Exhibit 10.1

 

Execution Version

 

CREDIT AGREEMENT

 

USD 690,000,000

 

DATED AS OF NOVEMBER 9, 2009

 

by and between

 

DANFOSS A/S,

as Lender

 

and

 

SAUER-DANFOSS INC.,
as Borrower

 

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TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

 

 

1.

DEFINITIONS AND TERMS

 

1

 

1.1.

Definitions

 

1

 

1.2.

Rules of Construction

 

13

 

 

 

 

 

2.

LOANS: GENERAL TERMS

 

13

 

2.1.

Credit Facility

 

13

 

2.2.

Disbursement of Proceeds

 

14

 

2.3.

Maturity Date; Termination of Loans

 

14

 

2.4.

Usury

 

14

 

2.5.

Elections as to Applicable Rate

 

14

 

2.6.

Indemnification for LIBOR Loans

 

15

 

2.7.

Closing Fee

 

15

 

2.8.

Unused Facility Fee

 

15

 

2.9.

Minimum Amount of Revolving Loans

 

15

 

 

 

 

 

3.

INTEREST; PAYMENT TERMS

 

16

 

3.1.

Interest Rates

 

16

 

3.2.

Interest Payments

 

16

 

3.3.

Principal Payments

 

16

 

3.4.

Place of Payment; Excess Obligations

 

17

 

3.5.

Application of Payments and Collections

 

17

 

3.6.

Costs and Other Payments

 

17

 

 

 

 

 

4.

REPRESENTATIONS AND WARRANTIES

 

18

 

4.1.

Organization; Requisite Power and Authority; Qualification

 

18

 

4.2.

Due Authorization

 

18

 

4.3.

No Conflict

 

18

 

4.4.

Binding Obligation

 

18

 

4.5.

Capital Stock

 

18

 

4.6.

Governmental Consents

 

19

 

4.7.

Financial Statements

 

19

 

4.8.

Intentionally Omitted

 

19

 

4.9.

Litigation

 

19

 

4.10.

Taxes

 

19

 

4.11.

Properties

 

19

 

4.12.

Environmental Matters

 

20

 

4.13.

Material Agreements

 

20

 

4.14.

Governmental Regulation

 

20

 

4.15.

Margin Stock

 

21

 

4.16.

Labor Matters

 

21

 

4.17.

ERISA Compliance

 

21

 

4.18.

Intellectual Property

 

22

 

4.19.

Compliance with Laws

 

22

 

4.20.

Disclosure

 

22

 

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4.21.

Pari-Passu

 

22

 

 

 

 

 

5.

AFFIRMATIVE COVENANTS

 

22

 

5.1.

Insurance

 

22

 

5.2.

Financial Reports

 

23

 

5.3.

Notices

 

23

 

5.4.

Taxes

 

25

 

5.5.

Existence

 

25

 

5.6.

Compliance with Laws

 

25

 

5.7.

Payment and Performance of Obligations

 

25

 

5.8.

Inspection of Property, Books and Records

 

25

 

5.9.

Use of Proceeds

 

26

 

5.10.

Further Assurances

 

26

 

 

 

 

 

6.

NEGATIVE COVENANTS

 

26

 

6.1.

Indebtedness

 

26

 

6.2.

Liens

 

27

 

6.3.

Contingent Obligations

 

28

 

6.4.

Compliance with ERISA

 

29

 

6.5.

Swap Agreements

 

29

 

6.6.

Restricted Payments

 

29

 

6.7.

Restrictive Agreements

 

30

 

6.8.

Consolidations, Mergers and Sales of Assets

 

30

 

6.9.

Purchase of Assets, Investments

 

31

 

6.10.

Transactions with Affiliates

 

31

 

6.11.

Modification of Organizational Documents

 

32

 

 

 

 

 

7.

CLOSING CONDITIONS

 

32

 

7.1.

Loan Documents

 

32

 

7.2.

Certified Copies of Organizational Documents

 

32

 

7.3.

Corporate or Other Action

 

32

 

7.4.

Incumbency Certificate

 

32

 

7.5.

Closing Certificate

 

33

 

7.6.

No Litigation

 

33

 

7.7.

Consents and Approvals

 

33

 

7.8.

Proceedings and Documents

 

33

 

7.9.

Certificates of Good Standing

 

33

 

7.10.

Initial Loan Request

 

33

 

 

 

 

 

8.

CONDITIONS TO ALL BORROWINGS

 

33

 

8.1.

Representations True; No Event of Default

 

33

 

8.2.

No Legal Impediment

 

34

 

8.3.

No Material Adverse Change

 

34

 

 

 

 

 

9.

DEFAULT

 

34

 

9.1.

Events of Default

 

34

 

9.2.

Acceleration and Suspension or Termination of Commitments

 

35

 

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9.3.

Default Rate of Interest and Suspension of LIBOR Loans

 

35

 

9.4.

Setoff Rights

 

35

 

 

 

 

 

10.

ASSIGNABILITY

 

36

 

10.1.

Assignments by Borrower

 

36

 

10.2.

Assignments by Lender

 

36

 

 

 

 

 

11.

GENERAL PROVISIONS

 

36

 

11.1.

Modification

 

36

 

11.2.

Severability

 

37

 

11.3.

Successors and Assigns

 

37

 

11.4.

Controlling Provisions

 

37

 

11.5.

Termination

 

37

 

11.6.

Liability Prior to Termination

 

37

 

11.7.

Waiver of Notice Omitted

 

38

 

11.8.

Designated Person

 

38

 

11.9.

Indemnification

 

38

 

11.10.

No Third Party Beneficiaries

 

38

 

11.11.

Acceptance by Lender

 

39

 

11.12.

Prior Agreements; Interpretation

 

39

 

11.13.

Notice

 

39

 

11.14.

Section Titles, etc

 

40

 

11.15.

Waiver of Claims

 

40

 

11.16.

Waiver by Borrower

 

40

 

11.17.

Governing Law

 

41

 

11.18.

Representation by Counsel

 

41

 

11.19.

Waiver of Trial by Jury

 

41

 

11.20.

Counterparts, Fax, PDF

 

42

 

iii

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Schedules

 

Schedule 4.11(b)

Subsidiaries

Schedule 4.17(a)

Benefit Obligations in Excess of Plan Assets

Schedule 4.17(b)

Foreign Pension Plans

Schedule 6.1

Existing Indebtedness

Schedule 6.2

Existing Liens

Schedule 6.3

Contingent Obligations

Schedule 6.7

Restrictive Agreements

Schedule 6.9

Existing Investments

 

Exhibits

 

Exhibit A

Revolving Note

Exhibit B

Loan Request

Exhibit C

Incumbency Certificate

Exhibit D

Closing Certificate

 

iv

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CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT is dated as of November 9, 2009 and is made by and between
Danfoss A/S, a Danish corporation (“Lender”) and Sauer-Danfoss Inc., a Delaware
corporation (“Borrower”).

 

RECITALS:

 

A.            Borrower has requested, and Lender has agreed to make available to
Borrower, a revolving credit facility upon and subject to the terms and
conditions set forth in this Agreement to (a) refinance Prior Indebtedness (as
hereinafter defined), (b) provide for working capital and other general
corporate purposes of Borrower and (c) fund expenses associated with the funding
of the Loans (as hereinafter defined);

 

B.            Lender is willing to make such credit facility available to
Borrower upon and subject to the terms and conditions hereinafter set forth.

 

NOW THEREFORE, in consideration of any loan, advance, extension of credit and/or
other financial accommodation at any time made by Lender to or for the benefit
of Borrower, and of the promises set forth herein, the parties hereto agree as
follows:

 

1.  DEFINITIONS AND TERMS

 

1.1.          Definitions.  In addition to terms defined elsewhere in this
Agreement, the following words, terms and/or phrases shall have the meanings set
forth thereafter.

 

“Advance”:  Any advance or disbursement of Loan proceeds pursuant to the terms
of this Agreement.

 

“Affiliate”:  With respect to a specified Person, another Person that directly,
or indirectly through one or more intermediaries, Controls or is Controlled by
or is under common Control with the Person specified.

 

“Agreement”:  This Credit Agreement, together with all Modifications hereto or
hereof.

 

“and/or”:  One or the other or both, or any one or more or all, of the things or
Persons in connection with which the conjunction is used.

 

“Applicable Rate”:  With respect to (1) any Base Rate Loan, a rate equal to the
sum of (A) Base Rate plus (B) 10% per annum, and (2) any LIBOR Loan, a rate
equal to the sum of (A) LIBOR Rate, as determined for the relevant Interest
Period plus (B) 10% per annum.

 

“Applicable Time”:  Chicago, Illinois time.

 

“Bankruptcy Code”:  The Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101,
et seq.), as amended and in effect from time to time and the regulations issued
from time to time thereunder.

 

“Base Rate”:  As of any date of determination, a fluctuating interest rate per
annum as in effect from time to time equal to the greater of (i) the “Current
Wall Street Journal Prime Rate”

 

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as it appears on the United States Prime Rate Website, www.wsjprimerate.us, and
(ii) the LIBOR Rate for an Interest Period of 3 months; each change in the Base
Rate shall be effective from and including the date such change is publicly
announced as being effective.

 

“Base Rate Loan”:  Any Loan bearing interest calculated by reference to the Base
Rate.

 

“Business Day”:  Any day, other than a Saturday, Sunday, a day that is a legal
holiday under the laws of Copenhagen, Denmark, or New York, New York, or any
other day on which banking institutions located in Copenhagen, Denmark, or New
York, New York, are authorized or required by law or other governmental action
to close and, in the case of a LIBOR Loan, any such day on which commercial
banks are open for international business (including dealings in Dollar
deposits) in London or such other eurodollar interbank market as may be selected
by Lender in its sole discretion acting in good faith.

 

“Capital Lease”:  Any lease of any property (whether real, personal or mixed) by
any Person as lessee that, in conformity with GAAP, is or should be accounted
for as a capital lease on the balance sheet of that Person.

 

“Capital Stock”:  Any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase or acquire any of the foregoing.

 

“Cash Equivalents”:  As to Borrower or any of its Subsidiaries, (a) securities
issued or directly and fully guaranteed or insured by the United States of
America and having a maturity of not more than one (1) year from the date of
acquisition; (b) certificates of deposit, time deposits and eurodollar time
deposits with maturities of one (1) year or less, bankers’ acceptances with
maturities not exceeding one (1) year and overnight bank deposits, in each case,
(i) with Lender or (ii) with any commercial bank organized under the laws of the
United States of America or any state thereof, and having capital and surplus in
excess of $500,000,000; (c) repurchase obligations with a term of not more than
thirty (30) days for underlying securities of the types described in clauses
(a) and (b) above; (d) securities with maturities of one year or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States, by any political subdivision or taxing authority
of any such state, commonwealth or territory, the securities of which state,
commonwealth, territory, political subdivision or taxing authority (as the case
may be) are rated not less than “P-1” or “A-1” or their equivalents by Moody’s
or S&P or their successors; (e) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit issued by
Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; (f) any commercial paper or finance company paper issued by
(i) Lender or any holding company controlling Lender or (ii) any other Person
that is rated not less than “P-1” or “A-1” or their equivalents by Moody’s or
S&P or their successors; (g) money market funds at least seventy-five percent
(75%) of which are intended to be invested in securities of the type described
in clauses (a) through (d) above, in each case that can be liquidated without
material financial penalty; and (h) money market funds that (i) comply with the
criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as
amended, (ii) are rated AAA by S&P and Aaa by Moody’s (iii) have portfolio
assets of at least $5,000,000,000 and (iv) can be liquidated without material
financial penalty.

 

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“Charges”:  All national, federal, state, county, city, municipal and/or other
governmental (or any instrumentality, division, agency, body or department
thereof, including without limitation the Pension Benefit Guaranty Corporation)
taxes, levies, assessments, charges, liens, claims or encumbrances upon and/or
relating to the Obligations, Borrower’s or any Subsidiaries’ business and/or
Borrower’s or any Subsidiaries’ income and/or gross receipts.

 

“Closing Date”:  The first date on which the conditions set forth in Article 7
have been satisfied and any Loans are to be made.

 

“Closing Fee”:  The term as defined in Section 2.7.

 

“Code”:  The Internal Revenue Code of 1986, as amended.

 

“Consolidated Net Worth”:  At any time, total consolidated stockholders’ equity
for Borrower and its Subsidiaries calculated on a consolidated basis as of such
time in accordance with GAAP.

 

“Contingent Obligation”:  With respect to any Person, any direct or indirect
liability of such Person:  (i) with respect to any debt, lease, dividend or
other obligation of another Person if the purpose or intent of such Person
incurring such liability, or the effect thereof, is to provide assurance to the
obligee of such liability that such liability will be paid or discharged, or
that any agreement relating thereto will be complied with, or that any holder of
such liability will be protected, in whole or in part, against loss with respect
thereto; (ii)  with respect to any letter of credit issued for the account of
such Person or as to which such Person is otherwise liable for the reimbursement
of any drawing; (iii) under any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to alter the risks
of such Person arising from fluctuations in currency values or interest rates;
(iv) to make take-or-pay or similar payments if required regardless of
nonperformance by any other party or parties to an agreement, or (v) for any
obligations of another Person pursuant to any agreement to purchase or otherwise
acquire any obligation or any property constituting security therefor, to
provide funds for the payment or discharge of such obligation or to preserve the
solvency, financial condition or level of income of another Person.  The amount
of any Contingent Obligation of any guaranteeing person shall be deemed to be
the lower of (a) an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made and
(b) the maximum amount for which such guaranteeing or otherwise supporting
person may be liable pursuant to the terms of the instrument embodying such
Contingent Obligation, unless such primary obligation and the maximum amount for
which such guaranteeing or otherwise supporting person may be liable are not
stated or determinable, in which case the amount of such Contingent Obligation
shall be such guaranteeing or otherwise supporting person’s maximum reasonably
anticipated liability in respect thereof as determined by Lender in its sole
discretion acting in good faith.

 

“Contractual Obligation”:  As to any Person, any provision of any security
issued by such Person or of any agreement, undertaking, contract, indenture,
mortgage, deed of trust or other instrument or arrangement (whether in writing
or otherwise) to which such Person is a party or by which it or any of such
Person’s property is bound or subject.

 

“Control”:  The possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ability to exercise

 

3

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voting power, by contract or otherwise.  “Controlling” and “Controlled” have
meanings correlative thereto.

 

“Costs”:  Any and all reasonable costs and expenses incurred by Lender at any
time, including reasonable costs and expenses of attorneys, in connection with: 
(i) the preparation, negotiation and execution of this Agreement and the Loan
Documents; (ii) the preparation, negotiation and execution of any Modification
of this Agreement or any Loan Document; (iii) the exercise or enforcement of any
of the rights of Lender under this Agreement or under any Loan Document;
(iv) any failure by Borrower to perform or observe any of the provisions of this
Agreement or any Loan Document; (v) any litigation, contest, dispute, suit,
proceeding or action in any way relating to this Agreement, the Loan Documents
or the transactions contemplated herein or therein; and (vi) any audit,
evaluation or inspection obtained by Lender in accordance with the provisions of
this Agreement or any Loan Document.

 

“Default Rate”:  Interest at a rate equal to the sum of three percent (3%) per
annum plus the Applicable Rate.

 

“Distribution”:  The declaration or payment of any dividend or distribution on
or in respect of any shares of any class of Capital Stock of any Person or any
distribution of cash or cash flow in respect of any partnership, membership or
other ownership interest in any Person, other than dividends payable solely in
shares of common stock or additional equity interests of such Person; or the
purchase, redemption, or other retirement of any shares of any class of Capital
Stock or ownership interest of any Person or ownership interests in such Person,
directly or indirectly through a subsidiary (of any tier) or otherwise; the
making of any loans to any shareholder, member, constituent partner or
affiliate; the return of capital by any Person to its shareholders, members or
partners as such; or any other distribution on or in respect of any shares of
any class of Capital Stock or ownership interest of any Person or any
partnership, membership or other ownership interest in any Person.

 

“Environmental Laws”:  Any and all applicable federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, codes, injunctions, permits, licenses, agreements and
governmental restrictions, whether now or hereafter in effect, relating to
protection of the environment or of human health or to emissions, discharges or
releases of pollutants, contaminants, Hazardous Materials or wastes into the
environment, including ambient air, surface water, groundwater or land, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, Hazardous
Materials or wastes or the clean-up or other remediation thereof.

 

“Equity Issuance”:  The sale or issuance by Borrower of any of its Capital
Stock.

 

“ERISA”:  The Employee Retirement Income Security Act of 1974, as amended from
time to time, and regulations promulgated thereunder.

 

“ERISA Affiliate”:  Borrower and all persons (whether or not incorporated) under
common control with Borrower or treated as a single employer within the meaning
of Section 414(b), 414(c), 414(m) or 414(o) of the Code or Section 4001 of
ERISA.

 

4

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“ERISA Event”:  (a) a Reportable Event with respect to a Qualified Plan; (b) a
withdrawal by Borrower or any ERISA Affiliate from a Qualified Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA); (c) the filing of a notice of
intent to terminate a Qualified Plan or the adoption of resolutions to terminate
a Qualified Plan, the treatment of a plan amendment as a termination under
Section 4041 or 4041A of ERISA or the commencement of proceedings by the PBGC to
terminate a Qualified Plan subject to Title IV of ERISA; (d) a failure by
Borrower or any ERISA Affiliate to make required contributions to a Qualified
Plan; (e) an event or condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Qualified Plan; (f) the imposition of any
liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate;
(g) the failure to make required installment payments under Section 412 of the
Code or an application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code with respect to any Plan; (h) a
non-exempt prohibited transaction occurs with respect to any Plan for which
Borrower or any ERISA Affiliate may be directly or indirectly liable; (i) an
event requiring Borrower or any of its ERISA Affiliates to provide security for
a plan under Code Section 401(a)(29); or (j) a violation of the applicable
requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under
Section 401(a) of the Code by any fiduciary or disqualified person with respect
to any Plan for which Borrower or any ERISA Affiliate may be directly or
indirectly liable.

 

“EUR”:  Euro being the lawful single currency unit of the participating member
states of the European Monetary Union.

 

“Event of Default”:  The term as defined in Section 9.1.

 

“Excess Cash”:  The amount of cash and Cash Equivalents of Borrower and its
Subsidiaries in the aggregate in excess of (i) $40,000,000 prior to the
availability of the Nordea line of credit described on Schedule 6.1 and
(ii) $20,000,000 thereafter, in each case excluding Restricted Cash.

 

“Fiscal Quarter”:  Each of the four consecutive three calendar month periods
during a Fiscal Year of Borrower ended December 31.

 

“Fiscal Year”:  The annual period from January 1 through December 31.

 

“Foreign Pension Plan”:  Any plan, fund (including, without limitation, any
superannuation fund) or other similar program established or maintained outside
the United States by Borrower or any one or more of its Subsidiaries primarily
for the benefit of employees of Borrower or such Subsidiaries residing outside
the United States, which plan, fund or other similar program provides, or
results in, retirement income, a deferral of income in contemplation of
retirement or payments to be made upon termination or severance of employment,
and which plan is not subject to ERISA or the Code.

 

“Foreign Subsidiary”:  Any Subsidiary that is organized under the laws of any
jurisdiction other than the United States of America, or any state or political
subdivision, including the District of Columbia.

 

5

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“GAAP”:  Generally accepted accounting principles in the United States of
America in effect from time to time.

 

“Governmental Authority”:  The government of the United States of America, any
other nation or any political subdivision thereof, whether foreign, state,
regional, local, municipal, or any department, commission, board, bureau,
agency, public authority or instrumentality thereof, regulatory body, central
bank or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government,
any court or arbitrator.

 

“Guaranty Equivalent”:  Without duplication, any agreement, document or
instrument pursuant to which a Person (the “Guarantor”) directly or indirectly
guarantees or in effect guarantees any Indebtedness (the “primary obligation”)
of any other Person (the “primary obligor”) including any obligation of the
Guarantor, whether or not contingent, direct or indirect, for the benefit of
another Person: (i) to purchase or assume, or to supply funds for the payment,
purchase or satisfaction of, any primary obligation; (ii) to make any loans,
advance, capital contribution or other investment in the primary obligor;
(iii) to purchase or lease any property or services for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation; (iv) to maintain the solvency of the
primary obligor; (v) to enable the primary obligor to meet any other financial
condition; (vi) to enable the primary obligor to satisfy any primary obligation;
(vii) to assure the holder of an obligation against loss; (viii) to purchase or
lease property or services from the primary obligor regardless of the
non-delivery of or failure to furnish such property or services; or (ix) in
respect of any other transaction the effect of which is to assure the payment or
performance (or payment of damages or other remedy in the event of nonpayment or
nonperformance) of any obligation, provided that the term Guaranty Equivalent
shall not include endorsements of instruments in the ordinary course of
business.

 

“Hazardous Materials”:  (i) Any “hazardous substance” as defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
(ii) asbestos, (iii) polychlorinated biphenyls, (iv) petroleum, its derivatives,
by-products and other hydrocarbons, and (v) any other toxic, radioactive,
caustic or otherwise hazardous substance regulated under any applicable
Environmental Laws.

 

“Hazardous Materials Contamination”:  Contamination (whether now existing or
hereafter occurring) of the improvements, buildings, facilities, soil,
groundwater or air on or of the relevant property by Hazardous Materials, or any
derivatives thereof, or on or of any other property as a result of Hazardous
Materials, or any derivatives thereof, generated on, emanating from or disposed
of in connection with the relevant property.

 

“Highest Lawful Rate”:  The term as defined in Section 2.4.

 

“Incumbency Certificate”:  The term as defined in Section 7.4.

 

“Indebtedness”:  With respect to any Person, at a particular time, without
duplication (i) indebtedness for borrowed money or for the deferred purchase
price of property or services in respect of which such Person is liable (other
than current trade payables incurred in the ordinary course of such Person’s
business), contingently or otherwise, as obligor, guarantor or otherwise;
(ii) obligations under Capital Leases; (iii) all obligations evidenced by notes,
bonds, debentures

 

6

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or other similar instruments; (iv) Guaranty Equivalents; (v) all obligations,
contingent and non-contingent, of such Person to reimburse Lender or other
Person in respect of amounts paid under a letter of credit, surety bond or
similar instrument; (vi) all equity securities of such Person subject to
repurchase or redemption otherwise that at the sole option of such Person, other
than any such securities expressly subject to the limitations set forth in
Section 6.5; (vii) all obligations secured by a Lien on any asset of such
Person, whether or not such obligation is otherwise an obligation of such
Person; (viii) earnout payments and similar payment obligations; (ix) accruals
and other items characterized as Indebtedness in accordance with GAAP; and
(x) obligations in respect of synthetic, off-balance sheet or tax retention
lease, sale and leaseback transactions or any agreement creating obligations
that do not appear on the balance sheet of such Person but which, upon the
application of the Bankruptcy Code (or other debtor relief laws) to such Person,
would be characterized as the indebtedness of such Person (without regard to
accounting treatment).

 

“Intellectual Property”:  With respect to any Person the collective reference to
all rights, priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, all patents, trademarks, tradenames, copyrights, technology, know how
and processes, and all applications therefor, used in or necessary for the
conduct of business by such Person.

 

“Interest Payment Date”:  (a) For LIBOR Loans  (other than a LIBOR Loan having
an Interest Period of longer than three (3) months) the last day of each
Interest Period applicable to such Loan, (b) with respect to any LIBOR Loan
having an Interest Period of longer than three (3) months, the last day of each
three (3) month interval and, without duplication, the last day of such Interest
Period, and (c) in all other cases, the last Business Day of each month
occurring after the date hereof, commencing on December 31, 2009.

 

“Interest Period”:  With regard to any LIBOR Loan the period commencing on the
borrowing or conversion date, as the case may be, with respect to such LIBOR
Loan and ending, one, two, three, six or twelve months thereafter as selected
from time to time by Borrower pursuant to Section 2.5; provided that (i) each
Interest Period occurring after the initial Interest Period of any LIBOR Loan
shall commence on the day on which the preceding Interest Period for such LIBOR
Loan expires; (ii) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day; (iii) whenever
the first day of any Interest Period occurs on a date for which there is no
numerically corresponding date in the month in which such Interest Period
terminates, such Interest Period shall end on the last day of such month, unless
such day is not a Business Day, in which case the Interest Period shall
terminate on the first Business Day of the following month; and (iv) the final
Interest Period for any LIBOR Loan must be such that its expiration occurs on or
before the Revolving Loan Maturity Date.  If for any reason Borrower shall fail
to select timely an Interest Period, then Borrower shall be deemed to have
elected to convert such LIBOR Loan to a Base Rate Loan on the last day of the
then existing Interest Period.  If at any time an Interest Period expires less
than one month before the Revolving Loan Maturity Date, such LIBOR Loan shall
automatically convert to a Base Rate Loan on the last day of the then existing
Interest Period, without further demand, presentment, protest or notice of any
kind, all of which are hereby waived by Borrower.

 

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“Investments”:  All expenditures made and all liabilities incurred (contingently
or otherwise) for the acquisition of Capital Stock or Indebtedness of, or for
loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person.  In determining the aggregate
amount of Investments outstanding at any particular time: (a) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding (subject to
any limits applicable thereto); and (b) there shall be deducted in respect of
each such Investment any amount received as a return of capital (but only by
repurchase, redemption, retirement, repayment, liquidating dividend or
liquidating distribution).

 

“Knowledge”:  The actual knowledge of any Responsible Officer, as such knowledge
has been obtained in the normal course of business after the exercise of
reasonable diligence.

 

“Laws”:  All laws, statutes, ordinances, rules, decrees, judgments, orders,
and/or regulations of any kind whatsoever, including, without limitation, those
relating to building, zoning, health, safety, life code, environmental
protection, access, environmental barriers, public highway and public access,
and specifically including Environmental Laws, the Americans with Disabilities
Act and similar state and local laws.

 

“Lender”:  Danfoss A/S.

 

“LIBOR Loan”:  Any Loan bearing interest calculated by reference to LIBOR.

 

“LIBOR”:  Relative to any Interest Period for LIBOR Loans, that rate per annum
(rounded upwards to the nearest 1/100 of 1%) appearing on Reuters Screen LIBOR01
Page as of 11:00 a.m. (London time) two (2) Business Days prior to the date of
such Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBOR01 Page, the
applicable rate shall be the arithmetic mean of all such rates.  If, for any
reason, neither of such rates is available, then “LIBOR” shall mean the rate per
annum, as determined by the Lender exercising its reasonable business judgment;
provided, however, that if, for any reason Lender is unable to determine LIBOR
at the time of an Advance, such Advance shall bear interest at the Base Rate.

 

“Lien”:  With respect to any asset, any mortgage, deed of trust, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other), charge,
preference, priority or other security interest or similar preferential
arrangement of any kind or nature whatsoever (excluding preferred stock and
equity related preferences) including, without limitation, those created by,
arising under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease, or any financing
lease having substantially the same economic effect as any of the foregoing.

 

“Loan Documents”:  Collectively, this Agreement, the Revolving Note, the
Incumbency Certificates, the Closing Certificate, and all documents,
certificates, agreements and other written matter heretofore, now and/or from
time to time hereafter executed by and/or on behalf of Borrower and delivered to
Lender, or issued by Lender upon the application and/or other request of, and on
behalf of, Borrower in any way relating to, evidencing or securing the Loans,
and all Modifications thereto and thereof.

 

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“Margin Stock”:  The term as defined in Regulation U of the Federal Reserve
Board.

 

“Material Adverse Effect”:  A material adverse change in, or a material adverse
effect on:

 

(a)           the business, operations, properties, financial condition or
assets of Borrower and its Subsidiaries, taken as a whole (other than (i) any
events leading up to the effectiveness of this Agreement, (ii) entry into this
Agreement, (iii) any event affecting companies operating in similar markets to
the extent such event does not affect Borrower and its Subsidiaries, taken as a
whole, in a manner that is disproportionately adverse when compared to the
effect on such other companies);

 

(b)           the ability of Borrower and its Subsidiaries, taken as a whole, to
pay any Obligation under any of the Loan Documents; or

 

(c)           (i) the validity, binding effect or enforceability of this
Agreement or any of the Loan Documents or (ii) the rights, remedies or benefits
available to Lender under this Agreement or the Loan Documents taken as a whole.

 

“Modifications”:  Any extension, renewal, substitution, replacement, supplement,
amendment or modification of any agreement, certificate, document, instrument or
other writing, whether or not contemplated in the original agreement, document
or instrument.

 

“Multiemployer Plan”:  A multiemployer plan, as defined in Section 3(37) of
Section 4001(a)(3) of ERISA, and to which Borrower or any ERISA Affiliate is a
party or contributes or has prior to the date hereof been a party or
contributed.

 

“Net Proceeds”:  With respect to any event, (a) the cash proceeds received in
respect of such event including, without limitation, (i) any cash received in
respect of any non-cash proceeds (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but excluding any interest
payments), but only as and when received, (ii) in the case of a casualty,
insurance proceeds, (iii) in the case of a condemnation or similar event,
condemnation awards and similar payments and (iv) in the case of an offering of
equity securities of a Person or the issuance of indebtedness for borrowed money
by a Person, cash received by or for such Person’s account, net of (b) the sum
of (i) all reasonable fees and out-of-pocket expenses paid to third parties in
connection with such event, (ii) in the case of a sale, transfer or other
disposition of an asset (including pursuant to a sale and leaseback transaction
or a casualty or a condemnation or similar proceeding), the amount of all
reasonable payments required to be made as a result of such event to repay
Indebtedness (other than the Loans) secured by such asset or otherwise subject
to mandatory prepayment as a result of such event, to the extent such
Indebtedness is permitted by this Agreement, (iii) the amount of all taxes paid
(or reasonably estimated to be payable) and the amount of any reserves
established to fund contingent liabilities reasonably estimated to be payable
and (iv) in the case of an offering of equity securities or an issuance of
indebtedness, the amount of reasonable legal, underwriting, and other costs,
fees, commissions and expenses incurred as a direct result thereof.

 

“Obligations”:  Collectively, all obligations, liabilities and indebtedness of
Borrower or any of its Subsidiaries to Lender (including, without limitation,
all debts, claims, Indebtedness,

 

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Costs and interest at the Applicable Rate and the Default Rate, as applicable)
whether primary, secondary, direct, contingent, fixed or otherwise, heretofore,
now and/or from time to time hereafter owing, due or payable, however arising,
evidenced, created, incurred, acquired or owing, whether now contemplated or
hereafter arising, under this Agreement or the Loan Documents.

 

“Organizational Documents”:  As applicable, a Person’s articles of
incorporation, by-laws, certificate of good standing, operating agreement,
shareholders’ agreement, certificate of partnership, certificate of limited
partnership, partnership agreement, articles of organization, or similar
documents or agreements governing its management and the rights, duties and
privileges of its equity owners.

 

“PBGC”:  The Pension Benefit Guaranty Corporation and any entity succeeding to
any or all of its functions under ERISA.

 

“Permitted Contest”:  A contest maintained in good faith by appropriate
proceedings promptly instituted and diligently conducted and with respect to
which such reserve or other appropriate provision, if any, as shall be required
in conformity with GAAP shall have been made.

 

“Permitted Liens”:  The term as defined in Section 6.2.

 

“Person”:  Any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, institution,
entity, party or government (whether national, federal, state, county, city,
municipal or otherwise, including without limitation any instrumentality,
division, agency, body or department thereof).

 

“Plan”:  (i) An employee benefit plan (as defined in Section 3(3) of ERISA)
which Borrower or any ERISA Affiliate sponsors or maintains and (ii) all other
pension, welfare, medical, dental, life, accident insurance, death, sick leave,
severance pay, deferred compensation, excess or supplemental benefit, bonus,
vacation, stock, stock option, fringe benefit, contracts, programs or
arrangements of any kind which Borrower or any ERISA Affiliate sponsors or
maintains.

 

“Prior Indebtedness”:  (i) the Indebtedness under that certain Facilities
Agreement, dated March 12, 2009, between Borrower and Lender, which provides for
a multicurrency term loan and revolving credit facilities in the aggregate
amount of $490,000,000 and (ii) the Indebtedness under that certain Loan
Agreement dated December 9, 2008, between Borrower and Lender, which provides
for a loan in the aggregate amount of $50,000,000.

 

“Qualified Plan”:  A pension plan (as defined in Section 3(2) of ERISA) intended
to be tax-qualified under Section 401(a) of the Code and which Borrower or any
ERISA Affiliate sponsors, maintains, or to which it makes, is making or is
obligated to make contributions, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any time during
the immediately preceding period covering at least five (5) plan years.

 

“Reference Period”:  Any period of four (4) consecutive Fiscal Quarters of
Borrower and its Subsidiaries ending on the relevant date.”

 

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“Requisite Time”:  With respect to any of the actions listed below, the time and
date set forth below opposite such action:

 

Type of Action

 

Applicable
Time

 

Date of Action

 

Delivery of Request for Extension of Credit for, or notice for:

 

 

 

 

 

·                  Borrowing or prepayment of Base Rate Loans

 

11:00 a.m.

 

5 Business Days prior to borrowing or prepayment

 

·                  Conversion into Base Rate Loans

 

11:00 a.m.

 

5 Business Days prior to such conversion

 

·                  Borrowing or prepayment of LIBOR Loans

 

11:00 a.m.

 

5 Business Days prior to such borrowing or prepayment

 

·                  Voluntary reduction in Revolving Loan Commitment

 

11:00 a.m.

 

5 Business Days prior to such reduction

 

·                  Continuation of, or conversion into LIBOR Loans

 

11:00 a.m.

 

5 Business Days prior to such continuation or conversion

 

·                  Determination of currency exchange rate

 

11:00 a.m.

 

Each Business Day when Section 1.3 may apply

 

·                  Payments by Borrower to Lender

 

11:00 a.m.

 

On date payment is due

 

 

“Responsible Officer”:  Either the Chief Executive Officer or the Chief
Financial Officer of Borrower, as applicable.

 

“Restricted Cash”:  The amount of cash that can not be freely distributed from
the local jurisdiction of Subsidiaries from time to time due to local capital
restrictions or material adverse tax consequences.

 

“Restricted Payment”:  As to any Person (i) any dividend or other distribution
on any equity interest in such Person and (ii) any payment on account of (a) the
purchase, redemption, retirement, defeasance, surrender or acquisition of any
equity interests in such Person or any claim respecting the purchase or sale of
any equity interest in such Person or (b) any option, warrant or other right to
acquire any equity interests in such Person.

 

“Revolving Loans”:  All loans made by Lender to Borrower pursuant to
Section 2.1(a).

 

“Revolving Loan Commitment”:  $690,000,000 as such amount may be reduced
pursuant to Section 3.5(a).

 

“Revolving Loan Maturity Date”:  April 29, 2011, unless terminated by
acceleration or otherwise.

 

“Revolving Note”:  The promissory note of Borrower issued pursuant to
Section 2.1e) hereof to evidence the Revolving Loans, in the form attached
hereto as Exhibit A.

 

“Securities Act”:  The Securities Act of 1933, as amended.

 

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“Solvent”:  With respect to any Person as of a particular date, (i) such Person
is able to pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (ii) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay as such debts and liabilities
mature in their ordinary course, (iii) such Person is not engaged in a business
or a transaction, and is not about to engage in a business or a transaction, for
which such Person’s assets would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in which
such Person is engaged or is to engage, (iv) the fair value of the assets of
such Person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person and (v) the aggregate fair
saleable value (i.e., the amount that may be realized within a reasonable time,
considered to be six months to one year, either through collection or sale at
the regular market value, conceiving the latter as the amount that could be
obtained for the assets in question within such period by a capable and diligent
businessman from an interested buyer who is willing to purchase under ordinary
selling conditions) of the assets of such  Person will exceed its debts and
other liabilities (including contingent, subordinated, unmatured and
unliquidated debts and liabilities).  For purposes of this definition, “debt”
means any liability on a claim, and “claim” means (i) a right to payment or
(ii) a right to an equitable remedy for breach of performance, if in light of
all of the facts and circumstances existing at such time, such right can
reasonably be expected to give rise to an actual or matured liability.

 

“Subsidiary”:  Any Person at least a majority of whose issued and outstanding
Capital Stock or other ownership interests now or at any time hereafter is
owned, directly or indirectly, by Borrower and/or one or more Subsidiaries.

 

“Swap Agreement”:  Any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value of any similar transaction or
any combination of these transactions; provided, that no phantom stock or
similar plan providing for payments only on account of services provided by
current or former directors, officers, employees or consultants of Borrower or
the Subsidiaries shall be a Swap Agreement.

 

“Wholly-Owned Subsidiary”:  With respect to a Person:  (a) any subsidiary all of
the outstanding voting securities of which shall at any time be owned or
controlled, directly or indirectly, by such Person or one or more Wholly-Owned
Subsidiaries of such person, or by such Person and one or more Wholly-Owned
Subsidiaries of such Person, or (b) any partnership, limited liability company,
association, joint venture or similar business organization 100% of the
ownership interests having ordinary voting power of which shall at the time be
so owned or controlled (other than in the case of Foreign Subsidiaries,
director’s qualifying shares and/or other nominal amounts of shares required to
be held by Persons other than the Borrower and its Subsidiaries under applicable
law).  Unless the context otherwise requires, “Wholly-Owned Subsidiary” means a
Wholly-Owned Subsidiary of Borrower.

 

“Withdrawal Liability”:  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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“Unmatured Default”:  Any event or condition which, with the passage of time or
the giving of notice or both, would constitute an Event of Default hereunder.

 

“Unused Facility Fee”:  The term as defined in Section 2.8.

 

“USD” or “$” or “Dollars”:  The lawful currency of the United States of America.

 

1.2.                              Rules of Construction.  In this Agreement,
unless a clear contrary intention appears:  (a) the singular number includes the
plural number and vice versa; reference to any gender includes each other
gender; (b) the words “herein”, “hereof” and “hereunder” and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision; (c) reference to any Person includes such
Person’s successors and assigns but, if applicable, only if such successors and
assigns are permitted by this Agreement, and reference to a Person in a
particular capacity excludes such Person in any other capacity or individually;
provided that nothing in this clause is intended to authorize any assignment not
otherwise permitted by this Agreement; (d) unless the context indicates
otherwise, reference to any agreement, document, note or instrument means such
agreement, document, note or instrument and all Modifications thereto, thereof
or therefor; (e) unless the context indicates otherwise, reference to any
Article, Section, Schedule or Exhibit means such Article or Section hereof or
such Schedule or Exhibit hereto; (f) the word “including” (and with correlative
meaning “include”) means including, without limiting the generality of any
description preceding such term; (g) with respect to the determination of any
period of time, the word “from” means “from and including” and the word “to”
means “to but excluding”; (h) reference to any Law means such as amended,
modified, codified or reenacted, in whole or in part, and in effect from time to
time to the extent any such amendment, modification, codification or reenactment
is applicable; (i) the Article and Section headings herein are for convenience
only and shall not affect the construction of this Agreement; and (j) each
reference herein that an event is an “Event of Default” shall be deemed to mean
an immediate Event of Default, without any obligation of notice or cure, unless
specifically provided for in the applicable Section.

 

1.3.                              Currency Fluctuations. If (a) the aggregate
principal amount outstanding of the Revolving Loan Commitment or (b) any amount
permitted as a basket under a covenant (e.g., permitted Liens, Indebtedness,
Investments) exceeds 105 % of the Revolving Loan Commitment or such permitted
amount due to currency fluctuations or for other reasons, the Borrower shall
promptly prepay or otherwise reduce the amount of such excess.  For purposes of
any determination under clauses (a) and (b) above, the amount denominated in EUR
shall be translated into Dollars at the currency exchange rate in effect at the
Applicable Time on each Business Day.  Such currency exchange rate shall be
determined in good faith by Borrower.

 

2.  LOANS:  GENERAL TERMS

 

2.1.                              Credit Facility.

 

(a)                                  Revolving Loans.  Subject to the terms and
conditions hereof, Lender shall make available to Borrower Revolving Loans from
time to time in an aggregate principal amount that will not result in the
aggregate outstanding principal amount of all Revolving Loans to exceed the
Revolving Loan Commitment.  Subject to the provisions hereof, the outstanding

 

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principal amount of Revolving Loans may be borrowed, repaid (without any premium
or penalty) and reborrowed again, from time to time in whole or in part.  The
unpaid principal balance of each Revolving Loan, and all portions thereof, shall
bear interest at the Applicable Rate or the Default Rate, if applicable.  The
entire unpaid principal balance plus accrued but unpaid interest on the
Revolving Loans is due and payable on the Revolving Loan Maturity Date.

 

(b)                                 Revolving Note.  Borrower shall execute and
deliver to Lender on the Closing Date (or, if such notice is delivered after the
Closing Date, promptly after the Borrower’s receipt of such notice) the
Revolving Note to evidence the Revolving Loans.

 

2.2.                              Disbursement of Proceeds.

 

(a)                                  Advances.  Borrower hereby authorizes and
directs Lender to disburse, for and on behalf of Borrower and for Borrower’s
account, the proceeds of any Revolving Loans as any Responsible Officer shall
direct in writing.  Borrower shall give Lender written notice of its request for
each Advance not later than the Requisite Time, which request shall be in the
form attached hereto as Exhibit B.  All Advances shall be denominated in USD or
EUR.

 

(b)                                 Excess Cash.  Notwithstanding
Section 2.2(a) to the contrary, Borrower shall not be authorized to request and
Lender shall not be obligated to fund an Advance to the extent Borrower’s
projected cash needs on the date of funding of an Advance, after taking into
account the proposed utilization of such Advance, will result in Borrower having
Excess Cash.

 

2.3.                              Maturity Date; Termination of Loans.  The
obligation of Lender to make any Advance to Borrower of the Revolving Loans,
pursuant to the provisions hereof shall be in effect until the Revolving Loan
Maturity Date, unless sooner suspended or terminated upon the occurrence and
continuation of an Event of Default pursuant to Section 9 or otherwise pursuant
to the terms hereof.

 

2.4.                              Usury.  The provisions of this Section 2.4
shall govern and control over any irreconcilably inconsistent provision
contained in this Agreement, the Revolving Note or in any Loan Document.  Lender
shall not be entitled to receive, collect, or apply as interest hereon (for
purposes of this Section 2.4, the word “interest” shall be deemed to include any
sums treated as interest under applicable law governing matters of usury and
unlawful interest), any amount in excess of the Highest Lawful Rate (hereinafter
defined) and, in the event Lender ever receives, collects, or applies as
interest any such excess, such amount which would be excessive interest shall be
deemed a partial prepayment of principal and shall be treated hereunder as such;
and, if the principal of this Agreement is paid in full, any remaining excess
shall forthwith be paid to Borrower.  “Highest Lawful Rate” shall mean the
maximum rate of interest which Lender is allowed to contract for, charge, take,
reserve or receive under applicable law after taking into account, to the extent
required by applicable law, any and all relevant payments or charges hereunder.

 

2.5.                              Elections as to Applicable Rate.  Borrower
shall elect to initiate any Revolving Loans as either a LIBOR Loan or a Base
Rate Loan, by written notice to Lender on its then-current election form which,
in the case of a LIBOR Loan, shall specify the Interest Period to be applicable
thereto.  If no such election is made with respect to any newly initiated Loan,
Borrower shall be deemed to have elected to initiate such Loan as a Base Rate
Loan.  Borrower may elect (a) to continue a LIBOR Loan, or a portion thereof, as
a LIBOR Loan, or (b) to

 

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convert a LIBOR Loan, or a portion thereof, to a Base Rate Loan, or (c) to
convert a Base Rate Loan, or a portion thereof, to a LIBOR Loan, in each case by
giving written notice thereof to Lender on its then-current election form not
later than the Requisite Time (election notices received after the Requisite
Time shall be processed and funded by Lender on the next Business Day
thereafter); provided that an outstanding LIBOR Loan may only be continued as a
LIBOR Loan on the last day of the then current Interest Period with respect to
such Loan, and provided further, if a continuation of a Loan as, or a conversion
of a Loan to, a LIBOR Loan is requested, such notice shall also specify the
Interest Period to be applicable thereto upon such continuation or conversion. 
If Borrower shall not timely deliver such a notice with respect to any
outstanding LIBOR Loan, Borrower shall be deemed to have elected to convert such
LIBOR Loan to a Base Rate Loan on the last day of the then current Interest
Period with respect to such Revolving Loans.

 

2.6.                              Indemnification for LIBOR Loans.  Borrower
agrees to indemnify Lender for any loss or expense that Lender may sustain or
incur as a consequence of (a) failure by such Borrower in making a borrowing of,
conversion into or continuation of LIBOR Loans after such Borrower has given a
notice requesting the same in accordance with the provisions of this Agreement,
(b) default by such Borrower in making any prepayment of or conversion into
LIBOR Loans after such Borrower has given a notice thereof in accordance with
the provisions of this Agreement or (c) the making of a prepayment of LIBOR
Loans on a day that is not the last day of an Interest Period with respect
thereto.

 

2.7.                              Closing Fee.  Borrower shall pay to Lender, a
closing fee of $2,000,000 not later than 4 Business Days from the Closing Date
(the “Closing Fee”).

 

2.8.                              Unused Facility Fee.  Borrower agrees to pay
Lender a fee (the “Unused Facility Fee”) calculated by multiplying (a) 4.0%
times (b) the average daily amount during each Fiscal Quarter (or portion
thereof) from the date hereof to the Revolving Loan Maturity Date by which the
Revolving Loan Commitment exceeds the principal amount of all Revolving Loans
during such Fiscal Quarter.  The Unused Facility Fee shall be payable quarterly
in arrears on the tenth Business Day of each Fiscal Quarter for the immediately
preceding Fiscal Quarter commencing on the first such date following the date
hereof, with a final payment on the Revolving Loan Maturity Date or any earlier
date on which the Revolving Loan Commitment shall terminate.  The Unused
Facility Fee shall be calculated based on a 360 day year for the actual number
of days elapsed.

 

2.9.                              Minimum Amount of Revolving Loans.  Each
Revolving Loan shall be in a minimum amount of $1,000,000 and in integral
multiples of $1,000,000.

 

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3.  INTEREST; PAYMENT TERMS

 

3.1.                              Interest Rates. Each of the Revolving Loans
hereunder shall bear interest at the Applicable Rate; provided that
(i) following the Revolving Loan Maturity Date, whether by acceleration or
otherwise, the Revolving Loans shall bear interest at the Default Rate and
(ii) following the occurrence of any Event of Default under Section 9.1 hereof
(including after acceleration or judgment), the Revolving Loans shall bear
interest at the Default Rate.  Interest in respect of the Revolving Loans shall
be calculated based on a 360 day year for the actual number of days elapsed. 
Interest shall accrue from the date of disbursement by Lender.

 

3.2.                              Interest Payments.  Borrower promises to pay
to the order of Lender, accrued but unpaid interest on the unpaid principal
amount of each of the Revolving Loans at the Applicable Rate (or the Default
Rate, if applicable) on each Interest Payment Date and at maturity (whether at
stated maturity, by acceleration or otherwise), and thereafter on demand.

 

3.3.                              Principal Payments.

 

(a)                                  Revolving Loans. Borrower promises to pay
to the order of Lender the unpaid principal balance, plus all accrued but unpaid
interest on the Revolving Loans and all other Obligations, on the Revolving Loan
Maturity Date.

 

(b)                                 Proceeds of Sale, Casualty or Condemnation
of Assets.  To the extent that the Net Proceeds from the sale to a third party
(other than as permitted by Section 6.8(b) below), loss, destruction or
condemnation of any asset of Borrower or any of its Subsidiaries exceeds
$5,000,000 in the aggregate during any four consecutive Fiscal Quarters,
Borrower shall immediately pay to Lender, as and when received by Borrower, an
amount equal to such excess Net Proceeds (including all insurance proceeds)
received by Borrower or, to the extent such Net Proceeds can be legally
transferred to Borrower or Lender without incurring excessive tax liabilities or
triggering thin-capitalization issues, any of its Subsidiaries from such sale,
loss, destruction or condemnation as a prepayment of the Obligations. 
Notwithstanding the foregoing Borrower shall not be obligated under this
Section 3.3(b) to make any mandatory prepayment if the Net Proceeds from such a
sale, loss, destruction or condemnation unless the aggregate amount of such
prepayment is at least $1,000,000, or if Borrower or any Subsidiary applies (or
commits to apply) the Net Proceeds from such sale, loss, destruction or
condemnation (or a portion thereof) within twelve months to pay all or a portion
of the purchase price to acquire, restore, replace, rebuild, develop, maintain
or upgrade real property, equipment or other capital assets useful or to be used
in the business of Borrower or its Subsidiaries; provided, however, if an Event
of Default has occurred and is continuing, all proceeds referenced above shall,
unless Lender consents otherwise, be immediately paid to Lender.  The proceeds
referenced above shall be applied to the Obligations, in accordance with
Section 3.5.  Any excess will be transferred to Borrower.

 

(c)                                  Proceeds of Equity Issuance.  To the extent
that Borrower shall make any Equity Issuance on or after the Closing Date other
than Capital Stock issued in connection with the exercise of employee/director
stock plans, including, but not limited to, long term incentive plans, director
restricted stock plans, Borrower shall promptly (and in any event within 5
Business Days following receipt thereof) pay or cause to be paid to Lender a sum
equal to the Net Proceeds of such Equity Issuance received by Borrower for
application to the Obligations in accordance with Section 3.5.

 

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(d)                                 Issuance of Indebtedness.  On the date of
receipt by Borrower of any proceeds from the issuance of any Indebtedness (other
than Indebtedness permitted by Section 6.1 hereof), Borrower shall promptly (and
in any event within 5 Business Days following receipt thereof) pay, or, to the
extent such proceeds can be legally transferred to Borrower or Lender without
incurring excessive tax liabilities or triggering thin-capitalization issues,
cause its Subsidiaries to promptly (and in any event within 5 Business Days
following receipt thereof) pay, to Lender a sum equal to the proceeds of such
issuance for application to the Obligations in accordance with Section 3.5. 
Nothing in this Section 3.3 shall be deemed to be a waiver of the terms of
Section 6.1 hereof.

 

(e)                                  Commitment Reductions.  Borrower may from
time to time upon written notice to Lender not later than the Requisite Time,
permanently reduce the Revolving Loan Commitment to an amount not less than the
aggregate amount of Revolving Loans outstanding; provided, that such reduction
shall be in a minimum amount of $1,000,000 and in integral multiples of
$1,000,000 thereafter.

 

3.4.                              Place of Payment; Excess Obligations.  All
payments to Lender hereunder and under the Loan Documents shall be payable at
Lender’s principal place of business or at such other place or places as Lender
may designate in writing to Borrower.  All payments by Borrower to Lender shall
be paid without demand, diminution, defense, reduction or offset.  If any
payment is or becomes due on a day which is not a Business Day, such payment
shall be due on the next succeeding Business Day.

 

3.5.                              Application of Payments and Collections.

 

(a)                                  Application of Mandatory Prepayments.  Any
and all payments of the Obligations which may be received by or tendered to
Lender pursuant to Sections 3.3(b), 3.3(c) or 3.3(d), shall be applied in the
following order of priority:  (i) to the payment of any Costs then due and
payable and any accrued and unpaid interest thereon in accordance with
Section 3.6; (ii) to accrued but unpaid interest, penalties, charges and amounts
due under this Agreement or any Loan Document; and (iii) to the outstanding
principal amount of the Revolving Loans accompanied by a permanent reduction in
the Revolving Loan Commitment.

 

(b)                                 Revival.  To the extent that Lender receives
any payment on account of the Obligations and any such payment(s) and/or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, subordinated and/or required to be repaid
to a trustee, receiver or any other Person under any bankruptcy act, state or
federal law, common law or equitable cause, then, to the extent of such
payment(s) or proceeds received, the Obligations or part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment(s) and/or proceeds had not been received by Lender and applied on
account of the Obligations.  Borrower shall execute any and all agreements,
notes and documents, reasonably requested by Lender to effect the provisions of
this Section 3.5(b).

 

(c)                                  Costs and Other Payments.  Borrower shall
be responsible for any Cost in this Agreement which shall be paid promptly upon
receipt of an invoice therefor.  Unless subject to a good faith dispute as to
the amount or the obligation of Borrower to pay under this Agreement, any Cost
not paid by the later of when due or 6 Business Days after receipt of such
invoice may be paid by Lender as an Advance hereunder, and if so paid shall be
part of the

 

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Obligations and shall bear interest at the Default Rate applicable to Base Rate
Loans until an amount equal to such Advance has been repaid to Lender.

 

4.  REPRESENTATIONS AND WARRANTIES

 

In order to induce Lender to enter into this Agreement and to make the Loans and
other credit accommodations contemplated hereby, Borrower represents and
warrants to Lender, on the Closing Date and on the date of the disbursement of
each Loan described in Section 2.2(a), that the following statements are true
and correct (it being understood and agreed that the representations and
warranties made on the Closing Date are deemed to be made concurrently with the
consummation of the Loans):

 

4.1.                              Organization; Requisite Power and Authority;
Qualification.    Each of Borrower and its Subsidiaries (a) is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization; (b) 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 hereby; and (c) is qualified to do business
and in good standing in every jurisdiction where its assets are located and
wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had, and would not be reasonably expected to have, a Material Adverse Effect.

 

4.2.                              Due Authorization.  The execution, delivery
and performance by Borrower of the Loan Documents have been duly authorized by
all necessary action on the part of Borrower pursuant to its Organizational
Documents.

 

4.3.                              No Conflict.  The execution, delivery and
performance by Borrower of the Loan Documents and the consummation of the
transactions contemplated by the Loan Documents do not and will not (a) violate
any provision of any law or any rule or regulation imposed by any Governmental
Authority applicable to Borrower or any of its Subsidiaries, any provision of
the Organizational Documents of Borrower, or any order, judgment or decree of
any court or other Governmental Authority binding on Borrower or any of its
Subsidiaries; (b) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any Contractual Obligation of
Borrower or any of its Subsidiaries; (c) result in or require the creation or
imposition of any Lien upon any of the properties or assets of Borrower; or
(d) require any approval of stockholders, members or partners or any approval or
consent of any Person under any Contractual Obligation of Borrower, except for
such approvals or consents which will be obtained on or before the Closing Date
and disclosed in writing to Lender.

 

4.4.                              Binding Obligation.  Each Loan Document has
been duly executed and delivered by Borrower and is the legally valid and
binding obligation of Borrower, enforceable against Borrower in accordance with
its respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally or by general equitable principles
(whether enforcement is sought by proceedings in equity or at law) relating to
enforceability.

 

4.5.                              Capital Stock.  The Capital Stock of Borrower
has been duly authorized and validly issued and is fully paid and
non-assessable.

 

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4.6.                              Governmental Consents.  The execution,
delivery and performance by Borrower of the Loan Documents and the consummation
of the transactions contemplated by the Loan Documents do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by, any Governmental Authority, except for such approvals or
consents which will be obtained on or before the Closing Date.

 

4.7.                              Financial Statements.

 

(a)                                  The consolidated balance sheet of Borrower
and its consolidated Subsidiaries as of December 31, 2008 and the consolidated
related statements of income, stockholders’ equity and cash flows, audited by
KPMG LLP, copies of which have been delivered to Lender, and the unaudited
consolidated balance sheet of Borrower and its consolidated Subsidiaries as of
June 30, 2009 and the related statements of income, stockholders’ or owners’
equity and cash flows and in each case for the 6 month period then ended, copies
of which have been delivered to Lender, and in each case, have been prepared in
conformity with GAAP consistently applied and present fairly in all material
respects the financial position of Borrower and its consolidated Subsidiaries as
of such date and its results of operations, changes in stockholders’ equity and
cash flows for the periods covered thereby.

 

(b)                                 As of the date of the balance sheets
referenced in Section 4.7(a) above, and the date hereof, neither Borrower nor
any of its consolidated Subsidiaries had or has any material liabilities,
contingent or otherwise, including liabilities for taxes, long-term leases or
forward or long-term commitments, which are not required to be reflected on such
balance sheets in accordance with GAAP.

 

4.8.                              [Intentionally Omitted].

 

4.9.                              Litigation.  There is no action, suit, or
proceeding pending against, or to Borrower’s Knowledge threatened against or
affecting Borrower or any of its Subsidiaries before any court or arbitrator or
any Governmental Authority which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect or which in any manner purports to
affect or pertain to this Agreement, any Loan Document, or any of the
transactions contemplated hereby or thereby.

 

4.10.                        Taxes.  All tax returns and reports of Borrower and
its Subsidiaries required to be filed 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 Borrower or any of its Subsidiaries and upon
their respective properties, assets, income, businesses and franchises which are
due and payable have been paid except for taxes, assessments, fees and other
governmental charges subject to a Permitted Contest or to the extent the failure
to do so could not reasonably be expected to result in a Material Adverse
Effect.

 

4.11.                        Properties.

 

(a)                                  Each of Borrower and its Subsidiaries has
(i) valid leasehold interests in (in the case of leasehold interests in real or
personal property), (ii) fee simple title to (in the case of interests in real
property) and (ii) good title to (in the case of all other personal property,
including, but not limited to, Intellectual Property and licenses) all of their
respective properties and assets material to its business, in each case except
(x) for minor defects in title that do not

 

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interfere with its ability to conduct its businesses as currently conducted or
to utilize such properties for their intended purposes and (y) for assets
disposed of since the date of the most recent balance sheet in the ordinary
course of business.  All of such properties and assets are sufficient for
Borrower and its Subsidiaries to conduct their operations as presently
conducted.  Except as permitted by this Agreement, all such properties and
assets are free and clear of Liens except for Permitted Liens.

 

(b)                                 As of the Closing Date, Borrower has no
Subsidiaries other than those Subsidiaries listed on Schedule 4.11(b).  Schedule
4.11(b) correctly sets forth, as of the Closing Date, (i) the percentage
ownership (direct or indirect) of Borrower in each class of Capital Stock of its
Subsidiaries and also identifies the direct owner thereof, and (ii) the
jurisdiction of organization of each such Subsidiary.

 

4.12.                        Environmental Matters.

 

(a)                                  Except with respect to matters that,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, neither Borrower nor any of its Subsidiaries has
failed to comply with any applicable Environmental Law.

 

(b)                                 No notice, notification, demand, request for
information, complaint, citation, summons, investigation, administrative order,
consent order and agreement, litigation or settlement with respect to Hazardous
Materials or Hazardous Materials Contamination is in existence or, to Borrower’s
Knowledge, proposed, threatened or anticipated with respect to or in connection
with the operation by Borrower or any of its Subsidiaries of any properties now
leased or operated by Borrower or any of its Subsidiaries.  All such properties
and their existing and prior uses by either Borrower or any of its Subsidiaries,
and any disposal of Hazardous Materials from any thereof, comply and at all
times have complied with all applicable Environmental Laws, other than any such
non compliance that would not reasonably be expected to have a Material Adverse
Effect.  There is no condition on any of such properties which is in violation
of any applicable Environmental Laws, other than any such violation that would
not reasonably be expected to have a Material Adverse Effect and neither
Borrower nor any of its Subsidiaries has received any notice of any claim from
or on behalf of any Governmental Authority that any such condition exists.

 

4.13.                        Material Agreements.  Neither Borrower nor any
Subsidiary is a party to any agreement or instrument or subject to any charter
or other corporate restriction which could reasonably be expected to have a
Material Adverse Effect.  Neither Borrower nor any Subsidiary is in default in
the performance, observance or fulfillment of any of the obligations or
conditions contained in any agreement to which it is a party, which default
could reasonably be expected to have a Material Adverse Effect.

 

4.14.                        Governmental Regulation.  Neither Borrower 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.  Neither
Borrower 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.

 

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4.15.                        Margin Stock.  Neither Borrower 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 or any of
its Subsidiaries will be used to purchase or carry any such Margin Stock or to
extend credit to others for any purpose that violates the provisions of
Regulation T, U or X of the Federal Reserve Board.

 

4.16.                        Labor Matters.  Except as would not reasonably be
expected to have a Material Adverse Effect (a) neither Borrower nor any of its
Subsidiaries is engaged in any unfair labor practice; (b) there is no unfair
labor practice complaint pending against Borrower or any of its Subsidiaries or
to the Knowledge of Borrower, threatened against Borrower or any of its
Subsidiaries before the National Labor Relations Board and no grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement that is so pending against Borrower or any of its Subsidiaries or to
the Knowledge of Borrower, threatened against Borrower or any of its
Subsidiaries; (c) as of the Closing Date, there are no strikes or other labor
disputes pending or, to Borrower’s Knowledge, threatened against Borrower or any
of its Subsidiaries; and (d) all payments due from Borrower and its
Subsidiaries, or for which any claim may be made against any of them, on account
of wages and employee and retiree health and welfare insurance and other
benefits have been paid or accrued as a liability on their books in accordance
with GAAP, as the case may be, except to the extent any such payments are the
subject of a Permitted Contest.  The consummation of the transactions
contemplated by the Loan Documents will not give rise to a right of termination
or right of renegotiation on the part of any union under any collective
bargaining agreement to which it is a party or by which it is bound.

 

4.17.        ERISA Compliance.

 

(a)                                  No ERISA Event has occurred or 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.  Except as set forth in
Schedule 4.17(a), The present value of all accumulated benefit obligations under
each Plan (based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the date of the most recent
financial statements reflecting such amounts, exceed by more than $10,000,000
the fair market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $10,000,000 the fair market value
of the assets of all such underfunded Plans.

 

(b)                                 Each Foreign Pension Plan has been
maintained in substantial compliance with its terms and in substantial
compliance with the requirements of any and all applicable laws, statutes,
rules, regulations and orders and has been maintained, where required, in good
standing with applicable regulatory authorities.  Except as set forth in
Schedule 4.17(b), all contributions required to be made with respect to a
Foreign Pension Plan have been timely made.  Neither Borrower nor any of its
Subsidiaries has incurred any material obligation in connection with the
termination of or withdrawal from any Foreign Pension Plan.  Except as set forth
on Schedule 4.17, the present value of accrued benefit liabilities (whether or
not vested) under each Foreign Pension Plan, determined as of the end of
Borrower’s most recently ended Fiscal Year on the

 

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basis of actuarial assumptions, each of which is reasonable, did not exceed the
current value of the assets of such Foreign Pension Plan allocable to such
benefit liabilities.

 

4.18.                        Intellectual Property.  Each of Borrower and its
Subsidiaries owns, is licensed to use or otherwise has the right to use
Intellectual Property material to its business.  Such Intellectual Property is
valid and has been duly registered or filed with all appropriate governmental
authorities, if applicable.  There is no objection to or pending challenge to
the validity of any Intellectual Property and Borrower has no Knowledge of any
grounds for any challenge thereto.  None of the Intellectual Property used by
Borrower and its Subsidiaries, and none of the products or services produced,
marketed or sold by Borrower and its Subsidiaries infringes upon or violates the
Intellectual Property rights of any third party except for such infringement
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.

 

4.19.                        Compliance with Laws.  Each of Borrower and its
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all Governmental
Authorities, in respect of the conduct of its business and the ownership of its
property except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.

 

4.20.                        Disclosure.  No representation or warranty of
Borrower or any of its Subsidiaries contained in any Loan Document or in any
other documents, certificates or written statements furnished to Lender by or on
behalf of Borrower or any of its Subsidiaries for use in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not materially misleading in light of the
circumstances in which the same were made.  Any projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by Borrower to be reasonable at the time
made, it being recognized by Lender that such projections may differ from actual
results.  To the Knowledge of Borrower, there are no facts (other than matters
of a general economic nature) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect and that have not
been disclosed herein or in such other documents, certificates and statements
furnished to Lender for use in connection with the transactions contemplated
hereby.

 

4.21.                        Pari-Passu.  The obligations under this Agreement
and the other Loan Documents rank at least pari-passu with the claims of all
unsecured and unsubordinated creditors of Borrower except those claims which are
given preference as a matter of law.

 

5.  AFFIRMATIVE COVENANTS

 

Borrower covenants with Lender that Borrower shall, unless it obtains Lender’s
prior written consent waiving or modifying any of the covenants hereunder:

 

5.1.                              Insurance.  Borrower will and will cause each
of its Subsidiaries to maintain with financially sound and reputable insurance
companies (or through self-insurance), insurance in such amounts and against
such risks as is consistent with sound business practice.

 

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5.2.                              Financial Reports.  Borrower shall and shall
cause each of its Subsidiaries to keep true and accurate books of account and
prepare true and accurate financial statements in accordance with GAAP
consistently applied throughout the periods reflected therein and with prior
periods.  Borrower shall furnish Lender with the following:

 

(a)                                  Annual Financial Statements.  As soon as
available, but not later than 90 calendar days after the close of each Fiscal
Year of Borrower, financial statements of Borrower and its consolidated
Subsidiaries, prepared on a consolidated basis, (including a consolidated
balance sheet and related statements of income, stockholders’ equity and cash
flow with supporting footnotes) as at the end of such year and for the year then
ended, audited and accompanied by a report and an unqualified opinion by KPMG
LLP or other firm of independent certified public accountants of recognized
national standing;

 

(b)                                 Quarterly Financial Statements.  As soon as
available, but in no event later 45 calendar days after the end of each Fiscal
Quarter, financial statements of Borrower and its Subsidiaries, prepared on a
consolidated basis, (including a consolidated balance sheet and related
statements of income, retained earnings, stockholders’ equity and cash flow) as
at the end of such Fiscal Quarter;

 

(c)                                  Certificate of Responsible Officer. 
Concurrently with each delivery of the financial statements described in
Sections 5.2(a) and 5.2(b), a certificate executed by a Responsible Officer
certifying that the Financial Statements delivered thereunder present fairly in
all material respects the consolidated financial position and results of
operations of Borrower and its Subsidiaries as of the dates and for the periods
indicated and shall have been prepared in accordance with GAAP (subject, in the
case of unaudited financial statements, to the absence of footnotes required by
GAAP and to normal year-end audit adjustments that are not material);

 

(d)                                 Public Filings.  Promptly after the same
become publicly available, copies of all periodic and other reports, proxy
statements and other materials filed by Borrower or any Subsidiary with the
Securities and Exchange Commission, or any Governmental Authority succeeding to
any or all of the functions of said Commission, or with any national securities
exchange, or distributed by Borrower to its shareholders generally, as the case
may be;

 

(e)                                  Other Indebtedness Documents.  Upon the
request of Lender, Borrower shall provide copies of all loan agreements, notes
and other loan documents in connection with Indebtedness incurred pursuant to
Section 6.1(i) as well as any modifications or amendments to any loan
agreements, notes or loan documents with respect to any Indebtedness in
existence as of the Closing Date; and

 

(f)                                    Other Data.  Such other data and
information (financial and otherwise) as Lender, from time to time, may
reasonably request bearing upon or related to financial condition of Borrower
and any of its Subsidiaries and/or result of operations, all in form and detail
reasonably acceptable to Lender.

 

5.3.          Notices.  Borrower shall furnish to Lender the following notices:

 

(a)                                  Defaults.  Promptly upon Borrower obtaining
Knowledge, written notice of the occurrence of any Unmatured Default or Event of
Default, together with a reasonably detailed description thereof, and the
actions Borrower proposes to take with respect thereto.  If

 

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any Person shall give any notice or take any other action in respect of a
claimed default (whether or not constituting an Event of Default) under this
Agreement or any other note, evidence of indebtedness, indenture or other
obligation in excess of $1,000,000 to which or with respect to which Borrower or
any of its Subsidiaries is a party or obligor, whether as principal, guarantor,
surety or otherwise, Borrower shall forthwith give written notice thereof to
Lender, describing the notice or action and the nature of the claimed default

 

(b)                                 Defaults of Other Indebtedness.  Promptly
upon the occurrence of a default or Borrower obtaining Knowledge of a threatened
default or upon the cancellation or reduction of any Indebtedness (other than
Revolving Loans) in excess of $5,000,000, written notice of such default,
cancellation or reduction.

 

(c)                                  Environmental Events.  Promptly upon
Borrower obtaining Knowledge, written notice (i) of any violation of any
applicable Environmental Law that Borrower or any of its Subsidiaries reports or
is required to report in writing (or for which any written report supplemental
to any oral report is made) to any Governmental Authority and (ii) of any
environmental inquiry, proceeding, investigation, or other action, including a
notice from any agency of potential environmental liability, of any Governmental
Authority with jurisdiction in each case that could reasonably be expected to
result in a Material Adverse Effect.

 

(d)                                 Notice of Litigation and Judgments.   Within
15 Business Days of Borrower obtaining Knowledge, written notice of any
litigation or proceedings threatened in writing or any pending litigation and
proceedings affecting Borrower or any of its Subsidiaries or to which Borrower
or any of its Subsidiaries is or becomes a party involving an uninsured claim
against Borrower or any of its Subsidiaries that could, if adversely determined,
reasonably be expected to have a Material Adverse Effect and stating the nature
and status of such litigation or proceedings.  Borrower will give notice to
Lender, in writing, in form and detail reasonably satisfactory to Lender, within
15 Business Days of any judgment not covered by insurance, final or otherwise,
against Borrower or any of its Subsidiaries in an amount that could reasonably
be expected to have a Material Adverse Effect.

 

(e)                                  Auditor’s Reports.  Promptly upon receipt
thereof by Borrower a copy of each “management letter” or other report submitted
by its independent accountants in connection with any annual, interim or special
audit of the books of Borrower or any of its consolidated Subsidiaries.

 

(f)                                    Governmental Authority.  Promptly upon
receipt thereof by Borrower from any Governmental Authority, written notice of
(i) any notice asserting any failure by Borrower or any of its Subsidiaries to
be in compliance with applicable Requirements of Law or that threatens the
taking of any action against Borrower or any of its Subsidiaries or sets forth
circumstances that, if taken or adversely determined, could reasonably be
expected to have a Material Adverse Effect, or (ii) any notice of any actual or
threatened suspension, limitation or revocation of, failure to renew, or
imposition of any restraining order, escrow or impoundment of funds in
connection with, any material license, permit, accreditation or authorization of
Borrower or any of its Subsidiaries.

 

(g)                                 Any Other Event Likely to Cause Material
Adverse Effect.  Promptly upon the occurrence of any other matter or event that
has, or would reasonably be expected to have, a Material Adverse Effect, written
notice, together with a written statement of a

 

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Responsible Officer setting forth the nature and period of existence thereof and
the action that Borrower or any of its Subsidiaries has taken and proposes to
take with respect thereto.

 

(h)                                 ERISA Matters.  Promptly upon the occurrence
of any ERISA Event that, alone or together with any other ERISA Events that have
occurred, could reasonably be expected to result in liability of Borrower and
its Subsidiaries in an aggregate amount exceeding $10,000,000.

 

5.4.                              Taxes.  Borrower will, and will cause each of
its Subsidiaries to, duly pay and discharge, or cause to be paid and discharged,
before the same shall become overdue, all Charges imposed upon them and their
real properties, sales and activities, or any part thereof, or upon the income
or profits therefrom, as well as all claims for labor, materials, or supplies
that if unpaid might by law become a lien or charge upon any of its properties
that, if not paid, could reasonably be expected to result in a Material Adverse
Effect; provided that any such Charge need not be paid if the validity or amount
thereof shall be the subject of a Permitted Contest; and provided further that
Borrower or its Subsidiaries, as the case may be, shall pay all such Charges
forthwith upon the commencement of proceedings to foreclose any Lien that may
have attached as security therefor other than Liens that could not reasonably be
expected to have a Material Adverse Effect.  Borrower will, and will cause each
of its Subsidiaries, to accurately prepare all tax returns required by law to be
filed by them.

 

5.5.                              Existence.  Borrower shall continue, and will
cause each of its Subsidiaries to continue, to preserve and maintain its
corporate existence, rights, privileges and franchises in the jurisdiction of
its incorporation or organization, and qualify and remain qualified to do
business in each other jurisdiction in which such qualification is necessary in
view of its business or operations, provided that the foregoing shall not
prohibit any merger, consolidation, liquidation or dissolution permitted under
Section 6.8.  Borrower will, and will cause each Subsidiary to, carry on and
shall continue to engage in business of substantially the same general type as
it now conducts and in substantially the same fields or enterprise as it is
presently conducted.

 

5.6.                              Compliance with Laws.  Borrower shall comply
in all material respects, and shall cause each of its Subsidiaries to comply in
all material respects, with all Laws (including all Environmental Laws and ERISA
and the rules and regulations thereunder) having applicability to it or to the
business or businesses at any time conducted by it.

 

5.7.                              Payment and Performance of Obligations. 
Borrower (i) will pay and discharge, and cause each of its Subsidiaries to pay
and discharge, at or before maturity, all of their respective obligations and
liabilities that if not paid, could reasonably be expected to result in a
Material Adverse Effect, except where the same may be the subject of a Permitted
Contest, (ii) will maintain, and cause its Subsidiaries to maintain appropriate
reserves, in accordance with GAAP, for the accrual of all of their respective
obligations and liabilities and (iii) will not breach or permit any of its
Subsidiaries to breach, or permit to exist any default under, the terms of any
material lease, commitment, contract, instrument or obligation to which it is a
party, or by which its properties or assets are bound except for any breach
which could not reasonably be expected to have a Material Adverse Effect.

 

5.8.                              Inspection of Property, Books and Records. 
Borrower will keep, and will cause each of its Subsidiaries to keep, proper
books of record and account in accordance with GAAP in which full time and
correct entries shall be made of all dealings and transactions in relation to
its

 

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business and activities; and will permit, and will cause each of Borrower and
its Subsidiaries to permit representatives of Lender, during normal business
hours and upon reasonable prior notice, and without material disruption to
Borrower’s and each Subsidiaries’ business operations to visit and inspect any
of their respective properties, to examine and make abstracts or copies from any
of their respective books and records to the extent related to the transactions
contemplated by this Loan Agreement, and to discuss their respective affairs,
finances and accounts with their respective officers, employees and independent
public accountants at reasonable times and as often as may be reasonably desired
and upon request of Lender Borrower shall reimburse Lender for all Costs
associated with any such inspection.

 

5.9.                              Use of Proceeds.  Borrower will use the
proceeds of the Loans solely to (a) refinance and repay in full all Prior
Indebtedness, (b) provide for working capital and other general corporate
purposes of Borrower, and (c) fund reasonable expenses associated with the
funding of the Loans.

 

5.10.                        Further Assurances.  Borrower will, and will cause
each of its Subsidiaries to, at its own cost and expense, cause to be promptly
(and in no event later than 10 Business Days following request therefore) and
duly taken, executed, acknowledged and delivered all such further acts,
documents and assurances as may from time to time be necessary or as Lender may
from time to time reasonably request in order to carry out the intent and
purposes of the Loan Documents and the transactions contemplated thereby.

 

6.               NEGATIVE COVENANTS

 

Borrower covenants with Lender that Borrower shall, unless it obtains Lender’s
prior written consent waiving or modifying any of the covenants hereunder:

 

6.1.          Indebtedness.  Borrower will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume, guarantee or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except for:

 

(a)                                  Indebtedness created in favor of Lender
under the Loan Documents;

 

(b)                                 without duplication of any Indebtedness
otherwise permitted under this Section 6.1 or 6.3, Indebtedness outstanding on
the date of this Agreement as set forth in Schedule 6.1 and any extension or
renewal thereof (provided there is no increase in Indebtedness as a result of
any extension or renewal);

 

(c)                                  intercompany Indebtedness arising from
loans made by Borrower to any Subsidiary, or by any Subsidiary to Borrower, or
by any Subsidiary to any other Subsidiary;

 

(d)                                 guaranties by Borrower of Indebtedness or
other obligations of any Subsidiary and by any Subsidiary of Indebtedness or
other obligations of Borrower or any other Subsidiary;

 

(e)                                  Indebtedness of Borrower or any Subsidiary
as an account party in respect of trade letters of credit or under Swap
Agreements permitted by Section 6.5;

 

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(f)                                    Indebtedness arising from the honoring by
a bank or other financial institution of a check, draft or similar instrument
drawn against insufficient funds in the ordinary course of business (and not as
part of an overdraft line or similar credit facility);

 

(g)                                 Indebtedness with respect to performance
bonds, surety bonds, appeal bonds or custom bonds required in the ordinary
course of business or in connection with the enforcement of rights or claims of
Borrower or any of its Subsidiaries;

 

(h)                                 Indebtedness that may be deemed to exist in
connection with obligations consisting of indemnification obligations, purchase
price adjustments, warranty claims and similar obligations in connection with
customer contracts or with agreements in connection with the acquisition or
disposition of assets permitted by this Agreement;

 

(i)                                     Indebtedness the Net Proceeds of which
are applied in accordance with Section 3.5(a) hereof; and

 

(j)                                     other Indebtedness in an aggregate
principal amount not exceeding $5,000,000.

 

6.2.          Liens.  Borrower will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, assume or suffer to exist any
Lien on any asset now owned or hereafter acquired by Borrower or any of its
Subsidiaries, except for the following Liens (the “Permitted Liens”):

 

(a)                                  without duplication of any Liens otherwise
permitted under this Section 6.2, Liens existing on the date of this Agreement
as set forth on Schedule 6.2 and any extension or renewal thereof (provided
there are no additional Liens are granted as a result of any extension or
renewal);

 

(b)                                 Liens on fixed or capital assets, acquired,
constructed or improved by Borrower or any Subsidiary; provided that (i) such
Liens secure Indebtedness not exceeding $5,000,000 in the aggregate, (ii) such
Liens and the Indebtedness secured thereby are incurred prior to or within 90
days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed the cost of
acquiring, constructing or improving such fixed or capital assets and (iv) such
Liens shall not apply to any other property or assets of Borrower or any
Subsidiary;

 

(c)                                  Liens for Charges not at the time
delinquent or thereafter payable without penalty or the subject of a Permitted
Contest;

 

(d)                                 statutory or common law Liens arising in the
ordinary course of business (i) in favor of carriers, warehousemen, mechanics
and materialmen, landlords, and other similar Liens imposed by law and (ii) in
connection with worker’s compensation, unemployment compensation and other types
of social security (excluding Liens arising under ERISA) or in connection with
surety bonds, bids, performance bonds and similar obligations (including those
to secure health, safety and environmental obligations) for sums not overdue or
the subject of a Permitted Contest and not involving any deposits or advances or
borrowed money or the deferred purchase price of property or services and, in
each case, for which it maintains adequate reserves;

 

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(e)                                  attachments, appeal bonds, judgments and
other similar Liens arising in connection with court proceedings; provided that
the execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are the subject of a Permitted Contest;

 

(f)                                    easements, rights of way, restrictions,
minor defects or irregularities in title and other similar Liens not interfering
in any material respect with the ordinary conduct of the business of Borrower or
any of its Subsidiaries;

 

(g)                                 Liens, including precautionary UCC financing
statements, arising under or in respect of operating leases, to the extent
limited to the asset so leased;

 

(h)                                 contractual and statutory rights of set-off
arising in the ordinary course of business and relating to deposit accounts in
favor of banks and other depository institutions;

 

(i)                                     Liens for Charges which are not yet due
and payable or claims and unfunded liabilities under ERISA not yet due and
payable or which are subject to Permitted Contests;

 

(j)                                     leases, licenses, subleases or
sublicenses granted to others in the ordinary course of business which do not
(i) interfere in any material respect with the business of Borrower or any of
its Subsidiaries or (ii) secure any Indebtedness;

 

(k)                                  Liens arising out of consignment
arrangements for the sale of goods entered into by Borrower or any of its
Subsidiaries in the ordinary course of business to the extent such Liens do not
attach to any assets other than the goods subject to such consignment
arrangements;

 

(l)                                     Liens in the ordinary course of business
(i) incurred in connection with the purchase or shipping of goods or assets (or
related assets and proceeds thereof), which Liens are in favor of the seller or
supplier of such goods or assets and only attach to such goods or assets, and
(ii) 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 or assets;

 

(m)                               Liens solely on any cash earnest money
deposits made by Borrower or any of its Subsidiaries in connection with any
letter of intent or purchase agreement permitted hereunder; and

 

(n)                                 other deposits to secure the performance of
bids, trade contracts, leases, statutory obligations, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business.

 

6.3.          Contingent Obligations.  Borrower will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create, assume, incur or
suffer to exist any Contingent Obligations, except for:

 

(a)                                  Contingent Obligations arising in respect
of the Loans evidenced by this Agreement and the Loan Documents;

 

(b)                                 Contingent Obligations resulting from
endorsements for collection or deposit in the ordinary course of business;

 

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(c)                                  Contingent Obligations outstanding on the
date of this Agreement as set forth in Schedule 6.3 and any extension or renewal
thereof (provided no greater Contingent Obligations result from any extension or
renewal);

 

(d)                                 Contingent Obligations incurred in the
ordinary course of business with respect to surety and appeal bonds, performance
bonds and other similar obligations not to exceed $5,000,000 in the aggregate at
any time outstanding;

 

(e)                                  Contingent Obligations resulting from any
Guaranty Equivalent provided by Borrower or any of its Subsidiaries with respect
to any Indebtedness permitted under Section 6.1; provided, that any such
Guaranty Equivalent of any such Indebtedness that is subordinated, in any
respect, to all or any portion of the Obligations shall itself be subordinated
to the Obligations on terms no less favorable to Lender as compared to the
applicable subordination terms of such Indebtedness.

 

6.4.          Compliance with ERISA.  Borrower shall not, and shall not suffer
or permit any ERISA Affiliate to:

 

(a)                                  establish, maintain, or operate any Plan
that is not in compliance in all material respects with ERISA, the Code and all
other applicable laws, and the regulations and interpretations thereunder;

 

(b)                                 terminate any Plan subject to Title IV of
ERISA so as to result in any material liability to Borrower;

 

(c)                                  permit to exist any ERISA Event or any
other event or condition, which would reasonably be expected to result in any
material liability to Borrower;

 

(d)                                 enter into any new Plan or modify any
existing Plan so as to increase its obligations thereunder which would
reasonably be expected to have a Material Adverse Effect; or

 

(e)                                  permit the present value of all
nonforfeitable accrued benefits under any Plan (using the actuarial assumptions
utilized by the PBGC upon termination of a Plan) materially to exceed the fair
market value of Plan assets allocable to such benefits, all determined as of the
most recent valuation date for each such Plan.

 

6.5.          Swap Agreements.  Borrower will not, and will not permit any of
its Subsidiaries to, enter into any Swap Agreement, except (a) Swap Agreements
entered into to hedge or mitigate risks to which Borrower or any Subsidiary has
actual exposure (other than those in respect of Capital Stock of Borrower or any
of its Subsidiaries), and (b) Swap Agreements entered into in order to
effectively cap, collar or exchange interest rates (from fixed to floating
rates, from one floating rate to another floating rate or otherwise) with
respect to any interest-bearing liability or investment of Borrower or any
Subsidiary.

 

6.6.          Restricted Payments.  Borrower will not, and will not permit any
of its Subsidiaries to, directly or indirectly, declare, order, pay, make or set
apart any sum for any Restricted Payment; provided that the foregoing shall not
restrict or prohibit:

 

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(a)                                  Borrower from declaring and paying
dividends with respect to its Capital Stock payable solely in additional shares
of its common stock;

 

(b)                                 any Subsidiary from declaring and paying
dividends ratably with respect to its Capital Stock;

 

(c)                                  Borrower from making Restricted Payments
pursuant to and in accordance with stock option plans or other benefit plans for
management or employees of Borrower and its Subsidiaries; and

 

(d)                                 so long as no Event of Default exists
immediately before or immediately after giving effect thereto, Borrower from
making other Restricted Payments.

 

6.7.          Restrictive Agreements.  Borrower will not, and will not permit
any of its Subsidiaries to, directly or indirectly (i) enter into or assume any
agreement (other than the Loan Documents) prohibiting the creation or assumption
of any Lien upon its properties or assets, whether now owned or hereafter
acquired or (ii) create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Subsidiary to:  (a) pay or make Restricted Payments to Borrower or any
Subsidiary; (b) pay any Indebtedness owed to Borrower or any Subsidiary;
(c) make loans or advances to or from Borrower or any Subsidiary; or
(d) transfer any of its property or assets to or from Borrower or any
Subsidiary; provided that (1) the foregoing shall not apply to restrictions and
conditions imposed by law or by the Loan Documents, (2) the foregoing shall not
apply to restrictions and conditions existing on the date hereof and contained
in the documents listed on Schedule 6.7, (3) the foregoing shall not apply to
customary restrictions and conditions contained in agreements relating to the
sale of a Subsidiary pending such sale, provided such restrictions and
conditions apply only to the Subsidiary that is to be sold and such sale is
permitted hereunder, (4) the foregoing shall not apply to restrictions or
conditions imposed by any agreement relating to secured Indebtedness permitted
by this Agreement if such restrictions or conditions apply only to the property
or assets securing such Indebtedness and (5) the foregoing shall not apply to
customary provisions in leases and other contracts restricting the assignment
thereof.

 

6.8.          Consolidations, Mergers and Sales of Assets.  Borrower will not,
and will not permit any of its Subsidiaries to, directly or indirectly
(a) consolidate or merge with or into any other Person, except that, if at the
time thereof and immediately after giving effect thereto no Event of Default
shall have occurred and be continuing (i) any Subsidiary may merge into Borrower
in a transaction in which Borrower is the surviving corporation, (ii) any Person
may merge into any Subsidiary in a transaction in which the surviving entity is
a Subsidiary, and (iii) any Subsidiary may liquidate or dissolve if Borrower
determines in good faith that such liquidation or dissolution is in the best
interests of Borrower and is not materially disadvantageous to Lender; and
(b) convey, sell, lease, assign, license or otherwise transfer, directly or
indirectly, any of its assets, other than, (i) sales of inventory or products in
the ordinary course of business, (ii) dispositions of Cash Equivalents,
(iii) dispositions of property for cash that Borrower or any Subsidiary
determines in good faith is worn out or obsolete, (iv) dispositions of assets
related to product lines that Borrower desires to discontinue directly
manufacturing and (v) dispositions of property by any Subsidiary to Borrower or
any other Subsidiary by any Subsidiary.

 

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6.9.                              Purchase of Assets, Investments.  Borrower
will not, and will not permit any of its Subsidiaries to, directly or indirectly
(i) acquire any assets other than in the ordinary course of business; (ii) form
or acquire any Subsidiary; (iii) engage in any joint venture or partnership with
any other Person or (iv) acquire or own any Investment in any Person other than:

 

(a)                                  Investments existing on the date of this
Agreement and set forth in Schedule 6.9 and any extension or renewal thereof
(provided there is no increase in Investments as a result of any extension or
renewal);

 

(b)                                 loans or advances, including Investments for
the recapitalization of Subsidiaries, made by Borrower to any Subsidiary and
made by any Subsidiary to Borrower or any other Subsidiary;

 

(c)                                  Cash Equivalents;

 

(d)                                 Investments in new Wholly-Owned Subsidiaries
of Borrower that own material operating assets, so long as Lender has consented
in writing to the formation or acquisition of such Subsidiary;

 

(e)                                  extensions of trade credit in the ordinary
course of business;

 

(f)                                    Investments in the form of Contingent
Obligations permitted under Section 6.3;

 

(g)                                 loans to officers and employees in an
aggregate principal amount not to exceed $1,000,000 at any time outstanding;

 

(h)                                 Swap Agreements to the extent permitted by
Section 6.5;

 

(i)                                     other investments (valued as of the time
made) not at any time exceeding 20% of Consolidated Net Worth determined as of
the most recent Fiscal Quarter for which financial statements have been
delivered pursuant to Section 5.2(b).

 

6.10.                        Transactions with Affiliates.  Borrower will not,
and will not permit any of its Subsidiaries to sell, lease or otherwise transfer
any property or assets from, or otherwise engage in any other transactions with,
any of its Affiliates, except:

 

(a)                                  in the ordinary course of business at
prices and on terms and conditions not less favorable to Borrower or such
Subsidiary than could be obtained on an arm’s-length basis from unrelated third
parties;

 

(b)                                 transactions between or among Borrower and
its Wholly-Owned Subsidiaries;

 

(c)                                  customary fees paid to non-officer
directors of Borrower and its Subsidiaries;

 

(d)                                 the issuance of shares of Borrower’s or its
Subsidiaries Capital Stock as otherwise permitted by this Agreement;

 

(e)                                  the entering into, and the making of
payments under, employment agreements, employee benefit plans, stock option
plans, indemnification provisions and other

 

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similar compensatory arrangements with officers, employees and directors of
Borrower and its Subsidiaries in the ordinary course of business consistent with
past practices;

 

(f)                                    the payment of reasonable management
fees, licensing fees and similar fees to Borrower or to any Subsidiary by any
Subsidiary; and

 

(g)                                 any Restricted Payment permitted by
Section 6.6.

 

6.11.                        Modification of Organizational Documents.  Borrower
will not, and will not permit any of its Subsidiaries to, directly or indirectly
amend or otherwise modify any Organizational Documents of such Person, except
for (i) such amendments or other modifications required by law, and (ii) such
amendments or other modifications which do not adversely impact Borrower, its
Subsidiaries or Lender.

 

7.  CLOSING CONDITIONS

 

The obligations of Lender to make the initial Loans shall be subject to the
satisfaction (as determined by Lender) of the following conditions precedent:

 

7.1.                              Loan Documents.  Lender shall have received a
fully executed copy of each of the following documents which shall have been
duly executed and delivered by the respective parties thereto, shall be in full
force and effect and shall be in form and substance satisfactory to Lender:

 

(a)                                  this Agreement;

 

(b)                                 the Revolving Note; and

 

(c)                                  such other agreements and documents as
Lender may reasonably require.

 

7.2.                              Certified Copies of Organizational Documents. 
Lender shall have received from Borrower a copy, certified by a duly authorized
officer of such Borrower to be true and complete on the Closing Date, of each of
its Organizational Documents as in effect on such date of certification and, in
the case of the certificate of incorporation, such document shall have been
certified as of a recent date by the secretary of its state of incorporation.

 

7.3.                              Corporate or Other Action.  All corporate (or
other) action necessary for the valid execution, delivery and performance by
Borrower of this Agreement and the other Loan Documents to which such party is
or is to become a party shall have been duly and effectively taken, and evidence
thereof satisfactory to Lender, certified by a Responsible Officer shall have
been provided to Lender.

 

7.4.                              Incumbency Certificate.  Lender shall have
received from Borrower, an incumbency certificate in the form attached hereto as
Exhibit C, dated as of the Closing Date, signed by a duly authorized officer of
Borrower and giving the name and bearing a specimen signature of each individual
who shall be authorized: (a) to sign, in the name and on behalf of each such
Person, each of the Loan Documents to which such Person is or is to become a
party; (b) to make Loan requests and conversion requests; and (c) to give
notices and to take other action on its behalf under the Loan Documents (the
“Incumbency Certificate”).

 

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7.5.                              Closing Certificate.  Lender shall have
received a certificate of a Responsible Officer dated as of the Closing Date
certifying (a) that Borrower and its Subsidiaries, taken as a whole, are Solvent
and will be Solvent following the consummation of the transactions contemplated
herein, (b) that each of the conditions set forth in this Article 7 have been
satisfied, and (c) such other matters as Lender may request, in the form
attached hereto as Exhibit D (the “Closing Certificate”).

 

7.6.                              No Litigation.  There shall be no action,
suit, or proceeding pending against, or threatened against or affecting,
Borrower or any of its Subsidiaries before any court or arbitrator or any
Governmental Authority in which an adverse decision would reasonably be expected
to have a Material Adverse Effect or which in any manner purports to affect or
pertain to any of the Loan Documents, or any of the transactions contemplated
hereby or thereby.

 

7.7.                              Consents and Approvals.  Lender shall have
received evidence that all material governmental and third-party approvals
necessary or advisable in connection with the credit facilities contemplated
hereby and the continuing operations of the Borrower shall have been obtained
(or, to the extent consented to in writing by Lender, waived) and shall be in
full force and effect, and all applicable waiting periods shall have expired
without any action being taken or threatened by any competent authority that
would restrain, prevent or otherwise impose materially adverse conditions on
Borrowers and its Subsidiaries taken as a whole or the credit facilities
contemplated hereby.

 

7.8.                              Proceedings and Documents.  All proceedings in
connection with the transactions contemplated by this Credit Agreement, the
other Loan Documents and all other documents incidental thereto, shall be
satisfactory in substance and in form to Lender and Lender’s counsel, and Lender
and such counsel shall have received all information and such counterpart
originals or certified or other copies of such documents as Lender may
reasonably request.

 

7.9.                              Certificates of Good Standing.  Lender shall
have received certificates of good standing, existence or its equivalent with
respect to Borrower certified as of a recent date by the appropriate
Governmental Authorities of the state or other jurisdiction of organization and
each other jurisdiction in which the failure to so qualify and be in good
standing could have or be reasonably expected to have a Material Adverse Effect.

 

7.10.                        Initial Loan Request.  Lender shall have received
an appropriate loan request, duly executed and completed, by the time specified
in Section 2.2 in the form attached hereto as Exhibit B.

 

8.  CONDITIONS TO ALL BORROWINGS

 

The obligations of Lender to make any Loan whether on or after the Closing Date,
shall also be subject to the satisfaction of the following conditions precedent:

 

8.1.                              Representations True; No Event of Default. 
Each of the representations and warranties of Borrower and any of its
Subsidiaries contained in this Agreement, the Loan Documents or in any document
or instrument delivered pursuant to or in connection with this Agreement shall
be true as of the date as of which they were made and shall also be true and
deemed remade as such at and as of the time of the making of such Loan with the
same effect as

 

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if made at and as of that time (except to the extent that such representations
and warranties relate expressly to an earlier date) and no Event of Default or
Unmatured Default shall have occurred and be continuing.

 

8.2.                              No Legal Impediment.  No change shall have
occurred in any law or regulations thereunder or interpretations thereof that
would make it illegal for Lender to make such Loan.

 

8.3.                              No Material Adverse Effect .  Since the date
of the most recent audited financial statements of Borrower, there shall have
been no event or condition which has had or could reasonably be expected to have
a Material Adverse Effect on Borrower and its Subsidiaries taken as a whole.

 

9.  DEFAULT

 

9.1.                              Events of Default.  The occurrence of any one
of the following events shall constitute a default (“Event of Default”) under
this Agreement:

 

(a)                                  Borrower shall fail to pay when due any
principal of any Revolving Loan;

 

(b)                                 Borrower shall fail to pay any interest,
Cost or any other amount (other than an amount referred to in Section 9.1(a))
payable under this Agreement, when and as the same shall become due and payable,
and such failure shall continue unremedied for a period of five Business Days;

 

(c)                                  Borrower shall fail to observe or perform
any covenant contained in Article 5 or Article 6;

 

(d)                                 Borrower or any of its Subsidiaries defaults
in the performance of or compliance with any term contained in this Agreement
(other than occurrences described in other provisions of this Section 9.1 for
which a different grace or cure period is specified or which constitute
immediate Events of Default) and such default is not remedied or waived within
30 calendar days after the earlier of (i) receipt by Borrower of notice from
Lender of such default or (ii) Knowledge of Borrower of such default;

 

(e)                                  any representation or warranty on the part
of Borrower or any of its Subsidiaries contained in this Agreement or the Loan
Documents, or any document, instrument or certificate delivered pursuant hereto
or thereto shall have been incorrect in any material respect when made or deemed
made;

 

(f)                                    any proceeding shall be instituted
against Borrower or any of its Subsidiaries seeking to adjudicate it bankrupt or
insolvent, or seeking dissolution, liquidation, winding up, reorganization,
protection, relief of debtors, or seeking the entry of an order for relief or
the appointment of a receiver, trustee, custodian or other similar official for
Borrower or any of its Subsidiaries or for any substantial part of its property,
and either such proceeding shall remain undismissed or unstayed for a period of
60 days or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against Borrower or any of its
Subsidiaries or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property) shall
occur;

 

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(g)                                 a petition under any section or chapter of
Bankruptcy Code or any similar law or regulation shall be filed by Borrower or
any of its Subsidiaries or Borrower or any of its Subsidiaries shall make an
assignment for the benefit of its creditors or if any case or proceeding is
filed by Borrower or any of its Subsidiaries for its dissolution or liquidation
and such injunction, restraint or petition is not dismissed or stayed within 60
days after the entry or filing thereof;

 

(h)                                 Borrower or any of its Subsidiaries is
enjoined, restrained or in any way prevented by court order from conducting all
or any material part of its business affairs;

 

(i)                                     one or more judgments or decrees shall
be entered against Borrower or any of its Subsidiaries, involving, individually,
or in the aggregate, a liability of $10,000,000 or more and all such judgments
or decrees shall not have been vacated, discharged or stayed pending appeal
within 60 days from the entry thereof;

 

(j)                                     an ERISA Event shall have occurred that,
in the opinion of counsel to Lender, when taken together with all other ERISA
Events that have occurred, could reasonably be expected to result in liability
of Borrower and its Subsidiaries in an aggregate amount exceeding (i) $5,000,000
in any year or (ii) $10,000,000 for all periods (in each case, exclusive of
amounts covered by insurance where the applicable insurer has acknowledged
liability); or

 

(k)                                  with respect to any Indebtedness (other
than the Revolving Loans) in excess of $1,000,000 any failure to make any
payment (whether of principal or interest) or other event shall occur or
condition shall exist, the effect of which failure, event or condition is to
cause, the holder or beneficiary of such Indebtedness to cause, with the giving
of notice if required, such Indebtedness to be accelerated and become
immediately due and payable.

 

9.2.                              Acceleration and Suspension or Termination of
Commitments.  Upon the occurrence and during the continuance of an Event of
Default, Lender may (i) by notice to Borrower suspend or terminate the Revolving
Loan Commitments, in whole or in part and/or (ii) by notice to Borrower declare
the Obligations to be, and the Obligations shall thereupon become, immediately
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by Borrower and Borrower will pay the same;
provided that in the case of any of the Events of Default specified in any of
Sections 9.1(f), 9.1(g), 9.1(h) or 9.1(i) above, without any notice to Borrower
or any other act by Lender, the Revolving Loan Commitments shall thereupon
terminate and all of the Obligations shall become immediately due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by Borrower and Borrower will pay the same.

 

9.3.                              Default Rate of Interest and Suspension of
LIBOR Loans.  At the election of Lender, after the occurrence of an Event of
Default and for so long as it continues, the Loans and other Obligations shall
bear interest at the Default Rate.  Furthermore, at the election of Lender
during any period in which any Event of Default is continuing (x) as the
Interest Periods for LIBOR Loans then in effect expire, such Loans shall be
converted into Base Rate Loans and (y) the LIBOR Loan election will not be
available to Borrower.

 

9.4.                              Setoff Rights.  During the continuance of any
Event of Default, Lender is hereby authorized by Borrower at any time or from
time to time, with reasonably prompt subsequent notice to Borrower (any prior or
contemporaneous notice being hereby expressly waived) to set

 

35

--------------------------------------------------------------------------------

 

off and to appropriate and to apply any and all property at any time held or
owing by Lender to or for the credit or for the account of Borrower or any of
its Subsidiaries, against and on account of any of the Obligations then due and
payable.  Borrower agrees, to the fullest extent permitted by law, that Lender
may exercise its right to set off with respect to the Obligations as provided in
this Section 9.4.

 

10.  ASSIGNABILITY.

 

10.1.                        Assignments by Borrower.  Borrower shall not have
the right to assign this Agreement or any interest therein except with the prior
written consent of Lender.

 

10.2.                        Assignments by Lender.  Lender may assign to one or
more banks or other financial institutions all or a portion of its rights and
obligations under this Agreement and the Loan Documents.

 

11.  GENERAL PROVISIONS

 

11.1.                        Modification.

 

(a)                                  Neither this Agreement nor any other Loan
Document shall be amended, modified or supplemented, or any provision waived,
without the written agreement of Borrower and Lender at the time of such
amendment, modification, supplement or waiver, and each such amendment,
modification, supplement or waiver shall be effective only in the specific
instance and for the specific purpose for which given.

 

(b)                                 Lender shall have the absolute right to
require full and complete performance of Borrower’s covenants and obligations
and strict compliance with the provisions of this Agreement and the other Loan
Documents by Borrower.  Failure by Lender to insist upon full and prompt
performance of any provision of this Agreement or any other Loan Documents, or
failure by Lender to take action in the event of any breach of any such
provision or Event of Default, shall not constitute a waiver of any rights of
Lender or any course of conduct, and Lender may at any time thereafter exercise
all rights specified herein, in any other Loan Document or provided by
applicable Law with respect to such breach or Event of Default.  If Lender
elects to make any Advance hereunder at any time that Borrower has not satisfied
all conditions precedent thereto, or if Lender fails to insist on strict
performance of any covenant or condition herein, Lender shall make such election
or determination, in Lender’s exclusive discretion.  Unless otherwise
specifically provided herein, all consents, to be granted herein, shall be
granted or withheld, or continued to be granted or withheld, in Lender’s
exclusive discretion.  Lender shall have no duty to Borrower to exercise any
judgment or discretion under the terms of this Agreement or any other Loan
Document for the benefit of Borrower.  Borrower hereby expressly acknowledges
that failure to require strict compliance by such Borrower with the provisions
of this Agreement or any other Loan Document shall not constitute a waiver by
Lender or establish a course of conduct, and that Lender shall not be deemed to
have waived any right to insist on strict compliance with all provisions
thereafter. Borrower hereby expressly waives any right to assert that it
detrimentally relied upon such continued waiver or that Lender acted in bad
faith in insisting upon strict compliance by such Borrower with the provisions
of this Agreement or in exercising any right or remedy expressly granted to
Lender hereunder.  Receipt by Lender of any instrument or document shall not
constitute or be deemed to be an approval thereof.

 

36

--------------------------------------------------------------------------------

 

11.2.                        Severability.  If any provision (in whole or in
part) of this Agreement or any other Loan Document or the application thereof to
any Person or circumstance is held invalid or unenforceable, then such provision
shall be deemed modified, restricted, or reformulated to the extent and in the
manner necessary to render the same valid and enforceable, or shall be deemed
excised from this Agreement and/or such Loan Document, as the case may require,
and this Agreement and/or such Loan Document shall be construed and enforced to
the maximum extent permitted by law, as if such provision had been originally
incorporated herein as so modified, restricted, or reformulated or as if such
provision had not been originally incorporated herein, as the case may be. 
Borrower and Lender further agree to seek a lawful substitute for any provision
found to be unlawful.  If such modification, restriction or reformulation is not
reasonably possible, the remainder of this Agreement and other the Loan
Documents and the application of such provision to other Persons or
circumstances will not be affected thereby and the provisions of this Agreement
and any other Loan Document shall be severable in any such instance.

 

11.3.                        Successors and Assigns.  This Agreement and the
other Loan Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Lender, provided that this Agreement, the
other Loan Documents and no interest or right hereunder or thereunder may be
assigned by Borrower without prior written consent of Lender which may be
withheld in Lender’s sole and exclusive discretion.

 

11.4.                        Controlling Provisions.  Except as otherwise
provided in this Agreement and except as otherwise provided in the Loan
Documents by specific reference to the applicable provision of this Agreement,
if any provision contained in this Agreement is in conflict with, or
inconsistent with, any provision in the Loan Documents, Lender, exercising
reasonable business judgment based on current market practice, shall have the
right to elect which provision shall govern and control.

 

11.5.                        Termination.  Except for the obligations set forth
herein and as may be expressly provided in any other Loan Document, this
Agreement and all of the covenants, agreements and obligations of Borrower set
forth herein and in the other Loan Documents and the liens and security
interests granted Lender pursuant hereto and the Loan Documents shall
automatically terminate when all accrued but unpaid Obligations (other than
contingent indemnification obligations to the extent no claim has been made)
hereunder have been paid in full and either (a) the term hereof has expired, or
(b) the Loans have been reduced to zero and has been terminated. In addition,
Lender shall promptly take, at the sole reasonable cost and expense of Borrower,
such other actions, and shall execute and/or file such documents, as Borrower
may reasonably request from time to time to evidence the termination of the
liens granted hereunder and the payment in full of the Obligations, including,
without limitation, cancellation of the Revolving Note.

 

11.6.                        Liability Prior to Termination.  Except to the
extent provided to the contrary in this Agreement and in the other Loan
Documents, no termination or cancellation (regardless of cause or procedure) of
this Agreement or the other Loan Documents shall in any way affect or impair the
powers, obligations, duties, rights and liabilities of Borrower or Lender in any
way or respect relating to any transaction or event occurring prior to such
termination or cancellation with respect to any of the undertakings, agreements,
covenants, warranties and representations of Borrower or Lender contained in
this Agreement or the other Loan Documents.

 

37

--------------------------------------------------------------------------------

 

11.7.                        Waiver of Notice Omitted.  Except as otherwise
specifically provided in this Agreement, Borrower waives any and all notice or
demand which such Borrower might be entitled to receive with respect to this
Agreement or the other Loan Documents by virtue of any applicable statute or
law, and waives presentment, demand and protest and notice of presentment,
protest, default, dishonor, non-payment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Lender on which such Borrower may in any way be liable and hereby
ratifies and confirms whatever Lender may do in this regard.

 

11.8.                        Designated Person.  Until Lender is notified by
Borrower to the contrary in writing by registered or certified mail directed to
Lender’s principal place of business, the signature upon this Agreement or upon
any of the other Loan Documents of any Responsible Officer or of any other
Person designated in writing to Lender by any of the foregoing shall bind
Borrower and be deemed to be the duly authorized act of Borrower.

 

11.9.                        Indemnification.  Borrower shall indemnify, defend,
and hold Lender, harmless from and against any and all losses, Costs,
liabilities, damages, and expenses (including other expenses incident thereto)
of every kind, nature and description, that result from or arise out of (a) the
breach of any representation or warranty of Borrower or any of its Subsidiaries
set forth in this Agreement or in any certificate, schedule, or other instrument
by Borrower or any of its Subsidiaries pursuant hereto, (b) the breach of any of
the covenants of Borrower or any of its Subsidiaries contained in or arising out
of this Agreement or the transactions contemplated hereby, or (c) any third
party claims relating to the conduct of Borrower or any of its Subsidiaries’
business (except to the extent that any of the foregoing are found by a final
and nonappealable decision of a court of competent jurisdiction to have resulted
from Lender’s own gross negligence or willful misconduct).

 

11.10.                  No Third Party Beneficiaries.  This Agreement and the
other Loan Documents are solely for the benefit of Lender, Borrower and their
respective permitted successors and assigns. Nothing contained herein or therein
shall be deemed to confer upon any other Person any right to insist on or to
enforce the performance or observance of any of the obligations, terms or
covenants contained herein or therein.  All conditions to the obligations of
Lender to make Loans are imposed solely and exclusively for the benefit of
Lender and their respective successors and assigns and no other Person shall
have standing to require satisfaction of such conditions in accordance with
their terms and no other Persons shall under any circumstances be deemed to be a
beneficiary of such conditions.  No term in this Agreement or in the Loan
Documents and no course of dealing between the parties, nor any action taken or
omitted to be taken by Lender or by Borrower shall be deemed to create any
relationship of agency, partnership or joint venture or any fiduciary duty by
Lender to Borrower or any other Person.  All rights and remedies granted to
Lender in the Loan Documents shall be in addition to and not in limitation of
any rights and remedies to which it is entitled in equity, at law or by statute,
and the invalidity of any right or remedy herein provided by reason of its
conflict with applicable Law or statute shall not affect any other valid right
or remedy afforded to Lender.  No waiver of any Event of Default or of any
default in the performance of any covenant contained in this Agreement or any
Loan Document shall at any time thereafter be held to be a waiver of any rights
of Lender hereunder or under any Loan Document, nor shall any waiver of a prior
Event of Default or default operate to waive any subsequent Event of Default or
default.  All remedies provided for herein and in any Loan

 

38

--------------------------------------------------------------------------------

 

Document, at law or in equity are cumulative and may, at the election of Lender,
be exercised alternatively, successively, or concurrently.  No act of Lender
shall be construed as an election to proceed under any one provision herein or
in any other Loan Document to the exclusion of any other provision.  Borrower
agrees that Lender shall not have any liability to Borrower (whether sounding in
tort, contract or otherwise) for losses suffered by Borrower in connection with,
arising out of, or in any way related to, the transactions contemplated and the
relationship established by the Loan Documents, or any act, omission or event
occurring in connection therewith, unless it is determined in a final
non-appealable judgment by a court of competent jurisdiction that such losses
resulted from the gross negligence or willful misconduct of the party from which
recovery is sought.  Lender shall not have any liability with respect to, and
Borrower hereby waives, releases and agrees not to sue for, any special,
indirect, consequential or punitive damages suffered by such Borrower in
connection with, arising out of, or in any way related to the Loan Documents or
the transactions contemplated thereby.

 

11.11.                  Acceptance by Lender.  This Agreement and the other Loan
Documents are submitted by Borrower to Lender (for Lender’s acceptance or
rejection thereof) at Lender’s principal place of business as an offer by
Borrower to borrow monies from Lender now and from time to time hereafter and
shall not be binding upon Lender or become effective until and unless accepted
by Lender, in writing, at said place of business.  If so accepted by Lender,
this Agreement and the other Loan Documents shall be deemed to have been made at
said place of business.

 

11.12.                  Prior Agreements; Interpretation.  Except as otherwise
provided herein, this Agreement and the other Loan Documents supersede in their
entirety any other agreement or understanding between Lender and Borrower with
respect to loans and advances made by Lender and all commitments of Lender in
connection therewith.

 

11.13.                  Notice.  Any and all notices given in connection with
this Agreement shall be deemed adequately given only if in writing and addressed
to the party for whom such notices are intended at the address set forth below. 
All notices shall be sent by personal delivery, FedEx or other overnight
messenger service, first class registered or certified mail, postage prepaid,
return receipt requested or facsimile machine (“FAX”).  A written notice shall
be deemed to have been given to the recipient party on the earlier of (a) the
date it shall be delivered to the address required by this Agreement; (b) the
date delivery shall have been refused at the address required by this Agreement;
(c) the date as of which the postal or delivery service shall have indicated
such notice to be undeliverable at the address required by this Agreement; or
(d) if by FAX, on the next Business Day.  Any and all notices referred to in
this Agreement, or which either party desires to give to the other, shall be
addressed as follows:

 

If to Borrower:

Sauer-Danfoss Inc.

 

2800 East 13th Street

 

Ames, IA 50010

 

Attn: Vice President and Chief Accounting Officer

 

FAX: +515-956-5364

 

 

with a copy to:

Sauer-Danfoss Inc.

 

Krokamp 35

 

D-24539 Neumünster

 

Germany

 

Attn: Chief Financial Officer

 

FAX: +49 4321 990 415

 

39

--------------------------------------------------------------------------------

 

If to Lender:

Danfoss A/S

 

Nordborgvej 81, 6430 Nordborg

 

Denmark

 

Attn:  General Counsel

 

FAX:  +45 74 88 62 35

 

 

with a copy to:

Reed Smith LLP

 

599 Lexington Avenue

 

22nd Floor

 

New York, NY 10022

 

Attn:  Uri Doron

 

FAX:  (212) 521-5450

 

The above addresses may be changed by notice of such change, mailed as provided
herein, to the last address designated.

 

11.14.                  Section Titles, etc.  The Section titles and table of
contents, if any, contained in this Agreement are and shall be without
substantive meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.  All references herein to Section,
paragraphs, clauses and other subdivisions refer to the corresponding Sections,
paragraphs, clauses and other subdivisions of this Agreement.  All Exhibits and
Schedules which are referred to herein or attached hereto are hereby
incorporated by reference.

 

11.15.                  Waiver of Claims.  Borrower and its Subsidiaries hereby
acknowledges, agrees and affirms that it possesses no claims, defenses, offsets,
recoupment or counterclaims of any kind or nature against or with respect to the
enforcement of this Agreement, the Revolving Note or any of the other Loan
Documents and any amendments thereto (collectively, the “Claims”), nor does
Borrower or any Subsidiary of Borrower now have knowledge of any facts that
would or might give rise to any Claims.  If facts now exist which would or could
give rise to any Claim against or with respect to the enforcement of this
Agreement, the Revolving Note and/or any other Loan Documents, as amended by the
amendments thereto.  Borrower and its Subsidiaries hereby unconditionally,
irrevocably and unequivocally waives and fully releases any and all such Claims
as if such Claims were the subject of a lawsuit, adjudicated to final judgment
from which no appeal could be taken and therein dismissed with prejudice.

 

11.16.                  Waiver by Borrower.  EXCEPT AS OTHERWISE PROVIDED FOR IN
THIS AGREEMENT OR REQUIRED BY LAW, BORROWER WAIVES PRESENTMENT, DEMAND AND
PROTEST, NOTICE OF PROTEST, NOTICE OF PRESENTMENT, DEFAULT, NON-PAYMENT,
MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL
COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL
PAPER AND GUARANTIES AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN

 

40

--------------------------------------------------------------------------------

 

ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN
THIS REGARD.

 

11.17.                  Governing Law.  THIS AGREEMENT HAS BEEN DELIVERED FOR
ACCEPTANCE BY LENDER IN NEW YORK, NEW YORK AND SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF
LAW PROVISIONS) OF THE STATE OF NEW YORK.  BORROWER HEREBY (A) IRREVOCABLY
SUBMITS, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED IN NEW YORK, NEW YORK, OVER ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS
AGREEMENT; (B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT SUCH BORROWER
MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT; (C) AGREES THAT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY
OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW; AND (D) TO THE EXTENT PERMITTED BY APPLICABLE LAW, AGREES NOT TO INSTITUTE
ANY LEGAL ACTION OR PROCEEDING AGAINST LENDER OR ANY OF ITS DIRECTORS, OFFICERS,
EMPLOYEES, LENDERS OR PROPERTY, CONCERNING ANY MATTER ARISING OUT OF OR RELATING
TO THIS AGREEMENT IN ANY COURT OTHER THAN ONE LOCATED IN NEW YORK COUNTY, NEW
YORK.  NOTHING IN THIS SECTION SHALL AFFECT OR IMPAIR LENDER’S RIGHT TO SERVE
LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW OR LENDER’S RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST BORROWER’S PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.

 

11.18.                  Representation by Counsel.  Borrower hereby represents
that it has been represented by competent counsel of its choice in the
negotiation and execution of this Agreement and the other Loan Documents; that
it has read and fully understood the terms hereof; such Borrower and its counsel
have been afforded an opportunity to review, negotiate and modify the terms of
this Agreement and the other Loan Documents and that such Borrower intends to be
bound hereby.  In accordance with the foregoing, the general rule of
construction to the effect that any ambiguities in a contract are to be resolved
against the party drafting the contract shall not be employed in the
construction and interpretation of this Agreement and the other Loan Documents.

 

11.19.                  Waiver of Trial by Jury.  TO THE EXTENT PERMITTED BY
LAW, BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS
OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF EITHER PARTY IN CONNECTION HEREWITH.  BORROWER HEREBY
EXPRESSLY ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR LENDER TO
MAKE THE LOANS.

 

41

--------------------------------------------------------------------------------

 

11.20.                  Counterparts, Fax, PDF.  This Agreement may be executed
in counterparts, and all said counterparts when taken together shall constitute
one and the same Agreement and the parties hereto are hereby authorized to
collate such counterparts into one original.  For purposes of negotiating and
finalizing this Agreement (including any subsequent amendments thereto), any
signed document transmitted by FAX or in portable document format (“PDF”) shall
be treated in all manner and respects as an original document.  The signature of
any party by FAX or PDF shall be considered for these purposes as an original
signature.  Any such FAX or PDF document shall be considered to have the same
binding legal effect as an original document.  Upon request, an original of such
FAX or PDF document shall be mailed by first class U.S. mail or personally
delivered to the recipient.  At the request of either party, any FAX of PDF
document subject to this Agreement shall be re-executed by both parties in an
original form.  The undersigned parties hereby agree that neither shall raise
the use of the FAX or PDF or the fact that any signature or document was
transmitted or communicated through the use of a FAX or PDF as a defense to the
formation of this Agreement.

 

The remainder of this page is intentionally left blank.  Signature page follows.

 

42

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, this Credit Agreement has been duly executed as of the day
and year specified at the beginning hereof.

 

 

 

BORROWER:

 

 

 

SAUER-DANFOSS INC.

 

 

 

 

 

By:

/s/ Jesper V. Christensen

 

 

Name:  Jesper V. Christensen

 

 

Title:  Executive Vice President and Chief Financial Officer

 

 

 

 

 

LENDER:

 

 

 

DANFOSS A/S

 

 

 

 

 

By:

/s/ Niels Christiansen

 

 

Name: 

 

 

Title:

 

--------------------------------------------------------------------------------

 

Schedule 4.11(b)

 

Subsidiaries

 

--------------------------------------------------------------------------------

 

Schedule 4.17

 

Foreign Pension Plans

 

--------------------------------------------------------------------------------

 

Schedule 4.17(a)

 

Listing of Plans With Accumulated Benefit Obligations

In Excess of Plan Assets By $10,000,000 Or More

As Of December 31, 2008

 

FUNDED PLANS

 

 

 

Accumulated

 

 

 

ABO In

 

 

 

Benefit

 

Plan

 

Excess Of

 

Name Of Plan

 

Obligation

 

Assets

 

Plan Assets

 

 

 

 

 

 

 

 

 

Sauer-Danfoss Employees’
Retirement Plan

 

$

85,502,029

 

$

56,289,221

 

$

29,212,808

 

 

 

 

 

 

 

 

 

Factory Pension Plan of
Sauer-Danfoss (LaSalle) et.al.

 

$

33,650,750

 

$

19,213,104

 

$

14,437,646

 

 

UNFUNDED PLANS

 

 

 

Accumulated

 

 

 

ABO In

 

 

 

Benefit

 

Plan

 

Excess Of

 

Name Of Plan

 

Obligation

 

Assets

 

Plan Assets

 

 

 

 

 

 

 

 

 

Sauer-Danfoss Post
Retirement Health Care

 

$

41,060,401

 

N/A

 

$

41,060,401

 

 

 

 

 

 

 

 

 

Sauer-Danfoss Supplemental
Retirement Plan – Final Avg Pay

 

$

1,894,357

 

N/A

 

$

1,894,357

 

 

 

 

 

 

 

 

 

Sauer-Danfoss Supplemental
Executive Savings Plan

 

$

50,556

 

N/A

 

$

50,556

 

 

 

 

 

 

 

 

 

Sauer-Danfoss Deferred
Compensation Plan – Cash

 

$

2,487,629

 

N/A

 

$

2,487,629

 

 

 

 

 

 

 

 

 

Sauer-Danfoss Deferred
Compensation Plan – LTIP

 

$

1,180,454

 

N/A

 

$

1,180,454

 

 

 

 

 

 

 

 

 

Sauer-Danfoss Deferred
LTIP Dividend Equivalents

 

$

223,958

 

N/A

 

$

223,958

 

 

 

 

 

 

 

 

 

Sauer-Danfoss Deferred
LTIP Tax Basis Protection

 

$

487,201

 

N/A

 

$

487,201

 

 

 

 

 

 

 

 

 

Sauer-Danfoss Accrued
Separation Pay - CEO

 

$

1,852,500

 

N/A

 

$

1,852,500

 

 

 

 

 

 

 

 

 

Total Unfunded Plans For Borrower & ERISA Affiliates

 

 

 

 

 

$

49,237,056

 

 

43

--------------------------------------------------------------------------------

 

Schedule 4.17(b)

 

Listing of Foreign Pension Plans With

Projected Benefit Obligations in Excess of Plan Assets

As Of December 31, 2008

 

FOREIGN PENSION PLANS

 

 

 

 

 

Projected

 

 

 

PBO In

 

 

 

 

 

Benefit

 

Plan

 

Excess Of

 

Location & Plan

 

Currency

 

Obligation

 

Assets

 

Plan Assets

 

 

 

 

 

 

 

 

 

 

 

Germany Pension

 

Euro

 

32,492,000

 

11,895,000

 

20,597,000

 

 

 

 

 

 

 

 

 

 

 

Norway Pension

 

NOK

 

16,846,000

 

9,715,000

 

7,131,000

 

 

 

 

 

 

 

 

 

 

 

France Pension

 

Euro

 

475,000

 

None

 

475,000

 

 

 

 

 

 

 

 

 

 

 

Denmark Emp Bonds

 

DKK

 

6,100,000

 

None

 

6,100,000

 

 

--------------------------------------------------------------------------------

 

Schedule 6.1

 

Existing Indebtedness

 

--------------------------------------------------------------------------------

 

Schedule 6.2

 

Existing Liens

 

--------------------------------------------------------------------------------

 

Schedule 6.3

 

Contingent Obligations

 

--------------------------------------------------------------------------------

 

Schedule 6.3

 

Contingent Obligations

 

Type

 

 

 

Guarantor

 

Guarantee

 

Beneficiary

 

Amount

 

bank guarantee

 

rent guarantee

 

Commerzbank

 

Sauer-Danfoss GmbH & Co. OHG

 

Heide Reisinger

 

EUR

 

7.200,00

 

bank guarantee

 

standby LC

 

Danske Bank

 

Sauer-Danfoss Holding ApS

 

HSBC India

 

INR

 

30.000.000,00

 

bank guarantee

 

standby LC

 

Danske Bank

 

Sauer-Danfoss Holding ApS

 

HSBC India

 

INR

 

155.000.000,00

 

bank guarantee

 

rent guarantee

 

Deutsche Bank

 

Sauer-Danfoss (Bologna) S.p.A.

 

Silvia Canulli Via Capello 2 40065 Pianoro

 

EUR

 

7.440,00

 

bank guarantee

 

rent guarantee

 

Deutsche Bank

 

Sauer-Danfoss BVBA

 

Georges Jacobs Zagerijstraat 21 B - 3700 Tongeren

 

EUR

 

4.800,00

 

bank guarantee

 

custom guarantee

 

Tatra Bank

 

Sauer-Danfoss a.s.

 

Slovak customs office

 

SKK

 

3.500.000,00

 

bank guarantee

 

custom guarantee

 

Commerzbank

 

Sauer-Danfoss GmbH & Co. OHG

 

Hauptzollamt Darmstadt

 

EUR

 

9.600,00

 

bank guarantee

 

custom guarantee

 

Commerzbank

 

Sauer-Danfoss GmbH & Co. OHG

 

Hauptzollamt Darmstadt

 

EUR

 

100.000,00

 

bank guarantee

 

custom guarantee

 

Commerzbank

 

Sauer-Danfoss GmbH & Co. OHG

 

Hauptzollamt Darmstadt

 

EUR

 

15.338,76

 

bank guarantee

 

custom guarantee

 

Commerzbank

 

Sauer-Danfoss GmbH & Co. OHG

 

Hauptzollamt Darmstadt

 

EUR

 

61.355,03

 

bank guarantee

 

standby LC

 

Bank of America

 

Sauer-Danfoss Inc.

 

Sentry Insurance

 

USD

 

1.500.000,00

 

bank guarantee

 

custom guarantee

 

Danske Bank

 

Sauer-Danfoss AB

 

Department for Custom Duty

 

SEK

 

50.000,00

 

bank guarantee

 

rent guarantee

 

Deutsche Bank

 

Sauer-Danfoss (Bologna) S.p.A.

 

 

 

EUR

 

18.000,00

 

bank guarantee

 

standby LC

 

Bank of America

 

Sauer-Danfoss Inc.

 

Iowa Department of Economic Develoment

 

USD

 

750.000,00

 

Corporate guarantee

 

 

 

Sauer-Danfoss Inc.

 

Sauer-Danfoss India Private Limited

 

Deutsche Bank AG New Delhi

 

INR

 

300.000.000,00

 

bank guarantee

 

rent guarantee

 

Deutsche Bank

 

Sauer-Danfoss BVBA

 

Oliflora Invest IV

 

EUR

 

17.000,00

 

bank guarantee

 

rent guarantee

 

Commerzbank

 

Sauer-Danfoss GmbH & Co. OHG

 

EPM Assetis GmbH, Mainz für Quadra Kaiserslautern Luxembourg

 

EUR

 

17.476,00

 

Insurance guarantee

 

custom bond

 

AON

 

Sauer-Danfoss US Company

 

Customs US

 

USD

 

100.000,00

 

Insurance guarantee

 

custom bond

 

AON

 

Sauer-Danfoss US Company

 

Customs Canada

 

CAD

 

25.000,00

 

rent guarantee

 

rent guarantee

 

Danske Bank

 

Oy Sauer-Danfoss Ab

 

Keskinäinen Vakuutusyhtiö Tapiola

 

EUR

 

28.108,00

 

bank guarantee

 

standby LC

 

Wells Fargo US

 

Sauer-Danfoss Inc.

 

HSBC Bank Brasil

 

BRL

 

8.000.000,00

 

Corporate guarantee

 

 

 

Sauer-Danfoss Inc.

 

Sauer-Danfoss sp.o.o.

 

operate lease new facility

 

EUR

 

16.858.740,00

 

Corporate guarantee

 

 

 

Sauer-Danfoss Inc.

 

Sauer-Danfoss AB

 

operate lease production facility

 

SEK

 

59.523.910,00

 

bank guarantee

 

rent guarantee

 

Deutsche Bank

 

Sauer-Danfoss B.V.

 

rent guarentee for building

 

EUR

 

16.362,00

 

bank guarantee

 

custom bond

 

Deutsche Bank

 

Sauer-Danfoss s.r.l.

 

guarantee for power supplier in Italy

 

EUR

 

60.000,00

 

bank guarantee

 

standby LC

 

Danske Bank

 

Sauer-Danfoss US Company

 

Bank of America N.A.

 

USD

 

750.000,00

 

bank guarantee

 

standby LC

 

Commerzbank

 

Sauer-Danfoss Inc.

 

Bank of America N.A.

 

USD

 

1.500.000,00

 

bank guarantee

 

custom bond

 

Danske Bank

 

Sauer-Danfoss Ltd.

 

HM Customs and Excise

 

GBP

 

75.000,00

 

Corporate guarantee

 

 

 

Sauer-Danfoss Inc.

 

Sauer-Danfoss Holding ApS

 

Deutsche Bank, Frankfurt

 

EUR

 

10.000.000,00

 

bank guarantee

 

standby LC

 

Commerzbank

 

Sauer-Danfoss GmbH & Co. OHG

 

Deutsche Leasing

 

EUR

 

475.000,00

 

Letter of Comfort

 

 

 

Sauer-Danfoss Inc.

 

Sauer-Danfoss entities

 

Danske Bank

 

for all overdraft facilities and issued guarantees

 

 

--------------------------------------------------------------------------------

 

Schedule 6.3

 

Contingent Obligations

(Continued)

 

Forward Foreign Exchange Contracts outstanding as of October 31, 2009

 

Counterparty

 

Ccy
Bought

 

Ccy Sold

 

Amount Sold in
USD

 

Agreed
Rate

 

Maturity Date

 

Market Value in
USD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commerzbank

 

EUR

 

USD

 

250.000

 

1,2828

 

20.11.2009

 

36.922

 

Commerzbank

 

EUR

 

USD

 

250.000

 

1,2830

 

21.12.2009

 

36.840

 

Commerzbank

 

EUR

 

USD

 

250.000

 

1,2833

 

20.01.2010

 

36.726

 

Commerzbank

 

EUR

 

USD

 

250.000

 

1,2834

 

22.03.2010

 

36.542

 

Commerzbank

 

EUR

 

USD

 

800.000

 

1,4597

 

22.11.2010

 

4.471

 

Commerzbank

 

EUR

 

USD

 

800.000

 

1,4596

 

20.12.2010

 

4.389

 

Commerzbank

 

DKK

 

USD

 

700.000

 

5,0470

 

20.12.2010

 

-6.010

 

Total Commerzbank

 

 

 

 

 

3.300.000

 

 

 

 

 

149.879

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Danske Bank

 

EUR

 

USD

 

1.000.000

 

1,5374

 

20.11.2009

 

-42.815

 

Danske Bank

 

EUR

 

USD

 

1.000.000

 

1,5358

 

21.12.2009

 

-41.866

 

Danske Bank

 

DKK

 

USD

 

2.500.000

 

4,8528

 

21.12.2009

 

-102.705

 

Danske Bank

 

DKK

 

USD

 

2.000.000

 

5,8970

 

20.01.2010

 

330.700

 

Danske Bank

 

DKK

 

USD

 

1.500.000

 

5,8944

 

22.02.2010

 

246.212

 

Danske Bank

 

DKK

 

USD

 

2.000.000

 

5,8824

 

22.03.2010

 

322.317

 

Danske Bank

 

EUR

 

USD

 

800.000

 

1,4595

 

22.03.2010

 

6.251

 

Danske Bank

 

EUR

 

USD

 

800.000

 

1,4594

 

20.07.2010

 

5.507

 

Danske Bank

 

DKK

 

USD

 

700.000

 

5,0491

 

20.07.2010

 

-4.045

 

Danske Bank

 

DKK

 

USD

 

700.000

 

5,0512

 

20.08.2010

 

-4.159

 

Danske Bank

 

EUR

 

USD

 

800.000

 

1,4592

 

20.09.2010

 

5.172

 

Danske Bank

 

DKK

 

USD

 

700.000

 

5,0524

 

20.09.2010

 

-4.394

 

Danske Bank

 

EUR

 

USD

 

800.000

 

1,4592

 

20.10.2010

 

4.919

 

Danske Bank

 

DKK

 

USD

 

700.000

 

5,0526

 

20.10.2010

 

-4.756

 

Danske Bank

 

DKK

 

USD

 

700.000

 

5,0533

 

22.11.2010

 

-4.969

 

Total Danske Bank

 

 

 

 

 

16.700.000

 

 

 

 

 

711.370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HeLaBa Frankfurt

 

DKK

 

USD

 

2.500.000

 

4,8495

 

20.11.2009

 

-103.007

 

HeLaBa Frankfurt

 

EUR

 

USD

 

800.000

 

1,4597

 

20.01.2010

 

6.470

 

HeLaBa Frankfurt

 

EUR

 

USD

 

800.000

 

1,4592

 

22.02.2010

 

6.557

 

HeLaBa Frankfurt

 

EUR

 

USD

 

800.000

 

1,4598

 

20.04.2010

 

5.922

 

HeLaBa Frankfurt

 

EUR

 

USD

 

800.000

 

1,4594

 

20.05.2010

 

5.964

 

HeLaBa Frankfurt

 

EUR

 

USD

 

800.000

 

1,4594

 

21.06.2010

 

5.698

 

HeLaBa Frankfurt

 

EUR

 

USD

 

800.000

 

1,4599

 

20.08.2010

 

5.002

 

Total Helaba

 

 

 

 

 

7.300.000

 

 

 

 

 

-67.394

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

JP Morgan Chase Bank

 

SKK

 

EUR

 

1.770.960

 

30,1150

 

20.11.2009

 

-620

 

JP Morgan Chase Bank

 

PLN

 

EUR

 

1.180.640

 

3,3755

 

20.11.2009

 

-244.492

 

JP Morgan Chase Bank

 

SKK

 

USD

 

1.100.000

 

19,6410

 

20.11.2009

 

-44.597

 

JP Morgan Chase Bank

 

SKK

 

EUR

 

2.213.700

 

30,1050

 

21.12.2009

 

-1.321

 

JP Morgan Chase Bank

 

PLN

 

EUR

 

1.180.640

 

3,3798

 

21.12.2009

 

-244.864

 

JP Morgan Chase Bank

 

SKK

 

USD

 

1.100.000

 

19,6300

 

21.12.2009

 

-45.171

 

Total JP Morgan Chase

 

 

 

 

 

8.545.940

 

 

 

 

 

-581.064

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grand Total

 

 

 

 

 

 

 

 

 

 

 

212.791

 

 

--------------------------------------------------------------------------------

 

Schedule 6.7

 

Restrictive Agreements

 

--------------------------------------------------------------------------------

 

Schedule 6.9

 

Existing Investments

 

--------------------------------------------------------------------------------

 

Exhibit A

 

Revolving Note

 

--------------------------------------------------------------------------------

 

REVOLVING NOTE

 

$690,000,000

November 9, 2009

New York, New York

 

 

FOR VALUE RECEIVED, Sauer-Danfoss Inc., a Delaware corporation (“Borrower”),
promises to pay to the order of Danfoss A/S, a Danish corporation (“Lender”), on
or before the Revolving Loan Maturity Date (as defined in the hereinafter
defined Credit Agreement), $690,000,000 to the Lender under and pursuant to that
certain Credit Agreement dated as of November 9, 2009, executed by and between
Borrower and Lender (as amended, supplemented or modified from time to time, the
“Credit Agreement”), and made available by Lender to Borrower at the maturity
and in the amount or amounts stated on the records of Lender, together with
interest (computed as set forth in the Credit Agreement) on the aggregate
principal amount of all Revolving Loans outstanding from time to time as
provided in the Credit Agreement.  Capitalized words and phrases not otherwise
defined herein shall have the meanings assigned thereto in the Credit Agreement,
which definitions are hereby incorporated by reference.

 

This Revolving Note is issued pursuant to, and evidences the Indebtedness
incurred by the Borrower under and pursuant to, the Credit Agreement, to which
reference is hereby made for a more complete statement of the terms and
conditions under which the Revolving Loans evidenced hereby are made and to be
repaid and under which the Revolving Loan Maturity Date or any payment hereon
may be accelerated.  The holder of this Revolving Note is entitled to all of the
benefits provided for in the Credit Agreement. All Revolving Loans shall be
repaid by the Borrower on the Revolving Loan Maturity Date, unless payable
sooner pursuant to the provisions of the Credit Agreement.

 

All payments of principal and interest shall be made in USD or EUR, in same day
funds and shall be paid to Lender at its address as set forth in the Credit
Agreement.  Each Revolving Loan made by Lender, and all payments on account of
the principal and interest thereof shall be recorded on the books and records of
Lender and the principal balance as shown on such books and records, or any copy
thereof certified by an officer of Lender, shall be rebuttably presumptive
evidence of the principal amount owing hereunder.

 

Except for such notices as may be required under the terms of the Credit
Agreement, Borrower irrevocably waives presentment, demand, notice, protest,
notice of protest, default, non-payment, maturity, release, compromise,
settlement, extension or renewal, and all other demands or notices, in
connection with the delivery, acceptance, performance, default, or enforcement
of this Revolving Note, and assents to any extension or postponement of the time
of payment or any other indulgence.

 

Borrower, for itself and for its successors and assigns, hereby irrevocably:
(i) agrees that this Revolving Note and any or all payments coming due hereunder
may be extended or renewed from time to time in the sole discretion of Lender
without in any way affecting or diminishing Borrower’s liability hereunder and
Borrower hereby ratifies whatever Lender may do in such

 

--------------------------------------------------------------------------------

 

regard; and (ii) waives any rights, remedies or defenses arising at law or in
equity relating to guarantees and suretyships.

 

The terms of this Revolving Note are subject to amendment only in the manner
provided in the Credit Agreement.

 

The Revolving Loans evidenced hereby have been made and/or issued and this
Revolving Note has been delivered in New York, New York.  This Revolving Note
shall be governed and construed in accordance with the laws of the State of New
York, in which state it shall be performed, and shall be binding upon Borrower,
and its successors and assigns.  Wherever possible, each provision of the Credit
Agreement and this Revolving Note shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of the Credit
Agreement or this Revolving Note shall be prohibited by or be invalid under such
law, such provision shall be severable, and be ineffective to the extent of such
prohibition or invalidity, without invalidating the remaining provisions of the
Credit Agreement or this Revolving Note.

 

[Remainder of this page intentionally left blank.  Signature page follows.]

 

2

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, Borrower has executed this Revolving Note as of the date set
forth above.

 

 

SAUER-DANFOSS INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

--------------------------------------------------------------------------------

 

Exhibit B

 

Loan Request

 

--------------------------------------------------------------------------------

 

LOAN REQUEST

 

Reference is made to that certain Credit Agreement dated as of November   , 2009
(the “Credit Agreement”), by and between Sauer – Danfoss Inc., a Delaware
corporation (“Borrower”) and Danfoss A/S, a Danish corporation (“Lender”).  All
capitalized terms not otherwise defined herein shall have the meanings assigned
thereto in the Credit Agreement.

 

Pursuant to Section 2.2(a) of the Credit Agreement, Borrower desires that Lender
make the following Revolving Loan to Borrower in accordance with the applicable
terms and conditions of the Credit Agreement on
                                     (“Borrowing Date”):

 

 

[      ,      ,      ]

Revolving Loan

 

 

 

 

(a)

Interest Rate:

 

 

 

 

 

 

o

Base Rate

 

 

 

 

 

 

o

LIBOR Rate

 

 

 

 

 

(b)

Interest Period (for LIBOR Rate Advances only):          months (insert 1, 2, 3,
6 or 12 months)

 

 

 

 

(c)

Currency:

 

 

 

 

 

 

o

USD

 

 

 

 

 

 

o

EUR

 

The proceeds of this Revolving Loan shall be credited to our account, account
number                                            .

 

Borrower hereby certifies to Lender that:

 

(i)            after making the Revolving Loan requested on the Borrowing Date,
the amount of the Revolving Loans outstanding shall not exceed the Maximum
Revolving Loan Amount then in effect;

 

(ii)           as of the Borrowing Date, each of the representations and
warranties contained in the Credit Agreement, the Loan Documents or in any
document or instrument delivered pursuant to or in connection with the Credit
Agreement are true as of the date as of which they were made and shall be true
and deemed remade as such at and as of the time of the making of the Loans
requested hereby, except to the extent such representations and warranties
relate expressly to an earlier date, in which case such representations and
warranties are true, correct and complete on and as of such earlier date;

 

(iii)          as of the Borrowing Date, no Event of Default or Unmatured
Default shall have occurred and is continuing; and

 

--------------------------------------------------------------------------------

 

(iv)          as of the Borrowing Date, to any Borrower’s Knowledge, no change
has occurred in any law or regulations thereunder or interpretations thereof
that would make it illegal for Lender to make the Loans requested hereby.

 

[Signature page to follow]

 

--------------------------------------------------------------------------------

 

DATE:                        , 2009

 

 

 

 

BORROWER:

 

 

 

SAUER – DANFOSS INC.

 

 

 

By

 

 

Name:

 

 

Title:

 

 

 

INITIAL FUNDING REQUEST

 

--------------------------------------------------------------------------------

 

Exhibit C

 

Incumbency Certificate

 

--------------------------------------------------------------------------------

 

INCUMBENCY CERTIFICATE

 

I, Kenneth D. McCuskey, the undersigned Secretary of Sauer-Danfoss Inc., a
Delaware corporation (the “Corporation”) do hereby certify, that:

 

1.                                       I am the duly elected, qualified and
acting Secretaryof the Corporation, and, as such Secretary I have access to and
custody of the books and records of the Corporation and am familiar with the
matters therein contained and herein certified.

 

2.                                       The following is a full, true and
complete list of the names of the individuals who, as officers of the
Corporation, executed and delivered the Credit Agreement dated as of the date
hereof between the Corporation and Danfoss A/S (“Credit Agreement”) and each
other document, certificate and instrument being delivered on behalf of the
Corporation on or after the date hereof pursuant to or as contemplated by the
Credit Agreement, including loan and conversion requests, notices and other
actions on the Corporation’s behalf, were duly elected, qualified and acting as
such officers holding their respective offices below set opposite their names,
and the signatures below set opposite their names are their genuine signatures:

 

Name

 

Office

 

Signature

 

 

 

 

 

Sven Ruder

 

President & Chief Executive Officer

 

 

 

 

 

 

 

Jesper V. Christensen

 

Executive Vice President & Chief Financial Officer

 

 

 

 

 

 

 

Charles M. Cohrs

 

Treasurer

 

 

 

 

IN WITNESS WHEREOF, I have signed this certificate this 9th day of November,
2009.

 

 

 

 

 

Name: Kenneth D. McCuskey

 

Title: Secretary

 

--------------------------------------------------------------------------------

 

Exhibit D

 

Closing Certificate

 

--------------------------------------------------------------------------------

 

CLOSING CERTIFICATE

 

This Closing Certificate dated as of November 9, 2009 (this “Certificate”) is
given by Sauer—Danfoss Inc. (“Borrower”) pursuant to, and in accordance with
that certain Credit Agreement dated as of November 9, 2009 between Borrower and
Danfoss A/S (“Lender”) (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”).  Capitalized
terms not otherwise defined herein shall have the meanings assigned to such
terms in the Credit Agreement.

 

I, Jesper V. Christensen, hereby certify as follows:

 

1.             I am the duly elected, qualified and acting Executive Vice
President & Chief Financial Officer of Borrower and I have been responsible for
acting on behalf of Borrower in connection with the negotiation and consummation
of the Credit Agreement.  I am familiar with the properties, assets, business,
liabilities and financial and other matters of Borrower and have made such
investigations and inquiries as to the financial condition of Borrower as are
necessary and prudent for the purposes of providing this Certificate.

 

2.             Both before and after giving effect to the transactions
contemplated by the Loan Documents, Borrower and its Subsidiaries, taken as a
whole, are Solvent.

 

3.             Neither Borrower nor any Subsidiary is contemplating filing a
petition in bankruptcy or for an arrangement or reorganization under the
Bankruptcy Code (or other debtor relief law), nor, to the knowledge of Borrower,
is there any threatened bankruptcy or insolvency proceedings against Borrower or
any Subsidiary.

 

4.             No event has occurred or circumstance arisen which would
reasonably be expected to result in an Unmatured Default or Event of Default.

 

5.             Each of the conditions set forth in Article 7 of the Credit
Agreement has been satisfied in all respects.

 

6.             Borrower acknowledges that Lender is relying on the truth and
accuracy of this Certificate in connection with the making of Revolving Loans
and other financial accommodations from time to time under the Credit Agreement
and the other Loan Documents.

 

[Signature page to follow]

 

--------------------------------------------------------------------------------

 

This Closing Certificate has been executed and delivered on November 9, 2009

 

 

BORROWER:

 

 

 

SAUER – DANFOSS INC.

 

 

 

By

 

 

Name: Jesper V. Christensen

 

Title: Executive Vice President & Chief Financial Officer

 

CLOSING CERTIFICATE

 

--------------------------------------------------------------------------------