Exhibit 10.1

 

CREDIT AGREEMENT

 

DATED AS OF JULY 16, 2010,

 

AMONG

 

COBRA ELECTRONICS CORPORATION,

 

THE LENDERS FROM TIME TO TIME PARTIES HERETO,

 

HARRIS N.A.,
AS ADMINISTRATIVE AGENT

 

AND

 

BMO CAPITAL MARKETS,
AS SOLE LEAD ARRANGER AND SOLE BOOK RUNNER

 

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TABLE OF CONTENTS

 

 

 

PAGE

 

 

SECTION 1. THE CREDIT FACILITIES

1

Section 1.1

Revolving Credit Commitments

1

Section 1.2

Swingline Loans; Agent Loans

2

Section 1.3

Letters of Credit

4

Section 1.4

Applicable Interest Rates

7

Section 1.5

Minimum Borrowing Amounts; Maximum Eurodollar Loans

7

Section 1.6

Manner of Borrowing Revolving Loans and Designating Applicable Interest Rates

8

Section 1.7

Interest Periods

11

Section 1.8

Maturity of Revolving Loans

11

Section 1.9

Prepayments

11

Section 1.10

Default Rate

14

Section 1.11

The Notes

15

Section 1.12

Funding Indemnity

15

Section 1.13

Revolving Credit Commitment Terminations

16

Section 1.14

Substitution of Lenders

16

 

 

SECTION 2. FEES

17

Section 2.1

Fees

17

 

 

SECTION 3. PLACE AND APPLICATION OF PAYMENTS

18

Section 3.1

Place and Application of Payments

18

Section 3.2

Computation of Obligations Outstanding

20

 

 

SECTION 4. THE COLLATERAL AND GUARANTIES

21

Section 4.1

Collateral

21

Section 4.2

Collateral Proceeds

21

Section 4.3

Liens on Real Property

22

Section 4.4

Guaranties

22

Section 4.5

Further Assurances

22

 

 

SECTION 5. INTENTIONALLY OMITTED

23

 

 

SECTION 6. REPRESENTATIONS AND WARRANTIES

23

Section 6.1

Organization and Qualification

23

Section 6.2

Loan Parties

23

Section 6.3

Authority and Validity of Obligations

24

Section 6.4

Use of Proceeds; Margin Stock

24

Section 6.5

Financial Reports

25

Section 6.6

No Material Adverse Change

25

Section 6.7

Full Disclosure

25

Section 6.8

Intellectual Property and Licenses

25

Section 6.9

Governmental Authority and Licensing

26

 

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Section 6.10

Good Title

26

Section 6.11

Litigation and Other Controversies

26

Section 6.12

Taxes

26

Section 6.13

Approvals

26

Section 6.14

Affiliate Transactions

27

Section 6.15

Investment Company

27

Section 6.16

ERISA

27

Section 6.17

Compliance with Laws

27

Section 6.18

Other Agreements

27

Section 6.19

Solvency

27

Section 6.20

No Event of Default

28

Section 6.21

Business Plans

28

Section 6.22

Employee Controversies

28

Section 6.23

Environmental Matters

28

Section 6.24

Fees to Third Parties

29

Section 6.25

Subsidiaries; Joint Ventures; Partnerships

29

Section 6.26

Receivables

29

Section 6.27

Trade Relations

29

 

 

SECTION 7. CONDITIONS PRECEDENT

29

Section 7.1

All Credit Events

30

Section 7.2

Initial Credit Event

30

 

 

 

SECTION 8. COVENANTS

32

Section 8.1

Maintenance of Business

32

Section 8.2

Maintenance of Properties

33

Section 8.3

Taxes and Assessments

33

Section 8.4

Insurance

33

Section 8.5

Financial Reports

34

Section 8.6

Inspection

37

Section 8.7

Borrowings and Guaranties

37

Section 8.8

Liens

38

Section 8.9

Investments, Acquisitions, Loans and Advances

40

Section 8.10

Mergers, Consolidations and Sales

40

Section 8.11

Maintenance of Subsidiaries

41

Section 8.12

Dividends and Certain Other Restricted Payments

41

Section 8.13

ERISA

42

Section 8.14

Compliance with Laws

42

Section 8.15

Burdensome Contracts With Affiliates

42

Section 8.16

No Changes in Fiscal Year

42

Section 8.17

Formation of Subsidiaries

42

Section 8.18

Change in the Nature of Business

42

Section 8.19

Use of Loan Proceeds

43

Section 8.20

No Restrictions

43

Section 8.21

Subordinated Debt

43

Section 8.22

Financial Covenants

43

Section 8.23

Amendment of Organizational Documents

44

 

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Section 8.24

Operating Accounts

44

Section 8.25

Intellectual Property

44

 

 

SECTION 9. EVENTS OF DEFAULT AND REMEDIES

44

Section 9.1

Events of Default

44

Section 9.2

Non-Bankruptcy Defaults

47

Section 9.3

Bankruptcy Defaults

47

Section 9.4

Collateral for Undrawn Letters of Credit

47

Section 9.5

Expenses

48

 

 

SECTION 10. CHANGE IN CIRCUMSTANCES

48

Section 10.1

Change of Law

48

Section 10.2

Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR

48

Section 10.3

Increased Cost and Reduced Return

49

Section 10.4

Lending Offices

50

Section 10.5

Discretion of Lender as to Manner of Funding

51

 

 

SECTION 11. THE ADMINISTRATIVE AGENT

51

Section 11.1

Appointment and Authorization of Administrative Agent

51

Section 11.2

Administrative Agent and its Affiliates

51

Section 11.3

Action by Administrative Agent

52

Section 11.4

Consultation with Experts

52

Section 11.5

Liability of Administrative Agent; Credit Decision

52

Section 11.6

Indemnity

53

Section 11.7

Resignation of Administrative Agent and Successor Administrative Agent

53

Section 11.8

L/C Issuer and Swingline Lender

54

Section 11.9

Hedging Liability and Funds Transfer and Deposit Account Liability

54

Section 11.10

Authorization to Release Liens and Limit Amount of Certain Claims

55

Section 11.11

Proportionate Interest of Lenders under the Loan Documents

55

 

 

 

SECTION 12. MISCELLANEOUS

55

Section 12.1

Withholding Taxes

55

Section 12.2

No Waiver, Cumulative Remedies

57

Section 12.3

Non-Business Days

57

Section 12.4

Documentary Taxes

57

Section 12.5

Survival of Representations

57

Section 12.6

Survival of Indemnities

58

Section 12.7

Sharing of Set-Off

58

Section 12.8

Notices

58

Section 12.9

Counterparts

59

Section 12.10

Successors and Assigns

59

Section 12.11

Participants

59

Section 12.12

Assignments

60

Section 12.13

Amendments

61

Section 12.14

Headings

62

Section 12.15

Costs and Expenses; Indemnification

62

Section 12.16

Set-off

63

 

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Section 12.17

Entire Agreement

63

Section 12.18

Governing Law

63

Section 12.19

Severability of Provisions

64

Section 12.20

Excess Interest.

64

Section 12.21

Construction

64

Section 12.22

Lenders’ Obligations Several

65

Section 12.23

Submission to Jurisdiction; Waiver of Jury Trial

65

 

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ANNEXES, EXHIBITS AND SCHEDULES

 

ANNEX 1

—

Definitions

EXHIBIT A

—

Notice of Payment Request

EXHIBIT B

—

Borrowing Base Certificate

EXHIBIT C

—

Revolving Note

EXHIBIT D

—

Compliance Certificate

EXHIBIT E

—

Assignment and Acceptance

 

 

 

SCHEDULE 1

—

Revolving Credit Commitments

SCHEDULE 6.2

—

Loan Parties

SCHEDULE 6.8

—

Intellectual Property and Licenses

SCHEDULE 6.22

—

Employee Controversies

SCHEDULE 6.23

—

Environmental Matters

SCHEDULE 6.24

—

Fees to Third Parties

SCHEDULE 8.7

—

Indebtedness

SCHEDULE 8.8

—

Liens

SCHEDULE 8.9

—

Investments

 

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CREDIT AGREEMENT

 

This Credit Agreement is entered into as of July 16, 2010, by and among Cobra
Electronics Corporation, a Delaware corporation (the “Borrower”), the several
financial institutions from time to time party to this Agreement, as Lenders,
and Harris N.A., as Administrative Agent as provided herein.  All capitalized
terms used herein without definition shall have the same meanings herein as such
terms are defined in Annex 1 hereto.

 

PRELIMINARY STATEMENT

 

The Borrower desires that the Lenders make certain loans, advances and other
financial accommodations to the Borrower pursuant to the terms of this Agreement
to refinance certain Indebtedness for Borrowed Money of the Borrower, to satisfy
the fees and expenses of the Borrower owing in connection with the transactions
contemplated by this Agreement, and to provide financing to the Borrower for
working capital and other lawful business purposes.

 

NOW, THEREFORE, in consideration of the mutual agreements contained herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

 

SECTION 1.
THE CREDIT FACILITIES.

 

Section 1.1                                                             
Revolving Credit Commitments.

 

(a)                                  General Terms.  Subject to the terms and
conditions hereof, each Lender, by its acceptance hereof, severally agrees to
make a loan or loans (individually a “Revolving Loan” and collectively the
“Revolving Loans”) to Borrower from time to time on a revolving basis up to the
amount of such Lender’s Revolving Credit Commitment before the Termination Date,
subject to any reductions thereof pursuant to the terms hereof.  Subject to the
terms and conditions hereof, Revolving Loans may be repaid by the Borrower and
reborrowed from time to time.  The sum of the aggregate principal amount of the
Revolving Loans, the, the US Dollar Equivalent of the L/C Obligations and other
extensions of credit hereunder, if any, by the Lenders to the Borrower at any
time outstanding shall not exceed the lesser of (i) the aggregate amount of
Revolving Credit Commitments in effect at such time and (ii) the Borrowing Base
as then determined and computed plus, in the Administrative Agent’s sole
discretion, any Permitted Overadvances then in effect.  Each Borrowing of
Revolving Loans shall be made ratably from the Lenders in proportion to their
respective Revolver Percentages.  As provided in Section 1.6(a) hereof, the
Borrower may elect that each Borrowing of Revolving Loans be either Base Rate
Loans or Eurodollar Loans.  Revolving Loans may be repaid and the principal
amount thereof re-borrowed before the Termination Date, subject to the terms and
conditions hereof.

 

(b)                                 Reserves.  Notwithstanding any other
provision of this Agreement to the contrary, the Administrative Agent shall have
the right from time to time, in its reasonable business judgment, to establish
Reserves against the amount of Revolving Credit which the Borrower may otherwise
request hereunder.  The amount of such Reserves shall be subtracted

 

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from the Borrowing Base when calculating the amount of availability under the
Revolving Credit.

 

(c)                                  Dilution.  In addition to its right to
establish reserves, as set forth above, the Administrative Agent shall have the
right from time to time to reduce any lending formula with respect to Eligible
Receivables (i) by reducing the advance rate against Eligible Accounts by
one-tenth of 1 percentage point for each tenth of a percentage point by which
dilution with respect to the Receivables for any period (based on the ratio of
(1) the aggregate amount of reductions in Receivables other than as a result of
payments in cash or the Agent’s establishing Reserves or otherwise declaring
such Receivables as ineligible in its discretion pursuant to clause (r) of the
definition of Eligible Receivables to (2) the aggregate amount of total sales)
is in excess, or is reasonably anticipated to be in excess, of 5.0% or (ii) to
the extent that the Administrative Agent otherwise determines in the exercise of
its reasonable business judgment that the general creditworthiness of Account
Debtors has materially declined.

 

Section 1.2                                                             
Swingline Loans; Agent Loans.

 

(a)                                  Swingline Loans.

 

(i)                                     Swingline Loans.  Subject to all of the
terms and conditions hereof, upon request by the Borrower, the Swingline Lender
may in its discretion make loans to the Borrower (“Swingline Loans”), which
shall not in the aggregate at any time outstanding exceed the lesser of (i) the
Swingline Amount or (ii) the difference between (x) the Revolving Credit
Commitments in effect at such time and (y) the sum of the principal amount of
all Revolving Loans and Swingline Loans and the US Dollar Equivalent of the L/C
Obligations outstanding at the time of computation.  The Swingline Amount may be
availed of by the Borrower from time to time and borrowings thereunder may be
repaid and used again during the period commencing on the Closing Date and
ending on the day immediately preceding the Termination Date.

 

(ii)                                  Requests for Swingline Loans.  Swingline
Loans shall be disbursed in the manner set forth in Section 1.6(d); provided,
that the Borrower may give the Administrative Agent prior notice (which may be
written or oral) no later than 12:00 noon (Chicago time) on the date upon which
the Borrower requests that any Swingline Loan be made, specifying in each case
the amount and date of such Swingline Loan.  The Administrative Agent shall
promptly advise the Swingline Lender of any such notice.  The Swingline Lender
shall promptly advise the Borrower of its election to make or not make the
requested Swingline Loan.  Without limiting the foregoing,  the obligation of
the Swingline Lender to make Swingline Loans shall be subject to all of the
terms and conditions of this Agreement (provided that the Swingline Lender shall
be entitled to assume that the conditions precedent to an advance of any
Swingline Loan have been satisfied unless notified to the contrary by the
Administrative Agent or the Required Lenders).

 

(iii)                               Interest on Swingline Loans.  Each Swingline
Loan shall be a Base Rate Loan, and as such, shall bear interest at the Base
Rate plus the Applicable Margin for Base Rate Loans.  Interest on each Swingline
Loan shall be due and payable as provided in Section 1.4, and interest after
maturity (whether by lapse of time, acceleration or otherwise) shall be due and
payable upon demand.

 

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(iv)                              Refunding Loans.  In its sole and absolute
discretion, the Swingline Lender may at any time, on behalf of the Borrower
(which hereby irrevocably authorizes the Swingline Lender to act on its behalf
for such purpose) and with notice to the Borrower and the Administrative Agent,
request each Lender to make a Revolving Loan in an amount equal to such Lender’s
Revolver Percentage of the amount of the Swingline Loans outstanding on the date
such notice is given.  Borrowings of Loans under this Section 1.2(a)(iv) shall
constitute Base Rate Loans.  Unless an Event of Default described in
Section 9.1(j) or 9.1(k) exists, regardless of the existence of any other Event
of Default, each Lender shall make the proceeds of its requested Loan available
to the Administrative Agent for the account of the Swingline Lender, in
immediately available funds, at the principal office of the Administrative Agent
in Chicago, Illinois, before 12:00 noon (Chicago time) on the Business Day
following the day such notice is given.  The proceeds of such Loans shall be
immediately applied to repay the Swingline Loans.  The Administrative Agent
shall promptly remit the proceeds of such Borrowing to the Swingline Lender to
repay such Swingline Loans.

 

(v)                                 Participations.  If any Lender refuses or
otherwise fails to make a Revolving Loan when requested by the Swingline Lender
pursuant to Section 1.2(a)(iv) above (because an Event of Default described in
Section 9.1(j) or 9.1(k) exists or otherwise), such Lender will, by the time and
in the manner such Loan was to have been funded to the Swingline Lender,
purchase from the Swingline Lender an undivided participating interest in the
outstanding Swingline Loans in an amount equal to its Revolver Percentage of the
aggregate principal amount of such Swingline Loans that were to have been repaid
with such Loans.  Each Lender that so purchases a participation in a Swingline
Loan shall thereafter be entitled to receive its Revolver Percentage of each
payment of principal received on such Swingline Loan and of interest received
thereon accruing from the date such Lender funded to the Administrative Agent
its participation in such Swingline Loan.  The obligation of the Lenders to the
Swingline Lender shall be absolute and unconditional and shall not be affected
or impaired by any Default or Event of Default which may then be continuing
hereunder.

 

(vi)                              Voluntary Prepayment of Swingline Loans.  The
Borrower may voluntarily prepay any Swingline Loan at any time upon notice
delivered to the Administrative Agent by the Borrower no later than 12:00 noon
(Chicago time) on the date of prepayment, such prepayment to be made by the
payment of the principal amount to be prepaid and accrued interest thereon to
the date fixed for prepayment.

 

(b)                                 Agent Loans.  Upon the occurrence and during
the continuance of an Event of Default, Administrative Agent, in its sole
discretion, may make Revolving Loans on behalf of Lenders, in an aggregate
amount not to exceed $1,000,000, if Administrative Agent, in its reasonable
business judgment, deems that such Loans are necessary or desirable (i) to
protect all or any portion of the Collateral, (ii) to enhance the likelihood, or
maximize the amount of, repayment of the Loans and the other Obligations, or
(iii) to pay any other amount chargeable to Borrower pursuant to this Agreement,
including without limitation costs, fees and expenses as described in Sections
9.5 and 12.15 (hereinafter, “Agent Loans”); provided, that in no event shall
(a) the maximum principal amount of the Loans plus the US Dollar Equivalent of
the L/C Obligations exceed the aggregate Revolving Loan Commitments and
(b) Required Lenders may at any time revoke Administrative Agent’s authorization
to make Agent Loans.  Any such revocation must be in writing and shall become
effective prospectively upon Administrative

 

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Agent’s receipt thereof.  Each Lender shall be obligated to advance its
Revolving Loan Percentage of each Agent Loan.  If Agent Loans are made pursuant
to the preceding sentence, then all Lenders that have committed to make
Revolving Loans shall be bound to make, participate in, or permit to remain
outstanding, such Agent Loans based upon their Revolving Loan Percentages in
accordance with the terms of this Agreement.

 

Section 1.3                                                              Letters
of Credit.

 

(a)                                  General Terms.  Subject to the terms and
conditions hereof, as part of the Revolving Credit, the L/C Issuer shall issue
standby letters of credit (“Standby Letters of Credit”) and commercial letters
of credit (“Commercial Letters of Credit”; and together with Standby Letters of
Credit, “Letters of Credit”, and each a “Letter of Credit”) for the Borrower’s
account or, at the request of Borrower but subject to the limitations set forth
in Section 8.7(f) hereof, any Subsidiary’s account in an aggregate US Dollar
Equivalent undrawn face amount at any one time issued and not expired up to the
amount of the L/C Sublimit; provided that, in the case of any Letter of Credit
issued for the account of any Subsidiary, (a) the Borrower shall be the
applicant and be primarily liable for all L/C Obligations arising under such
Letter of Credit and (b) such issuance shall constitute (i) an intercompany
advance made from the Borrower to such Subsidiary and (ii) Indebtedness for
Borrowed Money of such Subsidiary, in each case, in the US Dollar Equivalent
amount of the undrawn face amount of such Letter of Credit.  Letters of Credit
issued for the account of the Borrower or any of its Subsidiaries will be
denominated, at the request of the Borrower, in U.S. Dollars, Pound Sterling or
Euros.  Each Letter of Credit shall be issued by the L/C Issuer, but each Lender
shall be obligated to reimburse the L/C Issuer for such Lender’s Revolver
Percentage of the amount of each drawing thereunder and, accordingly, each
Letter of Credit shall constitute usage of the Revolving Credit Commitment of
each Lender pro rata in an amount equal to its Revolver Percentage of the US
Dollar Equivalent of the L/C Obligations then outstanding.

 

(b)                                 Applications.  At any time before the
Termination Date, the L/C Issuer shall, at the request of the Borrower, issue
one or more Letters of Credit, in a form satisfactory to the L/C Issuer, with
expiration dates no later than the earlier of twelve months from the date of
issuance (or be cancelable not later than twelve months from the date of
issuance and each renewal) or 30 days prior to the Termination Date, in an
aggregate face amount as set forth above, upon the receipt of an application
duly executed by the Borrower for the relevant Letter of Credit in the form then
customarily prescribed by the L/C Issuer for the Letter of Credit requested
(each an “Application”).  Notwithstanding anything contained in any Application
to the contrary: (i) the Borrower shall pay fees in connection with each Letter
of Credit as set forth in Section 2.1 hereof, (ii) except as otherwise provided
in Section 1.9 hereof, before the occurrence of an Event of Default, the L/C
Issuer will not call for the funding by the Borrower of any amount under a
Letter of Credit before being presented with a drawing thereunder, and (iii) if
the L/C Issuer is not timely reimbursed for the amount of any drawing under a
Letter of Credit on the date such drawing is paid (including without limitation
pursuant to a Borrowing hereunder after notice to the Borrower as provided in
Section 1.3(c)), the Borrower’s obligation to reimburse the L/C Issuer for the
amount of such drawing shall bear interest (which the Borrower hereby promises
to pay) from and after the date such drawing is paid at a rate per annum equal
to the sum of 2.0% plus the Applicable Margin plus the Base Rate from time to
time in effect (computed on the basis of a year of 360 days and the actual
number of days

 

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elapsed).  If the L/C Issuer issues any Letter of Credit with an expiration date
that is automatically extended unless the L/C Issuer gives notice that the
expiration date will not so extend beyond its then scheduled expiration date,
the L/C Issuer will give such notice of non-renewal before the time necessary to
prevent such automatic extension if before such required notice date: (i) the
expiration date of such Letter of Credit if so extended would be after the
thirtieth day prior to the Termination Date, (ii) the Revolving Credit
Commitments have been terminated, or (iii) a Default or an Event of Default
exists and the Administrative Agent, at the request or with the consent of the
Required Lenders, has given the L/C Issuer instructions not to so permit the
extension of the expiration date of such Letter of Credit.  The L/C Issuer
agrees to issue amendments to the Letter(s) of Credit increasing the amount, or
extending the expiration date, thereof at the request of the Borrower subject to
the conditions of Section 7 hereof and the other terms of this Section 1.3.

 

(c)                                  The Reimbursement Obligations.  Subject to
Section 1.3(b) hereof, the obligation of the Borrower to reimburse the L/C
Issuer for all drawings under a Letter of Credit (a “Reimbursement Obligation”)
shall be governed by the Application related to such Letter of Credit, except
that reimbursement shall be made by no later than 1:30 p.m. (Chicago time) on
the date when each drawing is paid if the Borrower has been informed of such
drawing by the L/C Issuer on or before 11:30 a.m. (Chicago time) on the date
when such drawing is paid or, if notice of such drawing is given to the Borrower
after 11:30 a.m. (Chicago time) on the date when such drawing is paid, by 1:30
p.m. (Chicago time) on the next Business Day thereafter, in immediately
available funds at the Administrative Agent’s principal office in Chicago,
Illinois or such other office as the Administrative Agent may designate in
writing to the Borrower (who shall thereafter cause to be distributed to the L/C
Issuer such amount(s) in like funds).  If the Borrower does not make any such
reimbursement payment on the date due and the Participating Lenders fund their
participations therein in the manner set forth in Section 1.3(d) below, then all
payments thereafter received by the Administrative Agent in discharge of any of
the relevant Reimbursement Obligations shall be distributed in accordance with
Section 1.3(d) below.

 

(d)                                 The Participating Interests.  Each Lender
(other than the Lender then acting as L/C Issuer in issuing the relevant Letters
of Credit), by its acceptance hereof, severally agrees to purchase from the L/C
Issuer, and the L/C Issuer hereby agrees to sell to each such Lender (a
“Participating Lender”), an undivided percentage participating interest (a
“Participating Interest”), to the extent of its Revolver Percentage, in each
Letter of Credit issued by, and each Reimbursement Obligation owed to, the L/C
Issuer.  Upon any failure by the Borrower to pay any Reimbursement Obligation at
the time required on the date the related drawing is paid, as set forth in
Section 1.3(c) above, or if the L/C Issuer is required at any time to return to
the Borrower or to a trustee, receiver, liquidator, custodian or other Person
any portion of any payment of any Reimbursement Obligation, each Participating
Lender shall, not later than the Business Day it receives a certificate in the
form of Exhibit A hereto from the L/C Issuer (with a copy to the Administrative
Agent) to such effect, if such certificate is received before 1:30 p.m. (Chicago
time), or not later than 1:30 p.m.  (Chicago time) the following Business Day,
if such certificate is received after such time, pay to the Administrative Agent
for the account of the L/C Issuer an amount equal to such Participating Lender’s
Revolver Percentage of such unpaid or recaptured Reimbursement Obligation, and
such Participating Lender shall fund its Revolver Percentage thereof together
with interest on such amount accrued from the date the related payment was made
by the L/C Issuer to the date of such payment by such Participating

 

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Lender at a rate per annum equal to: (i) from the date the related payment was
made by the L/C Issuer to the date 2 Business Days after payment by such
Participating Lender is due hereunder, the Federal Funds Rate for each such day
and (ii) from the date 2 Business Days after the date such payment is due from
such Participating Lender, the Base Rate in effect for each such day.  Each such
Participating Lender shall thereafter be entitled to receive its Revolver
Percentage of each payment received in respect of the relevant Reimbursement
Obligation and of interest paid thereon, with the L/C Issuer retaining its
Revolver Percentage as a Lender hereunder.

 

The several obligations of the Participating Lenders to the L/C Issuer under
this Section 1.2 shall be absolute, irrevocable and unconditional under any and
all circumstances whatsoever and shall not be subject to any set-off,
counterclaim or defense to payment which any Participating Lender may have or
have had against the Borrower, the L/C Issuer, the Administrative Agent, any
Lender or any other Person whatsoever.  Without limiting the generality of the
foregoing, such obligations shall not be affected by any Default or Event of
Default or by any reduction or termination of any Revolving Credit Commitment of
any Lender, and each payment by a Participating Lender under this Section 1.3
shall be made without any offset, abatement, withholding or reduction
whatsoever.

 

(e)                                  Indemnification.  The Participating Lenders
shall, to the extent of their respective Revolver Percentages, indemnify the L/C
Issuer (to the extent not reimbursed by the Borrower) against any cost, expense
(including reasonable counsel fees and disbursements), claim, demand, action,
loss or liability (except such as result from the L/C Issuer’s gross negligence
or willful misconduct) that the L/C Issuer may suffer or incur in connection
with any Letter of Credit issued by it.  The obligations of the Participating
Lenders under this Section 1.3(e) and all other parts of this Section 1.3 shall
survive termination of this Agreement and of all Applications, Letters of
Credit, and all drafts and other documents presented in connection with drawings
thereunder.

 

(f)                                    Manner of Obtaining Letters of Credit. 
The Borrower shall provide at least 1 Business Day’s advance written notice to
the Administrative Agent (by 12:00 noon (Chicago time)) of each request for the
issuance of a Letter of Credit, such notice in each case to be accompanied by an
Application for such Letter of Credit properly completed and executed by the
Borrower and, in the case of an extension or an increase in the amount of a
Letter of Credit, a written request therefor, in a form acceptable to the
Administrative Agent, in each case, together with the fees called for by this
Agreement; provided that the Borrower shall be permitted to provide same day
notice of such request to the Administrative Agent so long as (i) the
Administrative Agent has been notified on or prior to 10:00 a.m. (Chicago time)
on such day and (ii) the Application or written request, as applicable,
accompanying such notice has been pre-approved by the L/C Issuer).  The
Administrative Agent shall promptly notify the L/C Issuer of the Administrative
Agent’s receipt of each such notice and the L/C Issuer shall promptly notify the
Administrative Agent and the Lenders of the issuance of the Letter of Credit so
requested.

 

(g)                                 Obligations Absolute.  Borrower shall be
obligated to reimburse the L/C Issuer or the Swingline Lender or Lenders if the
Swingline Lender or Lenders have reimbursed the L/C Issuer on Borrower’s behalf,
for any payments made in respect of any Letter of Credit, which obligation shall
be unconditional and irrevocable and shall be paid regardless of, absent gross
negligence or willful misconduct on the part of the L/C Issuer, Swingline Lender
or Lenders in the case of departures, forgeries, fraud or noncompliance under
clauses (ii), (iv) or

 

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(v):  (i) any lack of validity or enforceability of any Letter of Credit, (ii)
any amendment or waiver of or consent or departure from all or any provisions of
any Letter of Credit, this Agreement or any other Loan Document, (iii) the
existence of any claim, set off, defense or other right which Borrower or any
other Person may have against any beneficiary of any Letter of Credit,
Administrative Agent, Lenders, Swingline Lender or the L/C Issuer, (iv) any
draft or other document presented under any Letter of Credit proving to be
forged, fraudulent, invalid, or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect, (v) any payment under any
Letter of Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit, and (vi) any other act or
omission to act or delay of any kind of the L/C Issuer, the Administrative
Agent, the Swingline Lender, the Lenders or any other Person or any other event
or circumstance that might otherwise constitute a legal or equitable discharge
of Borrower’s obligations hereunder.  It is understood and agreed by Borrower
that the L/C Issuer may accept documents that appear on their face to be in
order without further investigation or inquiry, regardless of any notice or
information to the contrary.

 

Section 1.4                                                             
Applicable Interest Rates.

 

(a)                                  Base Rate Loans.  Each Base Rate Loan made
or maintained by a Lender shall bear interest during each Interest Period it is
outstanding (computed on the basis of a year of 365 or 366, as applicable, days
and the actual days elapsed) on the unpaid principal amount thereof from the
date such Base Rate Loan is advanced, continued or created by conversion from a
Eurodollar Loan until maturity (whether by acceleration or otherwise) at a rate
per annum equal to the sum of the Applicable Margin plus the Base Rate from time
to time in effect, payable on the first Business Day following the last day of
its Interest Period and at maturity (whether by acceleration or otherwise).

 

(b)                                 Eurodollar Loans.  Each Eurodollar Loan made
or maintained by a Lender shall bear interest during each Interest Period it is
outstanding (computed on the basis of a year of 360 days and actual days
elapsed) on the unpaid principal amount thereof from the date such Eurodollar
Loan is advanced, continued or created by conversion from a Base Rate Loan until
maturity (whether by acceleration or otherwise) at a rate per annum equal to the
sum of the Applicable Margin plus the LIBOR Lending Rate applicable for such
Interest Period, payable on the last day of the Interest Period and at maturity
(whether by acceleration or otherwise), and, if the applicable Interest Period
is longer than three months, on each day occurring every three months after the
commencement of such Interest Period.

 

(c)                                  Rate Determinations.  The Administrative
Agent shall determine each interest rate applicable to the Loans and the
Reimbursement Obligations hereunder, and its determination thereof shall be
conclusive and binding except in the case of manifest error.

 

Section 1.5                                                              Minimum
Borrowing Amounts; Maximum Eurodollar Loans.

 

There shall be no minimum Borrowing amount for Base Rate Loans hereunder.  Each
Borrowing of Eurodollar Loans advanced, continued or converted shall be in an
amount equal to $1,000,000 or such greater amount which is an integral multiple
of $100,000.  Without the Administrative Agent’s consent, there shall not be
more than five (5) Borrowings of Eurodollar Loans outstanding hereunder at any
one time.

 

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Section 1.6                                                              Manner
of Borrowing Revolving Loans and Designating Applicable Interest Rates.

 

(a)                                  Notice to the Administrative Agent.  The
Borrower shall give notice to the Administrative Agent by no later than 12:00
noon (Chicago time):  (i) at least three Business Days before the date on which
the Borrower requests the Lenders to advance a Borrowing of Eurodollar Loans and
(ii) on the date the Borrower requests the Lenders to advance a Borrowing of
Base Rate Loans.  The Loans included in each Borrowing shall bear interest
initially at the type of rate specified in such notice of a new Borrowing. 
Thereafter, subject to the terms and conditions hereof, the Borrower may from
time to time elect to change or continue the type of interest rate borne by each
Borrowing or, subject to the minimum amount requirement set forth in Section 1.5
for each outstanding Borrowing of Eurodollar Loans, a portion thereof, as
follows:  (i) if such Borrowing is of Eurodollar Loans, on the last day of the
Interest Period applicable thereto, the Borrower may continue part or all of
such Borrowing as Eurodollar Loans or convert part or all of such Borrowing into
Base Rate Loans or (ii) if such Borrowing is of Base Rate Loans, on any Business
Day, the Borrower may convert all or part of such Borrowing into Eurodollar
Loans for an Interest Period or Interest Periods specified by the Borrower.  The
Borrower shall give all such notices requesting the advance, continuation or
conversion of a Borrowing to the Administrative Agent by telephone, facsimile or
email (which notice shall be irrevocable once given).  Notice of the
continuation of a Borrowing of Eurodollar Loans for an additional Interest
Period or of the conversion of part or all of a Borrowing of Base Rate Loans
into Eurodollar Loans must be given by no later than 1:00 p.m. (Chicago time) at
least three Business Days before the date of the requested continuation or
conversion.  All such notices concerning the advance, continuation or conversion
of a Borrowing shall specify the date of the requested advance, continuation or
conversion of a Borrowing (which shall be a Business Day), the amount of the
requested Borrowing to be advanced, continued or converted, the type of Loans to
comprise such new, continued or converted Borrowing and, if such Borrowing is to
be comprised of Eurodollar Loans, the Interest Period applicable thereto. 
Unless otherwise agreed by the Administrative Agent, no advance, continuation or
conversion of a Borrowing of Eurodollar Loans may be made if a Default or Event
of Default is then in existence.  The Borrower agrees that the Administrative
Agent may rely on any such telephonic, facsimile or email notice given by any
person the Administrative Agent in good faith reasonably believes is an
Authorized Representative without the necessity of independent investigation,
and in the event any such notice by telephone conflicts with any email
confirmation such telephonic notice shall govern if the Administrative Agent has
acted in reliance thereon.

 

(b)                                 Notice to the Lenders.  The Administrative
Agent shall give prompt telephonic or facsimile notice to the Lenders of any
notice from the Borrower received pursuant to Section 1.6(a) above and, if such
notice requests the Lenders to make Eurodollar Loans, the Administrative Agent
shall give notice to the Borrower and the Lenders by like means of the interest
rate applicable thereto promptly after the Administrative Agent has made such
determination.

 

(c)                                  Borrower’s Failure to Notify; Automatic
Continuations and Conversions.  Any outstanding Borrowing of Base Rate Loans
shall automatically be continued for an additional Interest Period on the last
day of its then current Interest Period unless the Borrower has notified the
Administrative Agent within the period required by Section 1.6(a) that the

 

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Borrower intends to convert such Borrowing, subject to Section 7.1 hereof, into
a Borrowing of Eurodollar Loans or such Borrowing is prepaid in accordance with
Section 1.9(a).  If the Borrower fails to give notice pursuant to Section 1.6(a)
above of the continuation or conversion of any outstanding principal amount of a
Borrowing of Eurodollar Loans before the last day of its then current Interest
Period within the period required by Section 1.6(a) or, whether or not such
notice has been given, one or more of the conditions set forth in Section 7.1
for the continuation or conversion of a Borrowing of Eurodollar Loans would not
be satisfied, and such Borrowing is not prepaid in accordance with Section
1.9(a), such Borrowing shall automatically be converted into a Borrowing of Base
Rate Loans.  In the event the Borrower fails to give notice pursuant to Section
1.6(a) above of a Borrowing equal to the amount of a Reimbursement Obligation
and has not notified the Administrative Agent by 12:00 noon (Chicago time) on
the day such Reimbursement Obligation becomes due that it intends to repay such
Reimbursement Obligation through funds not borrowed under this Agreement, the
Borrower shall be deemed to have requested a Borrowing of Base Rate Loans under
the Revolving Credit on such day in the amount of the Reimbursement Obligation
then due, which Borrowing shall be applied to pay the Reimbursement Obligation
then due.

 

(d)                                 Disbursement of Loans.  Not later than 12:00
noon (Chicago time) on the date of any requested advance of a new Borrowing
(exclusive of Swingline Loans and Agent Loans), subject to Section 7 hereof,
each Lender shall make available its Loan comprising part of such Borrowing in
funds immediately available at the principal office of the Administrative Agent
in Chicago, Illinois.  The Administrative Agent shall make the proceeds of each
new Borrowing available to the Borrower at the Administrative Agent’s principal
office in Chicago, Illinois, by depositing such proceeds to the credit of the
Borrower’s Account (or, solely during the period commencing on the Closing Date
and ending on September 16, 2010, with the PrivateBank Master Account), in
immediately available funds, upon receipt by the Administrative Agent from each
Lender of its Revolver Percentage of such Borrowing.

 

(e)                                  Authorization.  The Borrower hereby
irrevocably authorizes the Administrative Agent and the Lenders to make
Revolving Loans from time to time hereunder for payment of any Obligation then
due and payable (whether such Obligation is for interest then due on a Loan,
reimbursement under an Application or otherwise), and any such Revolving Loan
may be made without regard to the provisions of Section 7 hereof.  In the event
any such Revolving Loans are made under this Section 1.6(e), the Administrative
Agent shall provide the Borrower with notice thereof as soon as reasonably
practicable thereafter.  The Borrower acknowledges and agrees, however, that
neither the Administrative Agent nor the Lenders shall be under any obligation
to make a Revolving Loan under this Section 1.6(e), and neither the
Administrative Agent nor any Lender shall incur any liability to the Borrower or
any other Person for refusing to make a Revolving Loan under this Section
1.6(e).

 

(f)                                    Administrative Agent Reliance on Lender
Funding.  Unless the Administrative Agent shall have been notified by a Lender
prior to (or, in the case of a Borrowing of Base Rate Loans, by 12:00 noon
(Chicago time) on) the date on which such Lender is scheduled to make payment to
the Administrative Agent of the proceeds of a Revolving Loan (which notice shall
be effective upon receipt) that such Lender does not intend to make such
payment, the Administrative Agent may assume that such Lender has made such
payment when due and the Administrative Agent may in reliance upon such
assumption (but

 

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shall not be required to) make available to the Borrower the proceeds of the
Revolving Loan to be made by such Lender and, if any Lender has not in fact made
such payment to the Administrative Agent, such Lender shall, on demand, pay to
the Administrative Agent, the amount made available to the Borrower attributable
to such Lender together with interest thereon in respect of each day during the
period commencing on the date such amount was made available to the Borrower and
ending on (but excluding) the date such Lender pays such amount to the
Administrative Agent, at a rate per annum equal to:  (i) from the date the
related advance was made to the date 2 Business Days after payment by such
Lender is due hereunder, the Federal Funds Rate for each such day and (ii) from
the date 2 Business Days after the date such payment is due from such Lender to
the date such payment is made by such Lender, the Base Rate in effect for each
such day.  If such amount is not received from such Lender by the Administrative
Agent immediately upon demand, the Borrower will on demand repay to the
Administrative Agent the proceeds of the Revolving Loan attributable to such
Lender with interest thereon at a rate per annum equal to the interest rate
applicable to the relevant Revolving Loan, but without such payment being
considered a payment or prepayment of a Revolving Loan under Section 1.12 hereof
so that the Borrower will have no liability under such Section with respect to
such payment.

 

(g)                                 Defaulting Lenders.  If any Lender fails to
timely fund any portion of a Borrowing or other amount which it is required to
fund hereunder, as required under Section 1.2(a)(iv), Section 1.2(a)(v), Section
1.3(d), Section 1.3(e), Section 1.6(d), Section 1.6(f), or elsewhere (a
“Defaulting Lender”), the Administrative Agent shall not be obligated to
transfer to such Defaulting Lender any payments made by the Borrower to the
Administrative Agent or through a Concentration Account for the Defaulting
Lender’s benefit, nor shall such Defaulting Lender be entitled to the sharing of
any payments hereunder.  Amounts payable to a Defaulting Lender shall instead be
paid to or retained by the Administrative Agent.  After first applying such
amounts to any amounts due to the Administrative Agent or the other Lenders, the
Administrative Agent shall loan the Borrower the amount of all such payments
received or retained by it for the account of such Defaulting Lender to the
extent of the amounts that the Defaulting Lender was obligated to fund to or for
the benefit of the Borrower and has failed to do so.  Any amounts so loaned to
the Borrower shall bear interest at the rate applicable to Base Rate Loans and
for all other purposes of this Agreement shall be treated as if they were
Revolving Loans to the Borrower.  For purposes of voting or consenting to
matters with respect to the Loan Documents, such Defaulting Lender shall be
deemed not to be a “Lender”.  Until a Defaulting Lender cures its failure to
fund its applicable share of any Borrowing, such Defaulting Lender shall not be
entitled to any portion of the commitment fee payable under Section 2.1(a) or
the letter of credit fee payable under Section 2.1(b) and such portion of the
commitment fees and letter of credit fees shall be returned to the Borrower
unless, notwithstanding the existence of a Defaulting Lender, the Borrower shall
have received the full amount of any requested Borrowing, in which case such
portion of the commitment fees and letter of credit fees shall accrue in favor
of the Lenders that have funded their respective shares of such requested
Borrowing and shall be allocated among such performing Lenders ratably based
upon their relative Revolver Percentages.  This Section 1.6(g) shall remain
effective with respect to such Lender until such time as the Defaulting Lender
shall no longer be in default of any of its obligations under this Agreement. 
The terms of this Section 1.6(g) shall not be construed to increase or otherwise
affect the Revolving Credit Commitment of any Lender or relieve or excuse the
performance by the Borrower of its duties and obligations hereunder.

 

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Section 1.7                                                             
Interest Periods.

 

As provided in Section 1.6(a) hereof, at the time of each request to advance,
continue or create by conversion a Borrowing of Eurodollar Loans, the Borrower
shall select an Interest Period applicable to such Loans from among the
available options.  The term “Interest Period” means the period commencing on
the date a Borrowing of Loans is advanced, continued or created by conversion
and ending:  (a) in the case of Base Rate Loans, on the last day of each
calendar month in which such Borrowing is advanced, continued or created by
conversion (or on the last day of the following calendar month if such Loan is
advanced, continued or created by conversion on the last day of a calendar
month) and (b) in the case of a Eurodollar Loan, 1, 2, 3, or 6 months
thereafter; provided, however, that:

 

(i)                                     any Interest Period for a Borrowing of
Loans consisting of Base Rate Loans that otherwise would end after the
Termination Date shall end on the Termination Date;

 

(ii)                                  whenever the last day of any Interest
Period would otherwise be a day that is not a Business Day, the last day of such
Interest Period shall be extended to the next succeeding Business Day, provided
that, if such extension would cause the last day of an Interest Period for a
Borrowing of Eurodollar Loans to occur in the following calendar month, the last
day of such Interest Period shall be the immediately preceding Business Day; and

 

(iii)                               for purposes of determining an Interest
Period for a Borrowing of Eurodollar Loans, a month means a period starting on
one day in a calendar month and ending on the numerically corresponding day in
the next calendar month; provided, however, that if there is no numerically
corresponding day in the month in which such an Interest Period is to end or if
such an Interest Period begins on the last Business Day of a calendar month,
then such Interest Period shall end on the last Business Day of the calendar
month in which such Interest Period is to end.

 

Section 1.8                                                             
Maturity of Revolving Loans.

 

Each Loan, both for principal and interest not sooner paid, shall mature and
become due and payable by the Borrower on the Termination Date.

 

Section 1.9                                                             
Prepayments.

 

(a)                                  Optional.  The Borrower may prepay in whole
or in part (but, if in part, then in an amount such that the minimum amount
required for a Borrowing pursuant to Section 1.5 hereof remains outstanding) any
Borrowing at any time, such prepayment to be made by the payment of the
principal amount to be prepaid and, in the case of any Eurodollar Loans, accrued
interest thereon to the date fixed for prepayment plus any amounts due the
Lenders under Sections 1.12 and 2.1(c) hereof.

 

(b)                                 Mandatory.

 

(i)                                     Proceeds from Disposition or Event of
Loss.  If Borrower or any other Loan Party shall at any time or from time to
time make or agree to make a Disposition or shall suffer an Event of Loss
relating to any Property resulting in Net Cash Proceeds in excess of

 

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$250,000 individually or on a cumulative basis in any fiscal year (x) the
Borrower shall promptly notify the Administrative Agent of such proposed
Disposition or Event of Loss (including the amount of the estimated Net Cash
Proceeds to be received by the Borrower or such other Loan Party in respect
thereof) and (y) promptly upon receipt by the Borrower or such other Loan Party
of the Net Cash Proceeds of such Disposition or Event of Loss, the Borrower
shall prepay the outstanding Obligations in an aggregate amount equal to 100% of
the amount of all such Net Cash Proceeds; provided, that (1) in the case of each
Disposition of equipment and Event of Loss resulting in Net Cash Proceeds of
less than $1,000,000, or (2) in the case of each Disposition of equipment and
Event of Loss resulting in Net Cash Proceeds in excess of $1,000,000 with the
Administrative Agent’s consent determined in its reasonable credit judgment, if
the Borrower states in its notice of such event that the Borrower or the
applicable Loan Party intends to reinvest, within 180 days of the applicable
Disposition or receipt of Net Cash Proceeds from an Event of Loss, the Net Cash
Proceeds thereof in assets similar to the assets which were subject to such
Disposition or Event of Loss, then so long as no Default or Event of Default
then exists, the Borrower shall not be required to make a mandatory prepayment
under this Section in respect of such Net Cash Proceeds to the extent such Net
Cash Proceeds are actually reinvested in such similar assets within such 180-day
period.  Promptly after the end of such 180-day period, the Borrower shall
notify the Administrative Agent whether it or the applicable Loan Party has
reinvested such Net Cash Proceeds in such similar assets, and to the extent such
Net Cash Proceeds have not been so reinvested, the Borrower shall promptly
prepay the outstanding Obligations in the amount of such Net Cash Proceeds not
so reinvested.  Subject to Section 3.1(c) hereof, the amount of each such
prepayment shall be applied to the outstanding Revolving Credit (first to the
outstanding Swingline Loans and Agent Loans, then to the outstanding Revolving
Loans and then to cash collateralize outstanding L/C Obligations), but, except
as set forth below, such payments shall not reduce the Revolving Credit
Commitments.  Until applied to the Obligations or reinvested as set forth above,
all proceeds of such Disposition or Event of Loss shall be deposited with the
Administrative Agent (or its agent) and applied to the outstanding Revolving
Credit (first to the outstanding Revolving Loans and then to cash collateralize
outstanding L/C Obligations, but, except as set forth below, such payments shall
not reduce the Revolving Credit Commitments; provided, that the Administrative
Agent shall be entitled to establish a reserve under Section 1.2(b) in the
amount of such proceeds, to be held until such amounts are to be applied against
the Obligations or reinvested, as provided herein).  So long as no Default or
Event of Default exists, the Administrative Agent is authorized to disburse
amounts representing such proceeds from the Collateral Account to or at the
Borrower’s direction for application to or reimbursement for the costs of
replacing, rebuilding or restoring such Property.  Notwithstanding anything
contained in this Section 1.9(b)(i) to the contrary, all mandatory prepayments
(which, for the avoidance of doubt, shall not include Net Cash Proceeds being
used for reinvestment in accordance with this Section 1.9(b)(i)) required to be
made under this Section 1.9(b)(i) arising from a Disposition or an Event of Loss
relating to the real Property located at 6500 W. Cortland Street, Chicago, IL
60707 shall concurrently and permanently reduce the Real Estate Availability on
a dollar for dollar basis.

 

(ii)                                  Proceeds from Equity Issuances.  If after
the Closing Date, the Borrower shall issue new equity securities (whether common
or preferred stock or otherwise), other than equity securities issued in
connection with the exercise of employee stock options or issued to employees as
“bonus” or “incentive” compensation for work performed, the Borrower shall
promptly notify the Administrative Agent of the estimated Net Cash Proceeds of
such issuance to

 

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be received by or for the account of the Borrower or such other Loan Party in
respect thereof.  Promptly upon receipt by the Borrower or such other Loan Party
of Net Cash Proceeds of such issuance, the Borrower shall prepay the outstanding
Obligations in an aggregate amount equal to 100% of the amount of such Net Cash
Proceeds.  Subject to Section 3.1(c) hereof, the amount of each such prepayment
shall be applied to the Revolving Credit (first to the outstanding Swingline
Loans and Agent Loans, then to the outstanding Revolving Loans and then to cash
collateralize outstanding L/C Obligations), but such payments shall not reduce
the Revolving Credit Commitments.  The Borrower acknowledges that its
performance hereunder shall not limit the rights and remedies of the Lenders for
any outstanding breach of Sections 8.11 or 9.1(i) hereof or any other terms of
this Agreement.

 

(iii)                               Proceeds from Indebtedness for Borrowed
Money Issuances.  If after the Closing Date, the Borrower or any other Loan
Party shall issue any Indebtedness for Borrowed Money (other than such
indebtedness expressly permitted pursuant to Section 8.7(a), (b), (c), (d), (e),
(f) and (g) hereof), the Borrower shall promptly notify the Administrative Agent
of the estimated Net Cash Proceeds of such issuance to be received by or for the
account of the Borrower or such other Loan Party in respect thereof.  Promptly
upon receipt by the Borrower or such other Loan Party of Net Cash Proceeds of
such issuance, the Borrower shall prepay the outstanding Obligations in an
aggregate amount equal to 100% of the amount of such Net Cash Proceeds.  Subject
to Section 3.1(c) hereof, the amount of each such prepayment shall be applied to
the Revolving Credit (first to the outstanding Swingline Loans and Agent Loans,
then to the outstanding Revolving Loans and then to cash collateralize
outstanding L/C Obligations), but such payments shall not reduce the Revolving
Credit Commitments.  The Borrower acknowledges that its performance hereunder
shall not limit the rights and remedies of the Lenders for any breach of Section
8.7 hereof or any other terms of this Agreement.

 

(iv)                              Proceeds from Life Policies.  The proceeds of
the Life Policies collaterally assigned to the Administrative Agent as security
for the Obligations shall be applied to the Revolving Credit (first to the
outstanding Swingline Loans and Agent Loans, then to the outstanding Revolving
Loans and then to cash collateralize outstanding L/C Obligations), but such
payments shall not reduce the Revolving Credit Commitments (though, until the
next Borrowing Base is calculated, such payments will reduce the Insurance
Availability by an amount equal to 75% of the corresponding cash surrender value
of the underlying Life Policies from which such proceeds arise).

 

(v)                                 Overadvances.  If at any time the sum of the
unpaid principal balance of the Revolving Loans, Swingline Loans, Agent Loans,
L/C Obligations and any reserves taken pursuant to Section 1.1 then outstanding
shall be in excess of the Borrowing Base as then determined and computed plus
any Permitted Overadvances then in effect (each such excess, an “Overadvance”),
the Borrower shall immediately (or, solely in the case, and only to the extent,
of an Overadvance arising from an Insurance Overadvance, within fifteen (15) day
of notice thereof) and without notice or demand pay over the amount of the
excess to the Administrative Agent for the account of the Lenders as and for a
mandatory prepayment on such Obligations, with each such prepayment first to be
applied to the outstanding Swingline Loans and Agent Loans, and then to the
outstanding Revolving Loans until payment in full thereof with any remaining
balance to be held by the Administrative Agent in a Collateral Account as
security for the Obligations owing with respect to the Letters of Credit.

 

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(vi)                              Application First to Base Rate Loans.  Unless
the Borrower otherwise directs, prepayments of the Loans under this Section 1.9
shall be applied first to Borrowings of Base Rate Loans until payment in full
thereof with any balance applied to Borrowings of Eurodollar Loans in the order
in which their Interest Periods expire.  Each prepayment of Loans under this
Section 1.9 shall be made by the payment of the principal amount to be prepaid
and, in the case of any Eurodollar Loans, accrued interest thereon to the date
fixed for prepayment plus any amounts due the Lenders under Section 1.12
hereof.  Each pre-funding of L/C Obligations shall be made in accordance with
Section 9.4 hereof.

 

(c)                                  Prepayment Notices.  The Administrative
Agent will promptly advise each Lender of any notice of prepayment it receives
from the Borrower.  Any amount of the Revolving Loans paid or prepaid before the
Termination Date may, subject to the terms and conditions of this Agreement, be
borrowed, repaid and borrowed again.

 

(d)                                 Application.  Except as otherwise provided
in the preceding clause (b), all proceeds of Collateral, including without
limitation payments in respect of Receivables, shall be applied to the
Obligations in the manner described in Section 3.1 hereof, immediately upon
receipt by the Administrative Agent in the Concentration Account as provided in
Section 4.2 hereof.

 

Section 1.10                                                        Default
Rate.

 

Notwithstanding anything to the contrary contained in Section 1.4 hereof,
commencing upon notice from the Administrative Agent or the Requisite Lenders
(provided that, in the case of an Event of Default described in Section 9.1(a)
hereof or arising from a default in the observance or performance of any
covenant set forth in Section 8.22 hereof, such notice may be retroactively
dated as of the date of the first occurrence of such Event of Default), while
any Event of Default exists or after acceleration, the Borrower shall pay
interest (after as well as before entry of judgment thereon to the extent
permitted by law) on the principal amount of all Obligations owing by it at a
rate per annum equal to:

 

(a)                                  for any Base Rate Loan (which includes all
Swingline Loans and Agent Loans), the sum of 2.0% plus the Applicable Margin for
Base Rate Loans plus the Base Rate from time to time in effect;

 

(b)                                 for any Eurodollar Loan, the sum of 2.0%
plus the rate of interest in effect thereon at the time of such default until
the end of the Interest Period applicable thereto and, thereafter, at a rate per
annum equal to the sum of 2.0% plus the Applicable Margin for Base Rate Loans
plus the Base Rate from time to time in effect;

 

(c)                                  for any Reimbursement Obligation, the sum
of 2.0% plus the Applicable Margin for Base Rate Loans, plus the Base Rate from
time to time in effect; and

 

(d)                                 for any Letter of Credit, the sum of 2.0%
plus the Letter of Credit fee due under Section 2.1 with respect to such Letter
of Credit.

 

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Section 1.11                                                        The Notes.

 

(a)                                  The Revolving Loans made to the Borrower by
a Lender shall be evidenced by a single promissory note of the Borrower issued
to such Lender in the form of Exhibit C-1 hereto. Each such promissory note is
hereinafter referred to as a “Revolving Note” and collectively such promissory
notes are referred to as the “Revolving Notes.”

 

(b)                                 The Swingline Loans made to the Borrower by
the Swingline Lender shall be evidenced by a single promissory note of the
Borrower issued to the Swingline Lender in the form of Exhibit C-2 hereto.  Such
promissory note is hereinafter referred to as the “Swingline Note.”

 

(c)                                  Each Lender shall record on its books and
records or on a schedule to its appropriate Note the amount of each Loan
advanced, continued or converted by it, all payments of principal and interest
and the principal balance from time to time outstanding thereon, the type of
such Loan, and, for any Eurodollar Loan, the Interest Period and the interest
rate applicable thereto.  The record thereof, whether shown on such books and
records of a Lender or on a schedule to the relevant Note, shall be prima facie
evidence as to all such matters; provided, however, that the failure of any
Lender to record any of the foregoing or any error in any such record shall not
limit or otherwise affect the obligation of the Borrower to repay all Loans made
to it hereunder together with accrued interest thereon.  At the request of any
Lender and upon such Lender tendering to the Borrower the appropriate Note to be
replaced, the Borrower shall furnish a new Note to such Lender to replace any
outstanding Note.

 

Section 1.12                                                        Funding
Indemnity.

 

If any Lender shall incur any loss, cost or expense (including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
re-employment of deposits or other funds acquired by such Lender to fund or
maintain any Eurodollar Loan or the relending or reinvesting of such deposits or
amounts paid or prepaid to such Lender) as a result of:

 

(a)                                  any payment, prepayment or conversion of a
Eurodollar Loan on a date other than the last day of its Interest Period,

 

(b)                                 any failure (because of a failure to meet
the conditions of Section 7 or otherwise) by the Borrower to borrow or continue
a Eurodollar Loan, or to convert a Base Rate Loan into a Eurodollar Loan, on the
date specified in a notice given pursuant to Section 1.5(a) hereof,

 

(c)                                  any failure by the Borrower to make any
payment of principal on any Eurodollar Loan when due (whether by acceleration or
otherwise), or

 

(d)                                 any acceleration of the maturity of a
Eurodollar Loan as a result of the occurrence of any Event of Default hereunder,

 

then, upon the demand of such Lender, the Borrower shall pay to such Lender such
amount as will reimburse such Lender for such loss, cost or expense.  If any
Lender makes such a claim for compensation, it shall provide to the Borrower,
with a copy to the Administrative Agent, a

 

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certificate setting forth the amount of such loss, cost or expense in reasonable
detail and the amounts shown on such certificate shall be conclusive if
reasonably determined.

 

Section 1.13                                                        Revolving
Credit Commitment Terminations.

 

(a)                                  The Borrower shall have the right at any
time and from time to time, upon 30 days’ prior written notice to the
Administrative Agent (which notice shall be irrevocable), to terminate the
Revolving Credit Commitments.  The Administrative Agent shall give prompt notice
to each Lender of any such termination of the Revolving Credit Commitments.  If
the Borrower wishes to terminate the Revolving Credit Commitments, the Borrower
shall prepay the Obligations in full on the date fixed for such termination,
together with any amounts due the Lenders under Sections 1.12 and 2.1(c) hereof
and the Borrower shall either cause all Letters of Credit to be returned for
cancellation or provide the Administrative Agent with standby letters of credit
in form satisfactory to the Administrative Agent (in the face amount of 105% of
the applicable L/C Obligations) or cash collateral for existing Letters of
Credit (in the amount of 105% of the applicable L/C Obligations).

 

(b)                                 Any termination of the Revolving Credit
Commitments pursuant to this Section 1.13 may not be reinstated.

 

Section 1.14                                                        Substitution
of Lenders.

 

Upon the receipt by the Borrower of (a) a claim from any Lender for compensation
under Section 10.3 or 12.1 hereof, or a notice made by any Lender under
Section 10.1 or 10.2 hereof or (b) in the event any Lender is a Defaulting
Lender or is otherwise in default in any material respect with respect to its
obligations under the Loan Documents or (c) in the event any Lender refuses to
grant a requested amendment or waiver under Section 12.13 hereof after receiving
a written request therefor from the Borrower which is otherwise consented to by
the Required Lenders (any such Lender referred to in clauses (a)-(c) above being
hereinafter referred to as an “Affected Lender”), the Borrower may, in addition
to any other rights it may have hereunder or under applicable law, require, at
its expense, any such Affected Lender to assign, at par plus accrued interest
and fees, if any, without recourse, all of its interest, rights and obligations
hereunder (including all of its Revolving Credit Commitments and the Loans and
participation interests in Swingline Loans, Agent Loans and Letters of Credit
and other amounts at any time owing to it hereunder and the other Loan
Documents) to a bank or other institutional lender specified by the Borrower;
provided, that (i) such assignment shall not conflict with or violate any law,
rule or regulation or order of any court or other governmental authority,
(ii) in the case of an Affected Lender arising as a result of notice made by
such Lender under Section 10.1 or 10.2 hereof, the prospective assignee shall be
able to make Eurodollar Loans, (iii) the Borrower shall have received the
written consent of the Administrative Agent, which consent shall not be
unreasonably withheld, to such assignment, (iv) the Borrower shall have paid to
the Affected Lender all monies other than such principal owing to it hereunder,
and (v) the assignment is entered into in accordance with the other requirements
of Section 12.12 hereof.

 

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SECTION 2.
FEES.

 

Section 2.1                                                              Fees.

 

(a)                                  Commitment Fee.  The Borrower shall pay to
the Administrative Agent for the ratable account of the Lenders in accordance
with their Revolver Percentages a commitment fee at the rate of 0.50% per annum
(computed on the basis of a year of 360 days and the actual number of days
elapsed) for commitment fees multiplied by the average daily Unused Revolving
Credit Commitments.  Such fee shall be payable monthly in arrears on the first
Business Day of each month in each year (commencing on the first such date
occurring after the date hereof) and on the Termination Date, unless the
Revolving Credit Commitments are terminated in whole on an earlier date, in
which event the commitment fee for the period to the date of such termination in
whole shall be paid on the date of such termination.

 

(b)                                 Letter of Credit Fees.  Monthly in arrears,
on the first Business Day of each calendar month (commencing on the first such
date occurring after the date hereof), the Borrower shall pay to the
Administrative Agent, for the ratable benefit of the Lenders in accordance with
their Revolver Percentages, a letter of credit fee (i) with respect to Standby
Letters of Credit, at a rate per annum equal to the Applicable Margin for
Standby Letter of Credit fees (computed on the basis of a year of 360 days and
the actual number of days elapsed) multiplied by the daily average face amount
of Standby Letters of Credit outstanding during such calendar quarter and
(ii) with respect to Commercial Letters of Credit, at a rate per annum equal to
the Applicable Margin for Commercial Letter of Credit fees (computed on the
basis of a year of 360 days and the actual number of days elapsed) multiplied by
the daily average face amount of Commercial Letters of Credit outstanding during
such calendar quarter.  In addition, the Borrower shall pay to the L/C Issuer
for its own account the L/C Issuer’s standard issuance, drawing, negotiation,
amendment, and other administrative fees for each Letter of Credit.  Such
standard fees referred to in the preceding sentence may be established by the
L/C Issuer from time to time.

 

(c)                                  Other Fees.  The Borrower shall pay to the
Administrative Agent, for its own use and benefit, the fees agreed to between
the Administrative Agent and the Borrower in a fee letter dated the date hereof,
or as thereafter amended in writing between them.

 

(d)                                 Audit Fees.  Subject to the cost limitations
set forth in Section 8.6 hereof, the Borrower shall pay to the Administrative
Agent for its own use and benefit charges for audits of the Collateral performed
by the Administrative Agent or its agents or representatives in such amounts as
the Administrative Agent may from time to time request (the Administrative Agent
acknowledging and agreeing that such charges shall be computed in the same
manner as it at the time customarily uses for the assessment of charges for
similar collateral audits, plus reimbursement for reasonable out-of-pocket costs
and expenses).

 

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SECTION 3.
PLACE AND APPLICATION OF PAYMENTS.

 

Section 3.1                                                              Place
and Application of Payments.

 

(a)                                  Place of Payment.  All payments of
principal of and interest on the Loans and the Reimbursement Obligations, and of
all other Obligations payable by the Borrower under this Agreement and the other
Loan Documents, shall be made by the Borrower to the Administrative Agent by no
later than 1:00 p.m. (Chicago time) on the due date thereof at the office of the
Administrative Agent in Chicago, Illinois (or such other location as the
Administrative Agent may designate to the Borrower in writing).  Unless the
Administrative Agent shall otherwise agree, any payments received after such
time shall be deemed to have been received by the Administrative Agent on the
next Business Day.  All such payments shall be made in U.S. Dollars, in
immediately available funds at the place of payment.  The Administrative Agent
will promptly thereafter cause to be distributed like funds relating to the
payment of principal or interest on Loans and on Reimbursement Obligations in
which the Lenders have purchased Participating Interests ratably to the Lenders
and like funds relating to the payment of any other amount payable to any Lender
to such Lender, in each case to be applied in accordance with the terms of this
Agreement.  If the Administrative Agent causes amounts to be distributed to any
Lender in reliance upon the assumption that the Borrower will make a scheduled
payment and such scheduled payment is not so made, each Lender shall, on demand,
repay to the Administrative Agent the amount distributed to such Lender together
with interest thereon in respect of each day during the period commencing on the
date such amount was distributed to such Lender and ending on (but excluding)
the date such Lender repays such amount to the Administrative Agent, at a rate
per annum equal to:  (i) from the date the distribution was made to the date 2
Business Days after payment by such Lender is due hereunder, the Federal Funds
Rate for each such day and (ii) from the date 2 Business Days after the date
such payment is due from such Lender to the date such payment is made by such
Lender, the Base Rate in effect for each such day.

 

(b)                                 Application of Collateral Proceeds Before
Default. Prior to the occurrence of an Event of Default, all payments by the
Borrower hereunder on account of the Obligations and all other proceeds of
Collateral shall (subject to the other terms of this Agreement) be applied by
the Administrative Agent against the outstanding Obligations as follows, subject
to Section 1.6(g) hereof:

 

(i)                                     first, to any outstanding fees, charges,
and expenses then due to the Administrative Agent and the Lenders;

 

(ii)                                  second, to outstanding interest charges
then due in respect of the Obligations;

 

(iii)                               third, to the outstanding principal balance
of the Swingline Loans and Agent Loans;

 

(iv)                              fourth, to the outstanding principal balance
of the Revolving Loans, Reimbursement Obligations in respect of amounts drawn
under Letters of Credit and Hedging

 

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Liabilities of which Administrative Agent has been previously informed by the
Lender providing the products resulting in the Hedging Liabilities in accordance
with Section 11.9 hereof; and

 

(v)                                 finally, to the extent that there remains
any outstanding Obligations due and payable, to be applied to, or held as
security (in a non-interest bearing account) for, any remaining unpaid or
unsatisfied Obligations including Funds Transfer and Deposit Account Liability,
and otherwise, to the Borrower.

 

Notwithstanding clause (iii) above, after any payments required under clauses
(i) and (ii) above have been made, to the extent any Eurodollar Loans are
outstanding and there are no Base Rate Loans outstanding to the Borrower, the
Borrower may direct that such proceeds be held in a cash collateral account
maintained by the Administrative Agent for the ratable benefit of the Lenders
and not applied to the Obligations consisting of Eurodollar Loans until the
earlier of (i) the last day of the Interest Period applicable to such Eurodollar
Loans and (ii) the occurrence of an Event of Default; provided, that unless a
Default or an Event of Default is in existence, the funds held in such cash
collateral account, at the Borrower’s direction, (x) shall be invested at the
Administrative Agent as directed by the Borrower (to the extent such investments
are available at the Administrative Agent), with interest thereon accruing for
the Borrower’s account or (y) shall be disbursed, at the Borrower’s direction,
so long as after giving effect to such disbursement, the Borrower is in
compliance with the applicable limits and ratios contained in the definitions of
the term “Borrowing Base”, “Eligible Inventory” and “Eligible Receivables”
contained in this Agreement.

 

(c)                                  Application After Default.  Anything
contained herein or in any other Loan Document to the contrary notwithstanding,
all payments and collections received in respect of the Obligations and all
proceeds of the Collateral received, in each instance, by the Administrative
Agent or any of the Lenders after the occurrence and during the continuance of
an Event of Default shall be remitted to the Administrative Agent and
distributed as follows, subject to Section 1.6(g) hereof:

 

(i)                                     first, to the payment of any outstanding
costs and expenses incurred by the Administrative Agent in monitoring,
verifying, protecting, preserving or enforcing the Liens on the Collateral, and
in protecting, preserving or enforcing rights under this Agreement or any of the
other Loan Documents, and payable by the Borrower under this Agreement,
including without limitation under Section 12.15 hereof (such funds to be
retained by the Administrative Agent for its own account unless it has
previously been reimbursed for such costs and expenses by the Lenders, in which
event such amounts shall be remitted to the Lenders to reimburse them for
payments theretofore made to the Administrative Agent);

 

(ii)                                  second, to the payment of any outstanding
interest or fees due under the Loan Documents to be allocated pro rata in
accordance with the aggregate unpaid amounts owing to each holder thereof;

 

(iii)                               third, to the payment of principal on the
Swingline Loans and Agent Loans;

 

(iv)                              fourth, to the payment of principal on the
Revolving Loans, unpaid Reimbursement Obligations, together with amounts to be
held by the Administrative Agent as

 

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collateral security for any outstanding L/C Obligations pursuant to Section 9.4
hereof (until the Administrative Agent is holding an amount of cash equal to
105% of the then outstanding amount of all such L/C Obligations), the aggregate
amount paid to, or held as collateral security for, the Lenders to be allocated
pro rata in accordance with the aggregate unpaid amounts owing to each holder
thereof and the Hedging Liabilities of which Administrative Agent has been
previously informed by the Lender providing the products resulting in the
Hedging Liabilities in accordance with Section 11.9 hereof;

 

(v)                                 fifth, to the payment of all other unpaid
Obligations (including without limitation Funds Transfer and Deposit Account
Liability) and all other indebtedness, obligations, and liabilities of the
Borrower and any other Loan Parties secured by the Collateral Documents to be
allocated pro rata in accordance with the aggregate unpaid amounts owing to each
holder thereof; and

 

(vi)                              finally, to the Borrower or to whomever the
Administrative Agent reasonably determines to be lawfully entitled thereto.

 

(d)                                 Except as otherwise specifically provided
for herein, the Borrower hereby irrevocably waives the right to direct the
application of payments and collections at any time received by the
Administrative Agent or any of the Lenders from or on behalf of the Borrower,
and the Borrower hereby irrevocably agrees that, during the existence and
continuation of any Event of Default, the Administrative Agent shall have the
continuing exclusive right to apply and reapply any and all such payments and
collections received at any time by the Administrative Agent or any of the
Lenders against the Obligations in the manner described above.  In the event
that the amount of any Hedging Liability is not fixed and determined at the time
proceeds of Collateral are received which are to be allocated thereto, the
proceeds of Collateral so allocated shall be held by the Administrative Agent as
collateral security (in a non-interest bearing account) until such Hedging
Liability is fixed and determined and then the same shall (if and when, and to
the extent that, payment of such liability is required by the terms of the
relevant contractual arrangements) be applied to such liability.

 

(e)                                  The Borrower hereby irrevocably authorizes
the Administrative Agent or any Lender to charge any of the Borrower’s deposit
accounts maintained with the Administrative Agent or any Lender for the amounts
from time to time necessary to pay any then due Obligations; provided that the
Borrower acknowledges and agrees that neither the Administrative Agent nor any
Lender shall be under an obligation to do so and neither the Administrative
Agent nor any Lender shall incur any liability to the Borrower or any other
Person for the Administrative Agent’s or any Lender’s failure to do so.

 

Section 3.2                                                             
Computation of Obligations Outstanding.

 

For the purpose of calculating the aggregate principal balance of the
Obligations outstanding hereunder, the Obligations shall be deemed to be paid on
the date payments or collections, as the case may be, are applied by the
Administrative Agent to such Obligations.  The Administrative Agent shall apply
all payments and collections received in respect of the Obligations, and all
proceeds of Collateral, in each case received by the Administrative Agent, in
reduction of the Obligations immediately after the Administrative Agent deems
such sums collected in good funds in accordance with its then standard criteria
for determining availability

 

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of funds.  Notwithstanding the foregoing, if any item credited by the
Administrative Agent in reduction of the Obligations is not honored, the
Administrative Agent may reverse any provisional credit which has been given for
the item and make appropriate adjustments to the amount of interest and
principal otherwise due hereunder.

 

SECTION 4.
THE COLLATERAL AND GUARANTIES.

 

Section 4.1                                                             
Collateral.

 

The Obligations shall be secured by valid, perfected and enforceable Liens on
all right, title and interest of the Borrower and each other Loan Party in all
real and personal property and fixtures of such Person, including all accounts,
chattel paper, instruments, documents, general intangibles (including payment
intangibles and software, all patents, trademarks, copyrights and similar
intellectual property rights, and all application and registrations therefor,
and all tax refunds), letter-of-credit rights, supporting obligations, deposit
accounts, investment property, inventory, equipment, fixtures, and commercial
tort claims, whether now owned or hereafter acquired or arising, and all
proceeds thereof (all such terms shall have the meaning ascribed to such terms
in the Uniform Commercial Code as in effect in the State of Illinois).  The
Borrower acknowledges and agrees that the Liens on the Collateral shall be
granted to the Administrative Agent for the benefit of itself, the L/C Issuer,
the Lenders and their Affiliates, and shall be valid and perfected first
priority Liens subject only to Liens permitted by Section 8.8 hereof, in each
case pursuant to one or more Collateral Documents from such Persons, each in
form and substance satisfactory to the Administrative Agent.  The Obligations
shall be further secured by (i) valid, perfected and enforceable Liens on all
right, title and interests of the Borrower (or such other applicable Loan Party)
in 100% of the equity securities of each Domestic Subsidiary of the Borrower and
in 65% of the voting equity securities of each Foreign Subsidiary whose equity
securities are directly owned by the Borrower or a Domestic Subsidiary, (ii) the
Life Insurance Assignment and (iii) the Mortgages.

 

Section 4.2                                                             
Collateral Proceeds.

 

The Borrower agrees to make, and to cause each other Loan Party to make, such
arrangements as shall be necessary or appropriate to assure (through the use of
one or more lockboxes under the sole control of the Administrative Agent) that
all proceeds of the Collateral are deposited (in the same form as received) in
one or more remittance accounts maintained with or otherwise under the control
of the Administrative Agent, all of which, other than the PrivateBank Accounts
and the RBS Accounts, are maintained with the Administrative Agent or a Lender
(each special restricted account maintained with the Administrative Agent or a
Lender to be referred to herein as a “Concentration Account”).  Within 60 days
of the Closing Date, each of the PrivateBank Accounts shall be closed and any
remaining funds in the PrivateBank Master Account shall be transferred to the
Borrower’s Account and any remaining funds in the PrivateBank Collection Account
shall be transferred to a Concentration Account.  Until closed all proceeds in
the PrivateBank Collection Account shall be transferred on a daily basis to a
Concentration Account.  Any proceeds of Collateral (other than proceeds in the
RBS Merchant Services Account up to an amount equal to $50,000 at any one time)
received by the Borrower and any other Loan Party shall be held by the Borrower
or such other Loan Party in trust for the Administrative Agent and the Lenders
in the same form in which received, shall not be

 

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commingled with any assets of the Borrower or such other Loan Party, and shall
be delivered immediately to the Administrative Agent (together with any
necessary endorsements thereto) for deposit into a Concentration Account.  The
Borrower acknowledges (on behalf of itself and additional Loan Parties) that the
Administrative Agent has (and is hereby granted to the extent it does not
already have) a Lien on each Concentration Account and all funds contained
therein to secure the Obligations.  No amounts deposited in any Concentration
Account shall be released to the Borrower, but shall instead be applied to, or
otherwise held as collateral security for, the outstanding Obligations to the
extent and as set forth in Section 3.1 hereof, it being understood and agreed
that the Borrower, notwithstanding such application, shall have the right to
obtain additional Revolving Loans and Letters of Credit under this Agreement
subject to the terms and conditions hereof.

 

Section 4.3                                                              Liens
on Real Property.

 

In the event that the Borrower or any other Loan Party owns or hereafter
acquires any fee interest in real property with the higher of a fair market or
book value in excess of $100,000, the Borrower shall, or the Borrower shall
cause such other Loan Party to, execute and deliver to the Administrative Agent
(or a security trustee therefor) a Mortgage reasonably acceptable in form and
substance to the Administrative Agent for the purpose of granting to the
Administrative Agent for the benefit of itself, the L/C Issuer, the Lenders and
their Affiliates a Lien on such real property to secure the Obligations, shall
pay all taxes, costs and expenses incurred by the Administrative Agent in
recording such Mortgage, and shall supply to the Administrative Agent at the
Borrower’s cost and expense a survey, environmental report (including Phase I
and, if reasonably required by the Administrative Agent at any time, Phase II
environmental assessments), hazard insurance policy, appraisals and a
mortgagee’s policy of title insurance from a title insurer reasonably acceptable
to the Administrative Agent insuring the validity of such Mortgage and its
status as a first Lien (subject to Liens permitted by this Agreement) on the
real property encumbered thereby and such other instruments, documents,
certificates, and opinions reasonably required by the Administrative Agent in
connection therewith.

 

Section 4.4                                                             
Guaranties.

 

The payment and performance of the Obligations shall at all times be guaranteed
by each Loan Party (other than the Borrower), pursuant to one or more Guaranties
in form and substance reasonably acceptable to the Administrative Agent.

 

Section 4.5                                                              Further
Assurances.

 

The Borrower agrees that it shall, and shall cause each other Loan Party to,
from time to time at the request of the Administrative Agent, execute and
deliver such documents and do such acts and things as the Administrative Agent
may reasonably request in order to provide for or perfect or protect the Liens
of the Administrative Agent on the Collateral.  In the event the Borrower or any
other Loan Party forms or acquires any Domestic Subsidiary after the date
hereof, the Borrower shall promptly upon such formation or acquisition cause
such newly formed or acquired Domestic Subsidiary to execute a Guaranty and such
Collateral Documents as the Administrative Agent may then require, and the
Borrower shall also deliver to the Administrative Agent, or cause such Domestic
Subsidiary to deliver to the Administrative Agent,

 

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at the Borrower’s cost and expense, such other instruments, documents,
certificates, and opinions reasonably required by the Administrative Agent in
connection therewith, including without limitation a Pledge Agreement relating
to the equity of such new Domestic Subsidiary, appropriate Uniform Commercial
Code financing statements, evidence of corporate authority and appropriate legal
opinions.  In the event the Borrower or any other Loan Party directly forms or
acquires any Foreign Subsidiary after the date hereof and the voting equity
securities of such Foreign Subsidiary are directly owned by the Borrower or a
Domestic Subsidiary, the Borrower shall promptly upon such formation or
acquisition deliver or cause to be delivered a Pledge Agreement relating to 65%
of the voting equity securities of such new Foreign Subsidiary and such other
instruments, documents, certificates, and opinions reasonably required by the
Administrative Agent in connection therewith.

 

SECTION 5.
INTENTIONALLY OMITTED.

 

SECTION 6.
REPRESENTATIONS AND WARRANTIES.

 

The Borrower represents and warrants to the Administrative Agent and the Lenders
as follows:

 

Section 6.1                                                             
Organization and Qualification.

 

The Borrower is duly organized, validly existing and in good standing as a
corporation under the laws of its state of incorporation, as set forth in the
introductory paragraph of this Agreement, has full and adequate power to own its
Property and conduct its business as now conducted, and is duly licensed or
qualified and in good standing in each jurisdiction in which the nature of the
business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying, except where the failure to do so would
not have a Material Adverse Effect.

 

Section 6.2                                                              Loan
Parties.

 

Each Subsidiary of the Borrower is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated or
organized, as the case may be, has full and adequate power to own its Property
and conduct its business as now conducted, and is duly licensed or qualified and
in good standing in each jurisdiction in which the nature of the business
conducted by it or the nature of the Property owned or leased by it requires
such licensing or qualifying, except where the failure to do so would not have a
Material Adverse Effect.  As of the Closing Date, Schedule 6.2 hereto identifies
each Loan Party, the jurisdiction of its incorporation or organization, as the
case may be, the percentage of issued and outstanding shares of each class of
its capital stock or other equity interests owned by other Loan Parties (such
percentage amount limited to the Closing Date, in the case of the Borrower’s
equity securities) and a description of each class of its authorized capital
stock and other equity interests and the number of shares of each class issued
and outstanding (such number limited to the Closing Date in the case of the
Borrower).  All of the outstanding shares of capital stock and other equity
interests of each Loan Party are validly issued and outstanding and fully paid
and nonassessable and all such shares and other equity interests indicated on
Schedule 6.2 as owned

 

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by any Loan Party are owned, beneficially and of record, by such Loan Party free
and clear of all Liens other than the Liens granted in favor of the
Administrative Agent pursuant to the Collateral Documents.  There are no
outstanding commitments or other obligations of any Subsidiary of the Borrower
to issue, and no options, warrants or other rights of any Person to acquire, any
shares of any class of capital stock or other equity interests of any Subsidiary
of the Borrower.

 

Section 6.3                                                             
Authority and Validity of Obligations.

 

The Borrower has full right and authority to enter into this Agreement and the
other Loan Documents executed by it, to make the borrowings herein provided for,
to issue its Revolving Notes in evidence thereof, to grant to the Administrative
Agent the Liens described in the Collateral Documents executed by the Borrower,
and to perform all of its obligations hereunder and under the other Loan
Documents executed by it.  Each Loan Party (other than the Borrower) has full
right and authority to enter into the Loan Documents executed by it, to
guarantee the obligations of the Borrower, to grant to the Administrative Agent
the Liens described in the Collateral Documents executed by such Person, and to
perform all of its obligations under the Loan Documents executed by it.  The
Loan Documents delivered by each Loan Party have been duly authorized, executed,
and delivered by such Person and constitute valid and binding obligations of
such Person enforceable against it in accordance with their terms, except as
such enforceability may be limited by applicable bankruptcy laws and laws
affecting creditors’ rights generally; and this Agreement and the other Loan
Documents do not, nor does the performance or observance by any Loan Party of
any of the matters and things herein or therein provided for, (a) contravene or
constitute a default under any provision of law or any judgment, injunction,
order or decree binding upon any Loan Party or any provision of the
organizational documents (e.g., charter, articles of incorporation or by-laws,
articles of association or operating agreement, or partnership agreement, or
other similar constituent document) of any Loan Party, (b) contravene or
constitute a default under any covenant, indenture or agreement of or affecting
any Loan Party or any of its Property, which default could reasonably be
expected to have a Material Adverse Effect, or (c) result in the creation or
imposition of any Lien on any Property of any Loan Party other than the Liens
granted in favor of the Administrative Agent pursuant to the Collateral
Documents.

 

Section 6.4                                                              Use of
Proceeds; Margin Stock.

 

The Borrower shall use the proceeds of the Credit made available hereunder to
pay fees and expenses related to this Agreement, to repay Indebtedness for
Borrowed Money owing to the Existing Lender, for general working capital
purposes of the Borrower or any of its Subsidiaries, for financing Capital
Expenditures permitted by this Agreement, and for such other legal and proper
purposes as are consistent with this Agreement and all applicable laws.  No Loan
Party is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any Loan or any other extension of credit made hereunder will be used to
purchase or carry any such margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock.  Margin stock (as
hereinabove defined) constitutes less than 25% of those assets of the Loan
Parties which are subject to any limitation on sale, pledge, or other
restriction hereunder.  On the Closing Date, the Borrower has used proceeds of
the Loans advanced on the date hereof to satisfy fees and expenses payable in
connection with the transactions contemplated hereby and to repay and

 

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satisfy in full all of the Indebtedness for Borrowed Money and other obligations
of the Loan Parties to the Existing Lender and, in connection therewith, the
Existing Lender has released all of its Liens on the Property of each Loan
Party.

 

Section 6.5                                                             
Financial Reports.

 

The audited consolidated balance sheet of the Borrower and its Subsidiaries as
at December 31, 2009, and the related consolidated statements of income,
retained earnings and cash flows of the Borrower and its Subsidiaries for the
fiscal year then ended, and accompanying notes thereto, and the unaudited
interim consolidated balance sheet of the Borrower and its Subsidiaries as at
March 31, 2010, and the related consolidated statements of income, retained
earnings and cash flows of the Loan Parties for the 3 months then ended,
heretofore furnished to the Administrative Agent and the Lenders, fairly present
in all material respects the consolidated financial condition of the Borrower
and its Subsidiaries as at said dates and the consolidated results of their
operations and cash flows for the periods then ended in conformity with GAAP
applied on a consistent basis (and, in the case of interim financial statement,
subject to the absence of footnote disclosures and normal year-end
adjustments).  No Loan Party has contingent liabilities which are material to it
other than as indicated on such financial statements (or the notes thereto) or,
with respect to future periods, on the financial statements furnished pursuant
to Section 8.5 hereof.

 

Section 6.6                                                              No
Material Adverse Change.

 

Since March 31, 2010, there has been no change in the financial condition or
business prospects of the Borrower or any of its Subsidiaries except those
occurring in the ordinary course of business, none of which individually or in
the aggregate could reasonably be expected to result in a Material Adverse
Effect.

 

Section 6.7                                                              Full
Disclosure.

 

The written statements and information furnished to the Administrative Agent and
the Lenders in connection with the negotiation of this Agreement and the other
Loan Documents and the commitments by the Lenders to provide all or part of the
financing contemplated hereby do not contain any untrue statements of a material
fact or omit a material fact necessary to make the material statements contained
herein or therein not materially misleading.

 

Section 6.8                                                             
Intellectual Property and Licenses.

 

The Borrower and each of its Subsidiaries owns, possesses, or has the right to
use all necessary patents, licenses, franchises, trademarks, trade names, trade
styles, copyrights, trade secrets, know how and confidential commercial and
proprietary information material to the conduct of its businesses as now
conducted, without known conflict with any patent, license, franchise,
trademark, trade name, trade style, copyright or other proprietary right of any
other Person, which conflict could reasonably be expected to have a Material
Adverse Effect, all of which, to the extent federally-registered as of the
Closing Date, are described in Schedule 6.8 hereto.

 

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Section 6.9                                                             
Governmental Authority and Licensing.

 

The Borrower and each of its Subsidiaries has received all licenses, permits,
and approvals of all federal, state, and local governmental authorities, if any,
necessary to conduct their businesses, in each case where the failure to obtain
or maintain the same could reasonably be expected to have a Material Adverse
Effect.  No investigation or proceeding which could reasonably be expected to
result in revocation or denial of any license, permit, or approval is pending
or, to the knowledge of the Borrower, threatened which, in any such case, could
reasonably be expected to have a Material Adverse Effect.

 

Section 6.10                                                        Good Title.

 

The Borrower and each of its Subsidiaries has good and defensible title (or
valid leasehold interests) to all of its material assets as reflected on the
most recent consolidated balance sheet of the Loan Parties furnished to the
Administrative Agent and the Lenders (except for sales of assets in the ordinary
course of business and dispositions of Property permitted pursuant to
Section 8.10), subject to no Liens other than those permitted by Section 8.8
hereof.

 

Section 6.11                                                        Litigation
and Other Controversies.

 

No judgments are outstanding against the Borrower or any of its Subsidiaries,
nor is there any litigation or governmental or arbitration proceeding or labor
controversy pending, nor to the knowledge of the Borrower threatened, against
any Loan Party, except judgments, litigations, proceedings and controversies
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

 

Section 6.12                                                        Taxes.

 

All federal and state income tax returns and all other material tax returns
required to be filed by the Borrower and each of its Subsidiaries in any
jurisdiction have, in fact, been filed, and all taxes, assessments, fees and
other governmental charges upon the Borrower or any of its Subsidiaries or upon
any of its Property, income or franchises, which are shown to be due and payable
in such returns, have been paid, except such taxes, assessments, fees and
governmental charges, if any, as are being contested in good faith and by
appropriate proceedings which prevent enforcement of the matter under contest
and as to which adequate reserves established in accordance with GAAP have been
provided.  The Borrower does not know of any proposed additional tax assessment
against the Borrower or any of its Subsidiaries for which adequate provisions in
accordance with GAAP have not been made on their accounts. Adequate provisions
in accordance with GAAP for taxes on the books of the Borrower and each of its
Subsidiaries have been made for all open years, and for its current fiscal
period.

 

Section 6.13                                                        Approvals.

 

No authorization, consent, license, or exemption from, or filing or registration
with, any court or governmental department, agency or instrumentality, nor any
approval or consent of any other Person, is or will be necessary to the valid
execution, delivery or performance by any Loan Party of any Loan Document,
except for such approvals which have been obtained prior to the date of this
Agreement and remain in full force and effect.

 

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Section 6.14                                                        Affiliate
Transactions.

 

Except as set forth in Section 8.15, neither the Borrower nor any of its
Subsidiaries is a party to any contracts or agreements with any of its
Affiliates on terms and conditions which are less favorable to the Borrower or
such Subsidiary than would be usual and customary in similar contracts or
agreements between Persons not affiliated with each other.

 

Section 6.15                                                        Investment
Company.

 

No Loan Party is an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.

 

Section 6.16                                                        ERISA.

 

Each Loan Party and each other member of its Controlled Group has fulfilled in
all material respects its obligations under the minimum funding standards of and
is in compliance in all material respects with ERISA and the Code to the extent
applicable to it and has not incurred any liability to the PBGC or a Plan under
Title IV of ERISA other than a liability to the PBGC for premiums under
Section 4007 of ERISA and the obligation to satisfy the minimum funding standard
under Section 412 of the Code.  No Loan Party has any contingent liabilities
with respect to any post-retirement benefits under a Welfare Plan, other than
liability for continuation coverage described in Part 6 of Title I of ERISA
except for such liabilities which would not reasonably be excepted to have a
Material Adverse Effect.

 

Section 6.17                                                        Compliance
with Laws.

 

The Borrower and each of its Subsidiaries is in compliance with the requirements
of all federal, state and local laws, rules and regulations applicable to or
pertaining to their Property or business operations (including, without
limitation, the Occupational Safety and Health Act of 1970 and the Americans
with Disabilities Act of 1990) where any such non-compliance, individually or in
the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

Section 6.18                                                        Other
Agreements.

 

Neither the Borrower nor any of its Subsidiaries is in default under the terms
of any covenant, indenture or agreement of or affecting such Person or any of
its Property, which default if uncured could reasonably be expected to have a
Material Adverse Effect.  There is no dispute regarding any agreement, contract,
lease or commitment of or affecting the Borrower or any of its Subsidiaries,
which dispute could reasonably be expected to have Material Adverse Effect.

 

Section 6.19                                                        Solvency.

 

The Borrower and each of its Subsidiaries is now and, after giving effect to the
initial Loans to be made and initial Letters of Credit to be issued hereunder
and all related transactions, will be, Solvent.

 

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Section 6.20                                                        No Event of
Default.

 

No Event of Default has occurred and is continuing.

 

Section 6.21                                                        Business
Plans.

 

The business plans of the Borrower and its Subsidiaries furnished on the date
hereof have been, and the business plans of the Borrower and its Subsidiaries to
be furnished in accordance with Section 7.1 will be, prepared by the Borrower
and its financial personnel in light of the past business of the Borrower and
its Subsidiaries and represent or will represent, as applicable, as of the date
thereof, the reasonable good faith belief of the Borrower and such personnel as
to the probable course of the business of the Borrower and its Subsidiaries,
subject to the assumptions and qualifications stated therein, it being
understood that no assurance is given that the actual financial results of the
Borrower and its Subsidiaries will not be materially different from the
projected results set forth in such business plans as a result of events or
factors that impact or effect the assumptions and qualifications underlying such
business plans.

 

Section 6.22                                                        Employee
Controversies.

 

Except as disclosed on Schedule 6.22 attached hereto, (a) there are no
controversies pending or, to the best of the Borrower’s knowledge, threatened,
between the Borrower or any of its Subsidiaries and any of its respective
employees, other than employee grievances and controversies arising in the
ordinary course of business which would not, in the aggregate, be reasonably
likely to have a Material Adverse Effect, (b) the Borrower and each of its
Subsidiaries is in material compliance with all federal and state laws
respecting employment and employment terms, conditions and practices, except for
such noncompliance as would not be reasonably likely to have a Material Adverse
Effect and (c) as of the date hereof, neither the Borrower nor any of its
Subsidiaries has any union representation questions, grievances, discrimination
or unfair labor practice complaints pending or threatened against it.

 

Section 6.23                                                       
Environmental Matters.

 

Except as disclosed on Schedule 6.23 attached hereto, (a) neither the Borrower
nor any of its Subsidiaries has Managed Hazardous Substances on or off its
property other than in compliance with Environmental Laws, except for such
noncompliance as could not be reasonably likely to have a Material Adverse
Effect; (b) the Borrower and each of its Subsidiaries has complied in all
respects with Environmental Laws regarding transfer, construction on and
operation of its business and property (including but not limited to notifying
authorities, observing restrictions on use, transferring, modifying or obtaining
permits, licenses, approvals and registrations, making required notices,
certifications and submissions, complying with financial liability requirements,
Managing Hazardous Substances and Responding to the presence or Release of
Hazardous Substances connected with operation of the business or property), the
noncompliance of which would be reasonably likely to have a Material Adverse
Effect; (c) neither the Borrower nor any of its Subsidiaries has any material
contingent liability with respect to the Management of any Hazardous Substance;
(d) neither the Borrower nor any of its Subsidiaries shall permit others to
Manage, whether on or off its respective property, Hazardous Substances
connected with the operation of its business or property, except in compliance
with Environmental Laws, except for such noncompliance as could not be

 

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reasonably likely to have a Material Adverse Effect; (e) the Borrower and each
of its Subsidiaries shall take prompt action in compliance with Environmental
Laws to Respond to the on-site or off-site Release of Hazardous Substances
connected with the operation of its business or property; and (f) neither the
Borrower nor any of its Subsidiaries has received any Environmental Notice, a
copy of which has not been promptly forwarded to the Administrative Agent.

 

Section 6.24                                                        Fees to
Third Parties.

 

Except as disclosed on Schedule 6.24, as of the date hereof, no Loan Party is in
any way obligated to any Person in respect of any finder’s or broker’s fee or
similar commission in connection with the closing of the transactions evidenced
by the Loan Documents.  The Borrower agrees to indemnify the Administrative
Agent and each Lender and hold the Administrative Agent and each Lender harmless
from any claims for any finder’s or broker’s fees or similar commissions from
any Persons.

 

Section 6.25                                                       
Subsidiaries; Joint Ventures; Partnerships.

 

As of the date hereof, neither the Borrower nor any of its Subsidiaries has any
Subsidiaries except as set forth on Schedule 6.2 attached hereto.  Neither the
Borrower nor any of its Subsidiaries is engaged in any joint venture or
partnership with any other Person, except as set forth on Schedule 6.2 attached
hereto.

 

Section 6.26                                                        Receivables.

 

Administrative Agent may rely, in determining which Receivables are Eligible
Receivables, on all statements and representations made by Borrowers with
respect to any Receivable or Receivables.

 

Section 6.27                                                        Trade
Relations.

 

There exists no actual or, to Borrower’s knowledge, threatened termination,
cancellation or limitation of, or any modification or change in, the business
relationship between Borrower or any of its Subsidiaries and any customer or any
group of customers whose purchases individually or in the aggregate are material
to the business of Borrower and its Subsidiaries, or with any material supplier,
except in each case, where the same could not reasonably be expected to have a
Material Adverse Effect, and there exists no present condition or state of facts
or circumstances which would prevent the Borrower or any of its Subsidiaries
from conducting such business after the consummation of the transactions
contemplated by this Agreement in substantially the same manner in which it has
heretofore been conducted.

 

SECTION 7.
CONDITIONS PRECEDENT.

 

The obligation of each Lender to advance any Loan or of the L/C Issuer to issue,
extend the expiration date (including by not giving notice of non-renewal) of or
increase the amount of any Letter of Credit under this Agreement, shall be
subject to the following conditions precedent:

 

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Section 7.1                                                              All
Credit Events.

 

At the time of each Credit Event hereunder, with respect to each Lender:

 

(a)                                  each of the representations and warranties
set forth herein and in the other Loan Documents shall be and remain true and
correct in all material respects as of said time, except to the extent the same
expressly relate to an earlier date;

 

(b)                                 the Loan Parties shall be in compliance with
all of the terms and conditions hereof and of the other Loan Documents, and no
Default or Event of Default shall have occurred and be continuing or would occur
as a result of such Credit Event; provided, however, that the Lenders (or the
Administrative Agent, in the case of Revolving Loans made pursuant to Section
1.2(b) hereof), in their sole discretion, may continue to make advances with
respect to a Credit Event notwithstanding the existence of any Default or Event
of Default and any such advances so made shall not be deemed a waiver of any
such Default or Event of Default;

 

(c)                                  in the case of any request for an extension
of credit under the Revolving Credit, after giving effect to such extension of
credit, the aggregate principal amount of all Revolving Loans, Swingline Loans,
Agent Loans, the US Dollar Equivalent of L/C Obligations and any reserves taken
pursuant to Section 1.1 hereof shall not exceed the lesser of (i) the Revolving
Credit Commitments and (ii) the Borrowing Base as then determined and computed
plus any then Permitted Overadvances;

 

(d)                                 in the case of a Borrowing the
Administrative Agent or the Swingline Lender shall have received the applicable
notice required hereunder by Section 1.5 hereof, in the case of the issuance of
any Letter of Credit the L/C Issuer shall have received a duly completed
Application for such Letter of Credit together with any fees called for by
Section 2.1 hereof, and, in the case of an extension or increase in the amount
of a Letter of Credit, a written request therefor in a form reasonably
acceptable to the L/C Issuer together with fees called for by Section 2.1
hereof; and

 

(e)                                  such Credit Event shall not violate any
order, judgment or decree of any court or other governmental authority or any
provision of law or regulation applicable to the Administrative Agent or such
Lender (including, without limitation, Regulation U of the Board of Governors of
the Federal Reserve System) as then in effect.

 

Each request for a Borrowing hereunder and each request for the issuance of,
increase in the amount of, or extension of the expiration date of, a Letter of
Credit shall be deemed to be a representation and warranty by the Borrower on
the date on such Credit Event as to the facts specified in subsections
(a) through (e), both inclusive, of this Section.

 

Section 7.2                                                              Initial
Credit Event.

 

Before or concurrently with the initial Credit Event:

 

(a)                                  the Administrative Agent shall have
received for each Lender this Agreement duly executed by the Borrower and the
Lenders;

 

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(b)                                 the Administrative Agent shall have received
for each Lender such Lender’s duly executed Revolving Notes of the Borrower
dated the date hereof and otherwise in compliance with the provisions of
Section 1.11 hereof;

 

(c)                                  the Administrative Agent shall have
received duly executed Collateral Documents together with (to the extent not
heretofore delivered to the Administrative Agent) (i) except to the extent
represented by uncertificated securities, original stock certificates or other
similar instruments or securities representing the amount of issued and
outstanding shares of capital stock or other equity interests of each Loan Party
pledged hereunder, together with stock powers for such Collateral executed in
blank and undated, (ii) patent, trademark, and copyright security agreements as
the Administrative Agent shall reasonably require, and (iii) subject to
Section 4.2 hereof, deposit account and securities account control agreements as
the Administrative Agent shall reasonably require;

 

(d)                                 the Administrative Agent shall have received
evidence of insurance required to be maintained under the Loan Documents, naming
the Administrative Agent as lender’s loss payee or additional insured, as
applicable;

 

(e)                                  the Administrative Agent shall have
received for each Lender copies of each Loan Party’s organizational documents
(e.g., articles of incorporation or by-laws, or other similar constituent
document) and any amendments thereto, certified in each instance by its
Secretary or Assistant Secretary or analogous officer or manager;

 

(f)                                    the Administrative Agent shall have
received copies of resolutions of each Loan Party’s board of directors (or
analogous governing board) authorizing the execution, delivery and performance
of this Agreement and the other Loan Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby, together with
specimen signatures of the persons authorized to execute such documents on the
behalf of such Loan Party, all certified in each instance by its Secretary or
Assistant Secretary or analogous officer or manager;

 

(g)                                 the Administrative Agent shall have received
copies of the certificates of good standing for each Loan Party (dated no
earlier than 10 days prior to the date hereof) from the office of the secretary
of the state of its incorporation or organization and of each state in which it
is qualified to do business as a foreign corporation or organization;

 

(h)                                 the Administrative Agent shall have received
a list of the Borrower’s Authorized Representatives;

 

(i)                                     the Administrative Agent shall have
received an executed fee letter called for by Section 2.1(c) hereof, and the
Administrative Agent shall have received for itself and for the Lenders the
initial fees called for by Section 2.1 hereof and all reimbursement for expenses
of the Administrative Agent incurred through the date hereof;

 

(j)                                     the Administrative Agent shall have
received financing statement, tax, suit and judgment lien search results against
the Property of the Loan Parties evidencing the absence of Liens on the Property
of the Loan Parties except as permitted by Section 8.8 hereof;

 

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(k)                                  all financing statements and other
documents relating to the Collateral shall have been filed or recorded, as
appropriate;

 

(l)                                     the Administrative Agent shall have
received a certificate with respect to the Loan Parties, duly executed and
delivered by an officer of the Borrower, attesting to the solvency of the Loan
Parties, in conformity with the provisions of Section 6.19 and after giving
effect to the initial Loan advances contemplated hereby;

 

(m)                               the Administrative Agent shall have received a
Borrowing Base Certificate showing the computation of the Borrowing Base in
reasonable detail as of the close of business not earlier than 5 days prior to
the initial Credit Event hereunder; and such Borrowing Base Certificate shall
reflect that (i) assuming the payment in full by the Loan Parties of all
accounts payable of such Loan Parties that are aged more than 90 days past
invoice date or, if later, more than 60 days past the applicable due date, if so
stated, and (ii) after the initial Loans have been made hereunder, the initial
Letters of Credit have been issued hereunder, all closing costs in connection
with the transaction contemplated hereby have been paid (or if accrued, treated
as paid) and all Indebtedness for Borrowed Money of the Loan Parties to the
Existing Lender has been repaid in full, Excess Availability is at least the
Minimum Required Excess Availability Amount;

 

(n)                                 the Administrative Agent shall be satisfied
that since March 31, 2010, there has been no change in the financial condition
of any Loan Party which individually or in the aggregate would reasonably be
expected to have a Material Adverse Effect;

 

(o)                                 the Administrative Agent shall have received
for each Lender the favorable written opinions of counsel to the Loan Parties,
in form and substance satisfactory to the Administrative Agent; and

 

(p)                                 the Administrative Agent shall have received
for the account of the Lenders such other agreements, instruments, documents,
certificates, and opinions as the Administrative Agent may reasonably request.

 

SECTION 8.
COVENANTS.

 

The Borrower agrees that, so long as any credit is available to or in use by the
Borrower hereunder, except to the extent compliance in any case or cases is
waived in writing pursuant to the terms of Section 12.13 hereof:

 

Section 8.1                                                             
Maintenance of Business.

 

The Borrower shall, and shall cause each of its Subsidiaries to, preserve and
maintain its existence, except as otherwise provided in Section 8.10(c) hereof. 
The Borrower shall, and shall cause each of its Subsidiaries to, preserve and
keep in force and effect all licenses, permits, franchises, approvals, patents,
trademarks, trade names, trade styles, copyrights and other proprietary rights
necessary to the proper conduct of its business where the failure to do so could
reasonably be expected to have a Material Adverse Effect.

 

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Section 8.2                                                             
Maintenance of Properties.

 

The Borrower shall, and shall cause each of its Subsidiaries to, maintain,
preserve and keep all of its material Property, plant and equipment in good
repair, working order and condition (ordinary wear and tear excepted) and shall
from time to time make all needful and proper repairs, renewals, replacements,
additions and betterments thereto so that at all times the efficiency thereof
shall be fully preserved and maintained; provided, that, this Section 8.2 shall
not restrict the Borrower or any of its Subsidiaries from consummating any
disposition of Property permitted pursuant to Section 8.10 hereof.

 

Section 8.3                                                              Taxes
and Assessments.

 

The Borrower shall duly pay and discharge, and shall cause each of its
Subsidiaries to duly pay and discharge, all taxes, rates, assessments, fees and
governmental charges upon or against it or its Property, in each case before the
same become delinquent and before penalties accrue thereon, unless and to the
extent that the same are being contested in good faith and by appropriate
proceedings which prevent enforcement of the matter under contest and adequate
reserves are provided therefor, so long as such contest could not be reasonably
likely to have a Material Adverse Effect.

 

Section 8.4                                                             
Insurance.

 

(a)                                  The Borrower shall insure and keep insured,
and shall cause each of its Subsidiaries to insure and keep insured, with
insurance companies reasonably acceptable to the Administrative Agent, all
insurable Property owned by it which is of a character usually insured by
Persons similarly situated and operating like Properties against loss or damage
from such hazards and risks, and in such amounts, as are insured by Persons
similarly situated and operating like Properties, including, without limitation,
business interruption insurance in amounts reasonably satisfactory to the
Administrative Agent; and the Borrower shall insure, and shall cause each of its
Subsidiaries to insure, such other hazards and risks (including, without
limitation, employers’ risks, product liability risks and public liability
risks) with good and responsible insurance companies as and to the extent
usually insured by Persons similarly situated and conducting similar
businesses.  The Borrower shall in any event maintain, and cause each other Loan
Party to maintain, insurance on the Collateral to the extent required by the
Collateral Documents including, without limitation, naming the Administrative
Agent as loss payee and/or additional insured, as applicable, on all such
insurance policies under lender loss payable and/or additional insured
endorsements satisfactory to the Administrative Agent; provided that, for the
avoidance of doubt, the Administrative Agent hereby acknowledges that the
insurance agent of the Borrower does not need to execute that certain Assignment
of Business Interruption Insurance Policy as Collateral Security, dated as of
the Closing Date, by the Borrower in favor of the Administrative Agent.  The
Borrower shall, upon the request of the Administrative Agent, furnish to the
Administrative Agent and the Lenders a certificate setting forth in summary form
the nature and extent of the insurance maintained pursuant to this Section.

 

(b)                                 the Borrower hereby directs all insurers
under such policies of insurance to pay all proceeds of insurance policies
directly to the Administrative Agent for application against the Obligations. 
The Borrower irrevocably makes, constitutes and appoints the Administrative
Agent (and all officers, employees or agents designated by the Administrative

 

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Agent), as the Borrower’s true and lawful attorney-in-fact for the purpose of
(a) making, settling and adjusting claims under all such policies of insurance
and for making all determinations and decisions with respect to such policies of
insurance; provided, that if no Event of Default or Default is in existence, the
Borrower shall be permitted to take such actions with respect to each claim of
less than $250,000; and (b) endorsing the name of the Borrower or any other Loan
Party on any check, draft, instrument or other item of payment received by the
Borrower, any other Loan Party or the Administrative Agent pursuant to any such
policies of insurance.

 

(c)                                  Unless the Borrower provides the
Administrative Agent with evidence of the insurance coverage required by this
Agreement, the Administrative Agent may purchase insurance at the Borrower’s
expense, to protect the Administrative Agent’s interests in the Collateral. 
This insurance may, but need not, protect the interests of the Loan Parties. 
The coverage that the Administrative Agent purchases may not pay any claim that
any Loan Party may make or any claim that is made against any Loan Party in
connection with the Collateral.  The Borrower may later cancel any insurance
purchased by the Administrative Agent, but only after providing the
Administrative Agent with evidence that the Borrower has obtained insurance as
required by this Agreement.  If the Administrative Agent purchases insurance for
the Collateral, the Borrower will be responsible for the costs of that
insurance, including interest and any other charges that may be imposed in
connection with the placement of the insurance, until the effective date of the
cancellation or expiration of the insurance.  The costs of the insurance may be
added to the Obligations.  The costs of the insurance may be more than the cost
of insurance that the Loan Parties may be able to obtain on their own.

 

Section 8.5                                                             
Financial Reports.

 

The Borrower shall, and shall cause each of its Subsidiaries to, maintain a
standard system of accounting in accordance with GAAP and shall furnish to the
Administrative Agent:

 

(a)                                  as soon as available, and in any event no
later than 3 Business Days after the end of each calendar week (or on a more
frequent basis if the Administrative Agent acting in its reasonable discretion
so requires), a Borrowing Base Certificate in the form attached hereto as
Exhibit B showing the computation of the Borrowing Base in reasonable detail as
of the close of business on the last day of the immediately preceding week (with
the list of all Receivables and Inventory deemed as ineligible updated not less
often than one time per month), together with such other information as is
therein required, prepared by the Borrower and certified to by its chief
financial officer or such other officer of the Borrower reasonably acceptable to
the Administrative Agent;

 

(b)                                 as soon as available, and in any event
within 20 days after the last day of each calendar month, an accounts receivable
and accounts payable aging for the Borrower and its Subsidiaries and an
Inventory stock status report (by major category of Inventory and reserves by
type and location of the relevant Inventory) for the Borrower and its
Subsidiaries, each of the foregoing to be in form and scope reasonably
satisfactory to the Administrative Agent and prepared by the Borrower and
certified to by its chief financial officer or another officer of the Borrower
reasonably acceptable to the Administrative Agent;

 

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(c)                                  (i) for each calendar month (other than
calendar months ending on the last day of a calendar quarter or on the last day
of a fiscal year), as soon as available, and in any event within 30 days after
the last day of each such calendar month, a copy of balance sheets of the
Borrower and its Subsidiaries, by reporting segment, as of the last day of such
month and statements of income, retained earnings, and cash flows of the
Borrower and its Subsidiaries, in each case by reporting segment, for the month
and for the fiscal year-to-date period then ended, and (ii) for each calendar
month ending on the last day of a calendar quarter or ending on the last day of
a fiscal year, as soon as available, and in any event within 45 days after the
last day of each such calendar month ending on the last day of a calendar
quarter and within 60 days after the last day of each such calendar month ending
on the last day of a fiscal year, a copy of the consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries as of the last day of such
month and the consolidated and consolidating statements of income, retained
earnings, and cash flows of the Borrower and its Subsidiaries for the month and
for the fiscal year-to-date period then ended, in all cases, in reasonable
detail showing in comparative form the figures for the corresponding date and
period in the previous fiscal year as well as in comparative form against the
business plan of the Borrower and its Subsidiaries for the current fiscal year
(with an explanation of any material variances of actual results against such
plan), prepared by the Borrower in accordance with GAAP (subject to the absence
of footnotes required to be included in conformity with GAAP and year-end audit
adjustments) and certified to by its chief financial officer or another officer
of the Borrower reasonably acceptable to the Administrative Agent;

 

(d)                                 as soon as available, and in any event
within 90 days after the close of each fiscal year of the Borrower, a copy of
the consolidated and consolidating balance sheets of the Borrower and its
Subsidiaries as of the last day of the fiscal year then ended and the
consolidated and consolidating statements of income, retained earnings, and cash
flows of the Borrower and its Subsidiaries for the fiscal year then ended, and
accompanying notes thereto, each in reasonable detail showing in comparative
form the figures for the previous fiscal year as well as in comparative form
against the business plan of the Borrower and its Subsidiaries for such fiscal
year (with an explanation of any material variances of actual results against
such plan unless such variances were previously explained in reports delivered
pursuant to the preceding clause (c) above), accompanied in the case of the
consolidated financial statements by an unqualified opinion of a firm of
independent public accountants of recognized national standing, selected by the
Borrower and reasonably satisfactory to the Administrative Agent, to the effect
that the consolidated financial statements have been prepared in accordance with
GAAP and present fairly in accordance with GAAP the consolidated financial
condition of the Borrower and its Subsidiaries as of the close of such fiscal
year and the results of their operations and cash flows for the fiscal year then
ended and that an examination of such accounts in connection with such financial
statements has been made in accordance with generally accepted auditing
standards and, accordingly, such examination included such tests of the
accounting records and such other auditing procedures as were considered
necessary in the circumstances;

 

(e)                                  promptly after receipt thereof, any
additional written reports, management letters or other detailed information
contained in writing concerning significant aspects of Borrower’s or any of its
Subsidiary’s operations and financial affairs given to it by its independent
public accountants;

 

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(f)                                    promptly after the sending or filing
thereof, copies of each financial statement, report, notice or proxy statement
sent by the Borrower or any of its Subsidiaries to its stockholders or other
equity holders, and copies of each regular, periodic or special report,
registration statement or prospectus (including all Form 10-K, Form 10-Q and
Form 8-K reports) filed by the Borrower or any of its Subsidiaries with any
securities exchange or the Securities and Exchange Commission or any successor
agency;

 

(g)                                 as soon as available, and in any event prior
to the end of each fiscal year of the Borrower, a copy of a consolidated and
consolidating business plan of the Borrower and its Subsidiaries for the
following fiscal year, such business plan to show the projected consolidated and
consolidating revenues, expenses and balance sheet of the Borrower and its
Subsidiaries on an annual basis and on a fiscal month-by-month basis; in each
case such business plans shall be in reasonable detail prepared by the Borrower
and in form satisfactory to the Administrative Agent and the Required Lenders
and shall include a summary of the assumptions and qualifications made in
preparing such business plans;

 

(h)                                 prompt notice if the Borrower or any of its
Subsidiaries is enjoined, restrained or in any way prevented by the order of any
court or any administrative or regulatory agency from conducting all or any
material part of its business affairs;

 

(i)                                     promptly after knowledge thereof shall
have come to the attention of any executive officer of the Borrower, written
notice of any threatened or pending litigation or governmental or arbitration
proceeding or labor controversy against any the Borrower or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect or of the occurrence of any Default or Event of Default hereunder;

 

(j)                                     promptly after knowledge thereof shall
have come to the attention of any executive officer of the Borrower, written
notice of any default under, or breach or termination of, any material contract
or agreement of the Borrower, where such default, breach or termination could
reasonably be expected to have a Material Adverse Effect;

 

(k)                                  with reasonable promptness, such other
business or financial data in the possession of the Borrower or any of its
Subsidiaries, that the Borrower or any of its Subsidiaries normally prepares or
that the Borrower or any of its Subsidiaries can prepare with reasonable
efforts, as the Administrative Agent or any Lender may reasonably request; and

 

(l)                                     with each of the financial statements
furnished to the Administrative Agent pursuant to subsections (c) (for the last
month of a calendar quarter) and (d) above, a written certificate in the form
attached hereto as Exhibit D signed by the chief financial officer of the
Borrower, or another officer of the Borrower reasonably acceptable to the
Administrative Agent, to the effect that to the best of such officer’s knowledge
and belief no Default or Event of Default has occurred during the period covered
by such statements or, if any such Default or Event of Default has occurred
during such period, setting forth a description of such Default or Event of
Default and specifying the action, if any, taken by the Borrower or any of its
Subsidiaries to remedy the same.  Such certificate shall also set forth the
calculations supporting such statements in respect of Section 8.22 of this
Agreement.

 

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Section 8.6                                                             
Inspection.

 

The Borrower shall, and shall cause each other Loan Party to, permit the
Administrative Agent and each of its duly authorized representatives and agents
to visit and inspect any of its Property, corporate books and financial records,
to examine and make copies of its books of accounts and other financial records,
and to discuss its affairs, finances and accounts with, and to be advised as to
the same by, its officers, employees and independent public accountants (and by
this provision the Borrower hereby authorizes such accountants to discuss with
the Administrative Agent the finances and affairs of the Loan Parties) at such
reasonable times and intervals as the Administrative Agent may designate and, so
long as no Default or Event of Default exists, with reasonable prior notice to
the Borrower.  Each Lender shall have the right to have an agent or
representative accompany the Administrative Agent during each such visit;
provided, that each Lender shall be responsible for its own costs and expenses
of such agent or representative.  The Administrative Agent may obtain (or direct
the Borrower to obtain and provide to the Administrative Agent) updated
appraisals on any fixed assets (including its equipment and/or real property)
and inventory, or portion thereof, of the Loan Parties from time to time as the
Administrative Agent may designate, which appraisal reports shall in each case
be prepared by an appraiser reasonably acceptable to the Administrative Agent
and be in such format and contain such detail as the Administrative Agent may
reasonably request.  The reasonable costs and expenses incurred in obtaining any
such inspections and/or appraisals shall in each case be borne by the Borrower
(whether obtained by the Administrative Agent or the Borrower); provided that,
unless a Default of Event of Default is then in existence, the Borrower shall
not be obligated to incur the charges, costs and expenses of more than one
Inventory appraisal during each twelve month period and more than three complete
audits and inspections during each twelve month period.  The Borrower shall, at
the Administrative Agent’s reasonable request, provide, at the Borrower’s
expense, updated environmental questionnaires concerning activities and
conditions affecting the real property owned, leased or operated by any Loan
Party and, in the event that an environmental questionnaire indicates a material
environmental problem, as determined by the Administrative Agent, environmental
reports prepared for the Administrative Agent by an environmental consultant or
an environmental engineering firm reasonably acceptable to the Administrative
Agent concerning any real property owned, leased or operated by any Loan Party.

 

Section 8.7                                                             
Borrowings and Guaranties.

 

The Borrower shall not, nor shall it permit any of its Subsidiaries to, issue,
incur, assume, create or have outstanding any indebtedness or obligations, any
Indebtedness for Borrowed Money, or be or become liable as endorser, guarantor
or surety for any debt, obligation or undertaking of any other Person, or
otherwise agree to provide funds for payment of the obligations of another, or
advance funds thereto or otherwise assure a creditor of another against loss, or
apply for or become liable to the issuer of a letter of credit which supports an
obligation of another, or subordinate any material claim or demand it may have
to the claim or demand of any other Person; provided, however, that the
foregoing shall not restrict nor operate to prevent:

 

(a)                                  the Obligations;

 

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(b)                                 purchase money indebtedness and Capitalized
Lease Obligations for the purchase or financing of machinery and equipment of
the Borrower and its Subsidiaries in the ordinary course of business in an
amount not to exceed $500,000 in the aggregate at any one time outstanding;

 

(c)                                  indebtedness listed on Schedule 8.7, which
Indebtedness may be repaid and readvanced from time to time up to the amounts
set forth on such schedule;

 

(d)                                 obligations of the Borrower arising out of
interest rate, foreign currency, and commodity hedging agreements entered into
for its own account with one or more Lenders or their Affiliates in the ordinary
course of business;

 

(e)                                  endorsement of items for deposit or
collection of commercial paper received in the ordinary course of business;

 

(f)                                    unsecured Indebtedness for Borrowed Money
not otherwise permitted by this Section of (i) the Borrower to any of its
Subsidiaries in a principal amount (excluding interest paid in kind) not to
exceed the US Dollar Equivalent amount of $1,000,000 in the aggregate at any one
time outstanding, (ii) any Subsidiary of the Borrower to the Borrower in an
aggregate principal amount (excluding interest paid in kind and non-cash amounts
incurred for management fees) at any one time outstanding not to exceed the US
Dollar Equivalent amount of $3,000,000 (or, during one period of 120 consecutive
days within any period of 360 consecutive days, $4,000,000) and (iii) any
Subsidiary of the Borrower to another Subsidiary of the Borrower; provided that
at no time shall the aggregate principal amount (excluding interest paid in kind
and non-cash amounts incurred for management fees) of Indebtedness for Borrower
Money of Cobra Hong Kong to the Borrower and to all other Subsidiaries of the
Borrower exceed the US Dollar Equivalent of $500,000;

 

(g)                                 indebtedness of Cobra Electronics Europe
Limited, Cobra Electronics UK Limited and Performance Products Limited in an
aggregate amount not to exceed the greater of £5,000,000 and €5,000,000 in the
aggregate at any one time outstanding for working capital purposes;

 

(h)                                 indebtedness of the Borrower in respect of
any Factoring Arrangements; and

 

(i)                                     unsecured indebtedness of the Borrower
and its Subsidiaries not otherwise permitted by this Section in an amount not to
exceed $250,000 in the aggregate at any one time outstanding.

 

Section 8.8                                                              Liens.

 

The Borrower shall not, nor shall it permit any of its Subsidiaries to, create,
incur or permit to exist any Lien of any kind on any Property owned by any such
Person; provided, however, that the foregoing shall not apply to nor operate to
prevent:

 

(a)                                  Liens listed on Schedule 8.8 hereto;

 

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(b)                                 Liens arising by statute in connection with
worker’s compensation, unemployment insurance, old age benefits, social security
obligations, taxes, assessments, statutory obligations or other similar charges
(other than Liens arising under ERISA), good faith cash deposits in connection
with tenders, bids, contracts or leases to which any Loan Party is a party or
other cash deposits required to be made in the ordinary course of business,
provided in each case that the obligation is not for borrowed money and that the
obligation secured is not overdue or, if so overdue, is being contested in good
faith by appropriate proceedings or actions which prevent enforcement of the
matter under contest and adequate reserves have been established therefor;

 

(c)                                  mechanics’, workmen’s, materialmen’s,
landlords’, carriers’, or other similar Liens arising in the ordinary course of
business that secures amounts that are not due or which are being contested in
good faith by appropriate proceedings or actions which prevent enforcement of
the matter under contest, and in any case which could not reasonably be expected
to have a Material Adverse Effect;

 

(d)                                 judgment liens and judicial attachment liens
not constituting an Event of Default under Section 9.1(g) hereof and the pledge
of assets for the purpose of securing an appeal, stay or discharge in the course
of any legal proceeding, provided that the aggregate amount of such judgment
liens and attachments and liabilities of the Borrower and its Subsidiaries
secured by a pledge of assets permitted under this subsection, including
interest and penalties thereon, if any, shall not be in excess of $500,000 at
any one time outstanding;

 

(e)                                  Liens on property of the Borrower or its
Subsidiary created solely for the purpose of securing indebtedness permitted by
Section 8.7(b) hereof, representing or incurred to finance, refinance or refund
the purchase price of Property, provided that no such Lien shall extend to or
cover other Property of the Borrower or such Subsidiary other than the
respective Property so acquired, and the principal amount of indebtedness
secured by any such Lien shall at no time exceed the original purchase price of
such Property, as reduced by repayments of principal thereon;

 

(f)                                    any interest or title of a lessor under
any operating lease;

 

(g)                                 Liens securing the Indebtedness for Borrowed
Money permitted pursuant to Section 8.7(g) hereof;

 

(h)                                 easements, rights-of-way, restrictions and
other similar encumbrances against real property which, in the aggregate, are
not substantial in amount and which do not materially detract from the value of
the Property subject thereto or materially interfere with the ordinary conduct
of the business of the Borrower or any Subsidiary;

 

(i)                                     Liens or other encumbrances on
Receivables (and property rights and interests related to such Receivables) that
are sold pursuant to a Factoring Arrangement; and

 

(j)                                     the Liens granted in favor of the
Administrative Agent pursuant to the Collateral Documents to secure the
Obligations.

 

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Section 8.9                                                             
Investments, Acquisitions, Loans and Advances.

 

The Borrower shall not, nor shall it permit any of its Subsidiaries to, directly
or indirectly, make, retain or have outstanding any investments (whether through
purchase of stock or obligations or otherwise) in, or loans or advances to, any
other Person, or acquire all or any substantial part of the assets, stock or
business of any other Person or division thereof; provided, however, that the
foregoing shall not apply to nor operate to prevent:

 

(a)                                  investments listed on Schedule 8.9;

 

(b)                                 the Borrower’s investments in its
Subsidiaries existing on the Closing Date;

 

(c)                                  investments in direct obligations of the
United States of America or of any agency or instrumentality thereof whose
obligations constitute full faith and credit obligations of the United States of
America, provided that any such obligations shall mature within one year of the
date of issuance thereof;

 

(d)                                 investments in commercial paper rated at
least P-1 by Moody’s and at least A-1 by S&P maturing within one year of the
date of issuance thereof;

 

(e)                                  investments in certificates of deposit
issued by any Lender or by any United States commercial bank having capital and
surplus of not less than $100,000,000 which have a maturity of one year or less;

 

(f)                                    intercompany advances made from time to
time from the Borrower to any one or more Subsidiaries of the Borrower or by any
Subsidiaries of the Borrower or another Subsidiary of the Borrower (in each
case, subject to the limits of Section 8.7(f) hereof) in the ordinary course of
business to finance working capital needs; and

 

(g)                                 loans to officers, directors, employees and
shareholders not in excess of $150,000 in the aggregate at any time outstanding.

 

In determining the amount of investments, acquisitions, loans, and advances
permitted under this Section, investments and acquisitions shall always be taken
at the original cost thereof (regardless of any subsequent appreciation or
depreciation therein), and loans and advances shall be taken at the principal
amount thereof then remaining unpaid.

 

Section 8.10                                                        Mergers,
Consolidations and Sales.

 

The Borrower shall not, nor shall it permit any of its Subsidiaries to, be a
party to any merger or consolidation, or sell, transfer, lease or otherwise
dispose of all or any part of its Property, including any disposition of
Property as part of a sale and leaseback transaction, or in any event sell or
discount (with or without recourse) any of its notes or accounts receivable;
provided, however, that this Section shall not apply to nor operate to prevent:

 

(a)                                  the sale of Inventory in the ordinary
course of business;

 

(b)                                 the sale of Receivables pursuant to a
Factoring Arrangement;

 

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(c)                                  the merger of any Domestic Subsidiary of
the Borrower with and into the Borrower (provided that the Borrower is the
corporation surviving the merger); and

 

(d)                                 the sale, transfer, or other disposition of
equipment (i) being replaced in the ordinary course of business with other
equipment having a fair market value equal to or greater than that of the
equipment being replaced, and so long as such replacement is completed within 90
days of such sale, transfer or other disposition, or (ii) no longer required in
the operation of such Loan Party’s business, with an aggregate fair market value
for all of the Loan Parties not to exceed $250,000 in any fiscal year.

 

So long as no Default or Event of Default has occurred and is continuing or
would arise as a result thereof, upon the written request of the Borrower, the
Administrative Agent shall release its Lien on any Property sold pursuant to the
foregoing clause (d).

 

Section 8.11                                                        Maintenance
of Subsidiaries.

 

The Borrower shall not assign, sell or transfer, nor shall it permit any of its
Subsidiaries to issue, assign, sell or transfer, any shares of capital stock;
provided, however, that the foregoing shall not operate to prevent (a) Liens on
the capital stock of Loan Parties granted to the Administrative Agent pursuant
to the Collateral Documents and (b) any transaction permitted by Section 8.10(c)
above.

 

Section 8.12                                                        Dividends
and Certain Other Restricted Payments.

 

The Borrower shall not, nor shall the Borrower permit any of its Subsidiaries
to, (a) declare or pay any dividends on or make any other distributions in
respect of any class or series of its capital stock or other equity interests
(including, without limitation, any payments in respect of stock appreciation
rights and common stock equivalents), (b) directly or indirectly purchase,
redeem, or otherwise acquire or retire any of its capital stock or other equity
interests or any warrants or options to acquire the same, or (c) pay consulting,
management, or other similar fees to their Affiliates (collectively, “Restricted
Payments”); provided, however, that the foregoing shall not operate to prevent
(i) the making of dividends or distributions by any Subsidiary of the Borrower
to the Borrower or to another Subsidiary of the Borrower, and (ii) commencing
with the calendar year ending December 31, 2011, the making of dividends or
distributions by the Borrower and the repurchase by the Borrower of its equity
securities up to an aggregate amount not to exceed $1,250,000 in any fiscal year
so long as (x) no Default or Event of Default exists or would otherwise arise as
a result thereof, (y) the Fixed Charge Coverage Ratio (measured as of the day of
declaration in the case of dividends and as of the day of payment in the case of
distributions and repurchases) for the twelve month period ending on the last
day of the fiscal quarter most recently ended, as determined on a pro forma
basis, after giving effect to such dividend, distribution or repurchase, is not
less than 1.20 to 1.0 and (z) average daily Excess Availability for the 30 day
period immediately preceding the day of declaration of such dividend or the day
of payment of such distribution or repurchase, as applicable, and on the day of
declaration of such dividend or the day of payment of such distribution or
repurchase, in each case after giving effect to such dividend, distribution or
repurchase, exceeds the lesser of (1) $5,000,000 and (2) the greater of (A)
$4,000,000 and (B) Minimum Required Excess Availability Amount.

 

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Section 8.13                                                        ERISA.

 

The Borrower shall, and shall cause each of its Subsidiaries to, promptly pay
and discharge all obligations and liabilities arising under ERISA of a character
which if unpaid or unperformed could reasonably be expected to result in the
imposition of a Lien against any Property with a fair maker value in excess of
$250,000.  The Borrower shall, and shall cause each Subsidiary to, promptly
notify the Administrative Agent and each Lender of any of the following if it
would reasonably be expected to result in liability in excess of $250,000:  (a)
the occurrence of any Reportable Event (as defined in Section 4043 of ERISA)
with respect to a Plan, (b) receipt of any written notice from the PBGC of its
intention to seek termination of any Plan or appointment of a trustee therefor,
(c) its intention to terminate or withdraw from any Plan, and (d) the occurrence
of any event with respect to any Plan which would result in the incurrence by
the Borrower or any other Loan Party of any material liability, fine or penalty,
or any material increase in the contingent liability of the Borrower or any
other Loan Party with respect to any post-retirement Welfare Plan benefit.

 

Section 8.14                                                        Compliance
with Laws.

 

The Borrower shall, and shall cause each of its Subsidiaries to, comply in all
respects with the requirements of all federal, state, and local laws, rules,
regulations, ordinances and orders applicable to or pertaining to its Property
or business operations, where any such non-compliance, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect or
result in a Lien upon any of its Property which is not permitted under Section
8.8 hereof.

 

Section 8.15                                                        Burdensome
Contracts With Affiliates.

 

The Borrower shall not, nor shall it permit any of its Subsidiaries to, enter
into any contract, agreement or business arrangement with any of its Affiliates
on terms and conditions which are materially less favorable to the Borrower or
such Subsidiary than would be usual and customary in similar contracts,
agreements or business arrangements between Persons not affiliated with each
other.

 

Section 8.16                                                        No Changes
in Fiscal Year.

 

The Borrower’s fiscal year ends on December 31 of each year, and the Borrower
shall not change its fiscal year from its present basis.

 

Section 8.17                                                        Formation of
Subsidiaries.

 

Except for Subsidiaries existing on the Closing Date and disclosed on Schedule
6.2 hereof, the Borrower shall not, nor shall it permit any of its Subsidiaries
to, form or acquire any other Subsidiary.

 

Section 8.18                                                        Change in
the Nature of Business.

 

The Borrower shall not, nor shall it permit any of its Subsidiaries to, engage
in any business or activity if as a result the general nature of the business of
the Borrower or any

 

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Subsidiary would be changed in any material respect from the general nature of
the business engaged in by it as of the Closing Date.

 

Section 8.19                                                        Use of Loan
Proceeds.

 

The Borrower shall use the credit extended under this Agreement solely for the
purposes set forth in, or otherwise permitted by, Section 6.4 hereof.

 

Section 8.20                                                        No
Restrictions.

 

Except as provided herein, the Borrower shall not, nor shall it permit any of
its Subsidiaries to, directly or indirectly create or otherwise cause or suffer
to exist or become effective any consensual encumbrance or restriction of any
kind on the ability of such Loan Party to: (a) pay dividends or make any other
distribution on any Loan Party’s capital stock or other equity interests owned
by any other Loan Party, (b) pay any indebtedness owed to any Loan Party, (c)
make loans or advances to any Loan Party, (d) transfer any of its Property to
any Loan Party or (e) guarantee the Obligations and/grant Liens on its assets to
the Administrative Agent as required by the Loan Documents other than (i)
restrictions or conditions imposed by any agreement relating to purchase money
indebtedness and Capitalized Lease Obligations for the purchase or financing of
machinery and equipment permitted by this Agreement if such restrictions or
conditions apply only to the property or assets securing such indebtedness and
(ii) customary provisions in leases, licenses and other contracts restricting
the assignment thereof.

 

Section 8.21                                                        Subordinated
Debt.

 

The Borrower shall not, nor shall it permit any of its Subsidiaries to, amend or
modify any of the terms or conditions relating to any Subordinated Debt or make
any voluntary prepayment thereof or effect any voluntary redemption thereof or
make any payment on account of Subordinated Debt which is prohibited under the
terms of any instrument or agreement subordinating the same to the Obligations.

 

Section 8.22                                                        Financial
Covenants.

 

(a)                                  Capital Expenditures.  The Borrower shall
not permit aggregate Capital Expenditures expended or incurred by the Borrower
and its Subsidiaries (determined exclusive of Capital Expenditures with the Net
Cash Proceeds of an Event of Loss in order to replace the Property subject to
such Event of Loss) to exceed $3,500,000 for any fiscal year.  If the Borrower
and its Subsidiaries do not utilize the entire amount of Capital Expenditures
permitted in any fiscal year, so long as no Default or Event of Default exists
or would be caused thereby, the Borrower may carry forward to the immediately
succeeding fiscal year only, 50% of such unutilized amount (with Capital
Expenditures made by the Borrower and its Subsidiaries in such succeeding fiscal
year applied last to such unutilized amount).

 

(b)                                 Fixed Charge Coverage Ratio.  The Borrower
shall not permit the Fixed Charge Coverage Ratio, on the last day of each
calendar quarter commencing with the calendar quarter ending September 30, 2010,
for the three month period ending September 30, 2010, the six month period
ending December 31, 2010, the nine month period ending March 31, 2011 and

 

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each twelve month period ending on the last day of each calendar quarter
thereafter, to be less than 1.10 to 1.0.

 

Section 8.23                                                        Amendment of
Organizational Documents.

 

The Borrower shall not, and the Borrower shall not permit any of its
Subsidiaries to, amend its Certificate or Articles of Incorporation, as
applicable, or By-Laws, partnership agreement, limited liability company
agreement, operating agreement or other organizational documents, as applicable,
in any case in any manner that would be reasonably likely to have a Material
Adverse Effect.  The Borrower agrees to provide the Administrative Agent with a
copy of any amendment of any Loan Party’s Certificate or Articles of
Incorporation or By-Laws or any other organizational documents on or before its
effective date.

 

Section 8.24                                                        Operating
Accounts.

 

Subject to Section 4.2, the Borrower shall, and shall cause each of its Domestic
Subsidiaries to, maintain all of its lockbox accounts, blocked accounts,
disbursement accounts and other operating accounts (other than the PrivateBank
Accounts, the RBS Accounts and petty cash accounts, disbursement accounts and
payroll accounts) with Harris N.A. or another Lender.

 

Section 8.25                                                        Intellectual
Property.

 

The Borrower shall promptly notify the Administrative Agent if any Loan Party
acquires rights to any U.S. federally registered patents, trademarks, tradenames
or copyrights in which its does not have such rights as of the Closing Date.

 

SECTION 9.
EVENTS OF DEFAULT AND REMEDIES.

 

Section 9.1                                                              Events
of Default.

 

Any one or more of the following shall constitute an “Event of Default”
hereunder:

 

(a)                                  default in the payment when due of all or
any part of the principal of or interest in respect of the Loans or any
Reimbursement Obligations (whether at the stated maturity thereof or at any
other time provided for in this Agreement) or of any fee or other Obligation
payable hereunder or under any other Loan Document;

 

(b)                                 default in the observance or performance of
any covenant set forth in Sections 8.1 and 8.4-8.25 (inclusive), hereof or of
any provision in any Loan Document dealing with the use, disposition or
remittance of the proceeds of Collateral or requiring the maintenance of
insurance thereon;

 

(c)                                  default in the observance or performance of
any provision hereof (other than as set forth in clause (b) above), which is not
remedied within 15 days after the occurrence thereof;

 

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(d)                                 any representation or warranty made herein
or in any other Loan Document or in any certificate furnished to the
Administrative Agent or the Lenders pursuant hereto or thereto or in connection
with any transaction contemplated hereby or thereby proves untrue in any
material respect as of the date of the issuance or making or deemed making
thereof;

 

(e)                                  any event occurs or condition exists (other
than those described in subsections (a) through (d) above) which is specified as
an event of default under any of the other Loan Documents and continues beyond
any cure or  grace period set forth therein, or any of the Loan Documents shall
for any reason not be or shall cease to be in full force and effect or is
declared to be null and void, or any of the Collateral Documents shall for any
reason fail to create a valid and perfected first priority Lien in favor of the
Administrative Agent in the Collateral or any material part thereof except as
expressly permitted by the terms thereof, or any Loan Party takes any action for
the purpose of terminating, repudiating or rescinding any Loan Document executed
by it or any of its obligations thereunder;

 

(f)                                    default shall occur and be continuing
under any Indebtedness for Borrowed Money issued, assumed or guaranteed by any
Loan Party aggregating in excess of $500,000, or under any indenture, agreement
or other instrument under which the same may be issued, and such default shall
continue for a period of time sufficient to permit the acceleration of the
maturity of any such Indebtedness for Borrowed Money (whether or not such
maturity is in fact accelerated), or any such Indebtedness for Borrowed Money
shall not be paid when due (whether by demand, lapse of time, acceleration or
otherwise);

 

(g)                                 any judgment or judgments, writ or writs or
warrant or warrants of attachment, or any similar process or processes shall be
entered or filed against any Loan Party, or against any of its Property, in an
aggregate amount in excess of $250,000 (except to the extent fully covered by
insurance pursuant to which the insurer has accepted liability therefor in
writing), and which remains undischarged, unvacated, unbonded or unstayed for a
period of 30 days;

 

(h)                                 any Loan Party, or any member of its
Controlled Group, shall fail to pay when due an amount or amounts aggregating in
excess of $250,000 which it shall have become liable to pay to the PBGC or to a
Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans
having aggregate Unfunded Vested Liabilities in excess of $250,000
(collectively, a “Material Plan”) shall be filed under Title IV of ERISA by any
Loan Party, or any other member of its Controlled Group, any plan administrator
or any combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any Material Plan or a proceeding shall be instituted by a fiduciary
of any Material Plan against any Loan Party, or any member of its Controlled
Group, to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall
not have been dismissed within 45 days thereafter; or a condition shall exist by
reason of which the PBGC would be entitled to obtain a decree adjudicating that
any Material Plan must be terminated;

 

(i)                                     any Change of Control shall occur;

 

(j)                                     the Borrower or any of its Subsidiaries
shall (i) have entered involuntarily against it an order for relief under the
Bankruptcy Code, as amended, and such order is not

 

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dismissed within 60 calendar days of the date of the entry thereof (ii) not pay,
or admit in writing its inability to pay, its debts generally as they become
due, (iii) make an assignment for the benefit of creditors, (iv) apply for,
seek, consent to, or acquiesce in, the appointment of a receiver, custodian,
trustee, examiner, liquidator or similar official for it or any substantial part
of its Property, (v) institute any proceeding seeking to have entered against it
an order for relief under the Bankruptcy Code, as amended, to adjudicate it
insolvent, or seeking dissolution, winding up, liquidation, reorganization,
arrangement, adjustment or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors or fail to file
an answer or other pleading denying the material allegations of any such
proceeding filed against it, (vi) take any corporate action in furtherance of
any matter described in parts (i) through (v) above, or (vii) fail to contest in
good faith any appointment or proceeding described in Section 9.1(k) hereof;

 

(k)                                  a custodian, receiver, trustee, examiner,
liquidator or similar official shall be appointed for the Borrower or any of its
Subsidiaries, or any substantial part of any of its Property, or a proceeding
described in Section 9.1(j)(v) shall be instituted against the Borrower or any
of its Subsidiaries, and such appointment continues undischarged or such
proceeding continues undismissed or unstayed for a period of 60 days;

 

(l)                                     the Borrower or any of its Subsidiaries
voluntarily or involuntarily dissolves, except as permitted under Section 8.1;

 

(m)                               the Borrower or any of its Subsidiaries is
enjoined, restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting all or a material part of
its business affairs and such event has had or could be reasonably likely to
have a Material Adverse Effect;

 

(n)                                 a breach shall occur under any intercreditor
or subordination agreement or any subordination provisions of any agreement, in
each case evidencing or relating to any Subordinated Debt;

 

(o)                                 any loss, theft, substantial damage or
destruction of any item or items of Collateral shall occur if (i) the amount of
such loss with respect to which the insurer has not within 30 days accepted
liability exceeds $500,000 or (ii) such loss results in an interruption of the
business of any Loan Party which could reasonably be expected to have a Material
Adverse Effect;

 

(p)                                 there shall be instituted in any court
criminal proceedings against any the Borrower or any of its Subsidiaries, or the
Borrower or any of its Subsidiaries shall be indicted for any crime, in either
case for which forfeiture of a material amount of its Property is a potential
penalty;

 

(q)                                 Borrower, any Subsidiary of Borrower or any
Guarantor, or any Affiliate of any of them, shall challenge or contest in any
action, suit or proceeding the validity or enforceability of this Agreement or
any of the other Loan Documents, the legality or enforceability of any of the
Obligations or the perfection or priority of any Lien granted to Agent.

 

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(r)                                    an event shall occur which has a Material
Adverse Effect.

 

Section 9.2                                                             
Non-Bankruptcy Defaults.

 

When any Event of Default other than those described in subsection (k) or (l) of
Section 9.1 hereof has occurred and is continuing, the Administrative Agent
shall, by written notice to the Borrower:  (a) if so directed by the Required
Lenders, terminate the remaining Revolving Credit Commitments and all other
obligations of the Lenders hereunder on the date stated in such notice (which
may be the date thereof); (b) if so directed by the Required Lenders, declare
the principal of and the accrued interest on all outstanding Loans and all other
Obligations to be forthwith due and payable and thereupon all outstanding Loans
and all other Obligations, including both principal and interest thereon, shall
be and become immediately due and payable together with all other amounts
payable under the Loan Documents without further demand, presentment, protest or
notice of any kind; and (c) if so directed by the Required Lenders, demand that
the Borrower immediately pay to the Administrative Agent 105% of the full amount
then available for drawing under each or any Letter of Credit, and the Borrower
agrees to immediately make such payment and acknowledges and agrees that the
Lenders would not have an adequate remedy at law for failure by the Borrower to
honor any such demand and that the Administrative Agent, for the benefit of the
Lenders, shall have the right to require the Borrower to specifically perform
such undertaking whether or not any drawings or other demands for payment have
been made under any Letter of Credit.  The Administrative Agent, after giving
notice to the Borrower pursuant to this Section 9.2, shall also promptly send a
copy of such notice to the other Lenders, but the failure to do so shall not
impair or annul the effect of such notice.

 

Section 9.3                                                             
Bankruptcy Defaults.

 

When any Event of Default described in subsections (k) or (l) of Section 9.1
hereof has occurred and is continuing, then all outstanding Loans and other
Obligations shall immediately become due and payable together with all other
amounts payable under the Loan Documents without presentment, demand, protest or
notice of any kind, the obligation of the Lenders to extend further credit
pursuant to any of the terms hereof shall immediately terminate and the Borrower
shall immediately pay to the Administrative Agent 105% of the full amount then
available for drawing under all outstanding Letters of Credit, the Borrower
acknowledging and agreeing that the Lenders would not have an adequate remedy at
law for failure by the Borrower to honor any such demand and that the Lenders,
and the Administrative Agent on their behalf, shall have the right to require
the Borrower to specifically perform such undertaking whether or not any draws
or other demands for payment have been made under any of the Letters of Credit.

 

Section 9.4                                                             
Collateral for Undrawn Letters of Credit.

 

(a)                                  If the prepayment of the amount available
for drawing under any or all outstanding Letters of Credit is required under
Section 1.9(b) or under Section 9.2 or 9.3 above, the Borrower shall forthwith
pay the amount required to be so prepaid, to be held by the Administrative Agent
as provided in subsection (b) below.

 

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(b)                                 All amounts prepaid pursuant to subsection
(a) above shall be held by the Administrative Agent in one or more separate
collateral accounts (each such account, and the credit balances, properties and
any investments from time to time held therein, and any substitutions for such
account, any certificate of deposit or other instrument evidencing any of the
foregoing and all proceeds of and earnings on any of the foregoing being
collectively called the “Collateral Account”) as security for, and for
application by the Administrative Agent (to the extent available) to, the
reimbursement of any payment under any Letter of Credit then or thereafter made
by the Administrative Agent or the L/C Issuer, and to the payment of the unpaid
balance of any Loans and all other Obligations secured by the Collateral
Documents.  The Collateral Account shall be held in the name of and subject to
the exclusive dominion and control of the Administrative Agent for the benefit
of the Administrative Agent, the Lenders and the L/C Issuer.

 

Section 9.5                                                             
Expenses.

 

The Borrower agrees to pay to the Administrative Agent all expenses reasonably
incurred or paid by the Administrative Agent, including reasonable attorneys’
fees and court costs, in connection with any Default or Event of Default or in
connection with the enforcement of any of the Loan Documents (including all such
costs and expenses incurred in connection with a proceeding under the Bankruptcy
Code, as amended).

 

SECTION 10.
CHANGE IN CIRCUMSTANCES.

 

Section 10.1                                                        Change of
Law.

 

Notwithstanding any other provisions of this Agreement or any Note, if at any
time any change in applicable law or regulation or in the interpretation thereof
makes it unlawful for any Lender to make or continue to maintain any Eurodollar
Loans or to perform its obligations as contemplated hereby, such Lender shall
promptly give notice thereof to the Borrower and such Lender’s obligations to
make or maintain Eurodollar Loans under this Agreement shall be suspended until
it is no longer unlawful for such Lender to make or maintain Eurodollar Loans. 
The Borrower shall prepay on demand the outstanding principal amount of any such
affected Eurodollar Loans, together with all interest accrued thereon and all
other amounts then due and payable to such Lender under this Agreement;
provided, however, subject to all of the terms and conditions of this Agreement,
the Borrower may then elect to borrow the principal amount of the affected
Eurodollar Loans from such Lender by means of Base Rate Loans from such Lender,
which Base Rate Loans shall not be made ratably by the Lenders but only from
such affected Lender.

 

Section 10.2                                                       
Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR.

 

If on or prior to the first day of any Interest Period for any Borrowing of
Eurodollar Loans:

 

(a)                                  the Administrative Agent determines that
deposits in U.S. Dollars (in the applicable amounts) are not being offered to it
in the interbank eurodollar market for such

 

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Interest Period, or that by reason of circumstances affecting the interbank
eurodollar market adequate and reasonable means do not exist for ascertaining
the applicable LIBOR, or

 

(b)                                 the Required Lenders advise the
Administrative Agent that (i) LIBOR as determined by the Administrative Agent
will not adequately and fairly reflect the cost to such Lenders of funding their
Eurodollar Loans for such Interest Period or (ii) that the making or funding of
Eurodollar Loans has become impracticable,

 

then the Administrative Agent shall forthwith give notice thereof to the
Borrower and the Lenders, whereupon until the Administrative Agent notifies the
Borrower that the circumstances giving rise to such suspension no longer exist,
the obligations of the Lenders to make Eurodollar Loans shall be suspended;
provided, however, subject to all of the terms and conditions of this Agreement,
the Borrower may then elect to borrow the principal amount of the affected
Eurodollar Loans from the Lenders by means of Base Rate Loans from such Lender,
which Base Rate Loans shall not be made ratably by the Lenders but only from
such affected Lender.

 

Section 10.3                                                        Increased
Cost and Reduced Return.

 

(a)                                  If, on or after the date hereof, in the
reasonable interpretation of the Administrative Agent or any Lender, the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Lending Office) with
any request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency:

 

(i)                                     shall subject any Lender or the L/C
Issuer (or its Lending Office) to any tax, duty or other charge with respect to
its Eurodollar Loans, its Notes, its Letter(s) of Credit, or its participation
in any thereof, any Reimbursement Obligations owed to it or its obligation to
make Eurodollar Loans, issue a Letter of Credit, or to participate therein, or
shall change the basis of taxation of payments to any Lender (or its Lending
Office) or the L/C Issuer of the principal of or interest on its Eurodollar
Loans, Letter(s) of Credit, or participations therein or any other amounts due
under this Agreement or any other Loan Document in respect of its Eurodollar
Loans, Letter(s) of Credit, any participation therein, any Reimbursement
Obligations owed to it, or its obligation to make Eurodollar Loans, or issue a
Letter of Credit, or acquire participations therein (except for changes with
respect to Excluded Taxes); or

 

(ii)                                  shall impose, modify or deem applicable
any reserve, special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors of the
Federal Reserve System, but excluding with respect to any Eurodollar Loans any
such requirement included in an applicable Eurodollar Reserve Percentage)
against assets of, deposits with or for the account of, or credit extended by,
any Lender (or its Lending Office) or the L/C Issuer or shall impose on any
Lender (or its Lending Office) or the L/C Issuer or on the interbank market any
other condition affecting its Eurodollar Loans, its Notes, its Letter(s) of
Credit, or its participation in any thereof, any Reimbursement Obligation owed
to it, or its obligation to make Eurodollar Loans, or to issue a Letter of
Credit, or to participate therein;

 

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and the result of any of the foregoing is to increase the cost to such Lender
(or its Lending Office) of making or maintaining any Eurodollar Loan, issuing or
maintaining a Letter of Credit, or participating therein, or to reduce the
amount of any sum received or receivable by such Lender (or its Lending Office)
or the L/C Issuer under this Agreement or under any other Loan Document with
respect thereto, by an amount deemed by such Lender or the L/C Issuer to be
material, then, within 15 days after demand by such Lender or the L/C Issuer
(with a copy to the Administrative Agent), the Borrower shall be obligated to
pay to such Lender or the L/C Issuer such additional amount or amounts as will
compensate such Lender or the L/C Issuer for such increased cost or reduction. 
Upon the receipt by the Borrower of such demand, the Borrower shall have the
option to immediately repay such Eurodollar Loan or convert such Eurodollar Loan
to a Base Rate Loan (in each case, subject to Section 1.12 hereof), or terminate
such Letter of Credit, in each case in order to minimize or eliminate such
increased cost or reduction.

 

(b)                                 If, after the date hereof, any Lender, the
L/C Issuer or the Administrative Agent shall have determined that the adoption
of any applicable law, rule or regulation regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Lending Office) or the L/C Issuer or any corporation controlling such Lender
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
had the effect of reducing the rate of return on such Lender’s or the L/C
Issuer’s or such corporation’s capital as a consequence of its obligations
hereunder to a level below that which such Lender or the L/C Issuer or such
corporation could have achieved but for such adoption, change or compliance
(taking into consideration such Lender’s or the L/C Issuer’s or such
corporation’s policies with respect to capital adequacy) by an amount deemed by
such Lender or the L/C Issuer to be material, then from time to time, within 15
days after demand by such Lender (with such demand to be made by such Lender or
the L/C Issuer within 180 days of the incurrence of such reduction, and a copy
of such demand to be sent to the Administrative Agent), the Borrower shall pay
to such Lender or the L/C Issuer such additional amount or amounts as will
compensate such Lender or the L/C Issuer for such reduction.  Upon the receipt
by the Borrower of such demand, the Borrower shall have the option to
immediately repay such Eurodollar Loan or convert such Eurodollar Loan to a Base
Rate Loan (in each case subject to Section 1.12 hereof), or terminate such
Letter of Credit, in each case in order to minimize or eliminate such incurred
cost or reduction.

 

(c)                                  A certificate of a Lender or the L/C Issuer
claiming compensation under this Section 10.3 and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive if reasonably
determined.  In determining such amount, such Lender or the L/C Issuer may use
any reasonable averaging and attribution methods.

 

Section 10.4                                                        Lending
Offices.

 

Each Lender may, at its option, elect to make its Loans hereunder at the branch,
office or affiliate specified on the appropriate signature page hereof (each a
“Lending Office”) for each type of Loan available hereunder or at such other of
its branches, offices or affiliates as it may from time to time elect and
designate in a written notice to the Borrower and the Administrative Agent.  If
any Lender requests additional compensation under Section 10.3 or 12.1 hereof,
then such Lender shall use reasonable efforts to promptly designate a different
one

 

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of its Lending Offices or to assign its rights and obligations hereunder to
another of its offices or branches, if (a) in the reasonable judgment of such
Lender, such designation or assignment would eliminate or reduce amounts payable
pursuant to Section 10.3 or 12.1 hereof, as applicable, and (b) in the
reasonable judgment of such Lender, such designation or assignment would not
subject it to any material unreimbursed cost or expense and would not otherwise
be materially disadvantageous to it.

 

Section 10.5                                                        Discretion
of Lender as to Manner of Funding.

 

Notwithstanding any other provision of this Agreement, each Lender shall be
entitled to fund and maintain its funding of all or any part of its Loans in any
manner it sees fit, it being understood, however, that for the purposes of this
Agreement all determinations hereunder with respect to Eurodollar Loans shall be
made as if each Lender had actually funded and maintained each Eurodollar Loan
through the purchase of deposits in the interbank eurodollar market having a
maturity corresponding to such Eurodollar Loan’s Interest Period, and bearing an
interest rate equal to LIBOR for such Interest Period.

 

SECTION 11.
THE ADMINISTRATIVE AGENT.

 

Section 11.1                                                        Appointment
and Authorization of Administrative Agent.

 

Each Lender hereby appoints Harris N.A. as the Administrative Agent under the
Loan Documents and hereby authorizes the Administrative Agent to take such
action as Administrative Agent on its behalf and to exercise such powers under
the Loan Documents as are delegated to the Administrative Agent by the terms
thereof, together with such powers as are reasonably incidental thereto.  The
Lenders expressly agree that the Administrative Agent is not acting as a
fiduciary of the Lenders in respect of the Loan Documents, the Borrower or
otherwise, and nothing herein or in any of the other Loan Documents shall result
in any duties or obligations on the Administrative Agent or any of the Lenders
except as expressly set forth herein.

 

Section 11.2                                                       
Administrative Agent and its Affiliates.

 

The Administrative Agent shall have the same rights and powers under this
Agreement and the other Loan Documents as any other Lender and may exercise or
refrain from exercising such rights and power as though it were not the
Administrative Agent, and the Administrative Agent and its affiliates may accept
deposits from, lend money to, and generally engage in any kind of business with
the Borrower or any Affiliate of the Borrower as if it were not the
Administrative Agent under the Loan Documents.  The term “Lender” as used herein
and in all other Loan Documents, unless the context otherwise clearly requires,
includes the Administrative Agent in its individual capacity as a Lender. 
References in Section 1 hereof to the Administrative Agent’s Loans, or to the
amount owing to the Administrative Agent for which an interest rate is being
determined, refer to the Administrative Agent in its individual capacity as a
Lender.

 

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Section 11.3                                                        Action by
Administrative Agent.

 

If the Administrative Agent receives from the Borrower a written notice of an
Event of Default pursuant to Section 8.5(j) or (l) hereof, the Administrative
Agent shall promptly give each of the Lenders written notice thereof.  The
obligations of the Administrative Agent under the Loan Documents are only those
expressly set forth therein.  Without limiting the generality of the foregoing,
the Administrative Agent shall not be required to take any action hereunder with
respect to any Default or Event of Default, except as expressly provided in
Section 9.2.  Upon the occurrence of an Event of Default, the Administrative
Agent shall take such action to enforce its Lien on the Collateral and to
preserve and protect the Collateral as may be directed by the Required Lenders. 
Unless and until the Required Lenders give such direction, the Administrative
Agent may (but shall not be obligated to) take or refrain from taking such
actions as it deems appropriate and in the best interest of all the Lenders.  In
no event, however, shall the Administrative Agent be required to take any action
in violation of applicable law or of any provision of any Loan Document, and the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder or under any other Loan Document unless it first
receives any further assurances of its indemnification from the Lenders that it
may require, including prepayment of any related expenses and any other
protection it requires against any and all costs, expense and liability which
may be incurred by it by reason of taking or continuing to take any such
action.  The Administrative Agent shall be entitled to assume that no Default or
Event of Default exists unless notified in writing to the contrary by a Lender
or the Borrower.  In all cases in which the Loan Documents do not require the
Administrative Agent to take specific action, the Administrative Agent shall be
fully justified in using its discretion in failing to take or in taking any
action thereunder.  Any instructions, consents, approvals or waivers of the
Required Lenders, or of any other group of Lenders called for under the specific
provisions of the Loan Documents, shall be binding upon all the Lenders and the
holders of the Obligations.  No Lender may take any action to directly enforce
the Obligations owing to it or with respect to the Collateral except at the
direction of the Administrative Agent acting in accordance with this Agreement.

 

Section 11.4                                                        Consultation
with Experts.

 

The Administrative Agent may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.

 

Section 11.5                                                        Liability of
Administrative Agent; Credit Decision.

 

Neither the Administrative Agent nor any of its directors, officers, agents, or
employees shall be liable for any action taken or not taken by it in connection
with the Loan Documents: (i) with the consent or at the request of the Required
Lenders or (ii) in the absence of its own gross negligence or willful
misconduct.  Neither the Administrative Agent nor any of its directors,
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into or verify: (i) any statement, warranty or representation
made in connection with this Agreement, any other Loan Document or any Credit
Event; (ii) the performance or observance of any of the covenants or agreements
of any Loan Party contained herein or in any other Loan Document; (iii) the
satisfaction of any condition specified in Section 7 hereof, except receipt of

 

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items required to be delivered to the Administrative Agent; or (iv) the
validity, effectiveness, genuineness, enforceability, perfection, value, worth
or collectibility hereof or of any other Loan Document or of any other documents
or writing furnished in connection with any Loan Document or of any Collateral;
and the Administrative Agent makes no representation of any kind or character
with respect to any such matter mentioned in this sentence.  The Administrative
Agent may execute any of its duties under any of the Loan Documents by or
through employees, agents, and attorneys-in-fact and shall not be answerable to
the Lenders, the Borrower, or any other Person for the default or misconduct of
any such agents or attorneys-in-fact selected with reasonable care.  The
Administrative Agent shall not incur any liability by acting in reliance upon
any notice, consent, certificate, other document or statement (whether written
or oral) believed by it to be genuine or to be sent by the proper party or
parties.  In particular and without limiting any of the foregoing, the
Administrative Agent shall have no responsibility for confirming the accuracy of
any compliance certificate or other document or instrument received by it under
the Loan Documents.  The Administrative Agent may treat the payee of any
Revolving Note as the holder thereof until written notice of transfer shall have
been filed with the Administrative Agent signed by such payee in form
satisfactory to the Administrative Agent.  Each Lender acknowledges that it has
independently and without reliance on the Administrative Agent or any other
Lender, and based upon such information, investigations and inquiries as it
deems appropriate, made its own credit analysis and decision to extend credit to
the Borrower in the manner set forth in the Loan Documents.  It shall be the
responsibility of each Lender to keep itself informed as to the creditworthiness
of the Borrower and the other Loan Parties, and the Administrative Agent shall
have no liability to any Lender with respect thereto.

 

Section 11.6                                                        Indemnity.

 

The Lenders shall ratably, in accordance with their respective Revolver
Percentages, indemnify and hold the Administrative Agent, and its directors,
officers, employees, agents and representatives harmless from and against any
liabilities, losses, costs or expenses suffered or incurred by it under any Loan
Document or in connection with the transactions contemplated thereby, regardless
of when asserted or arising, except to the extent they are promptly reimbursed
for the same by the Borrower and except to the extent that any event giving rise
to a claim was caused by the gross negligence or willful misconduct of the party
seeking to be indemnified.  The obligations of the Lenders under this
Section shall survive termination of this Agreement.  The Administrative Agent
shall be entitled to offset amounts received for the account of a Lender under
this Agreement against unpaid amounts due from such Lender to the Administrative
Agent hereunder (whether as fundings of participations, indemnities or
otherwise), but shall not be entitled to offset against amounts owed to the
Administrative Agent by any Lender arising outside of this Agreement.

 

Section 11.7                                                        Resignation
of Administrative Agent and Successor Administrative Agent.

 

The Administrative Agent may resign at any time by giving written notice thereof
to the Lenders and the Borrower.  Upon any such resignation of the
Administrative Agent, the Required Lenders shall have the right to appoint a
successor Administrative Agent, and, so long as no Event of Default has occurred
and is continuing, such appointment shall be subject to the prior written
consent of the Borrower.  If no successor Administrative Agent shall have been
so appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days

 

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after the retiring Administrative Agent’s giving of notice of resignation then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent, and, so long as no Event of Default has occurred
and is continuing, such appointment shall be subject to the prior written
consent of the Borrower, which successor shall be any Lender hereunder or any
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$200,000,000.  Upon the acceptance of its appointment as the Administrative
Agent hereunder, such successor Administrative Agent shall thereupon succeed to
and become vested with all the rights and duties of the retiring Administrative
Agent under the Loan Documents, and the retiring Administrative Agent shall be
discharged from its duties and obligations thereunder.  After any retiring
Administrative Agent’s resignation hereunder as Administrative Agent, the
provisions of this Section 11 and all protective provisions of the other Loan
Documents shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent, but no successor Administrative
Agent shall in any event be liable or responsible for any actions of its
predecessor.  If the Administrative Agent resigns and no successor is appointed,
the rights and obligations of such Administrative Agent shall be automatically
assumed by the Required Lenders and (i) the Borrower shall be directed to make
all payments due each Lender hereunder directly to such Lender and (ii) the
Administrative Agent’s rights in the Collateral Documents shall be assigned
without representation, recourse or warranty to the Lenders as their interests
may appear.

 

Section 11.8                                                        L/C Issuer
and Swingline Lender.

 

The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of
Credit issued by it and the documents associated therewith, and the Swingline
Lender shall act on behalf of the Lenders with respect to the Swingline Loans
made hereunder.  The L/C Issuer and the Swingline Lender shall each have all of
the benefits and immunities (i) provided to the Administrative Agent in this
Section 11 with respect to any acts taken or omissions suffered by the L/C
Issuer in connection with Letters of Credit issued by it or proposed to be
issued by it and the Applications pertaining to such Letters of Credit or by the
Swingline Lender in connection with Swingline Loans made or to be made hereunder
as fully as if the term “Administrative Agent”, as used in this Section 11,
included the L/C Issuer and the Swingline Lender with respect to such acts or
omissions and (ii) as additionally provided in this Agreement with respect to
the L/C Issuer or the Swingline Lender, as applicable.

 

Section 11.9                                                        Hedging
Liability and Funds Transfer and Deposit Account Liability.

 

By virtue of a Lender’s execution of this Agreement or an assignment agreement
pursuant to Section 12.12 hereof, as the case may be, any Affiliate of such
Lender with whom the Borrower has entered into an agreement creating Hedging
Liability or Funds Transfer and Deposit Account Liability shall be deemed a
Lender party hereto for purposes of any reference in a Loan Document to the
parties for whom the Administrative Agent is acting, it being understood and
agreed that the rights and benefits of such Affiliate under the Loan Documents
consist exclusively of such Affiliate’s right to share in payments and
collections out of the Collateral and the Guaranties as more fully set forth in
Section 3.1 hereof.  At the Administrative Agent’s request, each Lender shall
deliver to the Administrative Agent a report on the amount and nature of Hedging
Liability and Funds Transfer and Deposit Account Liability owing to such Lender

 

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and its Affiliates.  In connection with any such distribution of payments and
collections, the Administrative Agent shall be entitled to assume no amounts are
due to any Lender or its Affiliate with respect to Hedging Liability or Funds
Transfer and Deposit Account Liability unless such Lender or its Affiliate has
notified the Agent in writing of the amount of any such liability owed to it
prior to such distribution.

 

Section 11.10                 Authorization to Release Liens and Limit Amount of
Certain Claims.

 

The Administrative Agent is hereby irrevocably authorized by each of the Lenders
to release any Lien covering any Property of the Loan Parties that is the
subject of a sale or other disposition which is permitted by this Agreement or
which has been consented to in accordance with Section 12.13.  The
Administrative Agent is further irrevocably authorized by each of the Lenders to
reduce or limit the amount of the obligations secured by any particular item of
Collateral to an amount not less than the estimated value thereof to the extent
necessary to reduce mortgage registry, filing, recording and similar taxes.

 

Section 11.11                 Proportionate Interest of Lenders under the Loan
Documents.

 

In the event any remedy is exercised with respect to the Loan Documents or the
Collateral, the Administrative Agent shall pursue remedies designated by the
Required Lenders.  Each Lender agrees that no Lender shall have any right
individually to realize upon the security created by the Loan Documents or
otherwise enforce any provision thereof, or make demand thereunder, it being
understood and agreed that such rights and remedies may be exercised by the
Administrative Agent for the ratable benefit of the Lenders, under the terms of
this Agreement and the Loan Documents.  Nothing set forth in the previous
sentence shall confer any rights or benefit on the Borrower or on any other
Person except the Lenders.

 

SECTION 12.
MISCELLANEOUS.

 

Section 12.1                   Withholding Taxes.

 

(a)           Payments Free of Withholding.  Except as otherwise required by law
and subject to Section 12.1(b) hereof, each payment by the Borrower under this
Agreement or the other Loan Documents shall be made without withholding for or
on account of any present or future taxes (other than Excluded Taxes).  If any
such withholding is so required, the Borrower shall make the withholding, pay
the amount withheld to the appropriate governmental authority before penalties
attach thereto or interest accrues thereon and forthwith pay such additional
amount as may be necessary to ensure that the net amount actually received by
each Lender and the Administrative Agent free and clear of such taxes (including
such taxes on such additional amount) is equal to the amount which that Lender
or the Administrative Agent (as the case may be) would have received had such
withholding not been made.  If the Administrative Agent or any Lender pays any
amount in respect of any such taxes, penalties or interest, the Borrower shall
reimburse the Administrative Agent or such Lender for that payment on demand in
the currency in which such payment was made.  If the Borrower pays any such
taxes, penalties or interest, it shall deliver official tax receipts evidencing
that payment, certified copies thereof or such other evidence as reasonably
requested by the Administrative Agent to the Lender or

 

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Administrative Agent on whose account such withholding was made (with a copy to
the Administrative Agent if not the recipient of the original) on or before the
thirtieth day after payment.

 

(b)           U.S. Withholding Tax Exemptions.  Each Lender that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) shall
submit to the Borrower and the Administrative Agent on or before the date the
initial Credit Event is made hereunder or, if later, the date such financial
institution becomes a Lender hereunder, two duly completed and signed copies of
(i) either Form W-8 BEN (relating to such Lender and entitling it to a complete
exemption from withholding under the Code on all amounts to be received by such
Lender, including fees, pursuant to the Loan Documents and the Obligations) or
Form W-8 ECI (relating to all amounts to be received by such Lender, including
fees, pursuant to the Loan Documents and the Obligations) of the United States
Internal Revenue Service or (ii) solely if such Lender is claiming exemption
from United States withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of “portfolio interest”, a Form W-8 BEN, or any
successor form prescribed by the Internal Revenue Service, and a certificate
representing that such Lender is not a bank for purposes of Section 881(c) of
the Code, is not a 10-percent shareholder (within the meaning of
Section 871(h)(3)(B) of the Code) of the Borrower and is not a controlled
foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code).  Thereafter and from time to time, each Lender
shall submit to the Borrower and the Administrative Agent such additional duly
completed and signed copies of one or the other of such Forms (or such successor
forms as shall be adopted from time to time by the relevant United States taxing
authorities) and such other certificates as may be (i) requested by the Borrower
in a written notice, directly or through the Administrative Agent, to such
Lender and (ii) required under then-current United States law or regulations to
avoid or reduce United States withholding taxes on payments in respect of all
amounts to be received by such Lender, including fees, pursuant to the Loan
Documents or the Obligations.  Upon the request of the Borrower or the
Administrative Agent, each Lender that is a United States person (as such term
is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower and
the Administrative Agent a certificate to the effect that it is such a United
States person and that it is exempt from backup withholding tax on IRS Form W-9
(or an applicable replacement or successor form).

 

(c)           Inability of Lender to Submit Forms.  If any Lender determines, as
a result of any change in applicable law, regulation or treaty, or in any
official application or interpretation thereof or otherwise, that it is unable
to submit to the Borrower or the Administrative Agent any form or certificate
that such Lender is obligated to submit pursuant to subsection (b) of this
Section 12.1 or that such Lender is required to withdraw or cancel any such form
or certificate previously submitted or any such form or certificate otherwise
becomes ineffective or inaccurate, such Lender shall promptly notify the
Borrower and Administrative Agent of such fact and the Lender shall to that
extent not be obligated to provide any such form or certificate and will be
entitled to withdraw or cancel any affected form or certificate, as applicable;
in such event the Borrower shall withhold the required taxes as provided by
applicable law and in compliance with Section 12.1(a).

 

(d)           Refunds and Credits.  So long  as no Event of Default has occurred
and is continuing, if the Administrative Agent or a Lender determines, in its
sole discretion, that it has

 

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received a refund or credit (available in lieu of a refund) of any taxes for
which Borrower has made a payment pursuant to Section 12.1(a) or Section 12.4,
it shall pay over such refund or credit to the Borrower (but only to the extent
of the additional amounts paid by the Borrower under this Section 12.1(a) or
Section 12.4 with respect to the taxes giving rise to such refund or credit),
net of all out-of-pocket expenses of the Administrative Agent or such Lender and
without interest (other than any interest paid by the relevant taxing authority
with respect to such refund or credit); provided, that the Borrower, upon the
request of the Administrative Agent or such Lender, agrees to repay the amount
paid over to the Borrower (plus any penalties, interest or other charges imposed
by the relevant taxing authority) to the Administrative Agent or such Lender in
the event the Administrative Agent or such Lender is required to repay such
refund or credit to such taxing authority. This Section shall not be construed
to require the Administrative Agent or any Lender to make available its tax
returns (or any other information relating to its taxes which it deems
confidential) to the Borrower or any other Person or to alter its customary
practices and procedures with respect to the administration of taxes.

 

Section 12.2                   No Waiver, Cumulative Remedies.

 

No delay or failure on the part of the Administrative Agent or any Lender or on
the part of the holder or holders of any of the Obligations in the exercise of
any power or right under any Loan Document shall operate as a waiver thereof or
as an acquiescence in any default, nor shall any single or partial exercise of
any power or right preclude any other or further exercise thereof or the
exercise of any other power or right.  The rights and remedies hereunder of the
Administrative Agent, the Lenders and of the holder or holders of any of the
Obligations are cumulative to, and not exclusive of, any rights or remedies
which any of them would otherwise have.

 

Section 12.3                   Non-Business Days.

 

If any payment hereunder becomes due and payable on a day which is not a
Business Day, the due date of such payment shall be extended to the next
succeeding Business Day on which date such payment shall be due and payable.  In
the case of any payment of principal falling due on a day which is not a
Business Day, interest on such principal amount shall continue to accrue during
such extension at the rate per annum then in effect, which accrued amount shall
be due and payable on the next scheduled date for the payment of interest.

 

Section 12.4                   Documentary Taxes.

 

The Borrower agrees to pay on demand any documentary, stamp or similar taxes
payable in respect of this Agreement or any other Loan Document, including
interest and penalties, in the event any such taxes are assessed, irrespective
of when such assessment is made and whether or not any credit is then in use or
available hereunder.

 

Section 12.5                   Survival of Representations.

 

All representations and warranties made herein or in any other Loan Document or
in certificates given pursuant hereto or thereto shall survive the execution and
delivery of this Agreement and the other Loan Documents, and shall continue in
full force and effect with

 

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respect to the date as of which they were made as long as any credit is in use
or available hereunder.

 

Section 12.6                   Survival of Indemnities.

 

All indemnities and other provisions relative to reimbursement to the Lenders of
amounts sufficient to protect the yield of the Lenders with respect to the Loans
and Letters of Credit, including, but not limited to, Sections 1.12, 10.3 and
12.15 hereof, shall survive the termination of this Agreement and the other Loan
Documents and the payment of the Obligations.

 

Section 12.7                   Sharing of Set-Off.

 

Each Lender agrees with each other Lender a party hereto that if such Lender
shall receive and retain any payment, whether by set-off or application of
deposit balances or otherwise, on any of the Loans or Reimbursement Obligations
in excess of its ratable share of payments on all such Obligations then
outstanding to the Lenders, then such Lender shall purchase for cash at face
value, but without recourse, ratably from each of the other Lenders such amount
of the Loans or Reimbursement Obligations, or participations therein, held by
each such other Lenders (or interest therein) as shall be necessary to cause
such Lender to share such excess payment ratably with all the other Lenders;
provided, however, that if any such purchase is made by any Lender, and if such
excess payment or part thereof is thereafter recovered from such purchasing
Lender, the related purchases from the other Lenders shall be rescinded ratably
and the purchase price restored as to the portion of such excess payment so
recovered, but without interest.  For purposes of this Section, amounts owed to
or recovered by the L/C Issuer in connection with Reimbursement Obligations in
which Lenders have been required to fund their participation shall be treated as
amounts owed to or recovered by the L/C Issuer as a Lender hereunder.

 

Section 12.8                   Notices.

 

Except as otherwise specified herein, all notices hereunder and under the other
Loan Documents shall be in writing (including, without limitation, notice by
facsimile) and shall be given to the relevant party at its address or facsimile
number set forth below, or such other address or facsimile number as such party
may hereafter specify by notice to the Administrative Agent and the Borrower
given by courier, by United States certified or registered mail, by facsimile or
by other telecommunication device capable of creating a written record of such
notice and its receipt.  Notices under the Loan Documents to the Lenders and the
Administrative Agent shall be addressed to their respective addresses or
facsimile numbers set forth on the signature pages hereof, and to the Borrower
to:

 

Cobra Electronics Corporation

6500 West Cortland Street

Chicago, Illinois 60707

Attention:

 

Michael Smith, SVP & CFO

Telephone:

 

(773) 804-6281

Facsimile:

 

(773) 889-8901

 

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With copies to:

 

Sidley Austin LLP
One South Dearborn Street
Chicago, Illinois  60603

Attention:

 

Michael L. Gold

Telephone:

 

(312) 853-7148

Facsimile:

 

(312) 853-7036

 

Each such notice, request or other communication shall be effective (i) if given
by facsimile, when such facsimile is transmitted to the facsimile numbers
specified in this Section or on the signature pages hereof and a confirmation of
such facsimile has been received by the sender, (ii) if given by mail, three
Business Days after such communication is deposited in the mail, certified or
registered with return receipt requested, addressed as aforesaid or (iii) if
given by any other means, when delivered at the addresses specified in this
Section or on the signature pages hereof; provided that any notice given
pursuant to Section 1 hereof shall be effective only upon receipt.

 

Section 12.9                   Counterparts.

 

This Agreement may be executed in any number of counterparts, and by the
different parties hereto on separate counterpart signature pages, and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.

 

Section 12.10                 Successors and Assigns.

 

This Agreement shall be binding upon the Borrower and its successors and
assigns, and shall inure to the benefit of the Administrative Agent and each of
the Lenders and the benefit of their respective successors and permitted
assigns, including any subsequent holder of any of the Obligations.  The
Borrower may not assign any of its rights or obligations under any Loan Document
without the written consent of all of the Lenders.

 

Section 12.11                 Participants.

 

Each Lender shall have the right at its own cost to grant participations (to be
evidenced by one or more agreements or certificates of participation) in the
Loans made and Reimbursement Obligations and/or Revolving Credit Commitments
held by such Lender at any time and from time to time to one or more other
Persons; provided that no such participation shall relieve any Lender of any of
its obligations under this Agreement, and, provided, further that no such
participant shall have any rights under this Agreement except as provided in
this Section, and the Administrative Agent shall have no obligation or
responsibility to such participant.  Any agreement pursuant to which such
participation is granted shall provide that the granting Lender shall retain the
sole right and responsibility to enforce the obligations of the Borrower under
this Agreement and the other Loan Documents including, without limitation, the
right to approve any amendment, modification or waiver of any provision of the
Loan Documents, except that such agreement may provide that such Lender will not
agree to any modification, amendment or waiver of the Loan Documents that would
reduce the amount of or postpone any fixed date for payment of any Obligation in
which such participant has an interest. 

 

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Any party to which such a participation has been granted shall have the benefits
of Section 1.11 and Section 10.3 hereof; provided that the rights of any
Participant only shall be derivative through the granting Lender with whom such
Participant participates and more specifically, no Participant shall be entitled
to receive any greater payment under Section 10.3 or 12.1 hereof than the
granting Lender would have been entitled to receive with respect to the
participation sold to such Participant.  The Borrower authorizes each Lender to
disclose to any participant or prospective participant under this Section any
financial or other information pertaining to any Loan Party.

 

Section 12.12                 Assignments.

 

(a)           Each Lender shall have the right at any time, with the prior
consent of the Administrative Agent and, so long as no Event of Default then
exists (except for (x) assignments to a Lender, an Affiliate of a Lender or a
Related Fund for which the consent of the Borrower shall not be required, and
(y) assignments of a portion of the Revolving Credit Commitments to a Lender
holding a portion of the Revolving Credit Commitment, an Affiliate of a Lender
holding a Revolving Credit Commitment or a Related Fund related to a Lender
holding a Revolving Credit Commitment for which the consent of the
Administrative Agent shall not be required), the Borrower (which consents shall
not be unreasonably withheld or delayed) to sell, assign, transfer or negotiate
all or any part of its rights and obligations under the Loan Documents
(including, without limitation, the indebtedness evidenced by the Revolving
Notes then held by such assigning Lender, together with an equivalent percentage
of its obligation to make Loans and participate in Letters of Credit) to one or
more commercial banks or other financial institutions or investors, provided
that, unless otherwise agreed to by the Administrative Agent, such assignment
shall be of a fixed percentage (and not by its terms of varying percentage) of
the assigning Lender’s rights and obligations under the Loan Documents;
provided, however, that in order to make any such assignment (i) unless the
assigning Lender is making such assignment to another Lender, an Affiliate of a
Lender or a Related Fund, the assigning Lender is assigning all of its Revolving
Credit Commitments, outstanding Loans and interests in Letters of Credit or such
requirement is otherwise waived by the Administrative Agent and, so long as no
Event of Default then exists, the Borrower (which consent by Borrower shall not
be unreasonably withheld or delayed), such assignment shall be in a minimum
aggregate amount equal to $1,000,000, (ii) each such assignment shall be
evidenced by a written agreement (substantially in the form attached hereto as
Exhibit E or in such other form acceptable to the Administrative Agent) executed
by such assigning Lender, such assignee Lender or Lenders, the Administrative
Agent and, if required as provided above, the Borrower, which agreement shall
specify in each instance the portion of the Obligations which are to be assigned
to the assignee Lender and the portion of the Revolving Credit Commitments of
the assigning Lender to be assumed by the assignee Lender, and (iii) the
assigning Lender shall pay to the Administrative Agent a processing fee of
$3,500 (other than in connection with an assignment to a Lender or a Related
Fund) and any out-of-pocket attorneys’ fees and expenses incurred by the
Administrative Agent in connection with any such assignment agreement.  Any such
assignee shall become a Lender for all purposes hereunder to the extent of the
rights and obligations under the Loan Documents it assumes and the assigning
Lender shall be released from its obligations, and will have released its
rights, under the Loan Documents to the extent of such assignment.  The address
for notices to such assignee Lender shall be as specified in the assignment
agreement executed by it.  Promptly upon the effectiveness of any such
assignment agreement, the Borrower shall execute

 

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and deliver replacement Notes to the assignee Lender and the assigning Lender in
the respective amounts of their Revolving Credit Commitments (or assigned
principal amounts, as applicable) after giving effect to the reduction
occasioned by such assignment (all such Notes to constitute “Notes” for all
purposes of the Loan Documents), and the assignee Lender shall thereafter
surrender to the Borrower its old Notes.  The Borrower authorizes each Lender to
disclose to any purchaser or prospective purchaser of an interest in the Loans
and interest in Letters of Credit owed to it or its Revolving Credit Commitments
under this Section any financial or other information pertaining to any Loan
Party.

 

(b)           Any Lender may at any time pledge or grant a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any such pledge or grant to a Federal Reserve Bank, and
this Section shall not apply to any such pledge or grant of a security interest;
provided that no such pledge or grant of a security interest shall release a
Lender from any of its obligations hereunder or substitute any such pledgee or
secured party for such Lender as a party hereto; provided further, however, the
right of any such pledgee or grantee (other than any Federal Reserve Bank) to
further transfer all or any portion of the rights pledged or granted to it,
whether by means of foreclosure or otherwise, shall be at all times subject to
the terms of this Agreement.

 

Section 12.13                 Amendments.

 

No amendment or waiver of any provision of this Agreement or any other Loan
Document (including without limitation any Note), nor consent to any departure
by the Borrower therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Required Lenders and Borrower, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, that no amendment, waiver or consent
shall be effective, unless (i) in writing and signed by each affected Lender, to
do any of the following:  (1) increase or decrease the aggregate Revolving Loan
Commitments or any Lender’s Revolving Loan Commitment; (2) reduce the principal
of, or interest on, any amount payable hereunder or under any Note, other than
those payable only to Administrative Agent, which may be reduced by
Administrative Agent unilaterally; (3) increase or decrease any interest rate
payable hereunder other than in connection with a waiver or reduction of a
supplemental rate of interest implemented pursuant to Section 1.10 hereof;
(4) other than in connection with a mandatory prepayment under
Section 1.9(b) hereof, postpone any date fixed for any payment of principal of,
or interest on, any amounts payable hereunder or under any Note, other than
those payable only to Administrative Agent, which may be postponed by
Administrative Agent unilaterally; (5) increase any advance percentage contained
in the definition of the terms “Borrowing Base”, “Real Estate Availability” or
“Insurance Availability”; (6) reduce the number of Lenders that shall be
required for Lenders or any of them to take any action hereunder; (7) other than
in connection with a sale, transfer, or other disposition permitted pursuant to
Section 8.10 hereof, release or discharge any Person liable for the performance
of any obligations of any Borrower hereunder or under any of the Loan Documents;
(8) amend any provision of this Agreement that requires the consent of all
Lenders or consent to or waive any breach thereof; (9) amend the definition of
the term “Required Lenders”; (10) amend this Section 12.13; or (11) release the
Administrative Agent’s lien on or security interest in all or substantially all
of the Collateral, unless otherwise permitted pursuant to the Loan Documents; 
or (ii) in writing and signed by Administrative Agent, the Swingline Lender or
the L/C Issuer in

 

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addition to the Lenders required above to affect the rights or duties of
Administrative Agent, the Swingline Lender or the L/C Issuer under this
Agreement, any Note or any other Loan Document.  If a fee is to be paid by
Borrowers in connection with any waiver or amendment hereunder, the agreement
evidencing such amendment or waiver may, at the discretion of Administrative
Agent (but shall not be required to), provide that only Lenders executing such
agreement by a specified date may share in such fee (and in such case, such fee
shall be divided among the applicable Lenders on a pro rata basis without
including the interests of any Lenders who have not timely executed such
agreement).

 

Section 12.14                 Headings.

 

Section headings used in this Agreement are for reference only and shall not
affect the construction of this Agreement.

 

Section 12.15                 Costs and Expenses; Indemnification.

 

(a)           The Borrower agrees to pay all reasonable costs and expenses of
the Administrative Agent in connection with the preparation, negotiation, and
administration of the Loan Documents, including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative Agent, in
connection with the preparation and execution of the Loan Documents, and any
amendment, waiver or consent related thereto, whether or not the transactions
contemplated herein are consummated, together with any fees and charges suffered
or incurred by the Administrative Agent in connection with periodic collateral
filing fees and lien searches.  The Borrower further agrees to indemnify the
Administrative Agent, each Lender, and their respective directors, officers,
employees, agents, financial advisors, and consultants against all losses,
claims, damages, penalties, judgments, liabilities and expenses (including,
without limitation, all reasonable expenses of litigation or preparation
therefor, whether or not the indemnified Person is a party thereto, or any
settlement arrangement arising from or relating to any such litigation) which
any of them may pay or incur arising out of or relating to any Loan Document or
any of the transactions contemplated thereby or the direct or indirect
application or proposed application of the proceeds of any Loan or Letter of
Credit, other than to the extent of those which arise, in whole or in part, from
the gross negligence or willful misconduct of the party claiming
indemnification.  The Borrower, upon demand by the Administrative Agent or a
Lender at any time, shall reimburse the Administrative Agent or such Lender for
any legal or other expenses incurred in connection with investigating or
defending against any of the foregoing (including any settlement costs relating
to the foregoing) except if the same is directly due to the gross negligence or
willful misconduct of the party to be indemnified; provided that such legal
expenses shall be limited to the fees of one counsel to the Administrative Agent
and one counsel to the other Lenders in the aggregate.  The obligations of the
Borrower under this Section shall survive the termination of this Agreement.

 

(b)           The Borrower unconditionally agrees to forever indemnify, defend
and hold harmless, and covenants not to sue for any claim for contribution
against, the Administrative Agent and the Lenders for any damages, costs, loss
or expense, including without limitation, response, remedial or removal costs,
arising out of any of the following: (i) any presence, release, threatened
release or disposal of any hazardous or toxic substance or petroleum by any Loan
Party or otherwise occurring on or with respect to its Property (whether owned
or leased), (ii) the operation or violation of any environmental law, whether
federal, state,

 

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or local, and any regulations promulgated thereunder, by any Loan Party or
otherwise occurring on or with respect to its Property (whether owned or
leased), (iii) any claim for personal injury or property damage in connection
with any Loan Party or otherwise occurring on or with respect to its Property
(whether owned or leased), and (iv) the inaccuracy or breach of any
environmental representation, warranty or covenant by any Loan Party made herein
or in any other Loan Document evidencing or securing any Obligations or setting
forth terms and conditions applicable thereto or otherwise relating thereto,
except for damages to the extent arising from the willful misconduct or gross
negligence of the party claiming indemnification.  This indemnification shall
survive the payment and satisfaction of all Obligations and the termination of
this Agreement, and shall remain in force beyond the expiration of any
applicable statute of limitations and payment or satisfaction in full of any
single claim under this indemnification.  This indemnification shall be binding
upon the successors and assigns of the Borrower and shall inure to the benefit
of Administrative Agent and the Lenders directors, officers, employees, agents,
and collateral trustees, and their successors and assigns.

 

Section 12.16                 Set-off.

 

In addition to any rights now or hereafter granted under applicable law and not
by way of limitation of any such rights, upon the occurrence and during the
continuance of any Event of Default, each Lender and each subsequent holder of
any Obligation is hereby authorized by the Borrower at any time or from time to
time, without notice to the Borrower or to any other Person, any such notice
being hereby expressly waived, at the direction of the Administrative Agent, to
set-off and to appropriate and to apply any and all deposits (general or
special, including, but not limited to, indebtedness evidenced by certificates
of deposit, whether matured or unmatured, but not including trust or payroll
accounts, and in whatever currency denominated) and any other indebtedness at
any time held or owing by that Lender or that subsequent holder to or for the
credit or the account of the Borrower, whether or not matured, against and on
account of the Obligations of the Borrower to that Lender or that subsequent
holder under the Loan Documents, including, but not limited to, all claims of
any nature or description arising out of or connected with the Loan Documents,
irrespective of whether or not (a) that Lender or that subsequent holder shall
have made any demand hereunder or (b) the principal of or the interest on the
Loans or Notes and other amounts due hereunder shall have become due and payable
pursuant to Section 9 and although said obligations and liabilities, or any of
them, may be contingent or unmatured.

 

Section 12.17                 Entire Agreement.

 

The Loan Documents constitute the entire understanding of the parties thereto
with respect to the subject matter thereof and any prior agreements, whether
written or oral, with respect thereto are superseded hereby.

 

Section 12.18                 Governing Law.

 

This Agreement and the other Loan Documents, and the rights and duties of the
parties hereto, shall be construed and determined in accordance with the
internal laws of the State of Illinois.

 

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Section 12.19                 Severability of Provisions.

 

Any provision of any Loan Document which is unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.  All rights, remedies and powers provided in this Agreement and
the other Loan Documents may be exercised only to the extent that the exercise
thereof does not violate any applicable mandatory provisions of law, and all the
provisions of this Agreement and other Loan Documents are intended to be subject
to all applicable mandatory provisions of law which may be controlling and to be
limited to the extent necessary so that they will not render this Agreement or
the other Loan Documents invalid or unenforceable.

 

Section 12.20                 Excess Interest.

 

Notwithstanding any provision to the contrary contained herein or in any other
Loan Document, no such provision shall require the payment or permit the
collection of any amount of interest in excess of the maximum amount of interest
permitted by applicable law to be charged for the use or detention, or the
forbearance in the collection, of all or any portion of the Loans or other
Obligations outstanding under this Agreement or any other Loan Document (“Excess
Interest”).  If any Excess Interest is provided for, or is adjudicated to be
provided for, herein or in any other Loan Document, then in such event (a) the
provisions of this Section shall govern and control, (b) neither the Borrower
nor any guarantor or endorser shall be obligated to pay any Excess Interest,
(c) any Excess Interest that the Administrative Agent or any Lender may have
received hereunder shall, at the option of the Administrative Agent, be
(i) applied as a credit against the then outstanding principal amount of
Obligations hereunder and accrued and unpaid interest thereon (not to exceed the
maximum amount permitted by applicable law), (ii) refunded to the Borrower, or
(iii) any combination of the foregoing, (d) the interest rate payable hereunder
or under any other Loan Document shall be automatically subject to reduction to
the maximum lawful contract rate allowed under applicable usury laws (the
“Maximum Rate”), and this Agreement and the other Loan Documents shall be deemed
to have been, and shall be, reformed and modified to reflect such reduction in
the relevant interest rate, and (e) neither the Borrower nor any guarantor or
endorser shall have any action against the Administrative Agent or any Lender
for any damages whatsoever arising out of the payment or collection of any
Excess Interest.  Notwithstanding the foregoing, but subject to applicable law,
if for any period of time interest on any of Borrower’s Obligations is
calculated at the Maximum Rate rather than the applicable rate under this
Agreement, and thereafter such applicable rate becomes less than the Maximum
Rate, the rate of interest payable on the Borrower’s Obligations shall remain at
the Maximum Rate until the Lenders have received the amount of interest which
such Lenders would have received during such period on the Borrower’s
Obligations had the rate of interest not been limited to the Maximum Rate during
such period.

 

Section 12.21                 Construction.

 

Nothing contained herein shall be deemed or construed to permit any act or
omission which is prohibited by the terms of any Collateral Document, the
covenants and agreements contained herein being in addition to and not in
substitution for the covenants and agreements contained in the Collateral
Documents; provided, however, that to the extent of any

 

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conflict between the provisions of this Agreement and the provisions of any
Collateral Documents, the provisions of this Agreement shall govern and control
for all purposes.

 

Section 12.22                 Lenders’ Obligations Several.

 

The obligations of the Lenders hereunder are several and not joint.  Nothing
contained in this Agreement and no action taken by the Lenders pursuant hereto
shall be deemed to constitute the Lenders a partnership, association, joint
venture or other entity.

 

Section 12.23                 Submission to Jurisdiction; Waiver of Jury Trial.

 

The Borrower hereby submits to the nonexclusive jurisdiction of the United
States District Court for the Northern District of Illinois and of any Illinois
State court sitting in the City of Chicago for purposes of all legal proceedings
arising out of or relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or thereby.  The Borrower irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.  THE BORROWER, THE ADMINISTRATIVE AGENT, AND
THE LENDERS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED THEREBY.

 

[Signature Pages Follow]

 

65

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This Agreement is entered into between us for the uses and purposes hereinabove
set forth as of the date first above written.

 

 

COBRA ELECTRONICS CORPORATION

 

 

 

 

 

By:

/s/ Michael Smith

 

Name:

Michael Smith

 

Title:

Sr. Vice President and CFO

 

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

 

 

HARRIS N.A.,

 

in its individual capacity as a Lender, as L/C Issuer

 

and as Administrative Agent

 

 

 

 

 

By:

/s/ William J. Kennedy

 

Name:

William J. Kennedy

 

Title:

Vice President

 

 

 

Address:

 

 

 

111 West Monroe Street

 

Chicago, Illinois 60603

 

Attention: Asset Based Lending

 

Facsimile:

(312) 765-1641

 

Telephone:

(312) 461-2116

 

2

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FIFTH THIRD BANK,

 

in its individual capacity as a Lender

 

 

 

 

 

By:

/s/ Herbert M. Kidd II

 

Name:

Herbert M. Kidd

 

Title:

Vice President

 

 

 

Address:

 

 

 

 

 

 

 

Attention:

 

 

Facsimile:

 

 

Telephone:

 

 

3

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ANNEX 1

 

Definitions

 

Definitions.

 

The following terms when used herein shall have the following meanings:

 

“Account Debtor” means the Person who is obligated on a Receivable.

 

“Adjusted EBITDA” means, with reference to any period, EBITDA plus (a)(i) losses
with respect to the cash surrender value of the Life Policies, (ii) FASB 123
stock option expenses, (iii) foreign exchange losses, (iv) deferred revenue
charges (net of any deferred revenue charges realized from prior periods),
(v) write-downs of intangible assets (to the extent, with respect to the
foregoing clauses (ii), (iii), (iv) and (v), they are non-cash charges),
(vi) breakage fees payable in cash incurred on the Closing Date as a result of
the termination by the Borrower of any agreement with respect of swaps so long
as, after giving effect to the payment of such fees, Excess Availability is at
least the Minimum Required Excess Availability Amount and (vii) other non-cash
losses acceptable to the Administrative Agent in its reasonable credit judgment,
minus (b)(i) gains with respect to the cash surrender value of the Life
Policies, (ii) foreign exchange gains, (iii) write-ups of intangible assets (to
the extent, with respect to the foregoing clauses (ii) and (iii), they are
non-cash charges) and (iv) other non-cash gains acceptable to the Administrative
Agent in its reasonable credit judgment.

 

“Administrative Agent” means Harris N.A., in its capacity as Administrative
Agent hereunder,  and any successor pursuant to Section 11.7 hereof.

 

“Affiliate” means any Person directly or indirectly controlling or controlled
by, or under direct or indirect common control with, another Person.  A Person
shall be deemed to control another Person for the purposes of this definition if
such Person possesses, directly or indirectly, the power to direct, or cause the
direction of, the management and policies of the other Person, whether through
the ownership of voting securities, common directors, trustees or officers, by
contract or otherwise; provided that, in any event for purposes of this
definition, any Person that owns, directly or indirectly, 10% or more of the
securities having the ordinary voting power for the election of directors or
governing body of a corporation or 10% or more of the partnership or other
ownership interest of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person.

 

“Agreement” means this Credit Agreement, as the same may be amended, modified,
or supplemented from time to time pursuant to the terms hereof.

 

“Applicable Margin” means with respect to Loans, Reimbursement Obligations and
letter of credit fees payable under Section 2.1 hereof with respect to Standby
Letters of Credit and Commercial Letters of Credit, in each case until the first
Pricing Date, the rates per annum shown opposite Level II below, and thereafter
from one Pricing Date to the next, the

 

1

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Applicable Margin means the rates per annum determined in accordance with the
following schedule:

 

Level

 

Fixed Charge Coverage
Ratio

 

Applicable
Margin for Base
Rate Loans and
Reimbursement
Obligations

 

Applicable
Margin for
Eurodollar Loans

 

Applicable
Margin for letter
of credit fees
with respect to
Standby Letters
of Credit

 

Applicable
Margin for letter
of credit fees
with respect to
Commercial
Letters of Credit

 

III

 

Less than 1.20 to 1.0

 

2.25

%

3.75

%

3.75

%

1.875

%

II

 

Greater than or equal to 1.20 to 1.0 but less than or equal to 1.75 to 1.0

 

2.00

%

3.50

%

3.50

%

1.75

%

I

 

Greater than 1.75 to 1.0

 

1.75

%

3.25

%

3.25

%

1.625

%

 

For purposes hereof, the term “Pricing Date” means, for any fiscal quarter of
the Borrower ending on or after December 31, 2010, the date on which the
Administrative Agent is in receipt of the Borrower’s most recent financial
statements (and, in the case of the year-end financial statements, audit report)
for the fiscal quarter then ended, pursuant to Section 8.5 hereof.  The
Applicable Margin shall be established based on the Fixed Charge Coverage Ratio
measured as of the last day of each fiscal quarter, commencing with the fiscal
quarter ending December 31, 2010.  The Applicable Margin established on a
Pricing Date shall remain in effect until the next Pricing Date.  If the
Borrower has not delivered its financial statements by the date such financial
statements (and, in the case of the year-end financial statements, audit report)
are required to be delivered under Section 8.5 hereof, until such financial
statements and audit report are delivered, the Applicable Margin shall be the
highest Applicable Margin (i.e. Level III pricing shall apply).  If the Borrower
subsequently delivers such financial statements before the next Pricing Date,
the Applicable Margin established by such late delivered financial statements
shall take effect from the date of delivery until the next Pricing Date.  In all
other circumstances, the Applicable Margin established by such financial
statements shall be in effect from the Pricing Date that occurs immediately
after the end of the fiscal quarter covered by such financial statements until
the next Pricing Date.  Each determination of the Applicable Margin made by the
Administrative Agent in accordance with the foregoing shall be conclusive and
binding on the Borrower and the Lenders, subject to adjustment for manifest
error.

 

“Application” is defined in Section 1.3(b) hereof.

 

“Authorized Representative” means those persons shown on the list of officers
and employees of the Borrower provided by the Borrower pursuant to
Section 7.2(h) hereof or on any update of any such list provided by the Borrower
to the Administrative Agent, or any further or different officers and employees
of the Borrower so named by any Authorized Representative of the Borrower in a
written notice to the Administrative Agent.

 

“Bankruptcy Code” means Title 11 of the United States Code or any other similar
federal or state statute.

 

“Base Rate” means, for any day, the greatest of:  (i) the rate of interest
announced or otherwise established by Agent from time to time as its prime
commercial rate, or its

 

2

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equivalent, for U.S. Dollar loans to borrowers located in the United States as
in effect on such day, with any change in the Base Rate resulting from a change
in said prime commercial rate to be effective as of the date of the relevant
change in said prime commercial rate (it being acknowledged and agreed that such
rate may not be Administrative Agent’s best or lowest rate), (ii) the sum of
(x) the rate determined by Agent to be the average (rounded upward, if
necessary, to the next higher of 1/100 of 1%) of the rates per annum quoted to
Administrative Agent at approximately 10:00 a.m. (Chicago time) (or as soon
thereafter as is practicable) on such day (or, if such day is not a Business
Day, on the immediately preceding Business Day) by two or more Federal funds
brokers selected by Administrative Agent for sale to Administrative Agent at
face value of Federal funds in the secondary market in an amount equal or
comparable to the principal amount owed to Agent for which such rate is being
determined, plus (y) ½ of 1% and (iii) the then applicable LIBOR Lending Rate
for one month interest periods plus 1%.

 

“Base Rate Loan” means a Loan bearing interest at a rate specified in
Section 1.3(a) hereof.

 

“Borrower” is defined in the introductory paragraph of this Agreement.

 

“Borrower’s Account” means the Borrower’s general operating account with the
Administrative Agent.

 

“Borrowing” means the total of Revolving Loans of a single type advanced,
continued for an additional Interest Period, or converted from a different type
into such type by the Lenders under the Revolving Credit Commitments on a single
date and, in the case of Eurodollar Loans, for a single Interest Period.
Borrowings of Revolving Loans are made and maintained ratably from each of the
Lenders under the Revolving Credit Commitments according to their Revolver
Percentages of the Revolving Credit Commitments.  A Borrowing is “advanced” on
the day Lenders advance funds comprising such Borrowing to the Borrower, is
“continued” on the date a new Interest Period for the same type of Revolving
Loan commences for such Borrowing, and is “converted” when such Borrowing is
changed from one type of Revolving Loan to the other, all as determined pursuant
to Sections 1.2 and 1.5 hereof.

 

“Borrowing Base” means, as of any time it is to be determined, the result of:

 

(a)           85% of the difference between the then outstanding unpaid amount
of Eligible Receivables less any and all returns, rebates, discounts, claims,
credits, allowances and/or finance charges of any nature at any time issued,
owing, available to or claimed by Account Debtors, granted, outstanding or
payable in connection with such Eligible Receivables at such time; plus

 

(b)           the lesser of (i) the sum of 65% of the value, computed at the
lower of cost or market using the first-in first-out method of Inventory
valuation applied by the Borrower in accordance with GAAP, of Eligible
Inventory, and (ii) the sum of 85% of the Net Orderly Liquidation Value, based
on the then most recent appraisal of Eligible Inventory; plus

 

(c)           the least of (i) the sum of 65% of the value, computed at the
lower of cost or market using the first-in first-out method of Inventory
valuation applied by the Borrower in accordance with GAAP, of Eligible
In-Transit Inventory and (ii) the sum of 85% of the Net

 

3

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

 

Orderly Liquidation Value, based on the most recent appraisal, of Eligible
In-Transit Inventory and (iii) $3,000,000; plus

 

(d)           with respect to Letters of Credit issued for the purpose of
purchasing Eligible In-Transit Inventory, the lesser of (i) the sum of 65% of
the value, computed at the lower of cost or market using the first-in first-out
method of Inventory valuation applied by the Borrower in accordance with GAAP,
of such underlying Eligible In-Transit Inventory and (ii) the sum of 85% of the
Net Orderly Liquidation Value, based on the most recent appraisal, of such
underlying Eligible In-Transit Inventory (provided, that in no event shall the
aggregate sum of clauses (c) and (d) of this definition exceed $3,000,000); plus

 

(e)           the Real Estate Availability; plus

 

(f)            the Insurance Availability;

 

provided, that the Borrowing Base shall be computed only as against and on so
much of the Collateral as is included on the Borrowing Base Certificates
furnished from time to time by the Borrower pursuant to the terms hereof and, if
required by the Administrative Agent pursuant to any of the terms hereof or any
Collateral Document, as verified by such other evidence reasonably required to
be furnished to the Administrative Agent pursuant hereto or pursuant to any such
Collateral Document.

 

“Borrowing Base Certificate” means the certificate in the form of Exhibit B
hereto, or in such other form acceptable to the Administrative Agent, to be
delivered to the Administrative Agent pursuant to Section 7.2 and 8.5 hereof.

 

“Business Day” means any day (other than a Saturday or Sunday) on which banks
are not authorized or required to close in Chicago, Illinois and, if the
applicable Business Day relates to the advance or continuation of, or conversion
into, or payment of a Eurodollar Loan, on which banks are dealing in U.S. Dollar
deposits in the interbank eurodollar market in London, England.

 

“Capital Expenditures” means, with respect to any Person for any period, the
aggregate amount of all expenditures (whether paid in cash or accrued as a
liability in accordance with GAAP) by such Person during that period for the
acquisition or leasing (pursuant to a Capital Lease) of fixed or capital assets
or additions to property, plant, or equipment (including replacements,
capitalized repairs, and improvements) which should be capitalized on the
balance sheet of such Person in accordance with GAAP.

 

“Capital Lease” means any lease of Property which in accordance with GAAP is
required to be capitalized on the balance sheet of the lessee.

 

“Capitalized Lease Obligation” means, for any Person, the amount of the
liability shown on the balance sheet of such Person in respect of a Capital
Lease determined in accordance with GAAP.

 

“Change of Control” means (i) the acquisition by any Person, or two or more
Persons acting in concert (other than any member of existing management as of
the date hereof)

 

4

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of beneficial ownership (within the meaning of Rule 13-d-3 of the Securities and
Exchange Commission under the federal Securities Exchange Act of 1934, as
amended) of more than 50% of the outstanding shares of voting stock of the
Borrower or (ii) the Borrower fails to own 100% of the outstanding equity
interests of each Subsidiary.

 

“Closing Date” means the date of this Agreement or such later Business Day upon
which each condition described in Section 7.2 shall be satisfied or waived in a
manner acceptable to the Administrative Agent and the Lenders in their
reasonable discretion.

 

“Cobra Hong Kong” means Cobra Electronics (HK) Limited, an entity formed under
the laws of Hong Kong.

 

“Code” means the Internal Revenue Code of 1986, as amended, and any successor
statute thereto.

 

“Collateral” means all properties, rights, interests and privileges from time to
time subject to the Liens granted to the Administrative Agent, or any security
trustee therefor, by the Collateral Documents.

 

“Collateral Account” is defined in Section 9.4 hereof.

 

“Collateral Documents” means the Pledge Agreements, the Security Agreements, the
Life Insurance Assignment, the Mortgages and all other mortgages, deeds of
trust, security agreements, pledge agreements, assignments, financing statements
and other documents as shall from time to time secure or relate to the
Obligations, or any part thereof.

 

“Commercial Letter of Credit” is defined in Section 1.3(a) hereof.

 

“Concentration Account” is defined in Section 4.2 hereof.

 

“Controlled Group” means all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under common control
which, together with a Loan Party, are treated as a single employer under
Section 414 of the Code.

 

“Credit Event” means the advancing of any Loan, the continuation of or
conversion into a Eurodollar Loan, or the issuance of, or extension of the
expiration date or increase in the amount of, any Letter of Credit.

 

“Currency Exchange Rate” means, with respect to a currency, the rate quoted by
Harris N.A. as the spot rate for the purchase by Harris N.A. of such currency
with another currency at approximately 10:30 a.m. (Chicago time) 1 Business Day
prior to the date as of which the foreign exchange computation is made.

 

“Default” means any event or condition the occurrence of which would, with the
passage of time or the giving of notice, or both, constitute an Event of
Default.

 

“Defaulting Lender” is defined in Section 1.6(g) hereof.

 

5

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“Designated Account Debtors” means, collectively, DAS Distributions, Inc., Best
Buy Co., Inc., Advance Auto Parts, Inc. and any other Account Debtor from time
to time accepted by the Administrative Agent in its sole discretion, and each
individually, a “Designated Account Debtor”.

 

“Disposition” means the sale, lease, conveyance, or other disposition of
Property other than as permitted under Sections 8.10(a) and (b) hereof.

 

“Domestic Subsidiary” means any Subsidiary organized under the laws of a State
of the United States or the District of Columbia.

 

“EBITDA” means, with reference to any Person for any period, Net Income
(determined for purposes hereof without giving effect to extraordinary gains or
losses incurred in connection with the sale of assets outside of the ordinary
course of business) for such period plus the sum of all amounts deducted in
arriving at such Net Income amount in respect of (i) Interest Expense,
(ii) federal, state and local income taxes and (iii) depreciation of fixed
assets and amortization of intangible assets, all determined for the Borrower
and its Subsidiaries on a consolidated basis in accordance with GAAP.

 

“Eligible Inventory” means any Inventory of the Borrower in which the
Administrative Agent has a perfected first priority security interest and which
complies with each of the following requirements:

 

(a)           it consists of raw materials or finished goods Inventory which is
not damaged or obsolete and is readily saleable by the Borrower in the ordinary
course of its business;

 

(b)           it substantially conforms to the Borrower’s advertised or
represented specifications, all applicable federal and state government
standards and regulations and other quality standards and has not been
determined by the Administrative Agent to be unacceptable due to type, variety,
quality or quantity;

 

(c)           it is not slow-moving Inventory or goods returned or rejected by
the Borrower’s customers;

 

(d)           it is not covered by a warehouse receipt or similar document,
unless the same has been delivered to the Administrative Agent and unless the
issuer thereof has waived any Liens it might have to secure charges owing to
such issuer in a manner reasonably satisfactory to the Administrative Agent;

 

(e)           it has not been consigned to a third party;

 

(f)            all warranties of the Borrower in the Loan Documents are true and
correct in all material respects with respect thereto;

 

(g)           it has been identified to the Administrative Agent in the manner
required by the Administrative Agent pursuant to the Security Agreement;

 

6

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(h)           it is located at a location in the United States that has been
disclosed in writing to the Administrative Agent, and, if requested by the
Administrative Agent, any Person (other than the Borrower) owning or controlling
such location shall have waived all right, title and interest in and to such
Inventory in a manner reasonably satisfactory to the Administrative Agent (it
being agreed that no such waiver shall be required from any such third-party if
and to the extent that a reserve therefor has been established and is being
maintained in accordance with Section 1.1 hereof);

 

(i)            it is not in-transit;

 

(j)            it is free and clear of all Liens other than Liens granted in
favor of the Administrative Agent and Liens permitted by Sections 8.8(b) and
(c) hereof;

 

(k)           it does not consist of spare parts, packaging and shipping
materials, supplies used or consumed in the Borrower’s business; and

 

(l)            it is otherwise deemed to be Eligible Inventory in the reasonable
credit judgment of the Administrative Agent.

 

“Eligible In-Transit Inventory” means any Inventory of the Borrower that would
be Eligible Inventory but for being covered by a warehouse receipt or similar
document and being in-transit, and which complies with each of the following
requirements:

 

(a)           is subject to a negotiable document showing the Administrative
Agent (or, with the consent of the Administrative Agent, the Borrower) as
consignee, which document is in the possession of the Administrative Agent or
such other Person as the Administrative Agent shall approve;

 

(b)           it is fully insured in a manner satisfactory to the Administrative
Agent;

 

(c)           it has been identified to the applicable sales contract and title
has passed to the Borrower;

 

(d)           it is not sold by a vendor that has a right to reclaim, divert
shipment of, repossess, stop delivery, claim any reservation of title or
otherwise assert Lien rights against the Inventory, or with respect to whom the
Borrower is in default of any obligations;

 

(e)           it is subject to purchase orders and other sale documentation
satisfactory to the Administrative Agent;

 

(f)            it is shipped by a common carrier that is not affiliated with the
vendor;

 

(g)           it is being handled by a customs broker, freight-forwarder or
other handler that has delivered a an agreement, in form and substance
satisfactory to the Administrative Agent, by which such Person waives or
subordinates any Lien it may have on the Collateral, agrees to hold any
documents in its possession relating to the Collateral as agent for the
Administrative Agent, and agrees to deliver the Collateral to the Administrative
Agent upon request; and

 

7

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(h)           it is otherwise deemed to be Eligible In-Transit Inventory in the
reasonable credit judgment of the Administrative Agent.

 

“Eligible Receivables” means any Receivable of the Borrower in which the
Administrative Agent has a first priority perfected Lien and which complies with
each of the following requirements:

 

(a)           it is not owing in respect of sales agency commissions payable to
the Borrower;

 

(b)           it is payable in U.S. Dollars and arises out of a bona fide sale
of Inventory delivered to the Account Debtor, or the provision of services which
have been fully performed for the Account Debtor, on said Receivable in the
ordinary course of business on ordinary trade terms;

 

(c)           all warranties of the Borrower in the Loan Documents are true and
correct in all material respects with respect thereto;

 

(d)           it has been identified to the Administrative Agent in the manner
required by the Administrative Agent pursuant to the applicable Security
Agreement;

 

(e)           it is evidenced by an invoice to the applicable Account Debtor
having a date that is neither prior to, nor more than 5 Business Days after, the
shipment date of the relevant Inventory;

 

(f)            (i) with respect to Receivables owing by any Account Debtor other
than a Designated Account Debtor, it has not remained unpaid more than 100 days
past the original invoice date or 60 days past the original due date and
(ii) with respect to Receivables owing by a Designated Account Debtor in an
aggregate amount not to exceed $12,000,000 for all such Receivables owing by
Designated Account Debtors, it has not remained unpaid for more than 150 days
past the original invoice date or 30 days past the original due date (with each
such due date being established on terms consistent with the business as
conducted on the date hereof or as otherwise acceptable to the Administrative
Agent in its sole discretion);

 

(g)           it is net of any credit or allowance given by the Borrower to such
Account Debtor;

 

(h)           it is not owing by an Account Debtor who (i) has become insolvent,
(ii) is the subject of any bankruptcy, arrangement, reorganization proceedings
or other proceedings for relief of debtors, (iii) has admitted its inability to
pay its debt generally or has stopped paying its debts generally or (iv) is an
Affiliate of the Borrower;

 

(i)            the Account Debtor is not principally located outside the United
States of America or Canada unless such Receivable is either (i) secured by an
irrevocable letter of credit issued by a commercial bank located in the United
States and which is on terms and conditions reasonably acceptable to the
Administrative Agent, and which has been assigned or transferred to the
Administrative Agent on terms and conditions reasonably acceptable to the
Administrative Agent or (ii) secured by an insurance policy issued by an insurer
reasonably satisfactory to the

 

8

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Administrative Agent, and which has been assigned or transferred to the
Administrative Agent on terms and conditions reasonably acceptable to the
Administrative Agent;

 

(j)            it is not owing by the United States of America or Canada or any
state or province or political subdivision thereof, or any department, agency or
instrumentality thereof, unless the Administrative Agent shall have received
evidence satisfactory to the Administrative Agent of compliance with the
Assignment of Claims Act or similar state or local or provincial statute;

 

(k)           it is not owing by an Account Debtor if 25% or more of all
Receivables owed by such Account Debtor are ineligible for any reason;

 

(l)            it is not subject to any counterclaim or defense asserted by the
Account Debtor thereunder, nor is it subject to any offset or contra account
payable to the Account Debtor (in any case, unless the amount of such Receivable
is net of such counterclaim, defense, offset or contra account established to
the reasonable satisfaction of the Administrative Agent);

 

(m)          it is not evidenced by an instrument or chattel paper;

 

(n)           it does not arise from a sale to an Account Debtor on a
bill-and-hold, guaranteed sale, sale-or-return, sale-on-approval, consignment or
other repurchase or return basis;

 

(o)           it is free and clear of all Liens other than Liens granted in
favor of the Administrative Agent and Liens permitted by Section 8.8(b) and
(c) hereof;

 

(p)           it has not been pre-billed or progress-billed by the Borrower;

 

(q)           it is not owing by an Account Debtor whose total obligations to
the Borrower exceed 15% of all Receivables owing by all Account Debtors provided
the following Account Debtors may have higher concentration limits, as follows;
and

 

Account Debtor

 

Limit

 

 

 

 

 

Wal Mart Stores Inc.

 

30%

 

 

 

 

 

Best Buy Co., Inc.

 

30%

 

 

 

 

 

DAS Distributions, Inc.

 

26%, or such other limit as the Administrative Agent may agree to in its sole
discretion; provided that such limit shall not exceed 30% without the consent of
the Required Lenders

 

 

(r)            it is otherwise deemed to be an Eligible Receivable in the
reasonable credit judgment of the Administrative Agent.

 

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“Environmental Laws” means all federal, state, local and foreign laws, statutes,
rules, regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety and environmental matters applicable to the
business and property of each Loan Party.  Such laws and regulations include but
are not limited to the Resource Conservation and Recovery Act, 42 U.S.C. § 6901
et seq., as amended; the Comprehensive Environmental Response, Compensation and
Liability Act (“CERCLA”), 42 U.S.C. § 9601 et seq., as amended; the Toxic
Substance Act, 15 U.S.C. § 2601 et seq., as amended; the Clean Water Act, 33
U.S.C. § 466 et seq., as amended; the Clean Air Act, 42 U.S.C. § 7401 et seq.,
as amended; state and federal superlien and environmental cleanup programs; and
U.S. Department of Transportation regulations.

 

“Environmental Notice” means any summons, citation, directive, information
request, notice of potential responsibility, notice of violation or deficiency,
order, claim, complaint, investigation, proceeding, judgment, letters or other
written communication, actual or threatened, from the United States
Environmental Protection Agency or other federal, state, local or foreign agency
or authority, or any other entity or individual, public or private, concerning
any intentional or unintentional act or omission which involves Management of
Hazardous Substances on or off the property of any Loan Party; the imposition of
any Lien on Property, including but not limited to Liens asserted by government
entities in connection with Responses to the presence or Release of Hazardous
Substances; any alleged violation of or responsibility under Environmental Laws;
and, after due inquiry and investigation, any knowledge of any facts which could
give rise to any of the above.

 

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

 

“Eurodollar Loan” means a Loan bearing interest at the rate specified in
Section 1.4(b) hereof.

 

“Event of Default” means any event or condition identified as such in
Section 9.1 hereof.

 

“Event of Loss” means, with respect to any Property, any of the following:
(a) any loss, destruction or damage of such Property or (b) any condemnation,
seizure, or taking, by exercise of the power of eminent domain or otherwise, of
such Property, or confiscation of such Property or the requisition of the use of
such Property.

 

“Excess Availability” means, as of any time the same is to be determined, the
amount (if any) by which (a) the lesser of the Borrowing Base as then determined
and computed or the Revolving Credit Commitment as then in effect exceeds
(b) the aggregate principal amount of Revolving Loans, Swingline Loans, Agent
Loans and the US Dollar Equivalent of L/C Obligations then outstanding, all
Reserves taken pursuant to Section 1.1 hereof and all trade payables that remain
unpaid more than 45 days after the due date thereof.

 

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender or
any other recipient of any payment to be made by or on account of any obligation
of the Borrower hereunder, (a) income or similar taxes imposed by the United
States of America, or by the jurisdiction under the laws of which such recipient
is organized or in which its principal

 

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office is located or, in the case of any Lender, in which its applicable Lending
Office is located, or (in each case) any political subdivision or taxing
authority thereof or therein; (b) any branch profits taxes imposed by any
jurisdiction described in clause (a), above; (c) any United States withholding
tax that is attributable to such Lender’s failure to comply with
Section 12.1(b) or (c); and (d) any taxes imposed as a result of a Lender’s
failure to comply with the information reporting requirements of Sections 1471
through 1474 of the Code, including any regulation or other authority
promulgated thereunder.

 

“Existing Lender” means collectively The PrivateBank and Trust Company and RBS
Citizens N.A.

 

“Factoring Arrangement” shall mean (a) the arrangement between the Borrower and
JPMorgan Chase Bank, N.A. evidenced by that certain Stand-By Claims Purchase
Agreement dated as of March 1, 2010 between the Borrower and JPMorgan Chase
Bank, N.A., which is subject to that certain Assignment Agreement for Proceeds
of Stand-By Agreement dated as of July 16, 2010 among the Borrower, JPMorgan
Chase Bank, N.A. and the Administrative Agent and (b) any arrangement between
the Borrower and another Person pursuant to which the Borrower sells Receivables
to such Person and the purchase price for such Receivables is paid directly to a
Concentration Account.  To constitute a Factoring Arrangement hereunder,
(i) such arrangement must be made pursuant to documents, instruments and
agreements reasonably satisfactory to the Administrative Agent (it being
understood and agreed that the Administrative Agent has deemed the arrangement
described in clause (a) of this definition as satisfactory), (ii) an agreement
among Administrative Agent, the Borrower and the factor must be executed
directing payment for such factored Receivables to a Concentration Account and
(iii) Receivables which are sold pursuant to a Factoring Arrangement shall no
longer be deemed to be Eligible Receivables.

 

“Federal Funds Rate” means the fluctuating interest rate per annum described in
part (x) of clause (ii) of the definition of Base Rate appearing in
Section 1.3(a) hereof.

 

“Fixed Charges” means, with reference to any period, the sum (without
duplication) of (a) the aggregate amount of scheduled payments required to be
made during such period in respect of principal on all Indebtedness for Borrowed
Money (excluding payments made on the Revolving Credit), plus (b) Interest
Expense payable in cash for such period (excluding Interest Expense arising as a
result of the termination by the Borrower of any agreement with respect of any
interest rate, foreign currency and/or commodity exchanges, swaps, caps,
collars, floors, forwards, options or other similar arrangements), plus
(c) Capitalized Lease Obligations payable in cash for such period, plus (d) all
Restricted Payments paid in cash during such period, all determined for the
Borrower and its Subsidiaries on a consolidated basis and in accordance with
GAAP.

 

“Fixed Charge Coverage Ratio” means, at any time the same is to be determined,
the ratio of (a) Adjusted EBITDA for the twelve then most recently completed
calendar months (or, with respect to any period ending on or prior to June 30,
2011, for the period commencing on July 1, 2010 and ending on the last day of
the then most recently ended calendar month), minus the sum of (i) Capital
Expenditures during such period to the extent not financed with the proceeds of
Indebtedness for Borrowed Money and (ii) federal, state, local and foreign
income taxes paid in cash during such period net of federal, state, local and
foreign income taxes refunds

 

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received in cash during such period to (b) Fixed Charges for such period, all
determined for the Borrower and its Subsidiaries on a consolidated basis and in
accordance with GAAP.

 

“Foreign Subsidiary” means any Subsidiary other than a Domestic Subsidiary.

 

“Funds Transfer and Deposit Account Liability” means the liability of any Loan
Party owing to any of the Lenders, or any Affiliates of such Lenders, arising
out of (a) the execution or processing of electronic transfers of funds by
automatic clearing house transfer, wire transfer or otherwise to or from the
deposit accounts of such Loan Party now or hereafter maintained with any of the
Lenders or their Affiliates, (b) the acceptance for deposit or the honoring for
payment of any check, draft or other item with respect to any such deposit
accounts, and (c) any other deposit, disbursement, and cash management services
afforded to such Loan Party by any of such Lenders or their Affiliates.

 

“GAAP” means generally accepted accounting principles set forth from time to
time in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date of
determination.

 

“Guaranties” means any guaranty of the Obligations now or hereafter delivered to
the Administrative Agent, as each of the same may be amended, modified,
supplemented or restated from time to time.

 

“Guarantors” means each Person that at any time executes and delivers a Guaranty
to the Administrative Agent.

 

“Hazardous Substances” means hazardous substances, hazardous wastes, hazardous
waste constituents and reaction by-products, hazardous materials, pesticides,
oil and other petroleum products, and toxic substances, including asbestos and
PCBs, as those terms are defined pursuant to Environmental Laws.

 

“Hedging Liability” means the liability of any Loan Party under any agreements
with respect of any interest rate, foreign currency and/or commodity exchanges,
swaps, caps, collars, floors, forwards, options, or other similar arrangements
as any Loan Party may from time to time enter into with any one or more of the
Lenders party to this Agreement or their Affiliates for the purpose of hedging
or otherwise protecting against interest rate, foreign currency and/or commodity
exposure.

 

“Indebtedness for Borrowed Money” means for any Person (without duplication)
(a) all indebtedness of such Person for borrowed money, whether current or
funded, or secured or unsecured, (b) all indebtedness for the deferred purchase
price of Property or services, (c) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to Property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of a default are limited to
repossession or sale of such Property), provided, that if recourse for such
indebtedness is limited to the Property acquired, the amount of such
indebtedness shall be deemed to be equal to the book value of such Property,

 

12

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(d) all indebtedness secured by a purchase money mortgage or other Lien to
secure all or part of the purchase price of Property subject to such mortgage or
Lien, (e) all obligations under leases which shall have been or must be, in
accordance with GAAP, recorded as Capital Leases in respect of which such Person
is liable as lessee, (f) any liability in respect of banker’s acceptances or
letters of credit, (g) any indebtedness, whether or not assumed, secured by
Liens on Property acquired by such Person at the time of acquisition thereof, it
being understood that the term “Indebtedness for Borrowed Money” shall not
include trade payables arising in the ordinary course of business (including,
without limitation, trade accounts payable arising in the ordinary course of
business between the Borrower and its Subsidiaries but only to the extent the
same represents payment for goods sold and delivered in an arms length
transaction on ordinary trade terms and are paid within 90 days of the due date
thereof), (h) obligations in respect of interest rate, foreign currency and/or
commodity exchanges, swaps, caps, collars, floors, forward options or other
similar arrangements entered into for the purpose of hedging or otherwise
protecting against interest rate, foreign currency and/or commodity exposure,
and (i) any guaranty of any of the foregoing.

 

“Insurance Availability” means the lesser of (i) the sum of 75% of the aggregate
cash surrender value of the Life Policies subject to Life Insurance Assignments
and (ii) $5,000,000.

 

“Insurance Overadvance” means any time the portion of the unpaid principal
balance of the Revolving Loans predicated on the Insurance Availability that
exceeds the sum of 75% of the aggregate cash value of the Life Policies.

 

“Interest Expense” means, with reference to any Person for any period, the sum
of all interest expense of such Person determined in accordance with GAAP.

 

“Interest Period” is defined in Section 1.7 hereof.

 

“Inventory” means all finished goods, work-in-progress and raw materials (other
than packaging, crating, and supplies inventory) held for sale in which the
Borrower now has or hereafter acquires title.

 

“L/C Issuer” means Harris N.A or another Lender.

 

“L/C Obligations” means the aggregate undrawn face amounts of all outstanding
Letters of Credit and all unpaid Reimbursement Obligations.

 

“L/C Sublimit” means $5,000,000, as reduced from time to time pursuant to the
terms hereof.

 

“Lenders” means and includes Harris N.A., Fifth Third Bank and the other
financial institutions from time to time party to this Agreement, including each
assignee Lender pursuant to Section 12.12 hereof.

 

“Lending Office” is defined in Section 10.4 hereof.

 

“Letter of Credit” is defined in Section 1.3(a) hereof.

 

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“LIBOR” means, relative to any Interest Period for LIBOR Loans, the offered rate
for deposits of U.S. Dollars in an amount approximately equal to the amount of
the requested LIBOR Loans for a term coextensive with the designated Interest
Period which the British Bankers’ Association fixes as its LIBOR rate as of
11:00 a.m. London time on the day which is two London Banking Days prior to the
beginning of such Interest Period.

 

“LIBOR Lending Rate” means, relative to any LIBOR Loan to be made, continued or
maintained as, or converted into, a LIBOR Loan for any Interest Period, a rate
per annum determined pursuant to the following formula:

 

LIBOR Lending Rate

=

LIBOR

 

 

 

 

(1.00 — LIBOR Reserve Percentage)

 

 

 

“LIBOR Reserve Percentage” means, relative to any day of any Interest Period for
LIBOR Loans, the maximum aggregate (without duplication) of the rates (expressed
as a decimal fraction) of reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
under any regulations of the Board of Governors of the Federal Reserve System
(the “Board”) or other governmental authority having jurisdiction with respect
thereto as issued from time to time and then applicable to assets or liabilities
consisting of “Eurocurrency Liabilities,” as currently defined in Regulation D
of the Board, having a term approximately equal or comparable to such Interest
Period.

 

“Lien” means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in the nature of the foregoing in respect of any
Property, including the interests of a vendor or lessor under any conditional
sale, Capital Lease or other title retention arrangement.

 

“Life Insurance Assignment” means the collateral assignment to the
Administrative Agent of the Life Policies, pursuant to those certain Collateral
Assignments and Assignments of Life Insurance Policy as Collateral, in each
case, dated as of or around the Closing Date, as the same may be amended,
modified or supplemented from time to time or pursuant to other collateral
assignment documentation in form and substance satisfactory to the
Administrative Agent.

 

“Life Policies” means collectively (a) the Borrower’s life insurance policies
maintained on the life of each of James Bode, Dennis Burke, Fred Hackendahl,
Michael Smith, James Flaherty, Dan Schiff, Bruce Legris, John Pohl, Lucy
Vallicelli, Bill Chamberlain and Sally Washlow, (b) any other life insurance
policy of the Borrower maintained on the life of an officer of the Borrower and
(c) and any life insurance policy maintained on the life of an officer of the
Borrower held in trust acceptable to the Administrative Agent in its sole
discretion and subject to collateral assignment documentation in form and
substance satisfactory to the Administrative Agent in its sole discretion.

 

“Loan” means any Revolving Loan, Agent Loan or the Swingline Loan, whether
outstanding as a Base Rate Loan or Eurodollar Loan, each of which is a “type” of
Loan hereunder.

 

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“Loan Documents” means this Agreement, the Notes, the Applications, the
Collateral Documents, the Guaranties, the fee letter agreement described in
Section 2.1(c), and each other instrument or document to be delivered hereunder
or thereunder or otherwise in connection therewith.

 

“Loan Party” means the Borrower and each of its Domestic Subsidiaries now
existing or hereafter arising.

 

“Manage” or “Management” means to generate, handle, manufacture, process, treat,
store, use, re-use, refine, recycle, reclaim, blend or burn for energy recovery,
incinerate, accumulate speculatively, transport, transfer, dispose of, release,
threaten to release or abandon Hazardous Substances.

 

“Material Adverse Effect” means (a) a material adverse change in, or material
adverse effect upon, the operations, business, Properties, financial condition
or performance of the Borrower and its Subsidiaries taken as a whole, (b) a
material impairment of the ability of the Borrower or any Loan Party to perform
its material obligations under any Loan Document, or (c) a material adverse
effect upon (i) the legality, validity, binding effect or enforceability against
the Borrower or any Loan Party of any Loan Document or the rights and remedies
of the Administrative Agent and the Lenders thereunder or (ii) the perfection or
priority of any Lien granted under any Collateral Document with respect to any
material portion of the Collateral.

 

“Minimum Required Excess Availability Amount” means, as of any time the same is
to be determined, an amount equal to 20% of the Borrowing Base as then
determined and computed.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Mortgages” means, collectively, (a) the certain real property mortgage executed
by the Borrower of even date herewith in favor of the Administrative Agent and
(b) each other mortgage, deed of trust or similar agreement encumbering real
Property now or at any time hereafter delivered by a Loan Party to the
Administrative Agent, as each of the same may be amended, modified, supplemented
or restated from time to time.

 

“Net Cash Proceeds” means, as applicable, (a) with respect to any Disposition by
a Person, cash and cash equivalent proceeds received by or for such Person’s
account, net of (i) reasonable direct costs relating to such Disposition and
(ii) income, capital gains, sale, use or other transactional taxes paid or
payable by such Person at the time of such Disposition as a direct result of
such Disposition; (b) with respect to any Event of Loss of a Person, cash and
cash equivalent proceeds received by or for such Person’s account (whether as a
result of payments made under any applicable insurance policy therefor or in
connection with condemnation proceedings or otherwise), net of (i) reasonable
direct costs incurred in connection with the collection of such proceeds, awards
or other payments and (ii) income or capital gains taxes paid or payable by such
Person at the time of receipt of such insurance proceeds as a direct result of
such Event of Loss; and (c) with respect to any offering of equity securities of
a Person or the issuance of any Indebtedness for Borrowed Money by a Person,
cash and cash equivalent proceeds received by or for such Person’s account, net
of reasonable legal, underwriting, and other fees and expenses incurred as a
direct result thereof.

 

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“Net Income” means, with reference to any Person for any period, the net income
(or net loss) of such Person for such period computed in accordance with GAAP,
but exclusive of noncash extraordinary gains and losses.

 

“Net Orderly Liquidation Value” means, at any time, the amount of the projected
recovery in respect of Inventory at such time on a net orderly liquidation value
basis as set forth in the most recent acceptable appraisal of Inventory received
by the Administrative Agent that has been conducted by an appraiser reasonably
acceptable to the Administrative Agent pursuant to a methodology reasonably
acceptable to the Administrative Agent in accordance with the Loan Documents.

 

“Notes” means and includes the Revolving Notes and the Swingline Notes.

 

“Obligations” means all obligations of the Borrower to pay principal and
interest on the Loans, all Reimbursement Obligations owing under the
Applications, all fees and charges payable hereunder, and all other payment
obligations of the Borrower or any other Loan Party arising under or in relation
to any Loan Document, all obligations of the Borrower or any other Loan Party in
respect of Hedging Liabilities and all obligations of the Borrower or any other
Loan Party in respect of Funds Transfer and Deposit Account Liability, in each
case whether now existing or hereafter arising, due or to become due, direct or
indirect, absolute or contingent, and howsoever evidenced, held or acquired.

 

“Overadvance” is defined in Section 1.9(b)(v).

 

“Participating Interest” is defined in Section 1.3(d) hereof.

 

“Participating Lender” is defined in Section 1.2(d) hereof.

 

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

 

“Permitted Overadvance” means an amount approved in the sole discretion of the
Administrative Agent not to exceed $1,000,000 at any one time outstanding by
which the outstanding principal balance of Revolving Loans, Swingline Loans,
Agent Loans, the US Dollar Equivalent of L/C Obligations and reserves taken
pursuant to Section 1.1(b) hereof knowingly exceeds the Borrowing Base as then
determined and computed and/or subsequent to the occurrence of a Default or
Event of Default; provided, however, that (a) at the request of the Required
Lenders (or, if there are only two or fewer Lenders, at the request of any
Lender), any Permitted Overadvance may be rescinded within 2 days of such
request, (b) in any event, Permitted Overadvances shall not knowingly be
permitted to be outstanding for a period exceeding 60 consecutive days (herein a
“Permitted Overadvance Period”), (c) each Permitted Overadvance Period shall be
separated from all other Permitted Overadvance Periods by at least 30
consecutive days, and (d) no more than 2 such Permitted Overadvance Periods
shall be permitted to occur in any period of 365 consecutive days.

 

“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof.

 

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“Plan” means any employee pension benefit plan covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Code that
either (a) is maintained by a member of the Controlled Group for employees of a
member of the Controlled Group or (b) is maintained pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contributions and to which a member of the Controlled Group is then making
or accruing an obligation to make contributions or has within the preceding five
plan years made contributions.

 

“Pledge Agreements” means, collectively, (a) that certain Pledge Agreement of
even date herewith between the Borrower and the Administrative Agent, and
(b) each other Pledge Agreement now or at any time hereafter delivered by any
other Loan Party to the Administrative Agent with respect to the equity of any
other Loan Party, as each of the same may be amended, modified, supplemented or
restated from time to time.

 

“PrivateBank Accounts” means, collectively, (i) the PrivateBank Collection
Account, (ii) the PrivateBank Disbursement Account and (iii) the PrivateBank
Master Account.

 

“PrivateBank Collection Account” means, collectively, deposit account
nos. 2162426 and 2162434 of the Borrower established and maintained at The
PrivateBank and Trust Company.

 

“PrivateBank Disbursement Account” means, collectively, deposit account
nos. 7702263 and 2162450 of the Borrower established and maintained at The
PrivateBank and Trust Company.

 

“PrivateBank Letters of Credit” means, collectively, any letters of credit
issued prior to the Closing Date by the Existing Lender on behalf of the
Borrower and cash collateralized by the RBS Cash Collateral Account.

 

“PrivateBank Master Account” means deposit account no. 2162418 of the Borrower
established and maintained at The PrivateBank and Trust Company.

 

“Property” means, as to any Person, all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent balance sheet of such Person and its subsidiaries under GAAP.

 

“RBS Accounts” means, collectively, (i) the RBS Cash Collateral Account and
(ii) the RBS Merchant Services Account.

 

“RBS Cash Collateral Account” means, collectively, deposit accounts of the
Borrower established and maintained at RBS Citizens N.A with account balances in
an aggregate amount not to exceed at any one time (a) during the period
commencing on the Closing Date and ending on October 16, 2010, an amount equal
to 105% of the full amount then available for drawing under the outstanding
PrivateBank Letters of Credit and (b) during any time thereafter, $50,000.

 

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“RBS Merchant Services Account” means, that certain merchant services account of
the Borrower established and maintained at RBS Citizens N.A with an account
balance in an aggregate amount not to exceed $50,000 at any one time.

 

“Real Estate Availability” means the lesser of (i) the sum of 70% of the
appraised fair market value (as determined by an appraiser acceptable to the
Administrative Agent) of the Borrower’s real Property located at 6500 W.
Cortland Street, Chicago, IL 60707, which appraisal may be updated or such real
property reappraised at the request of the Administrative Agent and
(ii) $3,000,000; provided that, commencing September 1, 2010, the foregoing
shall be reduced on the first day of each month following the date hereof by an
amount equal to one one hundred twentieth (1/120th) of the initial Real Estate
Availability.

 

“Receivables” means all rights to the payment of a monetary obligation, now or
hereafter owing to the Borrower, evidenced by accounts, contract rights,
instruments, chattel paper or general intangibles.

 

“Reimbursement Obligation” is defined in Section 1.3(c) hereof.

 

“Related Fund” means any (a) investment company, fund, trust, securitization
vehicle or conduit that is (or will be) engaged in making, purchasing, holding
or otherwise investing in commercial loans and similar extensions of credit in
the ordinary course of its business or (b) any Person (other than a natural
person) which temporarily warehouses loans for any Lender or any entity
described in the preceding clause (a) and that, with respect to each of the
preceding clauses (a) and (b), is administered or managed by (i) a Lender,
(ii) an Affiliate of a Lender or (iii) a Person (other than a natural person) or
an Affiliate of a Person (other than a natural person) that administers or
manages a Lender.

 

“Release” means any actual or threatened spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing of Hazardous Substances into the environment, as “environment” is
defined in CERCLA.

 

“Required Lenders” means, as of the date of determination thereof, (a) so long
as there are only two or fewer Lenders, all Lenders and (b) to the extent there
are more than two Lenders, each Lender who has a Revolving Credit Commitment
greater than or equal to $10,000,000.

 

“Rent and Charges Reserve” means the aggregate of (a) all past due rent and
other amounts owing by a Borrower to any landlord, warehouseman or processor who
possesses Inventory and could assert a Lien on such Inventory; and (b) a reserve
equal to three months rent and other charges that could be payable to any such
Person pursuant to the applicable lease, warehouse agreement or processor
agreement, unless it has executed and delivered to Administrative Agent a
landlord waiver or bailee or processor letter pursuant to subsection 8.1.5;
provided that with respect to any leased or warehouse location at which only
Eligible Inventory is stored, the applicable component of the Rent and Charges
Reserve shall not exceed the value attributed to such Eligible Inventory in the
Borrowing Base.

 

“Reserve Percentage” means the maximum aggregate reserve requirement (including
all basic, supplemental, marginal and other reserves) which is imposed on member

 

18

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

 

banks of the Federal Reserve System against “Euro-currency Liabilities” as
defined in Regulation D.

 

“Reserves” means such reserves as established by Administrative Agent from time
to time, in its reasonable credit judgment in such amounts, and with respect to
such matters, as Administrative Agent shall deem necessary or appropriate in its
reasonable credit judgment, against the amount of Loans which Borrower may
otherwise request under subsection 1.1.1, as applicable, including without
limitation with respect to (i) price adjustments, damages, unearned discounts,
returned products or other matters for which credit memoranda are issued in the
ordinary course of Borrower’s business; (ii) potential dilution related to
Receivables; (iii) shrinkage, spoilage and obsolescence of any Borrower’s
Inventory, (iv) slow moving Inventory (determined in accordance with clause
(c) of the definition of Eligible Inventory); (v) other sums chargeable against
Borrower as Revolving Loans under any section of this Agreement; (vi) amounts
owing by Borrower to any Person to the extent secured by a Lien on, or trust
over, any Property of Borrower; (vii) amounts owing by Borrower in connection
with Funds Transfer and Deposit Account Liability; (viii) the Rent and Charges
Reserves; (ix) unissued credit memoranda which, based on Borrower’s historical
performance, are anticipated to be issued against current Receivables; and
(x) such other specific events, conditions or contingencies as to which
Administrative Agent, in its reasonable credit judgment, determines reserves
should be established from time to time hereunder.  Notwithstanding the
foregoing, Administrative Agent shall not establish any reserves in respect of
any matters relating to any items of Collateral that have been taken into
account in determining Eligible Inventory, Eligible In-Transit Inventory or
Eligible Receivables, as applicable.

 

“Respond” or “Response” means any action taken pursuant to Environmental Laws to
correct, remove, remediate, cleanup, prevent, mitigate, monitor, evaluate,
investigate or assess the Release of a Hazardous Substance.

 

“Restricted Payments” is defined in Section 8.12 hereof.

 

“Revolver Percentage” means, for each Lender, the percentage of the aggregate
Revolving Credit Commitments of all Lenders represented by such Lender’s
Revolving Credit Commitment or, if the Revolving Credit Commitments have been
terminated, the percentage held by such Lender (including through participation
interests in Swingline Loans, Agent Loans and Reimbursement Obligations) of the
aggregate principal amount of all Revolving Loans, Swingline Loans, Agent Loans
and the US Dollar Equivalent of L/C Obligations then outstanding.

 

“Revolving Credit” means the credit facility for making Revolving Loans, Agent
Loans and Swingline Loans, and issuing Letters of Credit described in Sections
1.2 and 1.3 hereof.

 

“Revolving Credit Commitment” means, as to any Lender, the obligation of such
Lender to make Revolving Loans and to participate in Swingline Loans, Agent
Loans and Letters of Credit issued for the account of the Borrower hereunder in
an aggregate principal or face amount at any one time outstanding not to exceed
the applicable amount set forth opposite such Lender’s name on Schedule 1
attached hereto and made a part hereof, as the same may be reduced or modified
at any time or from time to time pursuant to the terms hereof.  The

 

19

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

 

Borrower and the Lenders acknowledge and agree that the Revolving Credit
Commitments of the Lenders aggregate $25,000,000 on the date hereof.

 

“Revolving Loan” is defined in Section 1.1 hereof and, as so defined, includes a
Base Rate Loan or a Eurodollar Loan, each of which (as so defined) is a “type”
of Revolving Loan hereunder.

 

“Revolving Note” is defined in Section 1.11 hereof.

 

“S&P” means Standard & Poor’s Ratings Services Group, a division of The
McGraw-Hill Companies, Inc.

 

“Security Agreements” means, collectively, (a) that certain Security Agreement
of even date herewith between the Borrower and the Administrative Agent, and
(b) each other Security Agreement now or at any time hereafter executed by a
Loan Party and delivered to the Administrative Agent, as each of same may be
amended, modified, supplemented or restated from time to time.

 

“Solvent” means, as to any Person, that such Person (i) owns Property whose fair
saleable value is greater than the amount required to pay all of such Person’s
liabilities (including contingent debts), (ii) is able to pay all of its
Indebtedness for Borrowed Money as such Indebtedness for Borrowed Money matures
and (iii) has capital sufficient to carry on its business and transactions and
all business and transactions in which it is about to engage.

 

“Standby Letter of Credit” is defined in Section 1.3(a) hereof.

 

“Subordinated Debt” means Indebtedness for Borrowed Money owing to any Person on
terms and conditions, and in such amounts, reasonably acceptable to the
Administrative Agent and the Required Lenders and which is subordinated in right
of payment to the prior payment in full of the Obligations pursuant to written
subordination provisions approved in writing by the Administrative Agent.

 

“Subsidiary” means, as to any particular parent corporation or organization, any
other corporation or organization more than 50% of the outstanding Voting Stock
of which is at the time directly or indirectly owned by such parent corporation
or organization or by any one or more other entities which are themselves
subsidiaries of such parent corporation or organization.  Unless otherwise
specifically referred to herein, the term “Subsidiary” means a Subsidiary of the
Borrower or of any of its direct or indirect Subsidiaries.

 

“Swingline Amount” means $5,000,000.

 

“Swingline Lender” means Harris N.A., acting in its capacity as the lender of
Swingline Loans hereunder, or any successor Lender acting in such capacity
appointed pursuant to Section 12.12 hereof.

 

“Swingline Loans” is defined in Section 1.2 hereof.

 

“Swingline Note” is defined in Section 1.11 hereof.

 

20

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

 

“Termination Date” means July 16, 2013, or such earlier date on which the
Revolving Credit Commitments are terminated in whole pursuant to Section 1.13,
9.2 or 9.3 hereof.

 

“Unfunded Vested Liabilities” means, for any Plan at any time, the amount (if
any) by which the present value of all vested nonforfeitable accrued benefits
under such Plan exceeds the fair market value of all Plan assets allocable to
such benefits, all determined as of the then most recent valuation date for such
Plan, but only to the extent that such excess represents a potential liability
of a member of the Controlled Group to the PBGC or the Plan under Title IV of
ERISA.

 

“Unused Revolving Credit Commitments” means, at any time, the difference between
the Revolving Credit Commitments then in effect and the aggregate outstanding
principal amount of all Loans and the US Dollar Equivalent of L/C Obligations.

 

“U.S. Dollar Equivalent” means, at any time, (a) as to any amount denominated in
U.S. Dollars, the amount thereof at such time, and (b) as to any amount
denominated in a currency other than U.S. Dollars, the equivalent amount in U.S.
Dollars as determined by the Administrative Agent at such time on the basis of
the Currency Exchange Rate for the purchase of U.S. Dollars with such currency.

 

“U.S. Dollars” and “$” each means the lawful currency of the United States of
America.

 

“Voting Stock” of any Person means capital stock or other equity interests of
any class or classes (however designated) having ordinary power for the election
of directors or other similar governing body of such Person, other than stock or
other equity interests having such power only by reason of the happening of a
contingency.

 

“Welfare Plan” means a “welfare plan” as defined in Section 3(1) of ERISA.

 

Interpretation.

 

The foregoing definitions are equally applicable to both the singular and plural
forms of the terms defined.  The words “hereof”, “herein”, and “hereunder” and
words of like import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement.  All
references to time of day herein are references to Chicago, Illinois time unless
otherwise specifically provided.  Where the character or amount of any asset or
liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, it shall be done in accordance with GAAP except
where such principles are inconsistent with the specific provisions of this
Agreement.

 

Change in Accounting Principles.

 

If, after the date of this Agreement, there shall occur any change in GAAP from
those used in the preparation of the financial statements referred to in
Section 6.5 hereof and such change shall result in a change in the calculation
of any financial covenant, standard or term

 

21

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

 

found in this Agreement, either the Borrower or the Required Lenders may by
notice to the Lenders and the Borrower, respectively, require that the Lenders
and the Borrower negotiate in good faith to amend such covenants, standards, and
term so as equitably to reflect such change in accounting principles, with the
desired result being that the criteria for evaluating the financial condition of
the Loan Parties shall be the same as if such change had not been made.  No
delay by the Borrower or the Required Lenders in requiring such negotiation
shall limit their right to so require such a negotiation at any time after such
a change in accounting principles.  Until any such covenant, standard, or term
is amended in accordance with this paragraph, financial covenants shall be
computed and determined in accordance with GAAP in effect prior to such change
in accounting principles.  Without limiting the generality of the foregoing, the
Borrower shall neither be deemed to be in compliance with any financial covenant
hereunder nor out of compliance with any financial covenant hereunder if such
state of compliance or noncompliance, as the case may be, would not exist but
for the occurrence of a change in accounting principles after the date hereof.

 

22

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EXHIBIT A

 

NOTICE OF PAYMENT REQUEST

 

[Date]

 

[Name of Lender]
[Address]

 

Attention:

 

Reference is made to the Credit Agreement, dated as of July 16, 2010, by and
among Cobra Electronics Corporation, a Delaware corporation (the “Borrower”),
the several financial institutions from time to time party to this Agreement, as
Lenders, and Harris N.A., as Administrative Agent (the “Credit Agreement”). 
Capitalized terms used herein and not defined herein have the meanings assigned
to them in the Credit Agreement.  [The Borrower has failed to pay its
Reimbursement Obligation in the amount of $[                        ].  Your
Revolver Percentage of the unpaid Reimbursement Obligation is
$[                          ]] or
[[                                                  ] has been required to
return a payment by the Borrower of a Reimbursement Obligation in the amount of
$[                              ].  Your Revolver Percentage of the returned
Reimbursement Obligation is $[                           ].]

 

1

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

 

EXHIBIT B

 

BORROWING BASE CERTIFICATE

 

Attached

 

1

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

 

EXHIBIT C-1

 

REVOLVING NOTE

 

 

 

Chicago, Illinois

$[                        ]

 

[                ], 20[    ]

 

On the Termination Date, for value received, the undersigned, COBRA ELECTRONICS
CORPORATION, a Delaware corporation (the “Borrower”), promises to pay to the
order of [                                  ] (the “Lender”) at the office of
Administrative Agent, at 111 West Monroe Street, Chicago, Illinois, (i) the
principal sum of [                                              ] DOLLARS
($[                      ]), or (ii) such different amount as may at the time of
the maturity hereof, whether by acceleration or otherwise, be the aggregate
unpaid principal amount of all Revolving Loans owing from the Borrower to the
Lender under the Credit Agreement hereinafter mentioned.

 

This Revolving Note evidences the Revolving Loans made and to be made to the
Borrower by the Lender under that certain Credit Agreement dated as of July 16,
2010, among the Borrower, Harris N.A., as Administrative Agent, the Lender and
the other lenders from time to time party thereto (said Credit Agreement, as the
same may be amended, modified or restated from time to time, being referred to
herein as the “Credit Agreement”), and the Borrower hereby promises to pay
interest at the office specified above on the outstanding principal balance of
the Revolving Loans evidenced hereby at the rates and at the times and in the
manner specified therefor in the Credit Agreement.

 

This Revolving Note is issued by the Borrower under the terms and provisions of
the Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Revolving Note and the holder hereof are entitled to all of
the benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof.  This Revolving Note may be
declared to be, or be and become, due prior to its expressed maturity, voluntary
prepayments may be made hereon, and certain prepayments are required to be made
hereon, all in the events, on the terms and with the effects provided in the
Credit Agreement.  All capitalized terms used herein without definition shall
have the same meanings herein as such terms are defined in the Credit Agreement.

 

1

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

 

The Borrower hereby promises to pay all costs and expenses (including attorneys’
fees) suffered or incurred by the holder hereof in collecting this Revolving
Note or enforcing any rights in any collateral therefor.  The Borrower hereby
waives presentment for payment and demand.  THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF ILLINOIS
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

 

 

 

COBRA ELECTRONICS CORPORATION

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

2

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

 

EXHIBIT C-2

 

SWINGLINE NOTE

 

 

 

Chicago, Illinois

$[                        ]

 

[                ], 20[    ]

 

On the Termination Date, for value received, the undersigned, COBRA ELECTRONICS
CORPORATION, a Delaware corporation (the “Borrower”), promises to pay to the
order of [                                  ] (the “Lender”) at the office of
Administrative Agent, at 111 West Monroe Street, Chicago, Illinois, (i) the
principal sum of [                                              ] DOLLARS
($[                      ]), or (ii) such different amount as may at the time of
the maturity hereof, whether by acceleration or otherwise, be the aggregate
unpaid principal amount of all Swingline Loans owing from the Borrower to the
Lender under the Credit Agreement hereinafter mentioned.

 

This Swingline Note evidences the Swingline Loans made and to be made to the
Borrower by the Lender under that certain Credit Agreement dated as of July 16,
2010, among the Borrower, Harris N.A., as Administrative Agent, the Lender and
the other lenders from time to time party thereto (said Credit Agreement, as the
same may be amended, modified or restated from time to time, being referred to
herein as the “Credit Agreement”), and the Borrower hereby promises to pay
interest at the office specified above on the outstanding principal balance of
the Swingline Loans evidenced hereby at the rates and at the times and in the
manner specified therefor in the Credit Agreement.

 

This Swingline Note is issued by the Borrower under the terms and provisions of
the Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Swingline Note and the holder hereof are entitled to all of
the benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof.  This Swingline Note may be
declared to be, or be and become, due prior to its expressed maturity, voluntary
prepayments may be made hereon, and certain prepayments are required to be made
hereon, all in the events, on the terms and with the effects provided in the
Credit Agreement.  All capitalized terms used herein without definition shall
have the same meanings herein as such terms are defined in the Credit Agreement.

 

1

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

 

The Borrower hereby promises to pay all costs and expenses (including attorneys’
fees) suffered or incurred by the holder hereof in collecting this Swingline
Note or enforcing any rights in any collateral therefor.  The Borrower hereby
waives presentment for payment and demand.  THIS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE OF ILLINOIS
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

 

 

 

COBRA ELECTRONICS CORPORATION

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

2

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

 

EXHIBIT D

 

COMPLIANCE CERTIFICATE

 

This Compliance Certificate is furnished to Harris N.A., as Administrative Agent
as provided for in and pursuant to that certain Credit Agreement dated as of
July 16, 2010 among Cobra Electronics Corporation, a Delaware corporation, (the
“Borrower”), certain Lenders which are signatories thereto and Harris N.A., as
Administrative Agent (the “Credit Agreement”).  Unless otherwise defined herein,
the terms used in this Compliance Certificate have the meanings ascribed thereto
in the Credit Agreement.

 

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

1.             I hold the office of
                                                             of the Borrower;

 

2.             I have reviewed the terms of the Credit Agreement and I have
made, or have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Borrower and each of its Subsidiaries during
the accounting period covered by the attached financial statements;

 

3.             The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or the occurrence of any
event which constitutes a Default or Event of Default during or at the end of
the accounting period covered by the attached financial statements or as of the
date of this Certificate, except as set forth below;

 

4.             The financial statements required by Section 8.5 of the Credit
Agreement and being furnished to you concurrently with this certificate are
true, correct and complete as of the dates and for the periods covered thereby;
and

 

5.             The Attachment hereto sets forth financial data and computations
evidencing the Borrower’s compliance with certain covenants of the Credit
Agreement, all of which data and computations are, to the best of my knowledge,
true, complete and correct and have been made in accordance with the relevant
Sections of the Credit Agreement.

 

Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Borrower has taken, is taking, or proposes to
take with respect to each such condition or event:

 

 

 

1

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

 

The foregoing certifications, together with the computations set forth in the
Attachment hereto and the financial statements delivered with this Certificate
in support hereof, are made and delivered this                    day of
                                     20      .

 

 

 

COBRA ELECTRONICS CORPORATION

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

2

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

 

 

ATTACHMENT TO COMPLIANCE CERTIFICATE

 

Compliance Calculations for Credit Agreement
Dated as of [                        ], 2010
Calculations as of                           , 20

 

A.

 

Capital Expenditures (Section 8.22(a))

 

 

 

 

 

 

 

 

 

 

 

1.

Year-to-Date Capital Expenditures by the Loan Parties

 

$

 

 

 

 

 

 

 

 

 

 

 

2.

Year-to-Date Capital Expenditures by the Loan Parties made with Net Cash
Proceeds of an Event of Loss in order to replace Property subject to such Event
of Loss

 

$

 

 

 

 

 

 

 

 

 

 

 

3.

Line A1 minus Line A2

 

$

 

 

 

 

 

 

 

 

 

 

 

4.

Capital Expenditures Annual Limit

 

$

3,500,000.00

 

 

 

 

 

 

 

 

 

 

5.

Permitted amount of Capital Expenditures carry forward

 

$

 

 

 

 

 

 

 

 

 

 

 

6.

Line A4 plus Line A5

 

$

 

 

 

 

 

 

 

 

 

 

 

7.

Line A3 must be less than or equal to Line A6

 

$

 

 

 

 

 

 

 

 

 

 

 

8.

The Borrower is in compliance (circle yes or no)

 

Yes/No

 

 

 

 

 

 

 

 

B.

 

Fixed Charge Coverage Ratio (Section 8.22(b))

 

 

 

 

 

 

 

 

 

 

 

 

1.

Net Income for the period

 

$

 

 

 

 

 

 

 

 

 

 

 

2.

Interest Expense for the period

 

$

 

 

 

 

 

 

 

 

 

 

 

3.

Federal, state and local income taxes for the period

 

$

 

 

 

 

 

 

 

 

 

 

 

4.

Depreciation of fixed assets and amortization of intangible assets for the
period

 

$

 

 

 

 

 

 

 

 

 

 

 

5.

Add Lines B1, B2, B3 and B4 (EBITDA)

 

$

 

 

 

 

 

 

 

 

 

 

 

6.

Losses with respect to the cash surrender value of the Life Policies

 

$

 

 

 

 

 

 

 

 

 

 

 

7.

FASB 123 stock option expenses

 

$

 

 

 

3

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

 

 

 

8.

Foreign exchange losses

 

$

 

 

 

 

 

 

 

 

 

 

 

9.

Deferred revenue charges (net of any deferred revenue charges realized from
prior periods)

 

$

 

 

 

 

 

 

 

 

 

 

 

10.

Write-downs of intangible assets

 

$

 

 

 

 

 

 

 

 

 

 

 

11.

Breakage fees payable in cash incurred on the Closing Date as a result of the
termination by the Borrower of any agreement with respect of swaps so long as,
after giving effect to the payment of such fees, Excess Availability is at least
the Minimum Required Excess Availability Amount

 

$

 

 

 

 

 

 

 

 

 

 

 

12.

Other non-cash losses acceptable to the Administrative Agent in its reasonable
credit judgment

 

$

 

 

 

 

 

 

 

 

 

 

 

13.

Add Lines B6, B7, B8, B9, B10, B11 and B12

 

$

 

 

 

 

 

 

 

 

 

 

 

14.

Gains with respect to the cash surrender value of the Life Policies

 

$

 

 

 

 

 

 

 

 

 

 

 

15.

Foreign exchange gains

 

$

 

 

 

 

 

 

 

 

 

 

 

16.

Write-ups of intangible assets

 

$

 

 

 

 

 

 

 

 

 

 

 

17.

Other non-cash gains acceptable to the Administrative Agent in its reasonable
credit judgment

 

$

 

 

 

 

 

 

 

 

 

 

 

18.

Add Lines B14, B15, B16 and B17

 

$

 

 

 

 

 

 

 

 

 

 

 

19.

Line B5 plus Lines B13 minus Line B18 (Adjusted EBITDA)

 

$

 

 

 

 

 

 

 

 

 

 

 

20.

Unfinanced Capital Expenditures for the period

 

$

 

 

 

 

 

 

 

 

 

 

 

21.

Federal, state, local and foreign income taxes paid in cash during the period
net of federal, state, local and foreign income taxes refunds received in cash
during the period

 

$

 

 

 

 

 

 

 

 

 

 

 

22.

Line B19 minus Line B20 minus B21

 

$

 

 

 

 

 

 

 

 

 

 

 

23.

Scheduled payments required to be made during the period in respect of principal
on all Indebtedness for Borrowed Money (excluding payments made on the Revolving
Credit)

 

$

 

 

 

 

 

 

 

 

 

 

 

24.

Interest Expense payable in cash for the period (excluding Interest Expense
arising as a result of the termination by the Borrower of any agreement with
respect of any interest rate, foreign currency and/or commodity exchanges,
swaps, caps,

 

 

 

 

 

4

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

 

 

 

 

collars, floors, forwards, options or other similar arrangements)

 

$

 

 

 

 

 

 

 

 

 

 

 

 

25.

Capitalized Lease Obligations payable in cash for the period

 

$

 

 

 

 

 

 

 

 

 

 

 

26.

Restricted Payments paid in cash during the period

 

$

 

 

 

 

 

 

 

 

 

 

 

27.

Add Lines B23, B24, B25 and B26 (Fixed Charges)

 

$

 

 

 

 

 

 

 

 

 

 

 

28.

Ratio of Line B22 to Line B27             : 1.0

 

        :1.0

 

 

 

 

 

 

 

 

 

 

29.

Line B28 ratio must not be less than 1.10 : 1.0

 

1.10:1.0

 

 

 

 

 

 

 

 

 

 

30.

The Borrower is in compliance (circle yes or no)

 

Yes/No

 

 

5

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

 

EXHIBIT E

 

ASSIGNMENT AND ACCEPTANCE

 

Dated                           , 20    

 

Reference is made to the Credit Agreement, dated as of July 16, 2010, by and
among Cobra Electronics Corporation, a Delaware corporation (the “Borrower”),
the several financial institutions from time to time party to this Agreement, as
Lenders, and Harris N.A., as Administrative Agent (the “Credit Agreement”). 
Terms defined in the Credit Agreement are used herein with the same meaning.

 

                                                                        (the
“Assignor”) and                                                    (the
“Assignee”) agree as follows:

 

1.             The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, a                %
interest in and to all of the Assignor’s rights and obligations under the Credit
Agreement as of the Effective Date (as defined below), including, without
limitation, such percentage interest in the Assignor’s Revolving Credit
Commitments as in effect on the Effective Date and the Loans, if any, owing to
the Assignor on the Effective Date and the Assignor’s Revolver Percentage of any
outstanding L/C Obligations.

 

2.             The Assignor (i) represents and warrants that as of the date
hereof (A) its Revolving Credit Commitment is $                              ,
(B) the aggregate outstanding principal amount of Loans made by it under the
Credit Agreement that have not been repaid is $                      
($                         of Revolving Loans) and a description of the interest
rates and interest periods of such Loans is attached as Annex 1 hereto, and
(C) the aggregate principal US Dollar Equivalent amount of Assignor’s Revolver
Percentage of outstanding L/C Obligations is $                      ;
(ii) represents and warrants that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear
of any adverse claim, lien, or encumbrance of any kind; (iii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement or any other
instrument or document furnished pursuant thereto; and (iv) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Loan Party or the performance or observance by any
Loan Party of any of its obligations under the Credit Agreement or any other
instrument or document furnished pursuant thereto.

 

3.             The Assignee (i) confirms that it has received a copy of the
Credit Agreement, together with copies of the most recent financial statements
delivered to the Lenders pursuant to Section 8.5 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (ii) agrees
that it will, independently and without reliance upon the Administrative Agent,
the Assignor or any other Lender and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not

 

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taking action under the Credit Agreement; (iii) appoints and authorizes the
Administrative Agent to take such action on its behalf and to exercise such
powers under the Credit Agreement and the other Loan Documents as are delegated
to the Administrative Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; (iv) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Lender; and
(v) specifies as its lending office (and address for notices) the offices set
forth beneath its name on the signature pages hereof.

 

4.             As consideration for the assignment and sale contemplated in
Annex 1 hereof, the Assignee shall pay to the Assignor on the Effective Date in
Federal funds an amount equal to $                        *.  It is understood
that commitment and/or letter of credit fees accrued to the Effective Date with
respect to the interest assigned hereby are for the account of the Assignor and
such fees accruing from and including the date hereof are for the account of the
Assignee.  Each of the Assignor and the Assignee hereby agrees that if it
receives any amount under the Credit Agreement which is for the account of the
other party hereto, it shall receive the same for the account of such other
party to the extent of such other party’s interest therein and shall promptly
pay the same to such other party.

 

5.             The effective date for this Assignment and Acceptance shall be
                         (the “Effective Date”).  Following the execution of
this Assignment and Acceptance, it will be delivered to the Administrative Agent
for acceptance and recording by the Administrative Agent and, if required, the
Borrower.

 

6.             Upon such acceptance and recording, as of the Effective Date,
(i) the Assignee shall be a party to the Credit Agreement and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.

 

7.             Upon such acceptance and recording, from and after the Effective
Date, the Administrative Agent shall make all payments under the Credit
Agreement in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees with respect
thereto) to the Assignee.  The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement for periods prior to the
Effective Date directly between themselves.

 

8.             In accordance with Section 12.12 of the Credit Agreement, the
Assignor and the Assignee request and direct that the Administrative Agent
prepare and cause the Borrower to execute and deliver to the Assignee the
relevant Notes payable to the Assignee in the amount of its Revolving Credit
Commitment and new Notes to the Assignor in the amount of its Revolving Credit
Commitment after giving effect to this assignment.

 

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* Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee, net of any portion of any
upfront fee to be paid by the Assignor to the Assignee.  It may be preferable in
an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.

 

2

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9.             This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of Illinois.

 

 

 

[Assignor Lender]

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

[Assignee Lender]

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

Lending office (and address for notices):

 

 

 

 

 

 

 

 

 

 

 

 

[Accepted and consented this

 

 

             day of                                 , 20

 

 

 

 

 

COBRA ELECTRONIC CORPORATION, as the Borrower

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 ]

 

 

3

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[Accepted and consented this

 

 

             day of                                 , 20

 

 

 

 

 

HARRIS N.A., as Administrative Agent

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 ]

 

 

4

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ANNEX I

 

TO ASSIGNMENT AND ACCEPTANCE

 

PRINCIPAL AMOUNT

 

TYPE OF LOAN

 

INTEREST RATE

 

MATURITY DATE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SCHEDULE 1

 

COMMITMENTS

 

NAME OF LENDER

 

REVOLVING CREDIT COMMITMENT

 

Harris N.A.

 

$

15,000,000

 

Fifth Third Bank

 

$

10,000,000

 

TOTAL

 

$

25,000,000

 

 

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