Exhibit 10.4

EXECUTION VERSION

FORBEARANCE AGREEMENT

AND

CONSENT, WAIVER AND AMENDMENT NO. 1

TO SECOND LIEN CREDIT AND GUARANTY AGREEMENT

FORBEARANCE AGREEMENT AND CONSENT, WAIVER AND AMENDMENT NO. 1 TO SECOND LIEN
CREDIT AND GUARANTY AGREEMENT, dated as of August 20, 2008 (this “Agreement”),
among X-RITE, INCORPORATED, a Michigan corporation (“Borrower”), certain
Subsidiaries of Borrower listed on the signature pages hereof under the heading
“Other Credit Parties”, as Guarantors, (such Subsidiaries, together with
Borrower, are referred to herein each individually as a “Credit Party” and
collectively as the “Credit Parties”), GOLDENTREE CAPITAL SOLUTIONS FUND
FINANCING, as sole lead arranger and sole bookrunner (in such capacities, “Lead
Arranger”), and THE BANK OF NEW YORK MELLON (f/k/a as The Bank of New York), as
administrative agent (in such capacity, together with its permitted successors
in such capacity, “Administrative Agent”) and as collateral agent (in such
capacity, together with its permitted successors in such capacity, “Collateral
Agent”), in each case for certain financial institutions from time to time party
thereto (each a “Lender” and collectively the “Lenders”), and the LENDERS
signatory hereto.

WITNESSETH:

WHEREAS, Borrower, the other Credit Parties, Administrative Agent, Collateral
Agent and the Lenders have entered into that certain Second Lien Credit and
Guaranty Agreement, dated as of October 24, 2007 (as amended, amended and
restated, supplemented or otherwise modified and in effect from time to time,
the “Credit Agreement”; capitalized terms used herein and not defined herein
shall have the meanings ascribed thereto in the Credit Agreement);

WHEREAS, pursuant to the Credit Agreement, (a) the Lenders have made certain
Loans to Borrower, (b) Borrower has secured all of the Obligations by granting
to Collateral Agent, for the benefit of Secured Parties, a Second Priority Lien
on substantially all of its assets, and (c) each Credit Party (other than
Borrower) has (i) guaranteed all existing and future Obligations of Borrower and
the other Credit Parties and (ii) secured its Obligations by granting to
Collateral Agent, for the benefit of Secured Parties, a Second Priority Lien on
substantially all of its assets;

WHEREAS, certain Defaults and Events of Default have occurred and are continuing
as of the date hereof (or the Credit Parties have informed the Agents and the
Lenders that certain other Defaults and Events of Default will occur and be
continuing after the date hereof), in each case as set forth in Schedule 1
hereto (such Defaults and Events of Default are referred to herein each
individually as a “Designated Default” and collectively as the “Designated
Defaults”);

[Signature Page to Second Lien Forbearance Agreement]

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WHEREAS, each Credit Party acknowledges and agrees that, (a) as a result of the
existence of the Designated Defaults, the Agents and the Lenders are (or will
be) entitled to accelerate the Obligations, to seek immediate repayment in full
of the Obligations and to exercise any or all of their respective rights and
remedies under the Credit Agreement, each of the other Credit Documents and
applicable law; and (b) the Lenders have no obligation to make any further Loans
or other extensions of credit to Borrower under the Credit Agreement or
otherwise;

WHEREAS, Borrower has further informed the Agents and the Lenders that Borrower
intends to enter into (a) an Investment Agreement dated of even date herewith, a
true, complete and correct copy of which is attached hereto as Exhibit A-1
(without giving effect to any amendments or supplements thereto, or restatements
or modifications thereof, except for any of the foregoing previously consented
to by Requisite Lenders (which consent shall not be unreasonably withheld,
delayed or conditioned) and copies of which shall have been provided to the
Agents and the Lenders, the “OEP Investment Agreement”), with OEPX, LLC, a
Delaware limited liability company (“OEP”), pursuant to which Borrower shall
issue to OEP, and OEP shall purchase from Borrower, 28,571,429 shares of the
common stock, $0.10 par value per share (the “Common Stock”), of Borrower (the
“OEP Equity Issuance”) for a cash purchase price of at least $100,000,000 (the
“OEP Gross Proceeds”), and (b) an Investment Agreement dated of even date
herewith, a true, complete and correct copy of which is attached hereto as
Exhibit A-2 (without giving effect to any amendments or supplements thereto, or
restatements or modifications thereof, except for any of the foregoing
previously consented to by Requisite Lenders (which consent shall not be
unreasonably withheld, delayed or conditioned) and copies of which shall have
been provided to the Agents and the Lenders, the “Additional Investors
Investment Agreement” and, together with the OEP Investment Agreement, the
“Investment Agreements”) with each of Sagard Capital Partners, L.P., Tinicum
Capital Partners II, L.P., Tinicum Capital Partners II Parallel Fund, L.P., and
Tinicum Capital Partners II Executive Fund, L.L.C. (collectively, the
“Additional Investors”, and the Additional Investors, together with OEP, the
“Equity Investors”), pursuant to which Borrower shall issue to the Additional
Investors, and the Additional Investors shall purchase in the aggregate from
Borrower, not less than 8,333,334 shares of Common Stock of Borrower (the
“Additional Investors Equity Issuance” and, together with the OEP Equity
Issuance, the “Required Equity Issuance”) for a cash purchase price of at least
$25,000,000 (the “Additional Investors Gross Proceeds” and, together with the
OEP Gross Proceeds, the “Required Gross Proceeds”);

WHEREAS, Borrower has further informed the Agents and Lenders that Borrower
intends to issue 10,000,000 additional shares of Common Stock (the “Incremental
Equity Issuance” and, together with the Required Equity Issuance, the “Equity
Issuance”) to certain of the Equity Investors for a cash purchase price of not
less than $30,000,000 (the “Incremental Gross Proceeds”);

WHEREAS, Borrower has further informed the Agents and Lenders that Borrower
desires to use: (a) a portion of the Required Gross Proceeds to (i) pay certain
fees and expenses of Borrower and each of the Equity Investors incurred in
connection with the Required Equity Issuance, this Agreement and the respective
transactions and other documentation related thereto (or reimburse Borrower and
each of the Equity Investors in respect of any such fees and expenses paid by
such Persons prior to the First Amendment Effective Date (as defined below), in
each case set forth in Schedule 2 hereto (or in any revised such Schedule 2
prepared in good faith by Borrower and delivered by Borrower to Lead Arranger at
any time and from time to time

 

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after the date hereof), in an aggregate amount for all such fees and expenses
not to exceed $25,000,000 (the “Initial Equity Issuance Payment”); provided that
any determination of Borrower’s compliance with such limitation on the amount of
the Initial Equity Issuance Payment shall exclude (x) the Second Lien Lender
Fees (as defined below) and the First Lien Lender Fees (as defined in the
Corresponding First Lien Agreement referred to below), (y) the Goldman Hedge
Payoff Amount (as defined below), and (z) fees, costs and expenses of Borrower
arising as a result of the receipt by Borrower of a Superior Proposal or
Acquisition Proposal (as such terms are defined in the Investment Agreements),
(ii) pay in full the outstanding principal amount due and owing to Goldman Sachs
Capital Markets, L.P. and its Affiliates (collectively, “Goldman”) in connection
with the Interest Rate Agreements set forth in Schedule 3 hereto (collectively,
the “Existing Hedge Agreements”) in an aggregate amount not to exceed
$12,165,000, plus the aggregate amount of interest accruing thereon pursuant to
the Existing Hedge Agreements through the First Amendment Effective Date
(collectively, the “Goldman Hedge Payoff Amount”), (iii) prepay the Existing
Headquarters Loan by an amount equal to $3,500,000 (the “Existing Headquarters
Loan Repayment Amount” and, together with the Goldman Hedge Payoff Amount, the
First Lien Lender Fees, the Second Lien Lender Fees and the portion of the
Required Gross Proceeds used to consummate the Initial Equity Issuance Payment,
the “Restructuring Transaction Costs”) and (iv) pay the First Lien Lender Fees
and the Second Lien Lender Fees; and (b) ninety percent (90%) of the Required
Gross Proceeds, net of the Restructuring Transaction Costs (such net Required
Gross Proceeds, the “Net Cash Proceeds from Required Equity Issuance”), to make
a mandatory prepayment of the First Lien Term Loans (the “Required Equity
Issuance Mandatory Prepayment”) in accordance with the terms of the First Lien
Credit Agreement; and (c) ten percent (10%) of the Net Cash Proceeds from
Required Equity Issuance to voluntarily prepay the Loans and any prepayment
premium on the amount prepaid payable pursuant to Section 2.13(b) of the Credit
Agreement (the “Initial Second Lien Prepayment”);

WHEREAS, Borrower has further informed the Agents and Lenders that Borrower
desires to use the Incremental Gross Proceeds to: (a) pay all fees and expenses
incurred by Borrower and the Equity Investors in connection with the Incremental
Equity Issuance and the respective transactions and documents related thereto
(the “Incremental Equity Issuance Payment” and, together with the Initial Equity
Issuance Payment, the “Equity Issuance Payment”), in each case set forth in
Schedule 4 hereto (or in any revised such Schedule 4 prepared in good faith by
Borrower and delivered by Borrower to Lead Arranger at any time and from time to
time after the date hereof); and (b) voluntarily prepay the Loans and any
prepayment premium on the amount prepaid payable pursuant to Section 2.13(b) of
the Credit Agreement with any portion thereof remaining after payment of the
Incremental Equity Issuance Payment, in an amount not exceeding $30,000,000 (the
“Incremental Second Lien Prepayment” and, together with the Initial Second Lien
Prepayment, the “Second Lien Prepayment”);

WHEREAS, Borrower has further informed the Agents and Lenders that Borrower
desires to enter into an amendment and modification to the Existing Headquarters
Mortgage, a true, complete and correct copy of which is attached hereto as
Exhibit B (the “Existing Headquarters Mortgage Modification”), pursuant to which
Borrower shall amend certain terms and provisions of the Existing Headquarters
Loan, which Existing Headquarters Mortgage Modification shall become effective
on or prior to August 30, 2008 (the “Existing Headquarters Mortgage Modification
Effective Date”);

 

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WHEREAS, Borrower has informed the Agents and Lenders that Borrower desires to
sell (the “Life Insurance Policy Sale”) those certain Key Person Life Insurance
Policies set forth in Schedule 5 hereto;

WHEREAS, Borrower has requested that the Agents and Lenders forbear in
accordance with the terms and subject to the conditions hereof from accelerating
the Obligations and taking action to collect payment of the Obligations;

WHEREAS, Borrower and the other Credit Parties have further requested that
Administrative Agent and the Requisite Lenders, in each case effective as of the
Forbearance Effective Date (as defined in Section 5), consent to (a) the Life
Insurance Policy Sale (and (x) subject to the terms and conditions set forth in
Section 2(c), waive any mandatory prepayment required pursuant to Section 2.14
of each of the Credit Agreement and the First Lien Credit Agreement as a result
thereof, but solely with respect to the Net Asset Sale Proceeds described in
clause (y) below, and (y) subject to the terms and provisions contained herein,
permit Borrower to retain $7,500,000 of the Net Asset Sale Proceeds thereof),
(b) the execution and delivery by Borrower of the Existing Headquarters Mortgage
Modification, (c) the Equity Issuance (and waive any mandatory prepayment that
would be required pursuant to Section 2.14 of each of the Credit Agreement and
the First Lien Credit Agreement as a result thereof), and (d) payment by
Borrower of the Equity Issuance Payment, the Goldman Hedge Payoff Amount, the
Required Equity Issuance Mandatory Prepayment, the Existing Headquarters Loan
Repayment Amount and the Second Lien Prepayment, respectively;

WHEREAS, Borrower and the other Credit Parties have further requested that
Administrative Agent and Requisite Lenders, in each case effective as of the
First Amendment Effective Date, (a) waive the Designated Defaults and (b) amend
the Credit Agreement in certain respects, in each case, in accordance with the
terms and subject to the conditions set forth herein; and

WHEREAS, the Agents and Lenders agree to accommodate such requests of Borrower
and the other Credit Parties, in each case on the terms and subject to the
conditions herein set forth;

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

Section 1. Forbearance; Forbearance Period.

(a) Each of Administrative Agent, Collateral Agent and each of the Lenders
signatories hereto agrees that, upon the terms and subject to the conditions set
forth herein (and notwithstanding the existence of the Designated Defaults),
during the period (the “Forbearance Period”) commencing on the Forbearance
Effective Date (as defined below) and ending on the date (the “Forbearance
Termination Date”) that is the earlier to occur of (i) January 1, 2009, and
(ii) the date of the occurrence of a Forbearance Termination Event (as defined
below), such

 

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Person shall not exercise or enforce any of its rights and remedies against any
Credit Party that such Person would otherwise be entitled to exercise under the
Credit Agreement or any of the other Credit Documents or applicable law,
including, without limitation, the UCC, by reason (and only by reason) of the
existence of the Designated Defaults (the “Forbearance”). The occurrence of any
of the following events or circumstances shall constitute a termination event
with respect to the Forbearance (each a “Forbearance Termination Event”):

(i) the OEP Investment Agreement (A) is terminated by any party thereto pursuant
to Article V thereof, (B) automatically terminates because Borrower and/or any
Subsidiary of Borrower shall have commenced any case, proceeding or other action
(x) under any existing or future law of any jurisdiction, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding up, liquidation, dissolution or composition, or (y) seeking appointment
of a receiver, trustee, custodian, conservator or other similar official for it
or for all or any substantial part of its assets, or (C) terminates because
there shall be commenced against Borrower and/or any Subsidiary of Borrower, any
case, proceeding or other action of a nature referred to in clause (B) above
that results in the entry of an order for relief or any such adjudication or
appointment; or

(ii) the later to occur of (A) the occurrence of an event or events, since
December 30, 2007, that would have a Material Adverse Effect (as defined in the
OEP Investment Agreement) except as was Previously Disclosed (as defined in the
OEP Investment Agreement), and (B) the receipt by Borrower and OEP of (x) a
written notice from the “Administrative Agent” under and as defined in the First
Lien Credit Agreement (the “First Lien Administrative Agent”), acting at the
direction of the Requisite Lenders (as defined in the First Lien Credit
Agreement), or (y) a written notice from Administrative Agent, acting at the
direction of the Requisite Lenders, in each case stating that an event has
occurred or events have occurred, since December 30, 2007, that would have a
Material Adverse Effect (as defined in the OEP Investment Agreement), except as
was Previously Disclosed (as defined in the OEP Investment Agreement). No Lender
shall have a right to terminate this Agreement as a result of a Forbearance
Termination Event under this clause (ii) until the fifth Business Day following
the receipt by Borrower and OEP of (x) a written notice from the First Lien
Administrative Agent, acting at the direction of the Requisite Lenders (as
defined in the First Lien Credit Agreement), or (y) a written notice from
Administrative Agent, acting at the direction of the Requisite Lenders, in each
case stating that an event has occurred or events have occurred, since
December 30, 2007, that would have a Material Adverse Effect (as defined in the
OEP Investment Agreement), except as was Previously Disclosed (as defined in the
OEP Investment Agreement, and setting forth in good faith and in reasonable
detail a description of the applicable event or events.

(b) The Forbearance is temporary and limited in nature and nothing contained
herein is intended, or shall be deemed or construed: (i) to preclude or prevent
any Agent or Lender from exercising any rights or remedies against any Credit
Party under the Credit Agreement, any of the other Credit Documents or
applicable law, including, without limitation the UCC, arising on account of
(A) any Default or Event of Default other than a Designated

 

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Default, or (B) any Designated Default from and after the Forbearance
Termination Date; (ii) except as otherwise expressly set forth herein, to effect
any amendment or other modification of the Credit Agreement or any of the other
Credit Documents, all of which shall remain in full force and effect in
accordance with their respective terms; (iii) except as otherwise expressly set
forth herein, to constitute a waiver of any of the Designated Defaults or any
future Defaults or Events of Default or any term or provision of the Credit
Agreement or any of the other Credit Documents or applicable law; or (iv) to
establish a custom or course of dealing between the Agents and the Lenders, on
the one hand, and the Credit Parties, on the other hand. Furthermore, nothing
contained herein is intended, or should be deemed or construed, to require any
Agent or Lender to extend the Forbearance Termination Date for any reason
whatsoever or make any additional extensions of credit under the Credit
Agreement.

(c) Notwithstanding anything contained herein to the contrary, on the
Forbearance Termination Date, without the requirement of any notice to any
Credit Party or any other Person: (i) the Forbearance and all agreements set
forth in Section 1(a) of this Agreement shall terminate automatically and be of
no further force or effect, and (ii) subject to the terms of the Credit
Documents and applicable law, including, without limitation, the UCC, each Agent
and Lender shall be free in its sole and absolute discretion without limitation
to proceed to enforce any or all of such Person’s rights and remedies set forth
in this Agreement, the Credit Agreement, the other Credit Documents and
applicable law, including, without limitation, the right to sue, ask for or
demand from the Credit Parties payment in full of all Obligations to the extent
then permitted pursuant to the Credit Agreement, in whole or in part, and to
otherwise enforce any or all of its rights and remedies (including rights of
acceleration and foreclosure) under the Credit Documents against any Credit
Party or any other Person. In furtherance of the foregoing, and notwithstanding
the occurrence of the Forbearance Effective Date, each Credit Party acknowledges
and confirms that, subject to the Forbearance, all rights and remedies of the
Agents and Lenders under the Credit Documents and applicable law with respect to
such Credit Party shall continue to be available to the Agents and Lenders from
and after the Forbearance Effective Date.

(d) Administrative Agent and the Lenders signatories hereto hereby agree that:

(i) during the Forbearance Period, in addition to the revolving loans and
letters of credit outstanding under the First Lien Credit Agreement as of the
Forbearance Effective Date, but in any event subject to the satisfaction of the
conditions precedent set forth in Section 3.2(a) of the First Lien Credit
Agreement (other than the conditions precedent set forth in Section 3.2(a)(iii)
and Section 3.2(a)(iv) thereof), each lender under the First Lien Credit
Agreement with a revolving commitment thereunder shall continue to make
revolving loans thereunder, and to issue or cause to be issued, and participate
in, letters of credit thereunder, in each case to or for the account of
Borrower; provided that the aggregate outstanding principal balance of such
additional revolving loans plus the aggregate undrawn face amount of all such
additional letters of credit shall not exceed $10,000,000 (the “Maximum
Forbearance Amount”) at any time during the Forbearance Period; provided,
further, that (A) only up to $2,000,000 of the Maximum Forbearance Amount shall
be available at all times during the Forbearance Period, (ii) only up to
$3,000,000 of the Maximum Forbearance Amount shall be available at all

 

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times during the Forbearance Period for the payment of fees and expenses
incurred in connection with this Agreement and the Corresponding First Lien
Agreement, the Equity Issuance and the other transactions contemplated by the
Corresponding First Lien Agreement, the Investment Agreements and any related
documentation, and (iii) the remaining $5,000,000 of the Maximum Forbearance
Amount shall be available only to the extent that an equal amount of Cash is
held by Foreign Subsidiaries. Notwithstanding anything contained herein or in
the First Lien Credit Agreement to the contrary, during the Forbearance Period,
(x) no revolving loans under the First Lien Credit Agreement shall be advanced
as Eurodollar Rate Loans (as defined in the First Lien Credit Agreement), and
(y) no loans under the First Lien Credit Agreement may be converted into or
continued as Eurodollar Rate Loans (as defined in the First Lien Credit
Agreement);

(ii) during the period beginning on July 1, 2008 until the First Amendment
Effective Date, the Applicable Margin shall be equal to (A) with respect to
Loans that are Eurodollar Rate Loans, 9.50% per annum, and (B) with respect to
Loans that are Base Rate Loans, 8.50% per annum; and

(iii) during the Forbearance Period, Borrower shall not be required to comply
with the financial covenants set forth in Section 6.8 of the Credit Agreement
with respect to any Fiscal Quarter occurring prior to the Fiscal Quarter ending
closest to December 31, 2008.

(e) Each of the Credit Parties hereby agrees that, during the Forbearance
Period:

(i) subject to the Forbearance, the waiver of Designated Defaults set forth in
Section 3 hereof and the other terms and provisions of this Agreement, all of
the Credit Documents shall remain in full force and effect and the Credit
Parties shall continue to comply with all covenants and other obligations under
the Credit Documents including, but not limited to, the obligation to make any
and all scheduled payments of principal or interest on the Loans or pursuant to
the Notes and other payments required under the Credit Documents in each case
when due and payable;

(ii) Borrower shall deliver to Administrative Agent, Lead Arranger and each of
the Lenders within 30 days after the end of each monthly fiscal period of
Borrower ending after the Forbearance Effective Date, (A) the consolidated
balance sheets of Borrower and its Subsidiaries as at the end of such monthly
fiscal period and the related consolidated statements of income and cash flows
of Borrower and its Subsidiaries for such monthly fiscal period, and (B) a
rolling thirteen (13) week cash flow forecast and cash balance report on a
consolidated basis for Borrower and its Subsidiaries, in each case in the form
customarily prepared by Borrower; and

(iii) on a date certain to be agreed upon by Borrower and Lead Arranger after
the delivery by Borrower of the financial statements referred to the foregoing
clause (ii) with respect to any monthly fiscal period, Borrower shall conduct a
single conference call with Lead Arranger and any Lender that desires to
participate therein regarding the

 

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financial results and the financial condition of Borrower and its Subsidiaries,
on which conference call shall be present the chief financial officer or such
other authorized representative of the Credit Parties as may be reasonably
requested by Lead Arranger, each of such conference calls to be held at a time
convenient to Lead Arranger, the Requisite Lenders and Borrower.

Section 2. Consents.

(a) Effective as of the Forbearance Effective Date, and notwithstanding anything
to the contrary contained in the Credit Agreement or any other Credit Document,
Administrative Agent, Collateral Agent and the Lenders signatories hereto hereby
consent to (i) the Required Equity Issuance (and hereby acknowledge and agree
that the Required Equity Issuance shall not constitute a Change of Control and
will not result in an Event of Default under Section 8.1(k) of the Credit
Agreement), (ii) the Initial Equity Issuance Payment, and (iii) the payment of
the Goldman Hedge Payoff Amount, the Existing Headquarters Loan Repayment Amount
and the Initial Second Lien Prepayment (and hereby waive the requirements of
Section 2.14 of the Credit Agreement, solely with respect to the Net Cash
Proceeds from Required Equity Issuance, to the extent such proceeds,
substantially contemporaneously with receipt thereof by or for the account of
Borrower, are used to pay the Goldman Hedge Payoff Amount, the Required Equity
Issuance Mandatory Prepayment, the First Lien Lender Fees, the Second Lien
Lender Fees, the Existing Headquarters Loan Repayment Amount and the Initial
Second Lien Prepayment); provided that the effectiveness of each of the
foregoing consents and waivers is subject to the following conditions:

(A) the Required Equity Issuance (x) is consummated no later than January 1,
2009, (y) results in the concurrent receipt by Borrower in immediately available
Dollars of Required Gross Proceeds in an aggregate amount not less than
$125,000,000 and (z) is consummated in accordance with the terms and conditions
set forth in the respective Investment Agreements and applicable law;

(B) the Required Gross Proceeds are used by Borrower solely to pay the
Restructuring Transaction Costs and, substantially contemporaneously with
receipt thereof by or for the account of Borrower, to make the Required Equity
Issuance Mandatory Prepayment and the Initial Second Lien Prepayment;

(C) on or prior to the First Amendment Effective Date, Borrower shall have
delivered to Administrative Agent and Lead Arranger a funds flow describing the
sources and uses of the Required Gross Proceeds and the Net Cash Proceeds from
Required Equity Issuance, in form and substance reasonably acceptable to Lead
Arranger;

(D) with respect to the Goldman Hedge Payoff Amount, on or prior to the First
Amendment Effective Date, Borrower shall have delivered to Administrative Agent
and Lead Arranger evidence reasonably satisfactory to Lead Arranger that such
amount has been applied to payment of Borrower’s obligations in respect of the
Existing Hedge Agreements and Borrower shall deliver a payoff letter evidencing
the payment in full of all amounts due and owing under the Existing Hedge
Agreements and the release of all claims against Borrower and each other Credit
Party by Goldman, in form and substance reasonable satisfactory to Lead
Arranger; and

 

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(E) the Existing Headquarters Loan shall have been repaid in an amount equal to
$3,500,000.

(b) Effective as of the Forbearance Effective Date, and notwithstanding anything
to the contrary contained in the Credit Agreement or any other Credit Document,
Administrative Agent, Collateral Agent and the Lenders signatories hereto hereby
consent to (i) the Incremental Equity Issuance, (ii) the Incremental Equity
Issuance Payment and (iii) the Incremental Second Lien Prepayment (and hereby
waive the requirements of Section 2.14 of the Credit Agreement solely with
respect to the Net Cash Proceeds from the Incremental Equity Issuance to the
extent that the Incremental Gross Proceeds substantially contemporaneously with
receipt thereof are used to consummate the Incremental Equity Issuance Payment
and the Incremental Second Lien Prepayment); provided that the effectiveness of
each of the foregoing consents and waivers is subject to the following
conditions:

(A) the Incremental Equity Issuance (x) is consummated no later than January 1,
2009 and is consummated substantially contemporaneously with the Required Equity
Issuance and (y) is consummated on terms and conditions substantially the same
as those set forth in the respective Investment Agreements;

(B) the Incremental Gross Proceeds are used by Borrower, substantially
contemporaneously with receipt thereof by or for the account of Borrower, solely
to make the Incremental Equity Issuance Payment and the Incremental Second Lien
Prepayment;

(C) on or prior to the First Amendment Effective Date, Borrower shall have
delivered to Administrative Agent and Lead Arranger a funds flow describing the
sources and uses of the Incremental Gross Proceeds and the Net Cash Proceeds
from the Incremental Equity Issuance, in form and substance reasonably
acceptable to Lead Arranger; and

(D) any Incremental Gross Proceeds in excess of $30,000,000 shall be applied
substantially contemporaneously with receipt thereof by or for the account of
Borrower as a mandatory prepayment of the Loans in accordance with Section 2.14
of the First Lien Credit Agreement.

(c) Effective as of the Forbearance Effective Date, and notwithstanding anything
to the contrary contained in the Credit Agreement or any other Credit Document,
Administrative Agent, Collateral Agent and the Lenders signatories hereto hereby
consent to the Life Insurance Policy Sale so long as the Net Asset Sale Proceeds
of the Life Insurance Policy Sale are promptly delivered to the First Lien
Administrative Agent to be applied as a mandatory prepayment of the First Lien
Term Loans as required pursuant to Section 2.14 of the First Lien Credit
Agreement; provided that, notwithstanding the foregoing, (i) the aggregate gross
proceeds of the Life Insurance Policy Sale shall be in an amount not less than
the cash surrender value of the Key Person Life Insurance Policies set forth in
Schedule 5 hereto as of the date on which Borrower enters into a binding
agreement providing for the Life Insurance Policy Sale, and (ii)

 

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Borrower shall be permitted to retain $7,500,000 of such Net Asset Sale Proceeds
(the “Retained Insurance Proceeds”); provided, further, that until the First
Amendment Effective Date, all Retained Insurance Proceeds shall be held by
Borrower in a segregated deposit account maintained with the First Lien
Collateral Agent or with a bank that has entered into an account control
agreement with Collateral Agent, the First Lien Collateral Agent and Borrower in
form and substance reasonably satisfactory to Collateral Agent (the “Insurance
Proceeds Control Agreement”); provided that, on the First Amendment Effective
Date, the Insurance Proceeds Control Agreement shall be terminated and the
Retained Insurance Proceeds shall be released to Borrower for use by Borrower
for general corporate purposes.

(d) Effective as of the Forbearance Effective Date, and notwithstanding anything
to the contrary contained in the Credit Agreement or any other Credit Document,
Administrative Agent, Collateral Agent and the Lenders signatories hereto hereby
consent to the Existing Headquarters Mortgage Modification and the transactions
contemplated thereby.

(e) Effective as of the Forbearance Effective Date, and notwithstanding anything
to the contrary contained in the Credit Agreement or any other Credit Document,
Administrative Agent, Collateral Agent and the Lenders signatories hereto hereby
consent to the Corresponding First Lien Agreement; provided that the
effectiveness of such consent is subject to the following: (A) the execution and
delivery to Administrative Agent by the First Lien Collateral Agent on or prior
to the First Amendment Effective Date of the Intercreditor Reaffirmation and
Amendment (as defined below) pursuant to which the “Lenders” under and as
defined in the First Lien Credit Agreement (the “First Lien Lenders”) shall have
agreed that the increase in the Applicable Margin provided for herein shall not
apply against the basket of permitted increases therein set forth in the
Intercreditor Agreement and (B) the First Lien Administrative Agent, the First
Lien Collateral Agent and the First Lien Lenders shall have consented to the
transactions contemplated by this Agreement.

Section 3. Waiver of Designated Defaults. Effective as of, and subject to the
occurrence of, the First Amendment Effective Date, and in reliance on the
representations and warranties of Borrower set forth in this Agreement and in
the Credit Agreement, as amended hereby, Administrative Agent, Collateral Agent
and the Lenders signatories hereto hereby waive each of the Designated Defaults.
The foregoing waiver is not intended and shall not be deemed or construed to
constitute a waiver of any other Default or Event of Default existing under the
Credit Agreement or that hereafter may occur under the Credit Agreement, as
amended, or to establish a custom or course of dealing among Borrower, any other
Credit Party, any Agent, the Lenders or any of them. Except as specifically set
forth herein, the Agents and the Lenders hereby expressly reserve all of their
rights and remedies under the Credit Agreement, as amended, the other Credit
Documents and applicable law.

Section 4. Amendments to Credit Agreement. Effective as of, and subject to the
occurrence of, the First Amendment Effective Date, and in reliance on the
representations and warranties of Borrower set forth in this Agreement and in
the Credit Agreement, as amended hereby, the Credit Agreement is hereby amended
as follows:

 

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(a) Section 1.1 of the Credit Agreement is hereby amended by adding thereto the
following defined terms and their respective definitions in the correct
alphabetical order:

“Cash Election” as defined in Section 2.8(e).

“Control Investment Affiliate” means, as to any Person, any other Person that
(a) directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person and (b) is organized by such Person primarily
for the purpose of making equity or debt investments in one or more companies.
For purposes of this definition, “control” of a Person means the power, directly
or indirectly, to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.

“Corresponding First Lien Agreement” as defined in the First Amendment
Agreement.

“Election” as defined in Section 2.8(e).

“Equity Issuance” as defined in the First Amendment Agreement.

“Existing Headquarters Mortgage Modification” as defined in the First Amendment
Agreement.

“Existing Headquarters Mortgage Modification Effective Date” as defined in the
First Amendment Agreement.

“First Amendment Agreement” means that certain Forbearance Agreement and
Consent, Waiver and Amendment No. 1 to Second Lien Credit and Guaranty Agreement
dated as of August 20, 2008 and effective as of the Forbearance Effective Date
by and among Borrower, the Guarantors, certain other Credit Parties,
Administrative Agent, Collateral Agent and the Requisite Lenders.

“First Amendment Effective Date” as defined in the First Amendment Agreement.

“Forbearance Effective Date” as defined in the First Amendment Agreement.

“Intercreditor Reaffirmation and Amendment” as defined in the First Amendment
Agreement.

“Interest Coverage Ratio” means the ratio as of the last day of any Fiscal
Quarter of (a) Consolidated Adjusted EBITDA for the four Fiscal Quarter period
then ended to (b) Consolidated Cash Interest Expense for such four Fiscal
Quarter period. Notwithstanding the foregoing, for purposes of determining the
Interest Coverage Ratio for the Fiscal Quarter (i) ending closest to
December 31, 2008, the Consolidated Cash Interest Expense for such Fiscal
Quarter (after giving pro forma effect to Borrower’s recapitalization plan and
assuming such recapitalization plan was consummated as of the first day of such
Fiscal Quarter) shall be multiplied by four, (ii) ending closest to March

 

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31, 2009, the Consolidated Cash Interest Expense for such Fiscal Quarter shall
be multiplied by four, (iii) ending closest to June 30, 2009, the Consolidated
Cash Interest Expense for the two most recently ended Fiscal Quarters shall be
multiplied by two, and (iv) ending closest to September 30, 2009, the
Consolidated Cash Interest Expense for the three most recently ended Fiscal
Quarters multiplied by 4/3.

“OEP” means OEPX, LLC, a Delaware limited liability company.

“Permitted Holders” means, collectively, OEP, Sagard Capital Partners, L.P.,
Tinicum Capital Partners II, L.P., Tinicum Capital Partners II Parallel Fund,
L.P. Tinicum Capital Partners II Executive Fund, L.L.C. and their respective
Control Investment Affiliates.

“PIK Election” as defined in Section 2.8(e).

“PIK Interest” means interest paid in the form of increasing the outstanding
principal amount of the Loans as provided in Section 2.8(e).

“Restructuring Transaction Costs” as defined in the First Amendment Agreement.

(b) Section 1.1 of the Credit Agreement is hereby further amended by
substituting the definitions of the terms set forth below in lieu of the current
versions of such definitions contained in Section 1.1 of the Credit Agreement:

“Applicable Margin” means from the First Amendment Effective Date with respect
to Loans that are Eurodollar Rate Loans, 11.375% per annum (of which up to
2.50% per annum may, at the option of the Borrower, be made as PIK Interest) and
with respect to Loans that are Base Rate Loans, 10.375% (of which up to
2.50% per annum may, at the option of the Borrower, be made as PIK Interest).

“Consolidated Adjusted EBITDA” means, for any period, an amount determined for
Borrower and its Subsidiaries on a consolidated basis equal to (i) the sum,
without duplication, of the amounts for such period of (a) Consolidated Net
Income, (b) Consolidated Interest Expense (including, without duplication and to
the extent constituting Consolidated Interest Expense in accordance with GAAP,
interest expense relating to the settlement of the Existing Interest Rate
Agreements), (c) provisions for taxes based on income, (d) total depreciation
expense, (e) total amortization expense, (f) Cash restructuring charges in
connection with the Pantone Mergers, the Prior Tender Offer and restructurings
occurring after the First Amendment Effective Date of up to $17,500,000 in the
aggregate with respect to all such charges, (g) non-Cash charges associated with
the cash surrender value of Borrower’s life insurance policy portfolio, (h) fees
and expenses incurred in connection with the Equity Issuance to the extent
deducted in the calculation of net income (or loss) for such period,
(i) property taxes paid prior to the First Amendment Effective Date by Borrower
on the Existing Headquarters Asset to the extent (x) deducted in the calculation
of net income (or loss) for such period, and (y) all addbacks in respect of
property taxes do not exceed $801,000, (j) the amount of non-Cash expenses
related to the implementation of changes in accounting methods or

 

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estimates at the time of such implementation, (k) one-time charges or reserves
(including, without limitation, fees and expenses) constituting Restructuring
Transaction Costs, (l) fees and expenses payable to any Agent or Lender on the
Forbearance Effective Date or the First Amendment Effective Date, (m) fees and
expenses payable to the “Administrative Agent” under and as defined in the First
Lien Credit Agreement or any “Lender” under and as defined in the First Lien
Credit Agreement on the Forbearance Effective Date or First Amendment Effective
Date, respectively, (n) one-time fees and expenses relating to Permitted
Acquisitions (whether or not consummated), and (o) other non-Cash losses,
charges, costs or other items reducing Consolidated Net Income for such period
(excluding any such non-Cash loss, charge, cost or other item to the extent that
it represents an accrual or reserve for potential Cash items in any future
period or amortization of a prepaid Cash item that was paid in a prior period),
minus (ii) other non-Cash items increasing Consolidated Net Income for such
period (excluding any such non-Cash item to the extent it represents the
reversal of an accrual or reserve for potential Cash item in any prior period).

“Consolidated Cash Interest Expense” means, for any period, Consolidated
Interest Expense for such period, excluding any amount not payable in Cash and,
to the extent constituting Consolidated Interest Expense, payments made in
respect of the Existing Interest Rate Agreements.

“Consolidated Excess Cash Flow” means, for any period, an amount (if positive)
equal to: (i) the sum, without duplication, of the amounts for such period of
(a) Consolidated Adjusted EBITDA, plus (b) the Consolidated Working Capital
Adjustment, minus (ii) the sum, without duplication, of the amounts for such
period of (a) Consolidated Capital Expenditures (net of any proceeds of (x) any
related financings with respect to such expenditures and (y) any sales of assets
used to finance such expenditures), (b) Consolidated Cash Interest Expense,
(c) provisions for current taxes based on income of Borrower and its
Subsidiaries and payable in cash with respect to such period, (d) Cash payments
for the purchase price paid in connection with Permitted Acquisitions (whether
or not consummated), to the extent not paid with the proceeds of any
Indebtedness (other than revolving loans under the First Lien Credit Agreement)
or from the issuance of, or capital contribution in respect of, any equity
securities and (e) transaction costs and expenses paid in Cash in connection
with Permitted Acquisitions (whether or not consummated) and added back to net
income in the determination of Consolidated Adjusted EBITDA.

“Consolidated Interest Expense” means, for any period, total interest expense
(including that portion attributable to Capital Leases and capitalized interest)
of Borrower and its Subsidiaries on a consolidated basis with respect to all
outstanding Indebtedness of Borrower and its Subsidiaries, including all
commissions, discounts and other fees and charges owed with respect to letters
of credit and net costs under Interest Rate Agreements.

 

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“Consolidated Net Income” means, for any period, (i) the net income (or loss) of
Borrower and its Subsidiaries on a consolidated basis for such period taken as a
single accounting period determined in conformity with GAAP, excluding
(ii) (a) the income (or loss) of any Person (other than a Subsidiary of
Borrower) in which any other Person (other than Borrower or any of its
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Borrower or any of its
Subsidiaries by such Person during such period, (b) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Borrower or is
merged into or consolidated with Borrower or any of its Subsidiaries or that
Person’s assets are acquired by Borrower or any of its Subsidiaries, (c) the
income of any Subsidiary of Borrower to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary of that income
is not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary, (d) any after tax gains or losses
attributable to Asset Sales or returned surplus assets of any Pension Plan and
(e) (to the extent not included in clauses (a) through (d) above) any net
extraordinary gains or net extraordinary losses.

“Consolidated Total Debt” means, as at any date of determination, the aggregate
stated balance sheet amount of all Indebtedness of Borrower and its Subsidiaries
determined on a consolidated basis in accordance with GAAP.

“Existing Headquarters Asset” means the property commonly known as 3100 44th
Street Southwest, Grandville, Michigan.

“Existing Headquarters Asset Sale” means the sale by Borrower of the Existing
Headquarters Asset pursuant to an Asset Sale.

(c) The definition of the term “Base Rate” set forth in Section 1.1 of the
Credit Agreement is hereby amended by deleting the figure “2.00%” appearing at
the end thereof and inserting the figure “4.00%” in lieu thereof.

(d) The definition of the term “Change of Control” set forth in Section 1.1 of
the Credit Agreement is hereby amended by (i) inserting the words “, other than
the Permitted Holders,” immediately after the words “(within the meaning of
Rules 13d-3 and 13d-5 under the Exchange Act)” appearing therein and
(ii) deleting the words “Closing Date” appearing in clause (ii) thereof and
substituting the words “First Amendment Effective Date” in lieu thereof.

(e) The definition of the term “Credit Document” set forth in Section 1.1 of the
Credit Agreement is hereby amended by inserting the words “the First Amendment
Agreement” immediately after the words “the Intercreditor Agreement,” appearing
therein.

(f) The definition of the term “Excluded Equity Issuance” set forth in
Section 1.1 of the Credit Agreement is hereby amended by (i) deleting the word
“and” appearing at the end of clause (b) thereof and (ii) inserting new clauses
(d) and (e) at the end thereof as follows: “, (d) Cash proceeds resulting from
the issuance of Capital Stock by Borrower to the extent used within one hundred
eighty (180) days of receipt thereof by or for the account of Borrower to
finance the consummation of a Permitted Acquisition and (e) up to $50,000,000 of
Cash proceeds resulting from the issuance of Capital Stock (other than proceeds
of the Equity Issuance) by Borrower to the extent used within sixty (60) days of
receipt thereof by or for the account of Borrower to finance Capital
Expenditures of Borrower and its Subsidiaries and/or any Investment otherwise
permitted pursuant to Section 6.7”.

 

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(g) The definition of the term “Permitted Acquisition” set forth in Section 1.1
of the Credit Agreement is hereby amended by (i) inserting the words “and Cash”
after the words “the “Revolving Commitments”“ appearing in clause (vi) thereof,
(ii) inserting “)” after the words “in connection therewith” appearing in clause
(vi) thereof, (iii) deleting the figure “$15,000,000” appearing in clause
(vi) thereof and inserting the figure “$20,000,000” in lieu thereof and
(iv) re-designating current clause (vii) thereof as clause (viii) and inserting
the following new clause (vii):

“(vii) after giving effect to such acquisition, Consolidated Adjusted EBITDA for
the most recent twelve-month period prior to the acquisition date for which
financial statements are available shall not be reduced by more than $2,000,000,
subject to pro forma adjustments reasonably acceptable to Lead Arranger; and”.

(h) Section 2.8 of the Credit Agreement is hereby amended by inserting the
following new clause (e):

“(e) Borrower shall, upon its election, pay the interest accrued pursuant to
Section 2.8(a) (i) entirely in cash (a “Cash Election”) or (ii) by capitalizing
and adding no more than 2.50% per annum of such interest to the unpaid principal
amount of the Loans and paying the remaining portion of such interest in cash (a
“PIK Election” and, together with a Cash Election, an “Election”); provided,
however, that each Election shall apply ratably to all outstanding Loans;
provided, further that, in each case, during each Interest Period within which
the Borrower has made a PIK Election, interest shall be considered paid on the
date due with respect to Loans subject to such PIK Election so long as the
Borrower has notified Administrative Agent of such PIK Election as set forth in
the next sentence. Borrower shall elect the form of interest payment with
respect to each Interest Period by notifying Administrative Agent, in writing,
at least three (3) Business Days prior to the beginning of such Interest Period.
Administrative Agent shall promptly notify each Lender of Borrower’s Election.
In the absence of such an Election for any Interest Period, interest for such
Interest Period will be payable in the form of the Election for the prior
Interest Period.”

(i) Section 2.10 of the Credit Agreement is hereby amended by deleting the words
“Upon the occurrence and during the continuance of an Event of Default under
Section 8.1(a)” appearing therein and inserting the following in lieu thereof:

“(a) At the election of the Requisite Lenders, upon the occurrence and during
the continuance of an Event of Default (other than under Section 8.1(f) and
8.1(g)), or (b) automatically, upon the occurrence and during the continuance of
an Event of Default under Section 8.1(f) or 8.1(g)”.

 

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(j) Section 2.14(a) of the Credit Agreement is hereby deleted in its entirety
and the following is substituted in lieu thereof:

“(a) Asset Sales. No later than the third (3rd) Business Day following the date
of receipt by Borrower or any of its Subsidiaries of any Net Asset Sale
Proceeds, Borrower shall prepay the Loans as set forth in Section 2.15 in an
aggregate amount equal to such Net Asset Sale Proceeds; provided that (i) so
long as no Default or Event of Default shall have occurred and be continuing,
and (ii) to the extent that aggregate Net Asset Sale Proceeds from the Closing
Date through the applicable date of determination do not exceed $5,000,000,
Borrower shall have the option, directly or through one or more of its
Subsidiaries, to invest such Net Asset Sale Proceeds (other than Net Asset Sale
Proceeds from any Existing Headquarters Asset Sale) within one hundred eighty
days of receipt thereof in long term productive assets of the general type used
in the business of Borrower and its Subsidiaries; provided, further, that the
Net Asset Sale Proceeds from the Existing Headquarters Asset Sale may be applied
first against the Existing Headquarters Loan, with any such Net Asset Sale
Proceeds remaining after payment in full in Cash of the Existing Headquarters
Loan being applied as otherwise required by this Section 2.14(a) (without being
reinvested as otherwise permitted by Section 2.14(a)).”

(k) Section 2.14(e) of the Credit Agreement is hereby amended by deleting the
words “December 31, 2008” appearing therein and substituting “December 31, 2009”
in lieu thereof.

(l) Section 4.9 of the Credit Agreement is hereby deleted in its entirety and
the following is substituted in lieu thereof:

“4.9. No Material Adverse Change. Since December 30, 2007, no event,
circumstance or change has occurred that has caused or evidences, either in any
case or in the aggregate, a Material Adverse Effect; provided that the Lenders
acknowledge that, in and of themselves, (i) the Designated Defaults, (ii) the
events that have been Previously Disclosed (as defined in the Investment
Agreements) and (iii) the execution and delivery of the First Amendment
Agreement, the Corresponding First Lien Agreement and the Investment Agreements,
in and of themselves, and the consummation of the respective transactions
contemplated hereby and thereby, do not constitute a Material Adverse Effect for
purposes of this Agreement.”

(m) Schedule 4.21 to the Credit Agreement is hereby deleted in its entirety and
a revised Schedule 4.21 attached hereto as Exhibit C is substituted in lieu
thereof.

(n) Section 5.1(a) of the Credit Agreement is hereby deleted in its entirety and
the following is substituted in lieu thereof:

“(a) Monthly Financial Statements. As soon as available, and in any event within
30 days after the end of each monthly fiscal period, the consolidated balance
sheet of Borrower and its Subsidiaries as at the end of such monthly fiscal
period and the related consolidated statements of income and cash flows of
Borrower and its Subsidiaries for such monthly fiscal period, in each case in
the form customarily prepared by Borrower;”.

 

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(o) Section 5.1(b) of the Credit Agreement is hereby amended by (i) deleting the
words “the consolidated and consolidating balance sheet of Borrower and its
Subsidiaries as at the end of such Fiscal Quarter and the related consolidated
(and with respect to statements of income, consolidating) statements of income,
stockholders’ equity and cash flows” appearing therein and substituting the
words “the consolidated balance sheet of Borrower and its Subsidiaries as at the
end of such Fiscal Quarter and the related consolidated statements of income and
cash flows” in lieu thereof and (ii) inserting the following proviso at the end
thereof: “provided that Borrower acknowledges and agrees that Borrower shall in
any event deliver financial statements under this clause (b) with no less
information set forth therein than the financial disclosures required to be
provided by Borrower in respect thereof in form 10-Q;”.

(p) Section 5.1(c) of the Credit Agreement is hereby amended by deleting the
words “and consolidating” and “(and with respect to statements of income,
consolidating)” in each case appearing in clause (i) thereof.

(q) Section 5.1(i) of the Credit Agreement is hereby deleted in its entirety and
the following is substituted in lieu thereof:

“(i) Financial Plan. As soon as practicable and in any event no later than
March 7 of each Fiscal Year, a consolidated plan and financial forecast for the
then current Fiscal Year and the forthcoming Fiscal Year (or portions thereof)
on a year by year basis, and for the then current Fiscal Year on a quarter by
quarter basis (a “Financial Plan”), including (i) a forecasted consolidated
balance sheet and forecasted consolidated statements of income and cash flows of
Borrower and its Subsidiaries for each such Fiscal Year, together with pro forma
Compliance Certificates for each such Fiscal Year and an explanation of the
assumptions on which such forecasts are based, and (ii) forecasted consolidated
statements of income and cash flows of Borrower and its Subsidiaries for each
quarter of each such Fiscal Year;”.

(r) Section 5.1(o) of the Credit Agreement is hereby amended by inserting the
following proviso immediately after the words “Form 8-K” appearing in clause
(A)(iii) thereof:

“provided that any information in this clause (A) that is filed by Borrower with
the Securities and Exchange Commission shall be deemed delivered for purposes of
this Section 5.1(o)”.

(s) Section 5.10 of the Credit Agreement is hereby amended by adding new clause
(c) immediately following clause (b) thereof as follows:

“(c) The foregoing provisions of this Section 5.10 notwithstanding, in the event
Requisite Lenders shall determine in their reasonable discretion, that the costs
of obtaining Liens and security interests required by this Section 5.10 are
excessive in relation to the value of the security to be afforded thereby or
obtaining such interest is not commercially practicable, then Borrower or the
applicable Subsidiary shall not be required to comply with the provisions of
clauses (a) and/or (b) of this Section 5.10; provided that the “Lenders” under
and as defined in the First Lien Credit Agreement have made a similar
determination and the First Lien Collateral Agent shall not have been granted
any Liens on or security interests in such assets.”

 

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(t) Section 5.11 of the Credit Agreement is hereby amended by adding the
following language immediately following the last sentence thereof:

“The foregoing provisions of this Section 5.11 notwithstanding, in the event
Requisite Lenders shall determine in their reasonable discretion, that the costs
of obtaining liens and security interest required by this Section 5.11 are
excessive in relation to the value of the security to be afforded thereby or
obtaining such interest is not commercially practicable, then Borrower or the
applicable Subsidiary shall not be required to comply with the provisions of
this Section 5.11; provided that the “Lenders” under and as defined in the First
Lien Credit Agreement have made a similar determination and the First Lien
Collateral Agent shall not have been granted any Liens on or security interests
in such assets.”

(u) Section 5.12 of the Credit Agreement is hereby deleted in its entirety and
the following is substituted in lieu thereof:

“5.12. Interest Rate Protection. No later than one hundred twenty (120) days
following the First Amendment Effective Date and at all times thereafter until
the third anniversary of the Closing Date, Borrower shall obtain and cause to be
maintained protection against fluctuations in interest rates pursuant to one or
more Interest Rate Agreements in form and substance reasonably satisfactory to
Lenders, in order to ensure that no less than 50% of the aggregate principal
amount of the total Indebtedness of Borrower and its Subsidiaries then
outstanding from time to time is either (a) subject to such Interest Rate
Agreements or (b) Indebtedness that bears interest at a fixed rate.”

(v) Section 5.13 of the Credit Agreement is hereby amended by (i) inserting the
words “after the last day of the Fiscal Year ending closest to December 31,
2008” immediately before the words “the gross revenues of X-Rite GmbH exceed the
foreign currency equivalent of $5,000,000” appearing in clause (a) thereof,
(ii) deleting the words “thirty (30) days” appearing in clause (a) thereof and
substituting “sixty (60) days” in lieu thereof, (iii) deleting the words
“December 31, 2007” appearing in clause (b) thereof and substituting “December
31, 2008 (or such later date as agreed by Requisite Lenders” in lieu thereof and
(iv) deleting clause (c) thereof in its entirety.

(w) Section 5.17 of the Credit Agreement is hereby deleted in its entirety and
the following is substituted in lieu thereof:

“5.17. Existing Headquarters Asset Sale. Simultaneously with the consummation of
the Existing Headquarters Asset Sale, Borrower and its Subsidiaries shall
(a) repay in full all Indebtedness outstanding under the Existing Headquarters
Loan with the proceeds of the Existing Headquarters Asset Sale, (b) terminate
any commitments to lend or make other extensions of credit thereunder and
(c) deliver to Administrative Agent and Lead Arranger copies of all documents or
instruments

 

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necessary to release all Liens (including, without limitation, the Existing
Headquarters Mortgage) securing Indebtedness outstanding under the Existing
Headquarters Loan or other obligations of Borrower and its Subsidiaries
thereunder being repaid in connection with the closing of the Existing
Headquarters Asset Sale; provided that (i) the consideration received for such
Asset Sale shall be in an amount at least equal to the fair market value thereof
(determined in good faith by the board of directors of Borrower (or similar
governing body)), (ii) not less than 100% of the consideration received for such
Asset Sale shall be paid in cash, and (iii) the Net Asset Sale Proceeds thereof
shall be applied as required by Section 2.14(a); provided that such Net Asset
Sale Proceeds shall be payable against the Existing Headquarters Loan (and
thereafter the Loans) no later than the third (3rd) Business Day following the
date of receipt by Borrower or any of its Subsidiaries of such Net Asset Sale
Proceeds, and such Net Asset Sale Proceeds may not be reinvested as otherwise
permitted by Section 2.14(a).”

(x) Section 5 of the Credit Agreement is hereby amended by adding the following
new Section 5.18 immediately following Section 5.17 thereof as follows:

“5.18. Lender Meetings. In the event that, at any time after the First Amendment
Effective Date, Borrower delivers to Administrative Agent, Lead Arranger or any
Lender financial statements pursuant to Section 5.1(b) demonstrating that the
Leverage Ratio for the twelve (12) month period ending on the last day of the
applicable Fiscal Quarter is greater than 4.00 to 1.00, upon the request of
Administrative Agent or Requisite Lenders, within five (5) days after receipt by
Administrative Agent, Lead Arranger or such Lender, as the case may be, of such
financial statements, Administrative Agent or Requisite Lenders may request
Borrower to conduct a conference call with Administrative Agent, Lead Arranger
and any Lenders who desire to participate therein to discuss the most recently
reported financial results and the financial condition of Borrower and its
Subsidiaries, on which call shall be present the chief financial officer and
such other officers of the Credit Parties as may be reasonably requested to
attend by Administrative Agent or Requisite Lenders. Such conference calls shall
be held at a time convenient to Administrative Agent, such Requisite Lenders and
Borrower.”

(y) Section 6.1(b) of the Credit Agreement is hereby deleted in its entirety and
the following is substituted in lieu thereof:

“(b) Investments permitted pursuant to Section 6.7(d);”.

(z) Section 6.1(k) of the Credit Agreement is hereby amended by deleting the
words “all principal payments” appearing in clause (i)(B) thereof and
substituting the words “the amount of the Required Equity Issuance Mandatory
Prepayment (as defined in the First Amendment Agreement) in respect of principal
and all other principal payments” in lieu thereof.

 

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(aa) Section 6.1(m) of the Credit Agreement is hereby deleted in its entirety
and the following is substituted in lieu thereof:

“(m) from the Closing Date, through and including the date that is the earlier
of (i) the date of the Existing Headquarters Asset Sale and (ii) October 24,
2012, the Existing Headquarters Loan and the Existing Headquarters Guaranty;
provided that such Existing Headquarters Loan shall be repaid in cash in full on
the earlier of (x) the date of the Existing Headquarters Asset Sale and
(y) October 24, 2012; provided, further, that the Existing Headquarters Guaranty
shall be cancelled and released upon the repayment in full of the Existing
Headquarters Loan; and”.

(bb) Section 6.1 of the Credit Agreement is hereby further amended by
(i) deleting the word “and” at the end of clause (l) thereof and (ii) adding a
new clause (n) thereto immediately following clause (m) thereof as follows:

“(n) unsecured Indebtedness of Borrower and its Subsidiaries not to exceed
$35,000,000 in aggregate principal amount at any time outstanding which is
subordinated to the Obligations in a manner reasonably satisfactory to Lead
Arranger; provided that, immediately prior to the incurrence of any such
Indebtedness, the Leverage Ratio, as determined of the last day of the
immediately preceding Fiscal Quarter with respect to which Borrower has
delivered to Administrative Agent, Lead Arranger and Lenders the financial
statements required pursuant to Section 5.1(b), for the twelve (12) month period
ending on such date, is less than 4.00 to 1.00.”

(cc) Section 6.2(p) of the Credit Agreement is hereby amended by deleting the
words “June 30, 2008” in each place appearing therein and substituting the words
“October 24, 2012” in lieu thereof.

(dd) Section 6.5(b) of the Credit Agreement is hereby deleted in its entirety
and the following is substituted in lieu thereof:

“(c) from the Closing Date, through and including the date that is the earlier
of (x) the Existing Headquarters Asset Sale and (y) October 24, 2012, Borrower
may make (i) payments in respect of the Indebtedness outstanding under the
Existing Headquarters Loan (as in effect on Existing Headquarters Mortgage
Modification Effective Date, after giving effect to the Existing Headquarters
Mortgage Modification) in accordance with the terms thereof and (ii) a single
voluntary prepayment of principal (and accrued interest) in respect of the
Indebtedness outstanding under the Existing Headquarters Loan (as in effect on
the Existing Headquarters Mortgage Modification Effective Date, after giving
effect to the Existing Headquarters Mortgage Modification) (A) with the proceeds
of the Existing Headquarters Asset Sale and/or (B) with Cash on hand or with the
proceeds of a “Revolving Loan” under and as defined in the First Lien Credit
Agreement; provided, in each case, that Borrower shall promptly comply with its
obligations under Section 5.11.”

(ee) Section 6.7(b) of the Credit Agreement is hereby deleted in its entirety
and the following is substituted in lieu thereof:

“(b)(i) equity Investments owned by Borrower and its Subsidiaries as of the
First Amendment Effective Date in any Subsidiary, (ii) Investments described in
clauses (i) and (ii) of the definition thereof made after the Closing Date in
any wholly-owned

 

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Guarantor Subsidiary, (iii) Investments described in clauses (i) and (ii) of the
definition thereof made after the Closing Date by any Foreign Subsidiary of
Borrower in another Foreign Subsidiary of Borrower, and (iv) Investments
described in clauses (i) and (ii) of the definition thereof made by Borrower or
any Domestic Subsidiary of Borrower in Foreign Subsidiaries of Borrower,
provided that, before and after giving effect to each such Investment made
pursuant to this clause (iv) on or after the First Amendment Effective Date, the
aggregate amount of all Investments, determined on a net basis, made pursuant to
this clause (iv) on or after the First Amendment Effective Date plus the
outstanding principal balance of all Investments made pursuant to
Section 6.7(d)(iii) on or after the First Amendment Effective Date shall not
exceed $10,000,000;”.

(ff) Section 6.7(d) of the Credit Agreement is hereby deleted in its entirety
and the following is substituted in lieu thereof:

“(d) Investments described in clause (iii) of the definition thereof by (i) any
Domestic Subsidiary of Borrower or Borrower to any other Domestic Subsidiary of
Borrower (other than GretagMacbeth, LLC) or Borrower; (ii) any Foreign
Subsidiary to Borrower or any Subsidiary of Borrower; (iii)(x) Borrower or any
Domestic Subsidiary of Borrower to Foreign Subsidiaries of Borrower outstanding
on the First Amendment Effective Date, and (y) Borrower or any Domestic
Subsidiary of Borrower to Foreign Subsidiaries of Borrower on or after the First
Amendment Effective Date, provided that, before and after giving effect to each
such Investment made on or after the First Amendment Effective Date, the
aggregate outstanding principal balance of all Investments made pursuant to this
clause (iii)(y) on or after the First Amendment Effective Date plus the
aggregate amount of all Investments, determined on a net basis, made pursuant to
Section 6.7(b)(iv) on or after the First Amendment Effective Date shall not
exceed $10,000,000; or (iv) a Foreign Subsidiary of Borrower to another Foreign
Subsidiary of Borrower; provided that (A) all such Investments permitted
pursuant to clauses (i), (ii) and (iii) of this Section 6.7(d), if constituting
Indebtedness, shall be evidenced by promissory notes, (B) all such notes
evidencing such Investments shall be subject to a Second Priority Lien pursuant
to the Pledge and Security Agreement, and (C) all such Investments, if
constituting Indebtedness, shall be unsecured and, if owed by a Credit Party,
subordinated in right of payment to the payment in full of the Obligations
pursuant to the terms of any applicable promissory notes or an intercompany
subordination agreement that, in any such case, is reasonably satisfactory to
Lead Arranger and Requisite Lenders;”.

(gg) Section 6.8(a) of the Credit Agreement is hereby deleted in its entirety
and the following is substituted in lieu thereof:

(a) Interest Coverage Ratio. Borrower shall not permit the Interest Coverage
Ratio as of the last day of any Fiscal Quarter ending closest to the dates set
forth below, beginning with the Fiscal Quarter ending closest to December 31,
2008, to be less than the correlative ratio indicated in the following table:

 

Fiscal Quarter Ended

   Interest Coverage
Ratio

December 31, 2008

   1.40 to 1.00

March 31, 2009

   1.50 to 1.00

June 30, 2009

   1.60 to 1.00

September 30, 2009

   1.70 to 1.00

December 31, 2009

   1.80 to 1.00

March 31, 2010 and the last day of each Fiscal Quarter ending thereafter

   1.90 to 1.00

 

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(hh) Section 6.8(b) of the Credit Agreement is hereby deleted in its entirety
and the following is substituted in lieu thereof:

(b) Leverage Ratio. Borrower shall not permit the Leverage Ratio as of the last
day of any Fiscal Quarter ending closest to the dates set forth below, beginning
with the Fiscal Quarter ending closest to December 31, 2008, to exceed the
correlative ratio indicated in the following table:

 

Fiscal Quarter Ended

   Leverage Ratio

December 31, 2008

   6.00:1.00

March 31, 2009

   6.00:1.00

June 30, 2009

   5.75:1.00

September 30, 2009

   5.50:1.00

December 31, 2009

   5.25:1.00

March 31, 2010

   5.13:1.00

June 30, 2010

   5.00:1.00

September 30, 2010

   4.88:1.00

December 31, 2010

   4.75:1.00

March 31, 2011

   4.63:1.00

June 30, 2011

   4.50:1.00

September 30, 2011

   4.38:1.00

December 31, 2011

   4.25:1.00

March 31, 2012

   4.13:1.00

June 30, 2012

   4.00:1.00

September 30, 2012

   3.88:1.00

December 31, 2012 and the last day of each Fiscal Quarter ending thereafter

   3.75:1.00

 

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(ii) Section 6.8(c) of the Credit Agreement is hereby deleted in its entirety
and the following is substituted in lieu thereof:

(c) Maximum Consolidated Capital Expenditures. Borrower shall not, and shall not
permit its Subsidiaries to, make or incur Consolidated Capital Expenditures, in
any Fiscal Year indicated below, in an aggregate amount for Borrower and its
Subsidiaries in excess of the corresponding amount set forth below opposite such
Fiscal Year; provided, such amount for any Fiscal Year shall be increased by an
amount equal to the excess, if any, (but in no event more than $4,000,000) of
such amount for the previous Fiscal Year (as adjusted in accordance with this
proviso) over the actual amount of Consolidated Capital Expenditures for such
previous Fiscal Year:

 

Fiscal Year

   Consolidated
Capital
Expenditures

2008

   $ 12,500,000

2009

   $ 13,500,000

2010 and each Fiscal Year thereafter

   $ 14,500,000

(jj) Section 6.8(d) of the Credit Agreement is hereby deleted in its entirety
and the following is substituted in lieu thereof:

“(d) Intentionally Omitted.”

(kk) Section 6.9(f) of the Credit Agreement is hereby deleted in its entirety
and the following is substituted in lieu thereof:

“(f) Permitted Acquisitions; provided that (i) the total consideration paid or
payable (including without limitation, any deferred payment) for all Permitted
Acquisitions consummated after the First Amendment Effective Date shall not
exceed $60,000,000 in the aggregate plus amounts paid with equity the issuance
of which is permitted hereunder or Cash equity proceeds not required to be used
to prepay Loans pursuant to the terms hereof, and (ii) subject to the other
terms and provisions hereof, Borrower may make such Permitted Acquisitions with
Cash of Borrower and its Subsidiaries, proceeds of revolving loans under the
First Lien Credit Agreement and other Indebtedness permitted hereunder, so long
as the aggregate amount of all such Cash of Borrower and its Subsidiaries,
proceeds of revolving loans under the First Lien Credit Agreement and other
Indebtedness permitted hereunder does not exceed $15,000,000 for all such
Permitted Acquisitions during the term of this Agreement (or, to the extent that
the aggregate amount of all such Cash, proceeds of revolving loans under the
First Lien

 

23

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Credit Agreement and other Indebtedness permitted hereunder exceeds $15,000,000,
so long as after giving pro forma effect to the incurrence of such Indebtedness
and the consummation of the applicable Permitted Acquisition, the Leverage
Ratio, as determined of the last day of the immediately preceding Fiscal Quarter
with respect to which Borrower has delivered to Administrative Agent, Lead
Arranger and Lenders the financial statements required pursuant to
Section 5.1(b)(ii), for the twelve (12) month period ending on such date, is
less than 4.50 to 1.00;”.

(ll) Section 6.12 of the Credit Agreement is hereby amended by (i) deleting the
words “such a holder or Affiliate” appearing therein and substituting the words
“an Affiliate” in lieu thereof, (ii) inserting the words “or board observers”
immediately after the words “(or similar governing body)” appearing in clause
(b) thereof, (iii) deleting the word “and” at the end of clause (c) thereof and
(iv) adding a new clause (e) thereto immediately following clause (d) thereof as
follows: “; and (e) any transaction between Borrower and any of its Subsidiaries
and any Subsidiary of Borrower that is expressly permitted hereunder”.

(mm) Section 6.14 of the Credit Agreement is hereby deleted in its entirety and
the following is substituted in lieu thereof:.

“6.14 Amendments or Waivers of Related Agreements. Except (a) pursuant to the
terms and provisions of the First Amendment Agreement and the Intercreditor
Reaffirmation and Amendment and (b) in the case of the First Lien Credit
Documents, as otherwise provided in the Intercreditor Agreement (as amended by
the Intercreditor Reaffirmation and Amendment), no Credit Party shall nor shall
it permit any of its Subsidiaries to agree to any material amendment,
restatement, supplement or other modification to, or waiver of, any of its
material rights under any Related Agreement after the date hereof without in
each case obtaining the prior written consent of Requisite Lenders to such
amendment, restatement, supplement or other modification or waiver.”

(nn) Section 6.15 of the Credit Agreement is hereby amended by (i) deleting the
words “No Credit Party” appearing at the beginning thereof and (ii) substituting
the words “Except pursuant to the terms and provisions of the Existing
Headquarters Mortgage Modification, no Credit Party” in lieu thereof.

(oo) Exhibit C to the Credit Agreement is hereby deleted in its entirety and a
revised Exhibit C attached hereto as Exhibit D is substituted in lieu thereof.

Section 5. Conditions to Effectiveness of this Agreement.

This Agreement shall become effective (the date of such effectiveness being
referred to herein as the “Forbearance Effective Date”) upon satisfaction in a
manner reasonably satisfactory to Lead Arranger and Requisite Lenders of each of
the following conditions:

(a) Administrative Agent shall have (i) signed this Agreement, (ii) received
counterparts of this Agreement executed by the Credit Parties and (iii) notified
the parties hereto that it has received counterparts of this Agreement executed
by Requisite Lenders;

 

24

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(b) Lead Arranger shall have received (i) a copy of a fully executed agreement
effecting, with necessary conforming changes, the terms and provisions of this
Agreement with respect to the First Lien Credit Documents (the “Corresponding
First Lien Agreement”) in the form attached hereto as Exhibit E, (ii) a fully
executed copy of each of the Investment Agreements (and each such Investment
Agreement shall have been executed and delivered by each of the respective
parties thereto and shall have become effective in accordance with its
respective terms) and (iii) a certificate of an Authorized Officer of Borrower
substantially in the form attached hereto as Exhibit F-1, dated as of the
Forbearance Effective Date, confirming satisfaction of the conditions precedent
set forth in Sections 5(d), 5(e) and 5(f) and in Sections 5(d), 5(e), 5(f) and
5(g) of the Corresponding First Lien Agreement;

(c) Lead Arranger shall have received a fully executed original of the Consent,
Reaffirmation and First Amendment to Intercreditor Agreement executed by the
First Lien Collateral Agent, Collateral Agent, Borrower and the other Credit
Parties (the “Intercreditor Reaffirmation and Amendment”) in the form attached
hereto as Exhibit G;

(d) Borrower shall have paid all fees then due and payable to the Agents and
Lead Arranger pursuant to the Credit Documents and, to the extent invoiced by
Lead Arranger not less than two (2) Business Days prior to the Forbearance
Effective Date, shall have reimbursed the Agents and Lead Arranger for all
reasonable costs and expenses incurred by Agents and Lead Arranger in connection
with this Agreement, including, without limitation, the preparation, negotiation
and execution of this Agreement (including reasonable attorney’s fees of counsel
to the Agents and Lead Arranger) and all actual costs and expenses of the
consultants or financial advisors employed or retained by the Agents and Lead
Arranger, on behalf of the Lenders, in connection with the restructuring of the
Loans and the negotiation of this Agreement; and

(e) Borrower shall have paid (and Borrower hereby covenants and agrees to pay)
to Administrative Agent in immediately available Dollars, for the account of
each Lender that has delivered an executed signature page to this Agreement on
or prior to the date hereof (each, a “Signing Lender”), a fee in an amount equal
to one-half of one percent (0.50%) of each such Signing Lender’s Loan Exposure
as of the Forbearance Effective Date, which fee shall be non-refundable for any
reason and fully earned and payable as of the date hereof; and

(f) the accuracy of the representations and warranties contained in Section 7
hereof.

Section 6. Conditions to Effectiveness of Waiver of Designated Defaults and
Amendments to the Credit Agreement. Notwithstanding anything to the contrary set
forth herein, the waiver of each of the Designated Defaults set forth in
Section 3, and the respective amendments to the Credit Agreement set forth in
Section 4, in each case shall become effective (the date of such effectiveness
being referred to herein as the “First Amendment Effective Date”) upon
satisfaction in a manner reasonably satisfactory to Lead Arranger and Requisite
Lenders of each of the following conditions:

(a) the Forbearance Termination Date shall not have occurred;

 

25

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(b) Lead Arranger shall have received a certificate of an Authorized Officer of
Borrower substantially in the form attached hereto as Exhibit F-2, dated as of
the First Amendment Effective Date, confirming satisfaction of the conditions
precedent set forth in Sections 6(a), 6(d) (to the extent applicable), 6(e),
6(f), 6(g), 6(h), 6(i), 6(j) and 6(k) and in Sections 6(a), 6(d) (to the extent
applicable), 6(e), 6(f), 6(g), 6(h), 6(i), 6(j), 6(k) and 6(l) of the
Corresponding First Lien Agreement;

(c) Lead Arranger shall have received evidence satisfactory to Lead Arranger and
Requisite Lenders that (i) the Required Equity Issuance has been consummated in
accordance with the terms and provisions of the respective Investment
Agreements, this Agreement and applicable law, (ii) the Required Gross Proceeds
are not less than $125,000,000, (iii) Required Gross Proceeds in an amount
necessary to pay and satisfy in full all Restructuring Transaction Costs shall
be applied substantially contemporaneously with receipt thereof by of for the
account of Borrower in payment of the Initial Equity Issuance Payment, the
Goldman Hedge Payoff Amount, the Existing Headquarters Loan Repayment Amount,
the First Lien Lender Fees and the Second Lien Lender Fees, in each case to the
extent and in the manner contemplated by this Agreement, (iv) the Net Cash
Proceeds from Required Equity Issuance have been applied on account of the
Required Equity Issuance Mandatory Prepayment and the Initial Second Lien
Prepayment, in each case to the extent and in the manner contemplated by this
Agreement, and (v) all conditions set forth in this Section 6 have been
satisfied;

(d) if the Life Insurance Policy Sale was consummated after the Forbearance
Effective Date, Borrower shall have made a mandatory prepayment of the First
Lien Term Loans with the Net Asset Sale Proceeds of such sale (other than the
Retained Insurance Proceeds) pursuant to Section 2.14 of the First Lien Credit
Agreement to the extent and in the manner contemplated by the Corresponding
First Lien Agreement;

(e) Borrower shall have delivered to Lead Arranger (i) a certificate of the
Secretary or an Assistant Secretary of each of the Credit Parties certifying
(A) the names and true signatures of the officers of each of the Credit Parties
authorized to sign this Agreement and the other documents to be delivered
hereunder and (B) the resolutions of the board of directors (or other governing
authority) of the Credit Parties evidencing approval for this Agreement, and the
Credit Agreement, as amended hereby, and (ii) originally executed copies of the
favorable opinions of counsel to the Credit Parties (which counsel shall be
reasonably satisfactory to Lead Arranger) with respect to such matters as Lead
Arranger may reasonably request, dated as of the First Amendment Effective Date
and otherwise in form and substance reasonably satisfactory to Lead Arranger
(and each Credit Party hereby instructs such counsel to deliver such opinions to
Agents and Lenders);

(f) Borrower shall have delivered to Lead Arranger a certificate executed by an
Authorized Officer of Borrower in form and substance reasonably satisfactory to
Lead Arranger and Requisite Lenders certifying that the Consolidated Adjusted
EBITDA for the Fiscal Quarter ended June 30, 2008 is not less than $15,000,000;

(g) Borrower shall have paid (and Borrower hereby covenants and agrees to pay)
to Administrative Agent in immediately available Dollars, for the account of
each Signing Lender, a fee in an amount equal to one-half of one percent (0.50%)
of such Signing Lender’s

 

26

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Loan Exposure as of the First Amendment Effective Date after giving effect to
any repayment of the Loans to be made on the First Amendment Effective Date
(such fee, together with the fees referred to in Section 5(e), the “Second Lien
Lender Fees”), which fee shall be non-refundable for any reason and fully earned
and payable as of the First Amendment Effective Date;

(h) Borrower shall have paid all fees then due and payable to the Agents and
Lead Arranger pursuant to the Credit Documents and, to the extent invoiced by
Lead Arranger not less than two (2) Business Days prior to the First Amendment
Effective Date, shall have reimbursed the Agents and Lead Arranger for all
reasonable costs and expenses incurred by the Agents and Lead Arranger in
connection with this Agreement, including, without limitation, the preparation,
negotiation and execution of this Agreement (including reasonable attorney’s
fees of counsel to the Agents and Lead Arranger) and all actual costs and
expenses of the consultants or financial advisors employed or retained by the
Agents and Lead Arranger, on behalf of the Lenders, in connection with the
restructuring of the Loans and the negotiation of this Agreement;

(i) the accuracy of the representations and warranties contained in Section 7
hereof;

(j) Borrower shall have delivered to Collateral Agent and Lead Arranger (i) an
updated Collateral Questionnaire, dated as of the First Amendment Effective Date
and executed by each Credit Party and (ii) a certificate of an Authorized
Officer of Borrower certifying that all Uniform Commercial Code financing
statements (including fixtures filings, as applicable) and all supplemental
intellectual property security agreements or other appropriate filings,
recordings or registrations, have been filed (or will be filed on the First
Amendment Effective Date) of record in each governmental, municipal or other
appropriate office in each jurisdiction identified pursuant to clause (i) above
to the extent reasonably necessary to effect, protect and perfect the security
interests under the Collateral Documents for a period of not less than 18 months
after the date of such certificate (except as noted therein with respect to any
continuation statements to be filed within such period) or as reasonably
required by Lead Arranger;

(k) after giving effect to Section 3 of this Agreement, no Default or Event of
Default under the Credit Agreement, as amended hereby, shall have occurred and
be continuing; and

(l) the Existing Headquarters Mortgage Modification shall have become effective.

Lead Arranger agrees that, upon receipt by Lead Arranger of: (a) a certificate
of an Authorized Officer of Borrower certifying that, subject to (i) the
application of the Net Cash Proceeds from Required Equity Issuance in payment of
the Required Equity Issuance Mandatory Prepayment and the Initial Second Lien
Prepayment, in each case to the extent and in the manner contemplated by this
Agreement, and (ii) the funding by the Equity Investors of the Required Gross
Proceeds and the application thereof to the payment and satisfaction in full of
the Initial Equity Issuance Payment, the Goldman Hedge Payoff Amount, the
Existing Headquarters Loan Repayment, the First Lien Lender Fees and the Second
Lien Lender Fees, in each case to the extent and in the manner contemplated by
this Agreement, Borrower has satisfied the conditions

 

27

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set forth in this Section 6 required to be satisfied by Borrower; (b) all
documents required to be delivered by Borrower to Lead Arranger pursuant to this
Section 6, in each case in form and substance conforming to the requirements
with respect thereto set forth in this Section 6, as reasonably determined by
Lead Arranger; and (c) a funds flow describing the sources and uses of the
Required Gross Proceeds and the Net Cash Proceeds from Required Equity Issuance,
respectively, that are consistent with the sources and uses of the Required
Gross Proceeds and the Net Cash Proceeds from Required Equity Issuance consented
to and otherwise contemplated by the terms and provisions of this Agreement,
Lead Arranger shall deliver written notice to Borrower and OEP confirming that
(x) the documents delivered pursuant to clause (b) of this paragraph are each in
form and substance satisfactory to Lead Arranger (so long as such documents are,
in fact, in form and substance reasonably satisfactory to Lead Arranger), and
(y) upon satisfaction of the requirements set forth in clauses (a)(i) and
(a)(ii) in this paragraph, and in reliance on the certificate of the Authorized
Officer of Borrower described in clause (a) above, the First Amendment Effective
Date will occur.

Section 7. Representations and Warranties. To induce the Agents and the Lenders
to enter into this Agreement, each Credit Party hereby represents and warrants
to the Agents and Lenders that (i) as of the date hereof (in the case of each of
such representations and warranties, other than those set forth in clause
(a) below) and (ii) as of the First Amendment Effective Date (in the case of all
such representations and warranties):

(a) After giving effect to Sections 2, 3 and 4 of this Agreement, each of the
representations and warranties made by such Credit Party contained in the Credit
Documents are true and correct in all material respects (without duplication of
any materiality qualifier contained therein) as of such date, except to the
extent such representation or warranty expressly relates to an earlier date (in
which case, such representations and warranties were true and correct in all
material respects (without duplication of any materiality qualifier contained
therein) as of such earlier date);

(b) such Credit Party has all requisite corporate or limited liability company,
as applicable, power and authority to execute, deliver and perform its
obligations under this Agreement and the Credit Agreement, as amended hereby;

(c) the execution, delivery and performance by such Credit Party of this
Agreement and the Credit Agreement, as amended hereby, have been duly authorized
by all necessary action by such Credit Party;

(d) the execution, delivery and performance by such Credit Party of this
Agreement, and the Credit Agreement, as amended hereby, and the consummation of
the transactions contemplated hereby, do not and will not (i) violate any
provision of any law or any governmental rule or regulation applicable to
Borrower or any of its Subsidiaries, any of the Organizational Documents of
Borrower or any of its Subsidiaries, or any order, judgment or decree of any
court or other agency of government binding on Borrower or any of its
Subsidiaries, except to the extent that any such violations could not singly or
in the aggregate reasonably be expected to have a Material Adverse Effect;
(ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any Contractual

 

28

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Obligation of Borrower or any of its Subsidiaries, except to the extent that any
such conflicts, breaches or defaults could not singly or in the aggregate
reasonably be expected to have a Material Adverse Effect; (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Borrower or any of its Subsidiaries (other than any Liens created
under any of the Credit Documents in favor of Collateral Agent, on behalf of
Secured Parties); or (iv) require any approval of stockholders, members or
partners or any approval or consent of any Person under any Contractual
Obligation of Borrower or any of its Subsidiaries, except for such approvals or
consents that were obtained on or before the date hereof and disclosed in
writing to Administrative Agent except for any such approvals or consents the
failure of which to obtain could not singly or in the aggregate reasonably be
expected to have a Material Adverse Effect;

(e) this Agreement constitutes, and the Credit Agreement, as amended hereby, on
the First Amendment Effective Date shall constitute, the legal, valid and
binding obligation of such Credit Party, enforceable against such Person in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles relating to enforceability; and

 

  (f) no Default or Event of Default presently exists, other than the Designated
Defaults.

Section 8. Reference and Effect on the Credit Documents.

(a) On and after the Amendment Closing Date each reference in the Credit
Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import
referring to the Credit Agreement, and each reference in the Notes and the other
Credit Documents to the “Credit Agreement”, shall mean and be a reference to the
Credit Agreement, as amended or otherwise modified hereby.

(b) The Credit Agreement, the Notes and each of the other Credit Documents, as
specifically amended or otherwise modified by this Agreement, are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed.

(c) The execution, delivery and effectiveness of this Agreement shall not,
except as expressly provided herein, operate as a waiver of any right, power or
remedy of any Lender or the Agents under any of the Credit Documents, nor
constitute a waiver of any provision of any of the Credit Documents. The Credit
Agreement and the other Credit Documents are in full force and effect and are
hereby in all respects ratified and confirmed.

(d) Except as expressly set forth herein, nothing contained in this Agreement
and no action by, or inaction on the part of, any Lender or the Agent shall, or
shall be deemed to, directly or indirectly constitute a consent to or waiver of
any past, present or future violation of any provisions of the Credit Agreement
or any other Credit Document.

(e) This Agreement is a Credit Document.

 

29

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Section 9. Amendments; Successors and Assigns.

No amendment, modification, termination or waiver of any provision of this
Agreement, or consent to any departure by any Credit Party therefrom, shall in
any event be effective without the written concurrence of Administrative Agent,
Collateral Agent and the Requisite Lenders and, in the case of any such
amendment or modification, each of the Credit Parties. This Agreement shall be
binding upon the parties hereto and their respective successors and assigns and
shall inure to the benefit of the parties hereto and the successors and assigns
of Lenders. No Credit Party’s rights or obligations hereunder nor any interest
therein may be assigned or delegated to any other Person by any Credit Party
without the prior written consent of Administrative Agent, Collateral Agent and
the Requisite Lenders.

Section 10. Tolling of Statute of Limitations.

Each and every statute of limitations or other applicable law, rule or
regulation governing the time by which any Agent or any Lender must commence
legal proceedings or otherwise take any action with respect to exercising any of
its respective rights, powers or remedies directly or indirectly against the
Credit Parties with respect to any breach or default existing on or prior to the
Forbearance Termination Date, including, without limitation, actions under or in
respect of the Credit Agreement or any of the other Credit Documents, shall be
tolled while this Agreement is effective. Each Credit Party agrees, to the
fullest extent permitted by law, not to include such period of time in any
assertion by it at any time that a statute of limitations or other applicable
law, rule or regulation bars or otherwise acts as a defense (whether equitable
or legal) to any legal proceeding or other action by any Agent or any Lender in
exercise of its respective rights, powers or remedies, directly or indirectly,
with respect to any or all of the breaches or defaults referred to in the
immediately preceding sentence.

Section 11. Agreement Not a Defense.

Each Credit Party agrees that, subject to the Forbearance, the waiver of the
Designated Defaults set forth in Section 3 hereof and the other terms and
provisions of this Agreement, the agreements of the Agents and Lenders under
this Agreement shall not constitute a defense by the Credit Parties to the
exercise by any Agent or any Lender of any right, power or remedy which such
Person may have under or in respect of the Credit Agreement or any of the other
Credit Documents and any other agreement or document relating thereto (and
including rights, powers and remedies at law, in equity or by statute).

Section 12. GOVERNING LAW AND JURISDICTION.

(a) GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES THEREOF.

 

30

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

(b) SUBMISSION TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY
CREDIT PARTY ARISING OUT OF OR RELATING HERETO MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW
YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH CREDIT PARTY, FOR ITSELF
AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND
UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (B) WAIVES
ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN
ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE CREDIT PARTY AT ITS ADDRESS
PROVIDED IN ACCORDANCE WITH SECTION 10.1 OF THE CREDIT AGREEMENT; (D) AGREES
THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER PERSONAL
JURISDICTION OVER THE APPLICABLE CREDIT PARTY IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT;
AND (E) AGREES THAT AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY CREDIT PARTY
IN THE COURTS OF ANY OTHER JURISDICTION.

SECTION 13. Miscellaneous.

(a) Further Assurances. At any time and from time to time, upon the request of
any Agent or Requisite Lenders, each Credit Party will, at its expense, promptly
execute, acknowledge and deliver all such further documents and do such other
acts and things as such Agent or Requisite Lenders, as the case may be, may
reasonably request in order to effect fully the purposes of this Agreement.

(b) Consent of Guarantors. Each of the Guarantors of the Obligations of Borrower
under the Credit Agreement that is a party to this Agreement hereby (a) consents
to the terms and provisions hereof, (b) acknowledges that notwithstanding the
execution and delivery hereof, the obligations of each of such Guarantor are not
impaired or affected and its Guaranty continues in full force and effect, and
(c) ratifies, confirms and reaffirms its Guaranty and each of the Credit
Documents to which it is a party.

(c) Reaffirmation. Each of the Credit Parties as debtor, grantor, pledgor,
guarantor, assignor, or in other any other similar capacity in which such Credit
Party grants liens or security interests in its property or otherwise acts as
accommodation party or guarantor, as the case may be, hereby (i) ratifies and
reaffirms all of its payment and performance obligations, contingent or
otherwise, under each of the Credit Documents to which it is a party (after
giving effect hereto) and (ii) to the extent such Credit Party granted liens on
or security interests in any of its property pursuant to any such Credit
Document as security for or otherwise guaranteed Borrower’s Obligations under or
with respect to the Credit Documents, ratifies and reaffirms such guarantee and
grant of security interests and liens and confirms and agrees that such security
interests and liens hereafter secure all of the Obligations as amended hereby.

 

31

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(d) Release of Claims. In consideration of the Lenders’ and the Agents’
agreements contained in this Agreement, each Credit Party hereby irrevocably
releases and forever discharge each of the Agents, Lenders, and their respective
affiliates, subsidiaries, successors, assigns, directors, officers, employees,
agents, consultants and attorneys (each, a “Released Person”) of and from any
and all claims, suits, actions, investigations, proceedings or demands, whether
based in contract, tort, implied or express warranty, strict liability, criminal
or civil statute or common law of any kind or character, which such Credit Party
ever had or now has against any Agent, any Lender or any other Released Person
which relates, directly or indirectly, to any acts or omissions of any Agent,
any Lender or any other Released Person relating to the Credit Agreement or any
other Credit Document on or prior to the date hereof and actually known to such
Credit Party as of the date hereof (it being understood and agreed that nothing
herein shall affect the continued effectiveness of the indemnity provisions set
forth in Section 10.3 of the Credit Agreement).

(e) No Waiver, Etc. Except as otherwise expressly set forth herein, nothing in
this Agreement is intended or shall be deemed or construed to extend to or
affect in any way any of the Obligations or any of the rights and remedies of
any Agent or any Lender arising under the Credit Agreement, any of the other
Credit Documents or applicable law. The failure of any Agent or any Lender at
any time or times hereafter to require strict performance by any Credit Party or
any other Person obligated under any Credit Document of any of the respective
provisions, warranties, terms and conditions contained herein or therein shall
not waive, affect or diminish any right of such Person at any time or times
thereafter to demand strict performance thereof; and no rights of any Agent or
any Lender hereunder shall be deemed to have been waived by any act or knowledge
of such Person, or any of its agents, attorneys, officers or employees, unless
such waiver is contained in an instrument in writing signed by an authorized
officer of such Person and specifying such waiver. Except as otherwise expressly
set forth herein, no waiver by any Agent or any Lender of any of its rights or
remedies shall operate as a waiver of any other of its rights or remedies or any
of its rights or remedies on a future occasion at any time and from time to
time. All terms and provisions of the Credit Agreement and each of the other
Credit Documents remain in full force and effect, except to the extent expressly
modified by this Agreement.

(f) Execution in Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
such counterparts taken together shall be deemed to constitute one and the same
instrument. Any party hereto may execute and deliver a counterpart of this
Agreement by delivering by facsimile transmission or electronic mail in portable
document format a signature page of this Agreement signed by such party, and
such signature shall be treated in all respects as having the same effect as an
original signature.

(g) Acknowledgment of Legal Counsel; Drafting of Agreement. Each Credit Party
represents and warrants that it is represented by legal counsel of its choice,
is fully aware of the terms contained in this Agreement and has voluntarily and
without coercion or duress of any kind whatsoever, entered into this Agreement
and the agreements, documents and instruments, if any, executed in connection
with this Agreement. Each Credit Party further represents and warrants and
acknowledges and agrees that it has participated in the drafting of this
Agreement.

 

32

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(h) Severability. The invalidity, illegality or unenforceability of any
provision in or obligation under this Agreement in any jurisdiction shall not
affect or impair the validity, legality or enforceability of the remaining
provisions or obligations under this Agreement or of such provision or
obligation in any other jurisdiction.

(i) No Third Party Beneficiaries. This Agreement shall be binding upon and inure
to the benefit of each party hereto and their respective successors and assigns.
No Person other than the parties hereto, their respective successors and assigns
and any other Lender shall have rights hereunder or be entitled to rely on this
Agreement, and all third-party beneficiary rights are hereby expressly
disclaimed.

(j) Section Titles. The section and subsection titles contained in this
Agreement are included for convenience only, shall be without substantive
meaning or content of any kind whatsoever, and are not a part of the agreement
between the Agents and the Lenders, on the one hand, and the Credit Parties on
the other hand. Any reference in this Agreement to any “Section” refers, unless
the context otherwise indicates, to a section of this Agreement.

[Signature Pages Follow]

 

33

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EXECUTION VERSION

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.

 

BORROWER: X-RITE, INCORPORATED, a Michigan corporation, as Borrower By:   /s/
Thomas J. Vacchiano, Jr. Name:   Thomas J. Vacchiano, Jr. Its:   Chief Executive
Officer

 

OTHER CREDIT PARTIES: OTP, INCORPORATED, a Michigan corporation MONACO
ACQUISITION COMPANY, a Michigan corporation X-RITE GLOBAL, INCORPORATED, a
Michigan corporation X-RITE HOLDINGS, INC., a Michigan corporation X-RITE MA,
INCORPORATED, a Michigan corporation HOLOVISION ACQUISITION COMPANY, a Michigan
corporation XR VENTURES, LLC, a Michigan limited liability company
GRETAGMACBETH, LLC, a Delaware limited liability company PANTONE, INC., a
Delaware corporation PANTONE ASIA, INC., a Delaware corporation PANTONE GERMANY,
INC., a Delaware corporation PANTONE INDIA, INC., a Delaware corporation PANTONE
JAPAN, INC., a Delaware corporation PANTONE U.K., INC., a Delaware corporation
By:   /s/ Thomas J. Vacchiano, Jr Name:   Thomas J. Vacchiano, Jr. Title:  
President

[Signature Page to Second Lien Forbearance Agreement]

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

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.

 

THE BANK OF NEW YORK MELLON (f/k/a The Bank of New York), as Administrative
Agent and Collateral Agent By:   /s/ Robert D. Hingston Name:   Robert D.
Hingston Title:   Vice President

[Signature Page to Second Lien Forbearance Agreement]

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

IN WITNESS WHEREOF, the undersigned has executed and delivered this Agreement as
of July 31, 2008 (it being acknowledged that such effective date shall not
affect any representations, warranties or other rights of any of the parties to
this Agreement).

 

ABLECO FINANCE LLC, as a Lender By:   /s/ Daniel E. Wolf Name:   Daniel E. Wolf
Title:   President

[Signature Page to Second Lien Forbearance Agreement]

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

ARES CAPITAL CORPORATION, as a Lender By:   /s/ R. Kipp deVeer Name:   R. Kipp
deVeer Title:   Authorized Signatory

 

ARCC COMMERCIAL LOAN TRUST 2006, as a Lender By:   /s/ Michael Arougheti Name:  
Michael Arougheti Title:   President

[Signature Page to Second Lien Forbearance Agreement]

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

Denali Capital LLC, managing member of

DC Funding Partners LLC, portfolio manager for

DENALI CAPITAL CLO VII, LTD, or an affiliate as a Lender By:   /s/ John P.
Thacker Name:   John P. Thacker Title:   Chief Credit Officer

 

Denali Capital LLC, managing member of

DC Funding Partners LLC, portfolio manager for

DENALI CAPITAL CREDIT OPPORTUNITY FUND FINANCING, LTD., or an affiliate as a
Lender By:   /s/ John P. Thacker Name:   John P. Thacker Title:   Chief Credit
Officer

[Signature Page to Second Lien Forbearance Agreement]

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

GE BUSINESS FINANCIAL SERVICES INC., as a Lender By:   /s/ Bond Harberts Name:  
Bond Harberts Title:   Duly Authorized Signatory

[Signature Page to Second Lien Forbearance Agreement]

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

GOLDENTREE CAPITAL SOLUTIONS FUND FINANCING, as Lead Arranger and a Lender

By:   GoldenTree Asset Management, LP

By:   /s/ Barry Ritholz Name:   Barry Ritholz Title:   Vice President

 

GOLDENTREE CAPITAL OPPORTUNITIES, LP, as a Lender

By:   GoldenTree Asset Management, LP

By:   /s/ Barry Ritholz Name:   Barry Ritholz Title:   Vice President

 

GOLDENTREE MULTISTRATEGY SUBSIDIARY LLC, as a Lender

By:   GoldenTree Asset Management, LP

By:   /s/ Barry Ritholz Name:   Barry Ritholz Title:   Vice President

 

GOLDENTREE 2004 TRUST, as a Lender

By:   GoldenTree Asset Management, LP

By:   /s/ Barry Ritholz Name:   Barry Ritholz Title:   Vice President

[Signature Page to Second Lien Forbearance Agreement]

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

GOLDENTREE CAPITAL SOLUTIONS OFFSHORE FUND FINANCING, as a Lender By: GoldenTree
Asset Management, LP By:   /s/ Barry Ritholz Name:   Barry Ritholz Title:   Vice
President

 

GOLDENTREE MULTISTRATEGY FINANCING LTD, as a Lender By: GoldenTree Asset
Management, LP By:   /s/ Barry Ritholz Name:   Barry Ritholz Title:   Vice
President

[Signature Page to Second Lien Forbearance Agreement]

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

GOLUB CAPITAL MANAGEMENT CLO

2007-1, LTD, as a Lender

By:   Golub Capital Management LLC, as Collateral Manager

By:   /s/ Mike Loehrke Name:   Mike Loehrke Title:   Senior Vice President

 

GOLUB CAPITAL SENIOR LOAN OPPORTUNITY FUND, LTD., as a Lender

By:   Golub Capital Incorporated, as Collateral Manager

By:   /s/ Mike Loehrke Name:   Mike Loehrke Title:   Senior Vice President

[Signature Page to Second Lien Forbearance Agreement]

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

KOHLBERG CAPITAL FUNDING LLC I,

as a Lender

By:   /s/ Daniel Gilligan Name:   Daniel Gilligan Title:   Authorized Signatory
  Kohlberg Capital Corporation

[Signature Page to Second Lien Forbearance Agreement]

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

WELLS FARGO BANK, N.A., as a Lender By:   /s/ Peta Swidler Name:   Peta Swidler
Title:   Senior Vice President

[Signature Page to Second Lien Forbearance Agreement]

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

PANGAEA CLO 2007-1 LTD, as a Lender By:   /s/ Michael P. King Name:   Michael P.
King Title:   Senior Managing Director

[Signature Page to Second Lien Forbearance Agreement]

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

DRYDEN VII - LEVERAGED LOAN CDO 2004, as a Lender

By:   

 

Prudential Investment Management, Inc.,

as Collateral Manager

By:   /s/ Joseph Lemanowicz Name:   Joseph Lemanowicz Title:   Principal

 

DRYDEN XVIII LEVERAGED LOAN 2007 LTD., as a Lender

By:   

 

Prudential Investment Management, Inc.,

as Collateral Manager

By:   /s/ Joseph Lemanowicz Name:   Joseph Lemanowicz Title:   Principal

[Signature Page to Second Lien Forbearance Agreement]

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

SCHEDULE 1

TO

FORBEARANCE AGREEMENT AND CONSENT, WAIVER AND AMENDMENT NO. 1

TO SECOND LIEN CREDIT AND GUARANTY AGREEMENT

Dated as of August 20, 2008

DESIGNATED DEFAULTS

 

(a) Event of Default or Default under Section 8.1(e) as a result of Borrower’s
failure to deliver evidence that each of the Key Person Life Insurance Policies
has been collaterally assigned to Collateral Agent for the benefit of the
Lenders as required pursuant to Section 5.16 of the Credit Agreement within
thirty (30) days after the Closing Date;

 

(b) Event of Default or Default under Section 8.1(c) as a result of Borrower’s
failure to maintain Interest Rate Agreements required pursuant to Section 5.12
of the Credit Agreement;

 

(c) Event of Default or Default under Section 8.1(c) as a result of Borrower’s
failure to comply with Section 6.1(m) of the Credit Agreement;

 

(d) Event of Default or Default under Section 8.1(c) as a result of Borrower’s
failure to comply with Section 6.2(p);

 

(e) Event of Default or Default under Section 8.1(e) as a result of Borrower’s
failure to sell the Existing Headquarters Asset pursuant to an Existing
Headquarters Asset Sale as required under Section 5.17 of the Credit Agreement;

 

(f) Event of Default or Default under Section 8.1(e) as a result of Borrower’s
failure to deliver certain Collateral to Collateral Agent in the event gross
revenue of X-Rite GmbH exceeds $5,000,000 as required under Section 5.13(a) of
the Credit Agreement;

 

(g) Event of Default or Default under Section 8.1(e) as a result of Borrower’s
failure to either deliver evidence that X-Rite International, Inc. has been
dissolved or to deliver Collateral to Collateral Agent on or prior to
December 31, 2007 as required pursuant to Section 5.13(b) of the Credit
Agreement;

 

(h) Event of Default or Default under Section 8.1(e) as a result of Borrower’s
failure to deliver the annual Collateral verification as and when required
pursuant to Section 5.1(n) of the Credit Agreement;

 

(i) Event of Default or Default under Section 8.1(e) as a result of Borrower’s
failure to deliver the reports and other Collateral with respect to Foreign
Subsidiaries pursuant to Section 5.10(b) of the Credit Agreement within sixty
(60) days following the end of Fiscal Year 2007;

 

40

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

(j) Event of Default or Default under Section 8.1(b) as a result of Borrower’s
the early termination and acceleration of Borrower’s Existing Interest Rate
Agreements with Goldman Sachs Capital Markets, L.P. (“Goldman Sachs”) resulting
in a liability of $12,165,000 and Borrower’s failure to pay such amount to
Goldman Sachs (the “Hedge Termination”);

 

(k) Event of Default or Default Section 8.1(c) as a result of Borrower’s failure
to comply with Section 6.8(a) of the Credit Agreement for the measurement period
ending as of the last day of the Fiscal Quarter ending closest to June 30, 2008;

 

(l) Event of Default or Default under Section 8.1(c) as a result of Borrower’s
failure to comply with Section 6.8(b) of the Credit Agreement for the
measurement period ending as of the last day of the Fiscal Quarter ending
closest to March 31, 2008 and the measurement period ending as of the last day
of the Fiscal Quarter ending closest to June 30, 2008;

 

(m) Event of Default or Default under Section 8.1(c) as a result of Borrower’s
failure to comply with Section 6.8(c) of the Credit Agreement for the
measurement period ending as of the last day of the Fiscal Year ending
December 30, 2007 (to the extent that the calculation of Consolidated Capital
Expenditures for such measurement period include capitalized software);

 

(n) Event of Default or Default Section 8.1(e) as a result of Borrower’s failure
to prepare or deliver consolidating balance sheets or consolidating statements
of income, or statements of shareholders’ equity or comparison against the
Financial Plan, as required under Section 5.1(b) and (c) of the Credit Agreement
for the Fiscal Year ending December 30, 2007 and for the Fiscal Quarters ending
closest to March 31, 2008 and June 30, 2008;

 

(o) Event of Default or Default under Section 8.1(c) as a result of Borrower’s
failure to comply with Section 6.8(d) of the Credit Agreement for the
measurement period ending as of the last day of the Fiscal Quarter ending
closest to June 30, 2008;

 

(p) Event of Default or Default under Section 8.1(e) as a result of Borrower’s
failure to deliver a control agreement with respect to or close the deposit
accounts of GretagMacBeth, LLC at Bank of America as set forth in that certain
letter agreement, dated as of October 24, 2007 (the “Post-Closing Deliveries
Letter”), between Administrative Agent and Borrower;

 

(q) Event of Default or Default under Section 8.1(e) as a result of Borrower’s
failure to deliver stock certificate representing 65% of the voting Capital
Stock of the Subsidiaries (other than X-Rite Limited) identified in the
Post-Closing Deliveries Letter;

 

(r) Event of Default or Default under Section 8.1(e) as a result of Borrower’s
failure to comply with the requirements of Section 5.10(a) of the Credit
Agreement with respect to X-Rite Shanghai Color Management Limited;

 

41

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

(s) Event of Default or Default under Section 8.1(b) as a result of Borrower’s
failure to cure within sixty days the events of default under Sections 8.1(b),
8.1(d) and 8.1(e) of the First Lien Credit Agreement;

 

(t) Event of Default or Default under Section 8.1(c) as a result of Borrower’s
failure to provide notice of the foregoing Events of Default as and when
required pursuant to Section 5.1(f) of the Credit Agreement;

 

(u) Event of Default or Default under Section 8.1(d) to the extent that any
representation, warranty, certification or statement may have been false in any
material respect as a result of the failure to disclose any of the Designated
Defaults, including without limitation the failure of Borrower to disclose in
the financial statements delivered for the Fiscal Year ending December 30, 2007
and the accompanying Compliance Certificate Borrower’s failure to comply with
Section 6.8(c) of the Credit Agreement for the measurement period ending as of
the last day of the Fiscal Year ending December 30, 2007 (to the extent such
calculation included of capitalized software);

 

(v) Event of Default or Default under Section 8.1(c) as a result of Borrower’s
failure to provide forecasts demonstrating projected compliance with the
requirements of Section 6.8 through the final maturity date of the Loans as
required pursuant to Section 5.1(i)(iii) of the Credit Agreement within forty
five (45) days following the first Business Day of Fiscal Year 2008; and

 

(w) Event of Default or Default under Section 8.1(c) as a as a result of
Borrower’s failure to comply with Section 5.17 of the Credit Agreement.

 

42

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SCHEDULE 2

TO

FORBEARANCE AGREEMENT AND CONSENT, WAIVER AND AMENDMENT NO. 1

TO SECOND LIEN CREDIT AND GUARANTY AGREEMENT

Dated as of August 20, 2008

CERTAIN FEES AND EXPENSES

 

Financial Advisors and Consulting Fees and Expenses

   $ 11,980,000.00

Legal Fees and Expenses

   $ 6,000,000.00

Total

   $ 17,980,000.00

 

43

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SCHEDULE 3

TO

FORBEARANCE AGREEMENT AND CONSENT, WAIVER AND AMENDMENT NO. 1

TO SECOND LIEN CREDIT AND GUARANTY AGREEMENT

Dated as of August 20, 2008

EXISTING HEDGE AGREEMENTS

 

(a) Swap Agreement dated August 31, 2006 by and between X-Rite, Inc. and Goldman
Sachs Capital Markets, L.P., initially identified by GS reference number
LTAA1706400397, in the initial amount of $32,500,000.00, with a trade date of
August 31, 2006 and an effective date of September 5, 2006 and a termination
date of June 5, 2008.

 

(b) Swap Agreement dated August 31, 2006 by and between X-Rite, Inc. and Goldman
Sachs Capital Markets, L.P., initially identified by GS reference number
LTAA1706400421, in the initial amount of $42,500,000.00, with a trade date of
August 31, 2006, and an effective date of September 5, 2006 and a termination
date of June 5, 2009.

 

(c) Swap Agreement dated August 31, 2006 by and between X-Rite, Inc. and Goldman
Sachs Capital Markets, L.P., initially identified by GS reference number
LTAA1706400463, in the initial amount of $53,100,000.00, with a trade date of
August 31, 2006, and an effective date of September 5, 2006 and a termination
date of June 5, 2010.

 

(d) Swap Agreement dated December 27, 2007 by and between X-Rite, Inc. and
Goldman Sachs Capital Markets, L.P., initially identified by GS reference number
LTAA1710377342, in the initial amount of $58,000,000, with a trade date of
December 27, 2007, and an effective date of December 27, 2007 and a termination
date of December 27, 2011.

 

(e) Swap Agreement dated December 27, 2007, by and between X-Rite, Inc. and
Goldman Sachs Capital Markets, L.P., initially identified by GS reference number
LTAA1710377368, in the initial amount of $50,000,000, with a trade date of
December 27, 2007, and an effective date of December 27, 2007 and a termination
date of December 27, 2012.

 

(f) Swap Agreement dated December 27,2007, by and between X-Rite, Inc. and
Goldman Sachs Capital Markets, L.P., initially identified by GS reference number
LTAA1710377382, in the initial amount of $50,000,000, with a trade date of
December 27, 2007, and an effective date of December 27, 2007 and a termination
date of December 27, 2012.

 

(g) Swap Agreement dated December 27, 2007, by and between X-Rite, Inc. and
Goldman Sachs Capital Markets, L.P., initially identified by GS reference number
LTAA1710377429, in the initial amount of $50,000,000, with a trade date of
December 27, 2007, and an effective date of December 27, 2007 and a termination
date of December 27, 2012.

 

44

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SCHEDULE 4

TO

FORBEARANCE AGREEMENT AND CONSENT, WAIVER AND AMENDMENT NO. 1

TO SECOND LIEN CREDIT AND GUARANTY AGREEMENT

Dated as of August 20, 2008

CERTAIN FEES AND EXPENSES

INCREMENTAL EQUITY ISSUANCE

 

Financial Advisors and Consulting Fees and Expenses

   $ 1,500,000.00

Total

   $ 1,500,000.00

 

45

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SCHEDULE 5

TO

FORBEARANCE AGREEMENT AND CONSENT, WAIVER AND AMENDMENT NO. 1

TO SECOND LIEN CREDIT AND GUARANTY AGREEMENT

Dated as of August 20, 2008

LIFE INSURANCE POLICIES

 

Policy #

   Date    Insurer    1st Insured    2nd Insured    Death Benefit

5101611

   16-Nov-97    ING Security Life    Quinten Elliott Ward    Edith R. Fleming   
15,000,000

5101612

   27-Nov-97    ING Security Life    Quinten Elliott Ward    Marian L. Ward   
15,000,000

5101613

   16-Nov-97    ING Security Life    Rufus S. Teesdale    Edith R. Fleming   
20,000,000

5101614

   27-Nov-97    ING Security Life    Quinten Elliott Ward    Marian L. Ward   
5,000,000

5101615

   28-Dec-97    ING Security Life    Charles Van Namen    Myrtle C. Van Namen   
20,000,000

5101616

   28-Dec-97    ING Security Life    Darrell Theodore Thompson    Rufus S.
Teesdale    5,000,000

5700063

   28-Dec-97    John Hancock    Charles Van Namen    Myrtle C. Van Namen   
10,000,000

57408890

   28-Nov-97    John Hancock    Quinten E. Ward    Marian L. Ward    10,000,000

57408908

   16-Jan-98    John Hancock    Darrell T. Thompson    Rufus S. Teesdale   
10,000,000

57408916

   16-Jan-98    John Hancock    Charles Van Namen    Myrtle C. Van Namen   
10,000,000

57408924

   17-Nov-97    John Hancock    Rufus S. Teesdale    Edith R. Fleming   
10,000,000                                 130,000,000

 

46