriers, mechanics, materialmen, laborers, or suppliers, incurred in the
ordinary course of business and not in connection with the borrowing of money,
and which Liens either (i) are for sums not yet delinquent, or (ii) are the
subject of Permitted Protests,

(h) Liens on amounts deposited to secure Parent’s and its Subsidiaries
obligations in connection with worker’s compensation or other unemployment
insurance,

(i) Liens on amounts deposited to secure Parent’s and its Subsidiaries
obligations in connection with the making or entering into of bids, tenders, or
leases in the ordinary course of business and not in connection with the
borrowing of money,

(j) Liens on amounts deposited to secure Parent’s and its Subsidiaries
reimbursement obligations with respect to surety or appeal bonds obtained in the
ordinary course of business,

(k) with respect to any Real Property, easements, rights of way, and zoning
restrictions that do not materially interfere with or impair the use or
operation thereof,

(l) non-exclusive licenses of patents, trademarks, copyrights, and other
intellectual property rights in the ordinary course of business,

(m) Liens that are replacements of Permitted Liens to the extent that the
original Indebtedness is the subject of permitted Refinancing Indebtedness and
so long as the replacement Liens only encumber those assets that secured the
original Indebtedness,

(n) rights of setoff or bankers’ liens upon deposits of cash in favor of banks
or other depository institutions, solely to the extent incurred in connection
with the maintenance of such deposit accounts in the ordinary course of
business,

(o) Liens granted in the ordinary course of business on the unearned portion of
insurance premiums securing the financing of insurance premiums to the extent
the financing is permitted under the definition of Permitted Indebtedness,

(p) Liens on assets of any Non-Loan Party to the extent such Liens secure
Indebtedness permitted hereunder,

(q) Liens on assets of Parent and its Domestic Subsidiaries to the extent such
Liens secure Indebtedness permitted under clause (n) of the definition of
Permitted Indebtedness so long as such Liens are subordinated to the Liens of
Agent on terms and conditions acceptable to Agent in its sole discretion,

(r) cash collateral held by Bank of America, N.A. to secure the obligations of
Borrower under the Existing Letters of Credit so long as: (i) the amount of such
cash collateral does not exceed $5,792,000, (ii) all such cash collateral is
returned to Borrower within 30 days of the Closing Date, and (iii) immediately
upon the release by Bank of America, N.A. of any such cash collateral, Borrower
remits the proceeds of such cash collateral to Agent for application to the
outstanding Advances (if any), and

 

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(s) 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.

“Permitted Preferred Stock” means and refers to any Preferred Stock issued by
Parent (and not by one or more of its Subsidiaries) that is not Prohibited
Preferred Stock.

“Permitted Protest” means the right of Parent or any of its Subsidiaries to
protest any Lien (other than any Lien that secures the Obligations), taxes
(other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve with respect
to such obligation is established on Parent’s or its Subsidiaries’ books and
records in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by Parent or its Subsidiary, as
applicable, in good faith, and (c) Agent is reasonably satisfied that, while any
such protest is pending, there will be no impairment of the enforceability,
validity, or priority of any of Agent’s Liens.

“Permitted Purchase Money Indebtedness” means, as of any date of determination,
Purchase Money Indebtedness incurred after the Closing Date by Parent and its
Domestic Subsidiaries in an aggregate principal amount outstanding at any one
time not in excess of $5,000,000.

“Person” means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Preferred Stock” means, as applied to the Stock of any Person, the Stock of any
class or classes (however designated) that is preferred with respect to the
payment of dividends, or as to the distribution of assets upon any voluntary or
involuntary liquidation or dissolution of such Person, over shares of Stock of
any other class of such Person.

“Prohibited Preferred Stock” means any Preferred Stock that by its terms is
mandatorily redeemable or subject to any other payment obligation (including any
obligation to pay dividends, other than dividends of shares of Preferred Stock
of the same class and series payable in kind or dividends of shares of common
stock) on or before a date that is less than 1 year after the Maturity Date, or,
on or before the date that is less than 1 year after the Maturity Date, is
redeemable at the option of the holder thereof for cash or assets or securities
(other than distributions in kind of shares of Preferred Stock of the same class
and series or of shares of common stock).

“Projections” means Borrower’s forecasted (a) balance sheets, (b) profit and
loss statements, and (c) cash flow statements, all prepared on a basis
consistent with Borrower’s historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.

 

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“Pro Rata Share” means, as of any date of determination:

(a) with respect to a Lender’s obligation to make Advances and right to receive
payments of principal, interest, fees, costs, and expenses with respect thereto,
(i) prior to the Revolver Commitments being terminated or reduced to zero, the
percentage obtained by dividing (y) such Lender’s Revolver Commitment, by
(z) the aggregate Revolver Commitments of all Lenders, and (ii) from and after
the time that the Revolver Commitments have been terminated or reduced to zero,
the percentage obtained by dividing (y) the outstanding principal amount of such
Lender’s Advances by (z) the outstanding principal amount of all Advances,

(b) with respect to a Lender’s obligation to participate in Letters of Credit
and Reimbursement Undertakings, to reimburse the Issuing Lender, and right to
receive payments of fees with respect thereto, (i) prior to the Revolver
Commitments being terminated or reduced to zero, the percentage obtained by
dividing (y) such Lender’s Revolver Commitment, by (z) the aggregate Revolver
Commitments of all Lenders, and (ii) from and after the time that the Revolver
Commitments have been terminated or reduced to zero, the percentage obtained by
dividing (y) the outstanding principal amount of such Lender’s Advances by
(z) the outstanding principal amount of all Advances; provided, however, that if
all of the Advances have been repaid in full and Letters of Credit remain
outstanding, Pro Rata Share under this clause shall be determined based upon
subclause (i) of this clause as if the Revolver Commitments had not been
terminated or reduced to zero and based upon the Revolver Commitments as they
existed immediately prior to their termination or reduction to zero,

(c) with respect to all other matters as to a particular Lender (including the
indemnification obligations arising under Section 15.7 of the Agreement),
(i) prior to the Revolver Commitments being terminated or reduced to zero, the
percentage obtained by dividing (y) such Lender’s Revolver Commitment, by
(z) the aggregate amount of Revolver Commitments of all Lenders, and (ii) from
and after the time that the Revolver Commitments have been terminated or reduced
to zero, the percentage obtained by dividing (y) the outstanding principal
amount of such Lender’s Advances, by (z) the outstanding principal amount of all
Advances; provided, however, that if all of the Advances have been repaid in
full and Letters of Credit remain outstanding, Pro Rata Share under this clause
shall be determined based upon subclause (i) of this clause as if the Revolver
Commitments had not been terminated or reduced to zero and based upon the
Revolver Commitments as they existed immediately prior to their termination or
reduction to zero.

“Protective Advances” has the meaning specified therefor in Section 2.3(d)(i) of
the Agreement.

“Purchase Money Indebtedness” means Indebtedness (other than the Obligations,
but including Capitalized Lease Obligations), incurred at the time of, or within
30 days after, the acquisition of any fixed assets for the purpose of financing
all or any part of the acquisition cost thereof.

“Qualified Cash” means, as of any date of determination, the amount of
unrestricted cash and Cash Equivalents of Borrower and its Domestic Subsidiaries
that is in Deposit Accounts or in Securities Accounts, or any combination
thereof, and which such Deposit Account or Securities Account is the subject of
a Control Agreement and is maintained by a branch office of the bank or
securities intermediary located within the United States.

“Real Property” means any estates or interests in real property now owned or
hereafter acquired by Parent or its Domestic Subsidiaries and the improvements
thereto.

“Real Property Collateral” means the Real Property identified on Schedule R-1
and any Real Property hereafter acquired in fee by Parent or its Domestic
Subsidiaries.

 

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“Record” means information that is inscribed on a tangible medium or that is
stored in an electronic or other medium and is retrievable in perceivable form.

“Refinancing Indebtedness” means refinancings, renewals, or extensions of
Indebtedness so long as:

(a) such refinancings, renewals, or extensions do not result in an increase in
the principal amount of the Indebtedness so refinanced, renewed, or extended,

(b) such refinancings, renewals, or extensions do not result in a shortening of
the average weighted maturity (measured as of the refinancing, renewal, or
extension) of the Indebtedness so refinanced, renewed, or extended, nor are they
on terms or conditions that, taken as a whole, are or could reasonably be
expected to be materially adverse to the interests of the Lenders,

(c) if the Indebtedness that is refinanced, renewed, or extended was
subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension must include subordination
terms and conditions that are at least as favorable to the Lender Group as those
that were applicable to the refinanced, renewed, or extended Indebtedness, and

(d) the Indebtedness that is refinanced, renewed, or extended is not recourse to
any Person that is liable on account of the Obligations other than those Persons
which were obligated with respect to the Indebtedness that was refinanced,
renewed, or extended.

“Reimbursement Undertaking” has the meaning specified therefor in
Section 2.11(a) of the Agreement.

“Related Fund” means, with respect to any Lender that is an investment fund, any
other investment fund that invests in commercial loans and that is managed or
advised by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials required by Environmental Laws.

“Replacement Lender” has the meaning specified therefor in Section 2.13(b) of
the Agreement.

“Report” has the meaning specified therefor in Section 15.16 of the Agreement.

“Required Availability” means that the sum of (a) Excess Availability, plus
(b) Qualified Cash exceeds $26,000,000.

“Required Lenders” means, at any time, Lenders whose aggregate Pro Rata Shares
(calculated under clause (c) of the definition of Pro Rata Shares) exceed 50%;
provided, however, that at any time there are 2 or more Lenders, “Required
Lenders” must include at least 2 Lenders.

“Reserve Percentage” means, on any day, for any Lender, the maximum percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor Governmental Authority) for determining the reserve requirements
(including any basic, supplemental, marginal, or

 

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emergency reserves) that are in effect on such date with respect to eurocurrency
funding (currently referred to as “eurocurrency liabilities”) of that Lender,
but so long as such Lender is not required or directed under applicable
regulations to maintain such reserves, the Reserve Percentage shall be zero.

“Revolver Commitment” means, with respect to each Lender, its Revolver
Commitment, and, with respect to all Lenders, their Revolver Commitments, in
each case as such Dollar amounts are set forth beside such Lender’s name under
the applicable heading on Schedule C-1 or in the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder, as such amounts may be
reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of Section 13.1 of the Agreement. Notwithstanding
anything to the contrary in this Agreement or on Schedule C-1, (A) the aggregate
amount of the Revolver Commitments of the Lenders hereunder, as of any date of
determination, shall not exceed the lesser of (i) the Maximum Revolver Amount as
of any date and (ii) the Borrowing Base as of any date, and the Revolver
Commitment of each Lender hereunder shall be deemed to be temporarily reduced
proportionate to such Lender’s Pro Rata Share to the extent either the Maximum
Revolver Amount or the Borrowing Base is less than the aggregate amount of the
Revolver Commitments, and (B) the aggregate amount of the Revolver Commitments
under this Agreement combined with the aggregate amount of “Revolver
Commitments” (as such term is used in the Domestic Credit Agreement) shall not
exceed $30,000,000.

“Revolver Usage” means, as of any date of determination, the sum of (a) the
amount of outstanding Advances, plus (b) the amount of the Letter of Credit
Usage.

“Sanctioned Entity” means (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or
indirectly controlled by a country or its government, (d) a Person resident in
or determined to be resident in a country, in each case, that is subject to a
country sanctions program administered and enforced by OFAC.

“Sanctioned Person” means a person named on the list of Specially Designated
Nationals maintained by OFAC.

“S&P” has the meaning specified therefor in the definition of Cash Equivalents.

“SEC” means the United States Securities and Exchange Commission and any
successor thereto.

“Securities Account” means a securities account (as that term is defined in the
Code).

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and any successor statute.

“Security Agreement” means a security agreement, in form and substance
reasonably satisfactory to Agent, executed and delivered by Borrower and
Guarantors to Agent.

“Senior Discount Note Indenture” means the Indenture dated as of December 20,
2004, pursuant to which Holdings has issued its 12.00% Senior Discount Notes Due
2015.

“Senior Subordinated Note Indenture” means the Indenture dated as of August 6,
2004, pursuant to which Borrower has issued its Senior Subordinated Notes due
2014.

“Settlement” has the meaning specified therefor in Section 2.3(e)(i) of the
Agreement.

 

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“Settlement Date” has the meaning specified therefor in Section 2.3(e)(i) of the
Agreement.

“Solvent” means, with respect to any Person on a particular date, that, at fair
valuations, the sum of such Person’s assets is greater than all of such Person’s
debts.

“Stock” means all shares, options, warrants, interests, participations, or other
equivalents (regardless of how designated) of or in a Person, whether voting or
nonvoting, including common stock, preferred stock, or any other “equity
security” (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).

“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the shares of Stock having ordinary voting power to elect a majority of
the board of directors (or appoint other comparable managers) of such
corporation, partnership, limited liability company, or other entity.

“Swing Lender” means WFF or any other Lender that, at the request of Borrower
and with the consent of Agent agrees, in such Lender’s sole discretion, to
become the Swing Lender under Section 2.3(b) of the Agreement.

“Swing Loan” has the meaning specified therefor in Section 2.3(b) of the
Agreement.

“Taxes” means any taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any jurisdiction or by
any political subdivision or taxing authority thereof or therein with respect to
such payments and all interest, penalties or similar liabilities with respect
thereto; provided, however, that Taxes shall exclude (i) any tax imposed on the
net income or net profits of any Lender or any Participant (including any branch
profits taxes), in each case imposed by the jurisdiction (or by any political
subdivision or taxing authority thereof) in which such Lender or such
Participant is organized or the jurisdiction (or by any political subdivision or
taxing authority thereof) in which such Lender’s or such Participant’s principal
office is located in each case as a result of a present or former connection
between such Lender or such Participant and the jurisdiction or taxing authority
imposing the tax (other than any such connection arising solely from such Lender
or such Participant having executed, delivered or performed its obligations or
received payment under, or enforced its rights or remedies under the Agreement
or any other Loan Document); (ii) taxes resulting from a Lender’s or a
Participant’s failure to comply with the requirements of Section 16(c) or (d) of
the Agreement, and (iii) any United States federal withholding taxes that would
be imposed on amounts payable to a Foreign Lender based upon the applicable
withholding rate in effect at the time such Foreign Lender becomes a party to
the Agreement (or designates a new lending office), except that Taxes shall
include (A) any amount that such Foreign Lender (or its assignor, if any) was
previously entitled to receive pursuant to Section 16(a) of the Agreement, if
any, with respect to such withholding tax at the time such Foreign Lender
becomes a party to the Agreement (or designates a new lending office), and
(B) additional United States federal withholding taxes that may be imposed after
the time such Foreign Lender becomes a party to the Agreement (or designates a
new lending office), as a result of a change in law, rule, regulation, order or
other decision with respect to any of the foregoing by any Governmental
Authority.

“Tax Lender” has the meaning specified therefor in Section 14.2(a) of the
Agreement.

“Trademark Security Agreement” has the meaning specified therefor in the
Security Agreement.

“Underlying Issuer” means Wells Fargo or one of its Affiliates.

 

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“Underlying Letter of Credit” means a Letter of Credit that has been issued by
an Underlying Issuer.

“United States” means the United States of America.

“Voidable Transfer” has the meaning specified therefor in Section 17.8 of the
Agreement.

“Wells Fargo” means Wells Fargo Bank, National Association, a national banking
association.

“WFF” means Wells Fargo Foothill, LLC, a Delaware limited liability company.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan, as such terms are
defined in Part I of Subtitle E of Title IV of ERISA.

 

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