Exhibit 10.1

 

 

 

CREDIT AND GUARANTY AGREEMENT

DATED AS OF NOVEMBER 15, 2012

AMONG

SPARTON CORPORATION AND THE OTHER BORROWERS PARTY HERETO,

THE GUARANTORS FROM TIME TO TIME PARTIES HERETO,

THE LENDERS FROM TIME TO TIME PARTIES HERETO,

AND

BMO HARRIS BANK N.A.,

AS ADMINISTRATIVE AGENT

 

 

 

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

 

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TABLE OF CONTENTS

 

SECTION   HEADING    PAGE  

SECTION 1. THE CREDIT FACILITIES

     2   

Section 1.1.

  Acquisition Loan Commitment      2   

Section 1.2.

  Revolving Credit Commitments      2   

Section 1.3.

  Letters of Credit      2   

Section 1.4.

  Applicable Interest Rates      6   

Section 1.5.

  Minimum Borrowing Amounts; Maximum Eurodollar Loans      8   

Section 1.6.

  Manner of Borrowing Loans and Designating Applicable Interest Rates      8   

Section 1.7.

  Swing Loans      10   

Section 1.8.

  Maturity of Loans      12   

Section 1.9.

  Prepayments      12   

Section 1.10.

  Default Rate      15   

Section 1.11.

  Evidence of Indebtedness      15   

Section 1.12.

  Funding Indemnity      16   

Section 1.13.

  Commitment Terminations      16   

Section 1.14.

  Substitution of Lenders      17   

Section 1.15.

  Defaulting Lenders      17   

Section 1.16.

  Joint and Several      18   

Section 1.17.

  Borrower Representative      19   

Section 1.18.

  Incremental Commitment Increases      19   

SECTION 2. FEES

     22   

Section 2.1.

  Fees      22   

SECTION 3. PLACE AND APPLICATION OF PAYMENTS

     23   

Section 3.1.

  Place and Application of Payments      23   

Section 3.2.

  Account Debit      25   

SECTION 4. GUARANTIES AND COLLATERAL

     25   

Section 4.1.

  Guaranties      25   

Section 4.2.

  Collateral      25   

Section 4.3.

  Liens on Real Property      26   

Section 4.4.

  Further Assurances      26   

SECTION 5. DEFINITIONS; INTERPRETATION

     27   

Section 5.1.

  Definitions      27   

Section 5.2.

  Interpretation      45   

Section 5.3.

  Change in Accounting Principles      46   

 

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SECTION 6. REPRESENTATIONS AND WARRANTIES

     46   

Section 6.1.

  Organization and Qualification      46   

Section 6.2.

  Subsidiaries      46   

Section 6.3.

  Authority and Validity of Obligations      47   

Section 6.4.

  Use of Proceeds; Margin Stock      47   

Section 6.5.

  Financial Reports      48   

Section 6.6.

  No Material Adverse Change      48   

Section 6.7.

  Full Disclosure      48   

Section 6.8.

  Trademarks, Franchises, and Licenses      48   

Section 6.9.

  Governmental Authority and Licensing      49   

Section 6.10.

  Good Title      49   

Section 6.11.

  Litigation and Other Controversies      49   

Section 6.12.

  Taxes      49   

Section 6.13.

  Approvals      49   

Section 6.14.

  Affiliate Transactions      49   

Section 6.15.

  Investment Company      50   

Section 6.16.

  ERISA      50   

Section 6.17.

  Compliance with Laws      50   

Section 6.18.

  OFAC      51   

Section 6.19.

  Other Agreements      51   

Section 6.20.

  Solvency      51   

Section 6.21.

  No Default      51   

Section 6.22.

  No Broker Fees      51   

Section 6.23.

  Related Transaction Purchase Agreement      51   

Section 6.24.

  Security Interest in Collateral      52   

Section 6.25.

  Common Enterprise      52   

Section 6.26.

  Subordinated Debt      52   

SECTION 7. CONDITIONS PRECEDENT

     52   

Section 7.1.

  All Credit Events      52   

Section 7.2.

  Initial Credit Event      53   

SECTION 8. COVENANTS

     56   

Section 8.1.

  Maintenance of Business      56   

Section 8.2.

  Maintenance of Properties      56   

Section 8.3.

  Taxes and Assessments      56   

Section 8.4.

  Insurance      56   

Section 8.5.

  Financial Reports      57   

Section 8.6.

  Inspection      58   

Section 8.7.

  Borrowings and Guaranties      59   

Section 8.8.

  Liens      60   

Section 8.9.

  Investments, Acquisitions, Loans and Advances      61   

Section 8.10.

  Mergers, Consolidations and Sales      62   

Section 8.11.

  Maintenance of Subsidiaries      63   

 

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Section 8.12.

  Dividends and Certain Other Restricted Payments      63   

Section 8.13.

  ERISA      64   

Section 8.14.

  Compliance with Laws      64   

Section 8.15.

  Compliance with OFAC Sanctions Programs      65   

Section 8.16.

  Burdensome Contracts With Affiliates      65   

Section 8.17.

  No Changes in Fiscal Year      66   

Section 8.18.

  Formation of Subsidiaries      66   

Section 8.19.

  Change in the Nature of Business      66   

Section 8.20.

  Use of Proceeds      66   

Section 8.21.

  No Restrictions      66   

Section 8.22.

  Subordinated Debt      66   

Section 8.23.

  Financial Covenants      66   

Section 8.24.

  [Reserved]      67   

Section 8.25.

  Cash Management      67   

Section 8.26.

  Limitations on Dormant Subsidiaries      67   

SECTION 9. EVENTS OF DEFAULT AND REMEDIES

     68   

Section 9.1.

  Events of Default      68   

Section 9.2.

  Non-Bankruptcy Defaults      69   

Section 9.3.

  Bankruptcy Defaults      70   

Section 9.4.

  Collateral for Undrawn Letters of Credit      70   

Section 9.5.

  Notice of Default      71   

SECTION 10. CHANGE IN CIRCUMSTANCES

     71   

Section 10.1.

  Change of Law      71   

Section 10.2.

  Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR
     71   

Section 10.3.

  Increased Cost and Reduced Return      72   

Section 10.4.

  Lending Offices      73   

Section 10.5.

  Discretion of Lender as to Manner of Funding      73   

SECTION 11. THE ADMINISTRATIVE AGENT

     74   

Section 11.1.

  Appointment and Authorization of Administrative Agent      74   

Section 11.2.

  Administrative Agent and its Affiliates      74   

Section 11.3.

  Action by Administrative Agent      74   

Section 11.4.

  Consultation with Experts      74   

Section 11.5.

  Liability of Administrative Agent; Credit Decision      75   

Section 11.6.

  Indemnity      75   

Section 11.7.

  Resignation of Administrative Agent and Successor Administrative Agent      76
  

Section 11.8.

  L/C Issuer and Swing Line Lender      76   

Section 11.9.

  Hedging Liability and Funds Transfer and Deposit Account Liability
Arrangements      77   

Section 11.10.

  Designation of Additional Agents      77   

Section 11.11.

  Authorization to Release or Subordinate or Limit Liens      77   

Section 11.12.

  Authorization to Enter into, and Enforcement of, the Collateral Documents     
77   

 

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SECTION 12. THE GUARANTEES

     78   

Section 12.1.

  The Guarantees      78   

Section 12.2.

  Guarantee Unconditional      78   

Section 12.3.

  Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances   
  79   

Section 12.4.

  Subrogation      80   

Section 12.5.

  Waivers      80   

Section 12.6.

  Limit on Recovery      80   

Section 12.7.

  Stay of Acceleration      80   

Section 12.8.

  Benefit to Guarantors      80   

Section 12.9.

  Guarantor Covenants      81   

SECTION 13. MISCELLANEOUS

     81   

Section 13.1.

  Withholding Taxes      81   

Section 13.2.

  No Waiver, Cumulative Remedies      82   

Section 13.3.

  Non-Business Days      82   

Section 13.4.

  Documentary Taxes      82   

Section 13.5.

  Survival of Representations      83   

Section 13.6.

  Survival of Indemnities      83   

Section 13.7.

  Sharing of Set-Off      83   

Section 13.8.

  Notices      83   

Section 13.9.

  Counterparts      84   

Section 13.10.

  Successors and Assigns      84   

Section 13.11.

  Participants      84   

Section 13.12.

  Assignments      85   

Section 13.13.

  Amendments      87   

Section 13.14.

  Headings      87   

Section 13.15.

  Costs and Expenses; Indemnification      88   

Section 13.16.

  Set-off      89   

Section 13.17.

  Entire Agreement      89   

Section 13.18.

  Governing Law      89   

Section 13.19.

  Severability of Provisions      90   

Section 13.20.

  Excess Interest      90   

Section 13.21.

  Construction      90   

Section 13.22.

  Lender’s and L/C Issuer ‘s Obligations Several      91   

Section 13.23.

  Submission to Jurisdiction; Waiver of Jury Trial      91   

Section 13.24.

  USA Patriot Act      91   

Section 13.25.

  Confidentiality      91    Signature Page      S-1   

 

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EXHIBIT A

   —    Notice of Payment Request

EXHIBIT B

   —    Notice of Borrowing

EXHIBIT C

   —    Notice of Continuation/Conversion

EXHIBIT D-1

   —    Acquisition Loan Note

EXHIBIT D-2

   —    Revolving Note

EXHIBIT D-3

   —    Swing Note

EXHIBIT E

   —    Compliance Certificate

EXHIBIT F

   —    Joinder Agreement

EXHIBIT G

   —    Assignment and Acceptance

SCHEDULE I

   —    Commitments

SCHEDULE 6.2

   —    Subsidiaries

SCHEDULE 6.17

   —    Environmental Matters

SCHEDULE 8.7

   —    Existing Indebtedness

SCHEDULE 8.8

   —    Existing Liens

SCHEDULE 8.9

   —    Existing Investments

SCHEDULE 8.9

   —    Existing Investments

SCHEDULE 8.26

   —    Activities of Dormant Subsidiaries

 

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CREDIT AND GUARANTY AGREEMENT

This Credit and Guaranty Agreement is entered into as of November 15, 2012, by
and among SPARTON CORPORATION, an Ohio corporation (the “Parent”), SPARTRONICS,
INC., a Michigan corporation, SPARTON TECHNOLOGY, INC., a New Mexico
corporation, SPARTON ELECTRONICS FLORIDA, INC., a Florida corporation, SPARTON
MEDICAL SYSTEMS, INC., a Michigan corporation, SPARTON MEDICAL SYSTEMS COLORADO,
LLC, a Colorado limited liability company, SPARTON BP MEDICAL DENVER, LLC, a
Delaware limited liability company, SPARTON ONYX, LLC, a Delaware limited
liability company, and, upon the consummation of the Related Transactions (as
such term is hereinafter defined), ONYX EMS, LLC, a South Dakota limited
liability company and RESONANT POWER TECHNOLOGY, INC., a Wisconsin corporation
(collectively with each other Person that becomes a “Borrower” hereunder
pursuant to a Joinder Agreement, the “Borrowers” and each, individually, a
“Borrower”), the direct and indirect Subsidiaries of the Borrowers from time to
time party to this Agreement, as Guarantors, the several financial institutions
from time to time party to this Agreement, as Lenders, and BMO HARRIS BANK N.A.,
as Administrative Agent as provided herein. All capitalized terms used herein
without definition shall have the same meanings herein as such terms are defined
in Section 5.1 hereof.

PRELIMINARY STATEMENT

SPARTON ONYX, LLC, a Delaware limited liability company (“Sparton Onyx”) was
organized for the purpose of acquiring all of the limited liability company
interests of ONYX EMS, LLC, a South Dakota limited liability company (“Onyx
EMS”), and, indirectly, all of the issued and outstanding capital stock of its
Wholly-Owned Subsidiary, RESONANT POWER TECHNOLOGY, INC., a Wisconsin
corporation (“RPT”) (the “Related Transaction”) pursuant to the terms of that
certain Unit Purchase Agreement dated as of November 2, 2012 (as amended or
otherwise modified, the “Related Transaction Purchase Agreement”) by and among
Everett Smith Group, Ltd. (“Seller”), and Sparton Onyx. Upon the consummation of
the Related Transaction, Onyx EMS and RPT will each join this Agreement as a
“Borrower” and “Loan Party”, the Security Agreement as “Grantor” and the other
applicable Loan Documents in the capacity set forth therein, without any further
documentation or action on the part of Administrative Agent, any Lender, any
Loan Party or other Person, and shall each be bound by all of the conditions,
covenants, representations, warranties, and other agreements set forth in this
Agreement, the Security Agreement and such other Loan Documents.

The Borrowers have requested, and the Lenders have agreed to extend, certain
credit facilities on the terms and conditions of this Agreement.

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

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SECTION 1. The Credit Facilities.

Section 1.1. Acquisition Loan Commitment. Prior to the Acquisition Loan
Commitment Expiry Date, each Lender severally and not jointly agrees, subject to
the terms and conditions hereof, to make Acquisition Loans (each, individually,
an “Acquisition Loan” and, collectively, the “Acquisition Loans”) in U.S.
Dollars to Borrowers from time to time up to the amount of such Lender’s
Acquisition Loan Commitment in effect at such time. The sum of the aggregate
principal amount of Acquisition Loans at any time outstanding shall not exceed
the Acquisition Loan Commitments in effect at such time. Each Borrowing of
Acquisition Loans shall be made ratably by the Lenders in proportion to their
respective Acquisition Loan Percentages. As provided in Section 1.6(a), and
subject to the terms hereof, Borrower Representative may elect that each
Borrowing of Acquisition Loans be either Base Rate Loans or Eurodollar Loans.
Acquisition Loans may be repaid and the principal amount thereof reborrowed
before the Acquisition Loan Commitment Expiry Date, subject to the terms and
conditions hereof.

Section 1.2. Revolving Credit Commitments. Subject to the terms and conditions
hereof, each Lender, by its acceptance hereof, severally agrees to make a loan
or loans (individually a “Revolving Loan” and collectively for all the Lenders
the “Revolving Loans”) in U.S. Dollars to the Borrowers from time to time on a
revolving basis up to the amount of such Lender’s Revolving Credit Commitment,
subject to any reductions thereof pursuant to the terms hereof, before the
Revolving Credit Termination Date. The sum of the aggregate principal amount of
Revolving Loans, Swing Loans, and L/C Obligations at any time outstanding shall
not exceed the Revolving Credit Commitments in effect at such time. Each
Borrowing of Revolving Loans shall be made ratably by the Lenders in proportion
to their respective Revolver Percentages. As provided in Section 1.6(a) hereof,
the Borrower Representative may elect that each Borrowing of Revolving Loans be
either Base Rate Loans or Eurodollar Loans. Revolving Loans may be repaid and
the principal amount thereof reborrowed before the Revolving Credit Termination
Date, subject to the terms and conditions hereof.

Section 1.3. Letters of Credit. (a) General Terms. Subject to the terms and
conditions hereof, as part of the Revolving Credit, the L/C Issuer shall issue
standby and commercial letters of credit (each a “Letter of Credit”) for the
account of any Borrower or for the account of any Borrower and/or one or more of
its Subsidiaries in an aggregate undrawn face amount up to the L/C Sublimit.
Each Letter of Credit shall be issued by the L/C Issuer, but each Lender shall
be obligated to reimburse the L/C Issuer for such Lender’s Revolver Percentage
of the amount of each drawing thereunder and, accordingly, each Letter of Credit
shall constitute usage of the Revolving Credit Commitment of each Lender pro
rata in an amount equal to its Revolver Percentage of the L/C Obligations then
outstanding.

(b) Applications. At any time before the Revolving Credit Termination Date, the
L/C Issuer shall, at the request of the Borrower Representative, issue one or
more Letters of Credit in U.S. Dollars, in a form satisfactory to the L/C
Issuer, in an aggregate face amount as set forth above, upon the receipt of an
application duly executed by the applicable Borrower and, if such Letter of
Credit is for the account of any Subsidiary of a Borrower, such Subsidiary for
the relevant Letter of Credit in the form then customarily prescribed by the L/C
Issuer for the Letter of Credit requested (each an “Application”). Each Letter
of Credit will have an expiration date no later than the earlier of (i) 12
months from the date of issuance (or which are cancelable not later than 12
months from the date of issuance and each renewal) or (ii) thirty (30) days
prior to the Revolving Credit Termination Date unless such Letter of Credit is
cash collateralized as hereinafter provided in which case such Letter of Credit
shall expire no later than the date that is

 

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thirty (30) days prior to the first anniversary of the Revolving Credit
Termination Date. If any Letter of Credit is outstanding for any reason on the
Revolving Credit Termination Date, the Borrowers shall deliver to the
Administrative Agent on or prior to the Revolving Credit Termination Date cash
collateral in an amount equal to 105% of the undrawn and unexpired amount of
such Letter of Credit to be held and applied in accordance with Section 9.4
hereof. Notwithstanding anything contained in any Application to the contrary:
(i) the Borrowers shall pay fees in connection with each Letter of Credit as set
forth in Section 2.1 hereof, (ii) except as otherwise provided in this Section,
in Section 1.9 or in Section 1.15 hereof, unless an Event of Default exists, the
L/C Issuer will not call for the funding by the Borrowers of any amount under a
Letter of Credit before being presented with a drawing thereunder, and (iii) if
the L/C Issuer is not timely reimbursed for the amount of any drawing under a
Letter of Credit on the date such drawing is paid, the Borrowers’ obligation to
reimburse the L/C Issuer for the amount of such drawing shall bear interest
(which the Borrowers hereby promise to pay) from and after the date such drawing
is paid at a rate per annum equal to the sum of the Applicable Margin plus the
Base Rate from time to time in effect (computed on the basis of a year of 360
days, and the actual number of days elapsed). If the L/C Issuer issues any
Letter of Credit with an expiration date that is automatically extended unless
the L/C Issuer gives notice that the expiration date will not so extend beyond
its then scheduled expiration date, unless the Administrative Agent or the
Required Lenders instruct the L/C Issuer otherwise, the L/C Issuer will give
such notice of non-renewal before the time necessary to prevent such automatic
extension if before such required notice date: (i) the expiration date of such
Letter of Credit if so extended would be after the date which is thirty
(30) days prior Revolving Credit Termination Date (or, to the extent cash
collateralized as set forth above, thirty (30) days prior to first anniversary
of the Revolving Credit Termination Date), (ii) the Revolving Credit Commitments
have been terminated, or (iii) a Default or an Event of Default exists and
either the Administrative Agent or the Required Lenders (with notice to the
Administrative Agent) have given the L/C Issuer instructions not to so permit
the extension of the expiration date of such Letter of Credit. The L/C Issuer
agrees to issue amendments to the Letter(s) of Credit increasing the amount, or
extending the expiration date, thereof at the request of the Borrower
Representative subject to the conditions of Section 7 hereof and the other terms
of this Section 1.3. Notwithstanding anything contained herein to the contrary,
the L/C Issuer shall be under no obligation to issue, extend or amend any Letter
of Credit if a default of any Lender’s obligations to fund under Section 1.3(c)
exists or any Lender is at such time a Defaulting Lender hereunder, unless the
L/C Issuer has entered into arrangements with the Borrowers or such Lender
satisfactory to the L/C Issuer to eliminate the L/C Issuer’s risk with respect
to such Lender.

(c) The Reimbursement Obligations. Subject to Section 1.3(b) hereof, the
obligation of the Borrowers to reimburse the L/C Issuer for all drawings under a
Letter of Credit (a “Reimbursement Obligation”) shall be governed by the
Application related to such Letter of Credit, except that reimbursement shall be
made by no later than 12:00 Noon (Chicago time) on the date when each drawing is
to be paid if the Borrower Representative has been informed of such drawing by
the L/C Issuer on or before 11:00 a.m. (Chicago time) on the date when such
drawing is to be paid or, if notice of such drawing is given to the Borrower
Representative after 11:00 a.m. (Chicago time) on the date when such drawing is
to be paid, by no later than 12:00 Noon (Chicago time) on the following Business
Day, in immediately available funds at the Administrative Agent’s principal
office in Chicago, Illinois, or such other office as the Administrative Agent
may designate in writing to the Borrower Representative (who shall

 

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thereafter cause to be distributed to the L/C Issuer such amount(s) in like
funds). If the Borrowers do not make any such reimbursement payment on the date
due and the Participating Lenders fund their participations therein in the
manner set forth in Section 1.3(e) below, then all payments thereafter received
by the Administrative Agent in discharge of any of the relevant Reimbursement
Obligations shall be distributed in accordance with Section 1.3(e) below.

(d) Obligations Absolute. The Borrowers’ obligation to reimburse L/C Obligations
as provided in subsection (c) of this Section shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement and the relevant Application under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision therein, (ii) any
draft or other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the L/C Issuer under a Letter of
Credit against presentation of a draft or other document that does not strictly
comply with the terms of such Letter of Credit, or (iv) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrowers’ obligations
hereunder. None of the Administrative Agent, the Lenders, or the L/C Issuer
shall have any liability or responsibility by reason of or in connection with
the issuance or transfer of any Letter of Credit or any payment or failure to
make any payment thereunder (irrespective of any of the circumstances referred
to in the preceding sentence), or any error, omission, interruption, loss or
delay in transmission or delivery of any draft, notice or other communication
under or relating to any Letter of Credit (including any document required to
make a drawing thereunder), any error in interpretation of technical terms or
any consequence arising from causes beyond the control of the L/C Issuer;
provided that the foregoing shall not be construed to excuse the L/C Issuer from
liability to the Borrowers to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by each of
the Borrowers to the extent permitted by applicable law) suffered by any
Borrower that are caused by the L/C Issuer ‘s failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of the L/C
Issuer (as finally determined by a court of competent jurisdiction), the L/C
Issuer shall be deemed to have exercised care in each such determination. In
furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
L/C Issuer may, in its sole discretion, either accept and make payment upon such
documents without responsibility for further investigation, regardless of any
notice or information to the contrary, or refuse to accept and make payment upon
such documents if such documents are not in strict compliance with the terms of
such Letter of Credit.

(e) The Participating Interests. Each Lender (other than the Lender acting as
L/C Issuer in issuing the relevant Letter of Credit), by its acceptance hereof,
severally agrees to purchase from the L/C Issuer, and the L/C Issuer hereby
agrees to sell to each such Lender (a “Participating Lender”), an undivided
percentage participating interest (a “Participating Interest”), to the extent of
its Revolver Percentage, in each Letter of Credit issued by, and each
Reimbursement Obligation owed to, the L/C Issuer. Upon any failure by the
Borrowers to pay

 

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any Reimbursement Obligation at the time required on the date the related
drawing is to be paid, as set forth in Section 1.3(c) above, or if the L/C
Issuer is required at any time to return to the Borrowers or to a trustee,
receiver, liquidator, custodian or other Person any portion of any payment of
any Reimbursement Obligation, each Participating Lender shall, not later than
the Business Day it receives a certificate in the form of Exhibit A hereto from
the L/C Issuer (with a copy to the Administrative Agent) to such effect, if such
certificate is received before 1:00 p.m. (Chicago time), or not later than
1:00 p.m. (Chicago time) the following Business Day, if such certificate is
received after such time, pay to the Administrative Agent for the account of the
L/C Issuer an amount equal to such Participating Lender’s Revolver Percentage of
such unpaid or recaptured Reimbursement Obligation together with interest on
such amount accrued from the date the related payment was made by the L/C Issuer
to the date of such payment by such Participating Lender at a rate per annum
equal to: (i) from the date the related payment was made by the L/C Issuer to
the date two (2) Business Days after payment by such Participating Lender is due
hereunder, the Federal Funds Rate for each such day and (ii) from the date two
(2) Business Days after the date such payment is due from such Participating
Lender to the date such payment is made by such Participating Lender, the Base
Rate in effect for each such day. Each such Participating Lender shall
thereafter be entitled to receive its Revolver Percentage of each payment
received in respect of the relevant Reimbursement Obligation and of interest
paid thereon, with the L/C Issuer retaining its Revolver Percentage thereof as a
Lender hereunder. The several obligations of the Participating Lenders to the
L/C Issuer under this Section 1.3 shall be absolute, irrevocable, and
unconditional under any and all circumstances whatsoever and shall not be
subject to any set-off, counterclaim or defense to payment which any
Participating Lender may have or have had against any Borrower, the L/C Issuer,
the Administrative Agent, any Lender or any other Person whatsoever. Without
limiting the generality of the foregoing, such obligations shall not be affected
by any Default or Event of Default or by any reduction or termination of any
Commitment of any Lender, and each payment by a Participating Lender under this
Section 1.3 shall be made without any offset, abatement, withholding or
reduction whatsoever.

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

(g) Manner of Requesting a Letter of Credit. The Borrower Representative shall
provide at least five (5) Business Days’ advance written notice to the
Administrative Agent of each request for the issuance of a Letter of Credit,
such notice in each case to be accompanied by an Application for such Letter of
Credit properly completed and executed by the applicable Borrower or the
applicable Subsidiary of any Borrower and, in the case of an extension or
amendment or an increase in the amount of a Letter of Credit, a written request
therefor, in a form acceptable to the Administrative Agent and the L/C Issuer,
in each case, together with the fees called for by this Agreement. The
Administrative Agent shall promptly notify the L/C

 

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Issuer of the Administrative Agent’s receipt of each such notice (and the L/C
Issuer shall be entitled to assume that the conditions precedent to any such
issuance, extension, amendment or increase have been satisfied unless notified
to the contrary by the Administrative Agent or the Required Lenders) and the L/C
Issuer shall promptly notify the Administrative Agent and the Lenders of the
issuance of the Letter of Credit so requested.

(h) Replacement of the L/C Issuer. The L/C Issuer may be replaced at any time by
written agreement among the Borrower Representative, the Administrative Agent,
the replaced L/C Issuer and the successor L/C Issuer. The Administrative Agent
shall notify the Lenders of any such replacement of the L/C Issuer. At the time
any such replacement shall become effective, the Borrowers shall pay all unpaid
fees accrued for the account of the replaced L/C Issuer. From and after the
effective date of any such replacement (i) the successor L/C Issuer shall have
all the rights and obligations of the L/C Issuer under this Agreement with
respect to Letters of Credit to be issued thereafter and (ii) references herein
to the term “L/C Issuer” shall be deemed to refer to such successor or to any
previous L/C Issuer, or to such successor and all previous L/C Issuers, as the
context shall require. After the replacement of a L/C Issuer hereunder, the
replaced L/C Issuer shall remain a party hereto and shall continue to have all
the rights and obligations of a L/C Issuer under this Agreement with respect to
Letters of Credit issued by it prior to such replacement, but shall not be
required to issue additional Letters of Credit.

Section 1.4. Applicable Interest Rates. (a) Base Rate Loans. Each Base Rate Loan
made or maintained by a Lender shall bear interest (computed on the basis of a
year of 360 days and the actual days elapsed) on the unpaid principal amount
thereof from the date such Loan is advanced, or created by conversion from a
Eurodollar Loan, until maturity (whether by acceleration or otherwise) at a rate
per annum equal to the sum of the Applicable Margin plus the Base Rate from time
to time in effect, payable by the Borrowers on each Interest Payment Date and at
maturity (whether by acceleration or otherwise).

“Base Rate” means, for any day, the rate per annum equal to the greatest of:
(a) the rate of interest announced or otherwise established by the
Administrative Agent from time to time as its prime commercial rate as in effect
on such day, with any change in the Base Rate resulting from a change in said
prime commercial rate to be effective as of the date of the relevant change in
said prime commercial rate (it being acknowledged and agreed that such rate may
not be the Administrative Agent’s best or lowest rate), (b) the sum of (i) the
rate determined by the Administrative Agent to be the average (rounded upward,
if necessary, to the next higher 1/100 of 1%) of the rates per annum quoted to
the Administrative Agent at approximately 10:00 a.m. (Chicago time) (or as soon
thereafter as is practicable) on such day (or, if such day is not a Business
Day, on the immediately preceding Business Day) by two or more Federal funds
brokers selected by the Administrative Agent for sale to the Administrative
Agent at face value of Federal funds in the secondary market in an amount equal
or comparable to the principal amount for which such rate is being determined,
plus (ii) 1/2 of 1%, and (c) the LIBOR Quoted Rate for such day plus 1.00%. As
used herein, the term “LIBOR Quoted Rate” means, for any day, the rate per annum
equal to the quotient of (i) the rate per annum (rounded upwards, if necessary,
to the next higher one hundred-thousandth of a percentage point) for deposits in
U.S. Dollars for a one-month interest period which appears on the LIBOR01
Page as of 11:00 a.m. (London, England time) on such day (or, if such day is not
a Business Day, on the immediately preceding Business Day) divided by (ii) one
(1) minus the Eurodollar Reserve Percentage.

 

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

“Adjusted LIBOR” means, for any Borrowing of Eurodollar Loans, a rate per annum
determined in accordance with the following formula:

 

 

Adjusted LIBOR

   =    LIBOR            1 - Eurodollar Reserve Percentage           

“Eurodollar Reserve Percentage” means the maximum reserve percentage, expressed
as a decimal, at which reserves (including, without limitation, any emergency,
marginal, special, and supplemental reserves) are imposed by the Board of
Governors of the Federal Reserve System (or any successor) on “eurocurrency
liabilities”, as defined in such Board’s Regulation D (or any successor
thereto), subject to any amendments of such reserve requirement by such Board or
its successor, taking into account any transitional adjustments thereto. For
purposes of this definition, the relevant Loans shall be deemed to be
“eurocurrency liabilities” as defined in Regulation D without benefit or credit
for any prorations, exemptions or offsets under Regulation D. The Eurodollar
Reserve Percentage shall be adjusted automatically on and as of the effective
date of any change in any such reserve percentage.

“LIBOR” means, for an Interest Period for a Borrowing of Eurodollar Loans,
(a) the LIBOR Index Rate for such Interest Period, if such rate is available,
and (b) if the LIBOR Index Rate cannot be determined, the arithmetic average of
the rates of interest per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) at which deposits in U.S. Dollars in immediately available funds
are offered to the Administrative Agent at 11:00 a.m. (London, England time) two
(2) Business Days before the beginning of such Interest Period by three (3) or
more major banks in the interbank eurodollar market selected by the
Administrative Agent for delivery on the first day of and for a period equal to
such Interest Period and in an amount equal or comparable to the principal
amount of the Eurodollar Loan scheduled to be made as part of such Borrowing.

“LIBOR Index Rate” means, for any Interest Period, the rate per annum (rounded
upwards, if necessary, to the next higher one hundred-thousandth of a percentage
point) for deposits in U.S. Dollars for a period equal to such Interest Period,
which appears on the LIBOR01 Page as of 11:00 a.m. (London, England time) on the
day two (2) Business Days before the commencement of such Interest Period.

“LIBOR01 Page” means the display designated as “LIBOR01 Page” on the Reuters
Service (or such other page as may replace the LIBOR01 Page on that service or
such other service as may be nominated by the British Bankers’ Association as
the information vendor for the purpose of displaying British Bankers’
Association Interest Settlement Rates for U.S. Dollar deposits).

 

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

Section 1.5. Minimum Borrowing Amounts; Maximum Eurodollar Loans. Each Borrowing
of Base Rate Loans advanced under a Credit shall be in an amount not less than
$100,000. Each Borrowing of Eurodollar Loans advanced, continued or converted
under a Credit shall be in an amount equal to $1,000,000 or such greater amount
which is an integral multiple of $500,000. Without the Administrative Agent’s
consent, there shall not be more than five (5) Borrowings of Eurodollar Loans
outstanding hereunder at any one time.

Section 1.6. Manner of Borrowing Loans and Designating Applicable Interest
Rates. (a) Notice to the Administrative Agent. The Borrower Representative shall
give notice to the Administrative Agent by no later than 10:00 a.m. (Chicago
time): (i) at least three (3) Business Days before the date on which the
Borrowers request the Lenders to advance a Borrowing of Eurodollar Loans and
(ii) on the date the Borrowers request the Lenders to advance a Borrowing of
Base Rate Loans. The Loans included in each Borrowing shall bear interest
initially at the type of rate specified in such notice of a new Borrowing.
Thereafter, subject to the terms and conditions hereof, the Borrower
Representative may from time to time elect to change or continue the type of
interest rate borne by each Borrowing or, subject to the minimum amount
requirement for each outstanding Borrowing set forth in Section 1.5 hereof, a
portion thereof, as follows: (i) if such Borrowing is of Eurodollar Loans, on
the last day of the Interest Period applicable thereto, the Borrowers may
continue part or all of such Borrowing as Eurodollar Loans or convert part or
all of such Borrowing into Base Rate Loans or (ii) if such Borrowing is of Base
Rate Loans, on any Business Day, the Borrowers may convert all or part of such
Borrowing into Eurodollar Loans for an Interest Period or Interest Periods
specified by the Borrower Representative. The Borrower Representative shall give
all such notices requesting the advance, continuation or conversion of a
Borrowing to the Administrative Agent by telephone, telecopy, or other
telecommunication device acceptable to the Administrative Agent (which notice
shall be irrevocable once given and, if by telephone, shall be promptly
confirmed in writing), substantially in the form attached hereto as Exhibit B
(Notice of Borrowing) or Exhibit C (Notice of Continuation/Conversion), as
applicable, or in such other form acceptable to the Administrative Agent. Notice
of the continuation of a Borrowing of Eurodollar Loans for an additional
Interest Period or of the conversion of part or all of a Borrowing of Base Rate
Loans into Eurodollar Loans must be given by no later than 10:00 a.m. (Chicago
time) at least three (3) Business Days before the date of the requested
continuation or conversion. All such notices concerning the advance,
continuation or conversion of a Borrowing shall specify the date of the
requested advance, continuation or conversion of a Borrowing (which shall be a
Business Day), the amount of the requested Borrowing to be advanced, continued
or converted, the type of Loans to comprise such new, continued or converted
Borrowing and, if such Borrowing is to be comprised of Eurodollar Loans, the
Interest Period applicable thereto. Upon notice to the Borrower Representative
by the Administrative Agent or the Required Lenders (or, in the case of an Event
of Default under Section 9.1(j) or 9.1(k) hereof with respect to any Loan Party
or any

 

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Subsidiary of any Loan Party, without notice), no Borrowing of Eurodollar Loans
shall be advanced, continued, or created by conversion if any Default or Event
of Default then exists. Each of the Borrowers agrees that the Administrative
Agent may rely on any such telephonic, telecopy or other telecommunication
notice given by any person the Administrative Agent in good faith believes is an
Authorized Representative without the necessity of independent investigation,
and in the event any such notice by telephone conflicts with any written
confirmation such telephonic notice shall govern if the Administrative Agent has
acted in reliance thereon.

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

(c) Borrower’s Failure to Notify. If the Borrowers fail to give notice pursuant
to Section 1.6(a) above of the continuation or conversion of any outstanding
principal amount of a Borrowing of Eurodollar Loans before the last day of its
then current Interest Period within the period required by Section 1.6(a) and
such Borrowing is not prepaid in accordance with Section 1.9(a), such Borrowing
shall automatically be converted into a Borrowing of Base Rate Loans. In the
event the Borrowers fail to give notice pursuant to Section 1.6(a) above of a
Borrowing equal to the amount of a Reimbursement Obligation and has not notified
the Administrative Agent by 12:00 noon (Chicago time) on the day such
Reimbursement Obligation becomes due that it intends to repay such Reimbursement
Obligation through funds not borrowed under this Agreement, the Borrowers shall
be deemed to have requested a Borrowing of Base Rate Loans under the Revolving
Credit (or, at the option of the Swing Line Lender, under the Swing Line) on
such day in the amount of the Reimbursement Obligation then due, which Borrowing
shall be applied to pay the Reimbursement Obligation then due.

(d) Disbursement of Loans. Not later than 1:00 p.m. (Chicago time) on the date
of any requested advance of a new Borrowing, subject to Section 7 hereof, each
Lender shall make available its Loan comprising part of such Borrowing in funds
immediately available at the principal office of the Administrative Agent in
Chicago, Illinois (or at such other location as the Administrative Agent shall
designate). The Administrative Agent shall make the proceeds of each new
Borrowing available to the Borrowers at the Administrative Agent’s principal
office in Chicago, Illinois (or at such other location as the Administrative
Agent shall designate), by depositing or wire transferring such proceeds to the
credit of the Borrowers’ Designated Disbursement Account or as the Borrower
Representative and the Administrative Agent may otherwise agree.

(e) Administrative Agent Reliance on Lender Funding. Unless the Administrative
Agent shall have been notified by a Lender prior to (or, in the case of a
Borrowing of Base Rate Loans, by 1:00 p.m. (Chicago time) on) the date on which
such Lender is scheduled to make payment to the Administrative Agent of the
proceeds of a Loan (which notice shall be effective upon receipt) that such
Lender does not intend to make such payment, the Administrative Agent may assume
that such Lender has made such payment when due and the Administrative Agent

 

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

Section 1.7. Swing Loans. (a) Generally. Subject to the terms and conditions
hereof, as part of the Revolving Credit, the Swing Line Lender may, in its
discretion, make loans in U.S. Dollars to the Borrowers under the Swing Line
(individually a “Swing Loan” and collectively the “Swing Loans”) which shall not
in the aggregate at any time outstanding exceed the Swing Line Sublimit. Swing
Loans may be availed of from time to time and borrowings thereunder may be
repaid and used again during the period ending on the Revolving Credit
Termination Date. Each Swing Loan shall be in a minimum amount of $100,000 or
such greater amount which is an integral multiple of $100,000.

(b) Interest on Swing Loans. Each Swing Loan shall bear interest until maturity
(whether by acceleration or otherwise) at a rate per annum equal to (i) the sum
of the Base Rate plus the Applicable Margin for Base Rate Loans under the
Revolving Credit as from time to time in effect (computed on the basis of a year
of 360 days) for the actual number of days elapsed) or (ii) the Swing Line
Lender’s Quoted Rate (computed on the basis of a year of 360 days for the actual
number of days elapsed). Interest on each Swing Loan shall be due and payable by
the Borrowers on each Interest Payment Date and at maturity (whether by
acceleration or otherwise).

(c) Requests for Swing Loans. The Borrower Representative shall give the
Administrative Agent prior notice (which may be written or oral) no later than
12:00 Noon (Chicago time) on the date upon which the Borrowers request that any
Swing Loan be made, of the amount and date of such Swing Loan, and, if
applicable, the Interest Period requested therefor. The Administrative Agent
shall promptly advise the Swing Line Lender of any such notice received from the
Borrowers. After receiving such notice, the Swing Line Lender shall in its
discretion quote an interest rate to the Borrower Representative at which the
Swing Line Lender would be willing to make such Swing Loan available to the
Borrowers for the Interest Period so requested (the rate so quoted for a given
Interest Period being herein referred to as “Swing Line Lender’s Quoted Rate”).
Each of the Borrowers acknowledges and agrees that the interest rate quote is
given for immediate and irrevocable acceptance. If the Borrowers do not so
immediately accept the Swing Line Lender’s Quoted Rate for the full amount
requested by the

 

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Borrowers for such Swing Loan, the Swing Line Lender’s Quoted Rate shall be
deemed immediately withdrawn and such Swing Loan shall bear interest at the rate
per annum determined by adding the Applicable Margin for Base Rate Loans under
the Revolving Credit to the Base Rate as from time to time in effect. Subject to
the terms and conditions hereof, the proceeds of each Swing Loan extended to the
Borrowers shall be deposited or otherwise wire transferred to the Borrowers’
Designated Disbursement Account or as the Borrower Representative, the
Administrative Agent, and the Swing Line Lender may otherwise agree. Anything
contained in the foregoing to the contrary notwithstanding, the undertaking of
the Swing Line Lender to make Swing Loans shall be subject to all of the terms
and conditions of this Agreement (provided that the Swing Line Lender shall be
entitled to assume that the conditions precedent to an advance of any Swing Loan
have been satisfied unless notified to the contrary by the Administrative Agent
or the Required Lenders).

(d) Refunding Loans. The Swing Line Lender shall on at least a monthly basis or
on any other more frequent basis that the Swing Line Lender elects in its sole
discretion, on behalf of the Borrowers (each of which hereby irrevocably
authorizes the Swing Line Lender to act on its behalf for such purpose) and with
notice to the Borrower Representative and the Administrative Agent, request each
Lender to make a Revolving Loan in the form of a Base Rate Loan in an amount
equal to such Lender’s Revolver Percentage of the amount of the Swing Loans
outstanding on the date such notice is given. Unless an Event of Default
described in Section 9.1(j) or 9.1(k) exists with respect to any Loan Party or
any Subsidiary of any Loan Party, regardless of the existence of any other Event
of Default, each Lender shall make the proceeds of its requested Revolving Loan
available to the Administrative Agent for the account of the Swing Line Lender),
in immediately available funds, at the Administrative Agent’s office in Chicago,
Illinois (or such other location designated by the Administrative Agent), before
12:00 Noon (Chicago time) on the Business Day following the day such notice is
given. The Administrative Agent shall promptly remit the proceeds of such
Borrowing to the Swing Line Lender to repay the outstanding Swing Loans.

(e) Participations. If any Lender refuses or otherwise fails to make a Revolving
Loan when requested by the Swing Line Lender pursuant to Section 1.7(d) above
(because an Event of Default described in Section 9.1(j) or 9.1(k) exists with
respect to any Loan Party, any Subsidiary of any Loan Party or otherwise), such
Lender will, by the time and in the manner such Revolving Loan was to have been
funded to the Swing Line Lender, purchase from the Swing Line Lender an
undivided participating interest in the outstanding Swing Loans in an amount
equal to its Revolver Percentage of the aggregate principal amount of Swing
Loans that were to have been repaid with such Revolving Loans. Each Lender that
so purchases a participation in a Swing Loan shall thereafter be entitled to
receive its Revolver Percentage of each payment of principal received on the
Swing Loan and of interest received thereon accruing from the date such Lender
funded to the Swing Line Lender its participation in such Loan. The several
obligations of the Lenders under this Section shall be absolute, irrevocable,
and unconditional under any and all circumstances whatsoever and shall not be
subject to any set-off, counterclaim or defense to payment which any Lender may
have or have had against any Loan Party, any other Lender, or any other Person
whatsoever. Without limiting the generality of the foregoing, such obligations
shall not be affected by any Default or Event of Default or by any reduction or
termination of the Commitments of any Lender, and each payment made by a Lender
under this Section shall be made without any offset, abatement, withholding, or
reduction whatsoever.

 

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Section 1.8. Maturity of Loans. (a) Payments of Acquisition Loans. The
Acquisition Loans shall not begin to amortize until the first anniversary of the
date of this Agreement. On the first anniversary of the date of this Agreement,
the aggregate principal amount of all Acquisitions Loans outstanding on such
date (such Acquisition Loans outstanding as of such anniversary date are
hereinafter referred to as the “Tranche A Acquisitions Loans” and the amount the
Tranche A Acquisition Loans outstanding as of such anniversary date is
hereinafter referred to as the “Tranche A Acquisition Loan Amount”) will convert
to term loans and will begin to amortize as hereinafter described. The Borrowers
shall make principal payments on the Tranche A Acquisition Loans in installments
on the last day of each March, June, September, and December in each year
commencing on March 31, 2014. Each such principal payment shall equal two and
one-half percent (2.5%) of the Tranche A Acquisition Loan Amount, provided that,
a final payment comprised of all principal and interest not sooner paid on the
Tranche A Acquisition Loans shall be due and payable on Acquisition Loan
Maturity Date. On the second anniversary of the date of this Agreement, all
Acquisition Loans outstanding on such date other than the Tranche A Acquisition
Loans (such Acquisition Loans, other than the Tranche A Acquisition Loans,
outstanding as of such anniversary date are hereinafter referred to as the
“Tranche B Acquisitions Loans” and the amount the Tranche B Acquisition Loans
outstanding as of such anniversary date is hereinafter referred to as the
“Tranche B Acquisition Loan Amount”) will convert to term loans and will begin
to amortize as hereinafter described. The Borrowers shall make principal
payments on the Tranche B Acquisition Loans in installments on the last day of
each March, June, September, and December in each year commencing on March 31,
2015. Each such principal payment shall equal two and one-half percent (2.5%) of
the Tranche B Acquisition Loan Amount, provided that, a final payment comprised
of all principal and interest not sooner paid on the Tranche B Acquisition Loans
shall be due and payable on Acquisition Loan Maturity Date. Each such principal
payment shall be applied to the Lenders holding the Acquisition Loans pro rata
based upon their Acquisition Loan Percentages.

(b) Revolving Loans. Each Revolving Loan, both for principal and interest not
sooner paid, shall mature and be due and payable by the Borrowers on the
Revolving Credit Termination Date.

(c) Swing Loans. Each Swing Loan, both for principal and interest not sooner
paid, shall mature and be due and payable by the Borrowers on the Revolving
Credit Termination Date.

Section 1.9. Prepayments. (a) Optional. The Borrowers may prepay in whole or in
part (but, if in part, then: (i) if such Borrowing is of Base Rate Loans, in an
amount not less than $100,000, (ii) if such Borrowing is of Eurodollar Loans, in
an amount not less than $500,000, and (iii) in each case, in an amount such that
the minimum amount required for a Borrowing pursuant to Section 1.5 and 1.7
hereof remains outstanding) any Borrowing of Eurodollar Loans at any time upon
three (3) Business Days prior notice by the Borrower Representative to the
Administrative Agent or, in the case of a Borrowing of Base Rate Loans, notice
delivered by the Borrower Representative to the Administrative Agent no later
than 10:00 a.m. (Chicago time) on the date of prepayment (or, in any case, such
shorter period of time then agreed to by the

 

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Administrative Agent), such prepayment to be made by the payment of the
principal amount to be prepaid and, in the case of any Acquisition Loans or
Eurodollar Loans or Swing Loans, accrued interest thereon to the date fixed for
prepayment plus any amounts due the Lenders under Section 1.12 hereof.

(b) Mandatory. (i) If any Loan Party or any Subsidiary shall at any time or from
time to time make or agree to make a Disposition or shall suffer an Event of
Loss with respect to any Property, then the Borrower Representative shall
promptly notify the Administrative Agent of such proposed Disposition or Event
of Loss (including the amount of the estimated Net Cash Proceeds to be received
by the applicable Loan Party or such Subsidiary in respect thereof) and,
promptly upon receipt by the applicable Loan Party or such Subsidiary of the Net
Cash Proceeds of such Disposition or Event of Loss, the Borrowers shall prepay
the Obligations in an aggregate amount equal to 100% of the amount of all such
Net Cash Proceeds; provided that (x) so long as no Default or Event of Default
then exists, this subsection shall not require any such prepayment with respect
to Net Cash Proceeds received on account of an Event of Loss so long as such Net
Cash Proceeds are applied to replace or restore the relevant Property in
accordance with the relevant Collateral Documents, (y) this subsection shall not
require any such prepayment with respect to Net Cash Proceeds received on
account of Dispositions during any fiscal year of the Loan Parties not exceeding
$1,000,000 in the aggregate so long as no Default or Event of Default then
exists, and (z) in the case of any Disposition not covered by clause (y) above,
so long as no Default or Event of Default then exists, if the Borrower
Representative states in its notice of such event that the applicable Loan Party
or the applicable Subsidiary intends to reinvest, within 180 days of the
applicable Disposition, the Net Cash Proceeds thereof in assets similar to the
assets which were subject to such Disposition, then the Borrowers shall not be
required to make a mandatory prepayment under this subsection in respect of such
Net Cash Proceeds to the extent such Net Cash Proceeds are actually reinvested
in such similar assets with such 180-day period. Promptly after the end of such
180-day period, the Borrower Representative shall notify the Administrative
Agent whether the applicable Loan Party or such Subsidiary has reinvested such
Net Cash Proceeds in such similar assets, and, to the extent such Net Cash
Proceeds have not been so reinvested, the Borrowers shall promptly prepay the
Obligations in the amount of such Net Cash Proceeds not so reinvested. The
amount of each such prepayment shall be applied, first to the outstanding
Acquisition Loans until paid in full and then to the Revolving Credit (without a
concomitant reduction in Revolving Credit Commitments). If the Administrative
Agent or the Required Lenders so request, all proceeds of such Disposition or
Event of Loss shall be deposited with the Administrative Agent (or its agent)
and held by it in the Collateral Account. So long as no Default or Event of
Default exists, the Administrative Agent is authorized to disburse amounts
representing such proceeds from the Collateral Account to or at the Borrower
Representative’s direction for application to or reimbursement for the costs of
replacing, rebuilding or restoring such Property.

(ii) If after the Closing Date any Loan Party or any Subsidiary shall issue new
equity securities (whether common or preferred stock or otherwise), other than
equity securities issued in connection with the exercise of employee stock
options, equity securities issued to employees, directors or representatives
under incentive plans and capital stock of Parent issued to the seller of an
Acquired Business in connection with an Acquisition permitted hereby, the
Borrower Representative shall promptly notify the Administrative Agent of the
estimated Net Cash Proceeds of such issuance to be received by or for the
account of the applicable Loan Party or

 

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such Subsidiary in respect thereof. Promptly upon receipt by the applicable Loan
Party or such Subsidiary of Net Cash Proceeds of such issuance, the Borrowers
shall prepay the Obligations in an aggregate amount equal to 50% of the amount
of such Net Cash Proceeds. The amount of each such prepayment shall be applied
first to the outstanding Acquisition Loans until paid in full and then to the
Revolving Credit (without a concomitant reduction in Revolving Credit
Commitments). Each of the Borrowers acknowledges that its performance hereunder
shall not limit the rights and remedies of the Lenders for any breach of
Section 8.11 (Maintenance of Subsidiaries) or Section 9.1(i) (Change of Control)
hereof or any other terms of the Loan Documents.

(iii) If after the Closing Date any Loan Party or any Subsidiary shall issue any
Indebtedness, other than Indebtedness permitted by Section 8.7(a)-(h) hereof,
the Borrower Representative shall promptly notify the Administrative Agent of
the estimated Net Cash Proceeds of such issuance to be received by or for the
account of the applicable Loan Party or such Subsidiary in respect thereof.
Promptly upon receipt by the applicable Loan Party or such Subsidiary of Net
Cash Proceeds of such issuance, the Borrowers shall prepay the Obligations in an
aggregate amount equal to 100% of the amount of such Net Cash Proceeds. The
amount of each such prepayment shall be applied first to the outstanding
Acquisition Loans until paid in full and then to the Revolving Credit (without a
concomitant reduction in Revolving Credit Commitments). Each of the Borrowers
acknowledges that its performance hereunder shall not limit the rights and
remedies of the Lenders for any breach of Section 8.7 hereof or any other terms
of the Loan Documents.

(iv) The Borrowers shall, on each date the Revolving Credit Commitments are
reduced pursuant to Section 1.13 hereof, prepay the Revolving Loans, Swing
Loans, and, if necessary, prefund the L/C Obligations by the amount, if any,
necessary to reduce the sum of the aggregate principal amount of Revolving
Loans, Swing Loans, and L/C Obligations then outstanding to the amount to which
the Revolving Credit Commitments have been so reduced.

(v) Unless the Borrower Representative otherwise directs, prepayments of Loans
under this Section 1.9(b) shall be applied first to Borrowings of Base Rate
Loans until payment in full thereof with any balance applied to Borrowings of
Eurodollar Loans in the order in which their Interest Periods expire. Each
prepayment of Loans under this Section 1.9(b) shall be made by the payment of
the principal amount to be prepaid and, in the case of any Acquisition Loans or
Eurodollar Loans or Swing Loans, accrued interest thereon to the date of
prepayment together with any amounts due the Lenders under Section 1.12 hereof.
Each prefunding of L/C Obligations shall be made in accordance with Section 9.4
hereof.

(c) Any amount of Revolving Loans and Swing Loans paid or prepaid before the
Revolving Credit Termination Date may, subject to the terms and conditions of
this Agreement, be borrowed, repaid and borrowed again. Prior to the Acquisition
Loan Commitment Expiry Date, Acquisition Loans paid or prepaid may, subject to
the terms and conditions of this Agreement, be borrowed, repaid and borrowed
again. After the Acquisition Loan Commitment Expiry Date, no amount of the
Acquisition Loans paid or prepaid may be reborrowed, and, in the case of any
partial prepayment, such prepayment shall be applied to the remaining
amortization payments on the relevant Loans in the inverse order of maturity.

 

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Section 1.10. Default Rate. Notwithstanding anything to the contrary contained
herein, while any Event of Default exists or after acceleration, the Borrowers
shall pay interest (after as well as before entry of judgment thereon to the
extent permitted by law) on the principal amount of all Loans and Reimbursement
Obligations, and letter of credit fees at a rate per annum equal to:

(a) for any Base Rate Loan or any Swing Loan bearing interest based on the Base
Rate, the sum of 2.0% plus the Applicable Margin plus the Base Rate from time to
time in effect;

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

(c) for any Reimbursement Obligation, the sum of 2.0% plus the amounts due under
Section 1.3 with respect to such Reimbursement Obligation; and

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

provided, however, that in the absence of acceleration, any adjustments pursuant
to this Section shall be made at the election of the Administrative Agent or
Administrative Agent, acting at the request of the Required Lenders, with
written notice to the Borrower Representative. While any Event of Default exists
or after acceleration, interest shall be paid on demand of the Administrative
Agent or Administrative Agent at the request of the Required Lenders.

Section 1.11. Evidence of Indebtedness. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrowers to such Lender resulting from each Loan made by
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.

(b) The Administrative Agent shall also maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the type thereof and the
Interest Period with respect thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrowers to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder from the Borrowers and each Lender’s share thereof.

(c) The entries maintained in the accounts maintained pursuant to paragraphs
(a) and (b) above shall be prima facie evidence of the existence and amounts of
the Obligations therein recorded; provided, however, that the failure of the
Administrative Agent or any Lender to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrowers to repay
the Obligations in accordance with their terms.

(d) Any Lender may request that its Loans be evidenced by a promissory note or
notes in the forms of Exhibit D-1 (in the case of its Acquisition Loans and
referred to herein as a “Acquisition Loan Note”), D-2 (in the case of its
Revolving Loans and referred to herein as a

 

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“Revolving Note”), or D-3 (in the case of its Swing Loans and referred to herein
as a “Swing Note”), as applicable (the Acquisition Loan Notes, Revolving Notes,
and Swing Note being hereinafter referred to collectively as the “Notes” and
individually as a “Note”). In such event, the Borrowers shall prepare, execute
and deliver to such Lender a Note payable to such Lender or its registered
assigns in the amount of the relevant Acquisition Loan Commitment, Revolving
Commitment, or Swing Line Sublimit, as applicable. Thereafter, the Loans
evidenced by such Note or Notes and interest thereon shall at all times
(including after any assignment pursuant to Section 13.12) be represented by one
or more Notes payable to the order of the payee named therein or any assignee
pursuant to Section 13.12, except to the extent that any such Lender or assignee
subsequently returns any such Note for cancellation and requests that such Loans
once again be evidenced as described in subsections (a) and (b) above.

Section 1.12. Funding Indemnity. If any Lender shall incur any loss, cost or
expense (including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or re-employment of deposits or other funds acquired
by such Lender to fund or maintain any Eurodollar Loan or Swing Loan or the
relending or reinvesting of such deposits or amounts paid or prepaid to such
Lender) as a result of:

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

(b) any failure (because of a failure to meet the conditions of Section 7 or
otherwise) by the Borrowers to borrow or continue a Eurodollar Loan or Swing
Loan, or to convert a Base Rate Loan into a Eurodollar Loan or Swing Loan on the
date specified in a notice given pursuant to Section 1.6(a) or 1.7 hereof,

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

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

then, upon the demand of such Lender, the Borrowers shall pay to such Lender
such amount as will reimburse such Lender for such loss, cost or expense. If any
Lender makes such a claim for compensation, it shall provide to the Borrower
Representative, with a copy to the Administrative Agent, a certificate setting
forth the amount of such loss, cost or expense in reasonable detail (including
an explanation of the basis for and the computation of such loss, cost or
expense) and the amounts shown on such certificate shall be conclusive if
reasonably determined.

Section 1.13. Commitment Terminations. (a) Optional Revolving Credit
Terminations. The Borrowers shall have the right at any time and from time to
time, upon five (5) Business Days prior written notice to the Administrative
Agent (or such shorter period of time agreed to by the Administrative Agent), to
terminate the Revolving Credit Commitments without premium or penalty and in
whole or in part, any partial termination to be (i) in an amount not less than
$5,000,000 and (ii) allocated ratably among the Lenders in proportion to their
respective Revolver Percentages, provided that the Revolving Credit Commitments
may not be reduced to an amount less than the sum of the aggregate principal
amount of Revolving Loans, Swing

 

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Loans, and L/C Obligations then outstanding. Any termination of the Revolving
Credit Commitments below the L/C Sublimit or the Swing Line Sublimit then in
effect shall reduce the L/C Sublimit and Swing Line Sublimit, as applicable, by
a like amount. The Administrative Agent shall give prompt notice to each Lender
of any such termination of the Revolving Credit Commitments.

(b) [Reserved].

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

Section 1.14. Substitution of Lenders. In the event (a) the Borrowers receive a
claim from any Lender for compensation under Section 10.3 or 13.1 hereof,
(b) the Borrower Representative receives notice from any Lender of any
illegality pursuant to Section 10.1 hereof, (c) any Lender is then a Defaulting
Lender or such Lender is a Subsidiary or Affiliate of a Person who has been
deemed insolvent or becomes the subject of a bankruptcy or insolvency proceeding
or a receiver or conservator has been appointed for any such Person, or (d) a
Lender fails to consent to an amendment or waiver requested under Section 13.13
hereof at a time when the Required Lenders have approved such amendment or
waiver (any such Lender referred to in clause (a), (b), (c), or (d) above being
hereinafter referred to as an “Affected Lender”), the Borrowers may, in addition
to any other rights the Borrowers may have hereunder or under applicable law,
require, at their expense, any such Affected Lender to assign, at par, without
recourse, all of its interest, rights, and obligations hereunder (including all
of its Commitments and the Loans and participation interests in Letters of
Credit and other amounts at any time owing to it hereunder and the other Loan
Documents) to an Eligible Assignee specified by the Borrowers, provided that
(i) such assignment shall not conflict with or violate any law, rule or
regulation or order of any court or other governmental authority, (ii) the
Borrowers shall have paid to the Affected Lender all monies (together with
amounts due such Affected Lender under Section 1.12 hereof as if the Loans owing
to it were prepaid rather than assigned) other than such principal owing to it
hereunder, and (iii) the assignment is entered into in accordance with, and
subject to the consents required by, Section 13.12 hereof (provided any
assignment fees and reimbursable expenses due thereunder shall be paid by the
Borrowers).

Section 1.15. Defaulting Lenders. Anything contained herein to the contrary
notwithstanding, in the event that any Lender at any time is a Defaulting
Lender, then (a) during any Defaulting Lender Period with respect to such
Defaulting Lender, such Defaulting Lender shall be deemed not to be a “Lender”
for purposes of voting on any matters (including the granting of any consents or
waivers) with respect to any of the Loan Documents and such Defaulting Lender’s
Commitments shall be excluded for purposes of determining “Required Lenders”
(provided that the foregoing shall not permit an increase in such Lender’s
Commitments or an extension of the maturity date of such Lender’s Loans or other
Obligations without such Lender’s consent); (b) to the extent permitted by
applicable law, until such time as the Defaulting Lender Excess with respect to
such Defaulting Lender shall have been reduced to zero, any voluntary prepayment
of the Loans shall, if the Administrative Agent so directs at the time of making
such voluntary prepayment, be applied to the Loans of other Lenders as if such
Defaulting Lender had no Loans outstanding; (c) such Defaulting Lender’s
Commitments and outstanding Loans shall be excluded for purposes of calculating
any commitment fee payable to

 

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Lenders pursuant to Section 2.1 in respect of any day during any Defaulting
Lender Period with respect to such Defaulting Lender, and such Defaulting Lender
shall not be entitled to receive any fee pursuant to Section 2.1 with respect to
such Defaulting Lender’s Commitment in respect of any Defaulting Lender Period
with respect to such Defaulting Lender (and any Letter of Credit fee otherwise
payable to a Lender who is a Defaulting Lender shall instead be paid to the L/C
Issuer for its use and benefit); (d) the utilization of Commitments as at any
date of determination shall be calculated as if such Defaulting Lender had
funded all Loans of such Defaulting Lender; and (e) if so requested by the L/C
Issuer at any time during the Defaulting Lender Period with respect to such
Defaulting Lender, the Borrowers shall deliver to the Administrative Agent cash
collateral in an amount equal to such Defaulting Lender’s Percentage of L/C
Obligations then outstanding (to be, held by the Administrative Agent as set
forth in Section 9.4 hereof). No Commitment of any Lender shall be increased or
otherwise affected, and, except as otherwise expressly provided in this
Section 1.15, performance by the Borrowers of their obligations hereunder and
the other Loan Documents shall not be excused or otherwise modified as a result
of the operation of this Section 1.15. The rights and remedies against a
Defaulting Lender under this Section 1.15 are in addition to other rights and
remedies which the Borrowers may have against such Defaulting Lender and which
the Administrative Agent or any Lender may have against such Defaulting Lender.

Section 1.16. Joint and Several. Each of the Borrowers hereby acknowledges and
agrees that it has joint and several liability on the Loans, Notes,
Reimbursement Obligations, Hedging Liability, Funds Transfer and Deposit Account
Liability and on all Obligations owed by the Borrower under this Agreement and
the other Loan Documents and that such liability is absolute and unconditional
and shall not in any manner be affected or impaired by any acts or omissions
whatsoever by the Administrative Agent, the L/C Issuers or any Lender, and
without limiting the generality of the foregoing, each of the Borrowers’ joint
and several liability on the Loans, Notes, Reimbursement Obligations, Hedging
Liability, Funds Transfer and Deposit Account Liability and other Obligations
under this Agreement and the other Loan Documents shall not be impaired by any
acceptance by the Administrative Agent, any L/C Issuer or any Lender of any
other security for or guarantors upon the Loans, Notes, Reimbursement
Obligations, Hedging Liability, Funds Transfer and Deposit Account Liability or
any other Obligations under this Agreement or any other Loan Document or by any
failure, neglect or omission on the Administrative Agent’s, any L/C Issuer’s or
any Lender’s part to resort to any one or all of the Borrowers for payment of
the Loans, Notes, Reimbursement Obligations, Hedging Liability, Funds Transfer
and Deposit Account Liability or the other Obligations under this Agreement or
any other Loan Document or to realize upon or protect any collateral security
therefor. Each of the Borrowers’ joint and several liability hereunder shall not
in any manner be impaired or affected by who receives or uses the proceeds of
the Loans, or the Letters of Credit, or for what purposes such proceeds are
used, and each of the Borrowers waives notice of requests for extensions of
credit issued by, and the Loans and Letters of Credit made to or for the account
of, any other Borrower. Each of the Borrowers hereby agrees not to exercise or
enforce any right of exoneration, contribution, reimbursement, recourse, or
subrogation available to any such Borrower for payment under this Agreement or
any other Loan Document against any party liable therefor unless and until all
Obligations owing to the Administrative Agent, the L/C Issuers and the Lenders
have been paid and satisfied in full and the Commitments have expired or
otherwise terminated (it being agreed the foregoing does not restrict
reimbursement of expenses between the Borrowers in the ordinary course of
business). Such joint and several

 

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liability of each of the Borrowers shall also not be impaired or affected by
(and each Lender, each L/C Issuer and the Administrative Agent, without notice
to anyone, is hereby authorized to make from time to time) any sale, pledge,
surrender, compromise, settlement, release, renewal, extension, indulgence,
alteration, substitution, exchange, change in, modification or disposition of
any collateral security for the Loans, Notes, Reimbursement Obligations, Hedging
Liability, Funds Transfer and Deposit Account Liability or the other Obligations
under this Agreement or any other Loan Document or of any guaranty thereof. In
order to enforce payment of the Loans, Notes, Reimbursement Obligations, Hedging
Liability, Funds Transfer and Deposit Account Liability and the other
Obligations under this Agreement and the other Loan Documents, foreclose or
otherwise realize on any collateral security therefor, and to exercise the
rights granted to the Lenders, the L/C Issuers and/or the Administrative Agent
hereunder and thereunder and under applicable law, no Lender, L/C Issuer or the
Administrative Agent shall be under any obligation at any time to first resort
to any collateral security, property, liens or any other rights or remedies
whatsoever, and the Lenders, the L/C Issuers and/or the Administrative Agent
shall have the right to enforce the Loans, Notes, Reimbursement Obligations,
Hedging Liability, Funds Transfer and Deposit Account Liability and the other
Obligations under this Agreement and the other Loan Documents irrespective of
whether or not other proceedings or steps are pending seeking resort to or
realization upon or from any of the foregoing. Each of the Borrowers hereby
expressly waives and surrenders any defense to its joint and several liability
on the Loans, Notes, Reimbursement Obligations, Hedging Liability, Funds
Transfer and Deposit Account Liability or other Obligations under this Agreement
or any other Loan Document based upon any of the foregoing. In furtherance
thereof, each of the Borrowers agrees that wherever in this Agreement it is
provided that a Borrower is liable for a payment such obligation is the joint
and several obligation of each of the Borrowers.

Section 1.17. Borrower Representative. Each Borrower hereby irrevocably appoints
and designates Parent (“Borrower Representative”) as its representative and
agent for all purposes under the Loan Documents, including requests for Loans
and Letters of Credit, designation of interest rates, delivery or receipt of
communications, preparation and delivery of financial reports, receipt and
payment of Obligations, requests for waivers, amendments or other
accommodations, actions under the Loan Documents (including in respect of
compliance with covenants), and all other dealings with the Lenders, the L/C
Issuers and/or the Administrative Agent. Borrower Representative hereby
irrevocably accepts such appointment. Each of the Lenders, the L/C Issuers and
the Administrative Agent shall be entitled to rely upon, and shall be fully
protected in relying upon, any notice or communication (including any notice of
borrowing) delivered by Borrower Representative on behalf of the Borrowers. Each
of the Lenders, the L/C Issuers and/or the Administrative Agent may give any
notice or communication with the Borrowers (or any one or more of them)
hereunder to Borrower Representative on behalf of such Borrower or Borrowers.
Each of the Lenders, the L/C Issuers and/or the Administrative Agent shall have
the right, in its discretion, to deal exclusively with Borrower Representative
for any or all purposes under the Loan Documents. Each of the Borrowers agrees
that any notice, election, communication, representation, agreement or
undertaking made on its behalf by Borrower Representative shall be binding upon
and enforceable against it.

Section 1.18. Incremental Commitment Increases. (a) Borrower Representative may,
by written notice to the Administrative Agent (whereupon the Administrative
Agent shall promptly deliver a copy to each of the Lenders), request (i) at any
time prior to the Acquisition Loan

 

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Commitment Expiry Date, one or more increases in the Acquisition Loan
Commitments (each such increase, an “Acquisition Loan Commitment Increase”)
and/or (ii) at any time prior to the Revolving Credit Termination Date, one or
more increases in the Revolving Credit Commitments (each such increase, a
“Revolving Credit Commitment Increase” and, together with any Acquisition Loan
Commitment Increase, the “Incremental Commitment Increases”), provided that:
(A) at the time of each such request and upon the Incremental Facility Closing
Date, (1) each of the conditions set forth in Section 7.1 (it being understood
that all references to “Credit Event” in Section 7.1 shall be deemed to also
refer to a request for and effectiveness of an Incremental Commitment Increase),
(2) the Loan Parties shall be in compliance on a pro forma basis with the
covenants contained in Section 8.23 recomputed as of the last day of the
most-recently ended fiscal quarter of Borrowers for which financial statements
are available and (3) the Borrowers shall have delivered a certificate of the
chief financial officer (or other officer acceptable to Administrative Agent) to
the effect set forth in clauses (1) and (2), together with reasonably detailed
calculations demonstrating compliance with clause (2) above; (B) each
Acquisition Loan Commitment Increase and each Revolving Credit Commitment
Increase shall be in an integral multiple of $10,000,000, provided that such
amount may be less than $10,000,000 if such amount represents all the remaining
availability under the Incremental Commitment Increases permitted by clause
(C) below; (C) the aggregate principal amount of all Incremental Commitment
Increases shall not exceed $35,000,000; and (D) if such request is made prior to
both the Acquisition Loan Commitment Expiry Date and the Revolving Credit
Termination Date, the proportions of Acquisition Loan Commitment Increase and
Revolving Credit Commitment Increase shall be approved by the Administrative
Agent.

(b) Each notice from the Borrower Representative pursuant to this Section shall
set forth the requested amount of the relevant Incremental Commitment Increase.
Any such requested Incremental Commitment Increase shall be first made to all
existing Lenders on a pro rata basis. To the extent that the existing Lenders
decline to increase their applicable Commitments, or decline to increase their
applicable Commitments to the amount requested by the Borrower Representative,
the Administrative Agent, in consultation with the Borrower Representative, will
use its reasonable efforts to arrange for other Persons to become a Lender
hereunder and to issue commitments in an amount equal to the amount of the
increase in the applicable Commitments requested by the Borrower Representative
and not accepted by the existing Lenders (each existing Lender or other Person
electing to extend an Incremental Commitment Increase, an “Additional Lender”),
provided that (i) no Lender shall be obligated to provide a Incremental
Commitment Increase as a result of any such request by the Borrower
Representative and (ii) any Additional Lender which is not an existing Lender
shall be subject to the approval of the Administrative Agent (and, in the case
of any Revolving Credit Commitment Increase, the L/C Issuer and Swing Line
Lender) and the Borrower Representative (which approval shall not be
unreasonably withheld). Each Additional Lender, the Loan Parties and the
Administrative Agent shall enter into an amendment (an “Incremental Facility
Amendment”) to this Agreement to evidence the Incremental Commitment Increase
and such other Loan Documents as may be requested by the Administrative Agent.
An Incremental Facility Amendment may, without the consent of any other Lenders,
effect such amendments to any Loan Documents as may be necessary or appropriate,
in the opinion of the Administrative Agent, to effect the provisions of this
Section.

 

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(c) In addition to the conditions set forth above, the effectiveness of any
Incremental Facility Amendment shall, unless otherwise agreed to by the
Administrative Agent and the Additional Lenders, be subject to the satisfaction
on the date thereof (each, an “Incremental Facility Closing Date”) of each of
the following conditions: (i) the execution and delivery of Incremental Facility
Amendment by the Loan Parties, the Additional Lenders and Administrative Agent;
(ii) the payment by the Borrowers of such fees and other compensation to the
Additional Lenders as the Borrower Representative and such Additional Lenders
shall agree; (iii) the payment by the Borrowers of such arrangement fees or
other fees to the Administrative Agent as the Borrower Representative and the
Administrative Agent may agree; (iv) the Borrowers shall deliver to the
Administrative Agent certificates of the secretary of each Loan Party attaching
a true, complete and correct copy of the constituent documents and resolutions
of such Loan Party authorizing the borrowing and/or guarantees under the
Incremental Commitment Increase, it being understood and agreed that such
resolutions may be adopted at any time and provide for borrowings under
Incremental Commitment Increases from time to time requested; (v) if requested
by any Additional Lender a Note issued to such Additional Lender to the extent
necessary to reflect the Incremental Commitment Increase of such Additional
Lender and (vi) the Loan Parties and the Additional Lender shall have delivered
such other instruments, documents and agreements as the Administrative Agent may
reasonably have requested. The Administrative Agent shall notify each Lender as
to the effectiveness of each Incremental Commitment Increase, and at such time
the applicable Commitments under, and for all purposes of, this Agreement shall
be increased by the aggregate amount of such Incremental Commitment Increases.

(d) In connection with a Revolving Credit Commitment Increase hereunder, the
Lenders with Revolving Credit Commitments and the Borrowers agree that,
notwithstanding anything to the contrary in this Agreement, (i) the Borrowers
shall, in coordination with the Administrative Agent, (x) repay outstanding
Revolving Loans of such Lenders, and/or obtain Revolving Loans from such other
Lenders (including the Additional Lenders), or (y) take such other actions as
reasonably may be required by the Administrative Agent, in each case to the
extent necessary so that all of the Lenders with Revolving Credit Commitments
effectively participate in each of the outstanding Revolving Loans pro rata on
the basis of their Revolver Percentages (determined after giving effect to any
increase in the Revolving Credit Commitments pursuant to this Section),
(ii) each Lender with a Revolving Credit Commitment immediately prior to such
increase will automatically and without further act be deemed to have assigned
to each Additional Lender providing a portion of such Revolving Credit
Commitment Increase and each such Additional Lender will automatically and
without further act be deemed to have assumed, a portion of such Lender’s
participations hereunder in outstanding Letters of Credit and Swing Loans such
that, after giving effect to such Revolving Credit Commitment Increase and each
such deemed assignment and assumption of participations, the percentage of the
aggregate outstanding participations hereunder in Letters of Credit and
participations hereunder in Swing Loans held by each Lender with a Revolving
Credit Commitment (including each such Additional Lender) will equal such
Lender’s Revolver Percentage, and (iii) the Borrowers shall pay to such Lenders
any costs of the type referred to in Section 1.12 in connection with any
repayment and/or Revolving Loans required pursuant to preceding clause (i). The
parties hereto hereby agree that the minimum borrowing, pro rata borrowing and
pro rata payment requirements contained elsewhere in this Agreement shall not
apply to the transactions effected pursuant to the immediately preceding
sentence.

 

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(e) In connection with a Acquisition Loan Commitment Increase under this
Section, the Lenders with Acquisition Loan Commitments and the Borrowers agree
that, notwithstanding anything to the contrary in this Agreement, (i) the
Borrowers shall, in coordination with the Administrative Agent, (x) repay
outstanding Acquisition Loans of such Lenders, and/or obtain Acquisition Loans
from such other Lenders (including the Additional Lenders), or (y) take such
other actions as reasonably may be required by the Administrative Agent, in each
case to the extent necessary so that all of the Lenders with Acquisition Loan
Commitments effectively participate in each of the outstanding Acquisition Loans
pro rata on the basis of their Acquisition Loan Percentages (determined after
giving effect to any increase in the Acquisition Loan Commitments pursuant to
this Section), and (ii) the Borrowers shall pay to such Lenders any costs of the
type referred to in Section 1.12 in connection with any repayment and/or
Acquisition Loans required pursuant to preceding clause (i). The parties hereto
hereby agree that the minimum borrowing, pro rata borrowing and pro rata payment
requirements contained elsewhere in this Agreement shall not apply to the
transactions effected pursuant to the immediately preceding sentence.

SECTION 2. Fees.

Section 2.1. Fees.

(a) Revolving Credit Commitment Fee. The Borrowers shall pay to the
Administrative Agent for the ratable account of the Lenders in accordance with
their Revolver Percentages a commitment fee at the rate per annum equal to the
Applicable Margin (computed on the basis of a year of 360 days and the actual
number of days elapsed) on the average daily Unused Revolving Credit
Commitments. Such commitment fee shall be payable quarterly in arrears on the
last day of each March, June, September, and December in each year (commencing
on the first such date occurring after the date hereof) and on the scheduled
Revolving Credit Termination Date, unless the Revolving Credit Commitments are
terminated in whole on an earlier date, in which event the commitment fee for
the period to the date of such termination in whole shall be paid on the date of
such termination.

(b) Acquisition Loan Commitment Fee. The Borrowers shall pay to the
Administrative Agent for the ratable account of the Lenders in accordance with
their Acquisition Loan Percentages a commitment fee at the rate per annum equal
to the Applicable Margin (computed on the basis of a year of 360 days and the
actual number of days elapsed) on the average daily Unused Acquisition Loan
Commitments. Such commitment fee shall be payable quarterly in arrears on the
last day of each March, June, September, and December in each year (commencing
on the first such date occurring after the date hereof) and on the scheduled
Acquisition Loan Commitment Expiry Date, unless the Acquisition Loan Commitments
are terminated in whole on an earlier date, in which event the commitment fee
for the period to the date of such termination in whole shall be paid on the
date of such termination.

(c) Letter of Credit Fees. On the date of issuance or extension, or increase in
the amount, of any Letter of Credit pursuant to Section 1.3 hereof, the
Borrowers shall pay to the L/C Issuer for its own account a fronting fee equal
to 0.125% of the face amount of (or of the increase in the face amount of) such
Letter of Credit. Quarterly in arrears, on the last day of each March, June,
September, and December, commencing on the first such date occurring after the

 

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date hereof, the Borrowers shall pay to the Administrative Agent, for the
ratable benefit of the Lenders in accordance with their Revolver Percentages, a
letter of credit fee at a rate per annum equal to the Applicable Margin
(computed on the basis of a year of 360 days and the actual number of days
elapsed) in effect during each day of such quarter applied to the daily average
face amount of Letters of Credit outstanding during such quarter. In addition,
the Borrowers shall pay to the L/C Issuer for its own account the L/C Issuer’s
standard issuance, drawing, negotiation, amendment, assignment, and other
administrative fees for each Letter of Credit as established by the L/C Issuer
from time to time.

(d) Administrative Agent Fees. The Borrowers shall pay to the Administrative
Agent, for its own use and benefit, the fees agreed to between the
Administrative Agent and the Borrowers in a fee letter dated November 1, 2012,
or as otherwise agreed to in writing between them.

(e) Audit Fees. The Borrowers shall pay to the Administrative Agent for its own
use and benefit charges for audits of the Collateral performed by the
Administrative Agent or its agents or representatives in such amounts as the
Administrative Agent may from time to time request (the Administrative Agent
acknowledging and agreeing that such charges shall be computed in the same
manner as it at the time customarily uses for the assessment of charges for
similar collateral audits); provided, however, that in the absence of any Event
of Default, the Borrowers shall not be required to pay the Administrative Agent
for more than one (1) such audit per calendar year.

SECTION 3. Place and Application of Payments.

Section 3.1. Place and Application of Payments. All payments of principal of and
interest on the Loans and the Reimbursement Obligations, and of all other
Obligations payable by the Borrowers under this Agreement and the other Loan
Documents, shall be made by the Borrowers to the Administrative Agent by no
later than 12:00 Noon (Chicago time) on the due date thereof at the office of
the Administrative Agent in Chicago, Illinois (or such other location as the
Administrative Agent may designate to the Borrower Representative), for the
benefit of the Lender(s) or L/C Issuer entitled thereto. Any payments received
after such time shall be deemed to have been received by the Administrative
Agent on the next Business Day. All such payments shall be made in U.S. Dollars,
in immediately available funds at the place of payment, in each case without
set-off or counterclaim. The Administrative Agent will promptly thereafter cause
to be distributed like funds relating to the payment of principal or interest on
Loans and on Reimbursement Obligations in which the Lenders have purchased
Participating Interests ratably to the Lenders and like funds relating to the
payment of any other amount payable to any Lender to such Lender, in each case
to be applied in accordance with the terms of this Agreement. If the
Administrative Agent causes amounts to be distributed to the Lenders in reliance
upon the assumption that the Borrowers will make a scheduled payment and such
scheduled payment is not so made, each Lender shall, on demand, repay to the
Administrative Agent the amount distributed to such Lender together with
interest thereon in respect of each day during the period commencing on the date
such amount was distributed to such Lender and ending on (but excluding) the
date such Lender repays such amount to the Administrative Agent, at a rate per
annum equal to: (i) from the date the distribution was made to the date two
(2) Business Days after payment by such Lender is due hereunder, the Federal
Funds Rate for each such day and (ii) from the date two (2) Business Days after
the date such payment is due from such Lender to the date such payment is made
by such Lender, the Base Rate in effect for each such day.

 

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Anything contained herein to the contrary notwithstanding (including, without
limitation, Section 1.9(b) hereof), all payments and collections received in
respect of the Obligations and all proceeds of the Collateral received, in each
instance, by the Administrative Agent or any of the Lenders after acceleration
or the final maturity of the Obligations or termination of the Commitments as a
result of an Event of Default shall be remitted to the Administrative Agent and
distributed as follows:

(a) first, to the payment of any outstanding costs and expenses incurred by the
Administrative Agent, and any security trustee therefor, in monitoring,
verifying, protecting, preserving or enforcing the Liens on the Collateral, in
protecting, preserving or enforcing rights under the Loan Documents, and in any
event including all costs and expenses of a character which the Borrowers have
agreed to pay the Administrative Agent under Section 13.15 hereof (such funds to
be retained by the Administrative Agent for its own account unless it has
previously been reimbursed for such costs and expenses by the Lenders, in which
event such amounts shall be remitted to the Lenders to reimburse them for
payments theretofore made to the Administrative Agent);

(b) second, to the payment of the Swing Loans, both for principal and accrued
but unpaid interest;

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

(d) fourth, to the payment of principal on the Loans (other than Swing Loans),
unpaid Reimbursement Obligations, together with amounts to be held by the
Administrative Agent as collateral security for any outstanding L/C Obligations
pursuant to Section 9.4 hereof (until the Administrative Agent is holding an
amount of cash equal to the then outstanding amount of all such L/C
Obligations), and Hedging Liability, the aggregate amount paid to, or held as
collateral security for, the Lenders and L/C Issuer and, in the case of Hedging
Liability, their Affiliates to be allocated pro rata in accordance with the
aggregate unpaid amounts owing to each holder thereof;

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

(f) finally, to the Borrowers or whoever else may be lawfully entitled thereto.

Section 3.2. Account Debit. Each of the Borrowers hereby irrevocably authorizes
the Administrative Agent to charge any of the Borrowers’ deposit accounts
maintained with the Administrative Agent for the amounts from time to time
necessary to pay any then due Obligations; provided that each of the Borrowers
acknowledges and agrees that the

 

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Administrative Agent shall not be under an obligation to do so and the
Administrative Agent shall not incur any liability to any Borrower or any other
Person for the Administrative Agent’s failure to do so.

SECTION 4. GUARANTIES AND COLLATERAL.

Section 4.1. Guaranties. The payment and performance of the Obligations, Hedging
Liability, and Funds Transfer and Deposit Account Liability shall at all times
be guaranteed by each of Parent’s direct and indirect Subsidiaries (other than
the Borrowers and any Excluded Subsidiaries) pursuant to Section 12 hereof or
pursuant to one or more guaranty agreements in form and substance acceptable to
the Administrative Agent, as the same may be amended, modified or supplemented
from time to time (individually a “Guaranty” and collectively the “Guaranties”
and each such Loan Party executing and delivering this Agreement as a Guarantor
(including any Subsidiary hereafter executing and delivering a Joinder Agreement
as a Guarantor in the form called for by Section 12 hereof) or a separate
Guaranty being referred to herein as a “Guarantor” and collectively the
“Guarantors”); provided that, a Foreign Subsidiary shall not be required to be a
Guarantor if providing such Guaranty would cause a material adverse effect on
the Borrowers’ federal income tax liability; provided, further, that the Vietnam
Subsidiary shall not be required to be a Guarantor unless so requested by the
Administrative Agent after the occurrence and during the continuance of an Event
of Default. The Borrower Representative may at any time designate an Excluded
Subsidiary as a Non-Excluded Subsidiary; provided that (i) immediately before
and after such designation, no Event of Default shall have occurred and be
continuing, (ii) the Administrative Agent shall have consented to such
designation and (iii) the Borrowers shall have otherwise complied with this
Section 4 in connection therewith.

Section 4.2. Collateral. The Obligations, Hedging Liability, and Funds Transfer
and Deposit Account Liability shall be secured by valid, perfected, and
enforceable Liens on all right, title, and interest of each Borrower and each
Guarantor in all of its accounts, chattel paper, instruments, documents, general
intangibles, letter-of-credit rights, supporting obligations, deposit accounts,
investment property, inventory, equipment, fixtures, commercial tort claims, and
certain other Property, whether now owned or hereafter acquired or arising, and
all proceeds thereof; provided, that: (i) until an Event of Default has occurred
and is continuing and thereafter until otherwise required by the Administrative
Agent or the Required Lenders, Liens on local petty cash accounts maintained by
the Borrowers and the Guarantors in proximity to their operations need not be
perfected provided that the total amount on deposit at any one time not so
perfected shall not exceed $500,000 in the aggregate and Liens on payroll
accounts maintained by the Borrowers and the Guarantors need not be perfected
provided the total amount on deposit at any time does not exceed the current
amount of their payroll obligations (the “Excluded Accounts”), (ii) until an
Event of Default has occurred and is continuing and thereafter until otherwise
required by the Administrative Agent or the Required Lenders, Liens on vehicles
which are subject to a certificate of title law need not be perfected provided
that the total value of such property at any one time not so perfected shall not
exceed $500,000 in the aggregate (the “Excluded Vehicles”), and (iii) Liens on
the Voting Stock of a Foreign Subsidiary shall be limited to 66% of the total
outstanding Voting Stock of such Foreign Subsidiary if providing a Lien on 100%
of the Voting Stock of such Foreign Subsidiary would cause a material adverse
effect on the Borrowers’ federal income tax liability; provided, further, that
the Borrowers shall not be required to pledge the stock or other equity
interests issued by the

 

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Vietnam Subsidiary under the local laws of Vietnam unless so requested by the
Administrative Agent after the occurrence and during the continuance of an Event
of Default (the Voting Stock excluded from Administrative Agent’s Lien by this
clause (iii), the “Excluded Stock”). Each of the Borrowers and each of the
Guarantors acknowledges and agrees that the Liens on the Collateral shall be
granted to the Administrative Agent for the benefit of the holders of the
Obligations, the Hedging Liability, and the Funds Transfer and Deposit Account
Liability and shall be valid and perfected first priority Liens subject,
however, to the proviso appearing at the end of the preceding sentence and to
Liens permitted by Section 8.8 hereof, in each case pursuant to one or more
Collateral Documents from such Persons, each in form and substance satisfactory
to the Administrative Agent.

Section 4.3. Liens on Real Property. In the event that any Borrower or any
Guarantor owns or hereafter acquires any real property, the applicable Borrower
shall, or shall cause such Guarantor to, execute and deliver to the
Administrative Agent a mortgage or deed of trust acceptable in form and
substance to the Administrative Agent for the purpose of granting to the
Administrative Agent (or a security trustee therefor) a Lien on such real
property to secure the Obligations, Hedging Liability, and Funds Transfer and
Deposit Account Liability, shall pay all taxes, costs, and expenses incurred by
the Administrative Agent in recording such mortgage or deed of trust, and shall
supply to the Administrative Agent at the Borrowers’ cost and expense a survey,
environmental report, hazard insurance policy, appraisal report, and a
mortgagee’s policy of title insurance from a title insurer acceptable to the
Administrative Agent insuring the validity of such mortgage or deed of trust and
its status as a first Lien (subject to Liens permitted by this Agreement) on the
real property encumbered thereby and such other instrument, documents,
certificates, and opinions reasonably required by the Administrative Agent in
connection therewith; provided, however, that unless otherwise required by the
Administrative Agent or the Required Lenders during the existence of any Event
of Default, neither any Borrower nor any Guarantor shall be required to grant
any such mortgages or deeds of trust, and, in no event, will the Borrowers be
required to grant a mortgage or deed of trust with respect to the Excluded Real
Estate.

Section 4.4. Further Assurances.

(a) Each of the Borrowers agrees that it shall, and shall cause each of the
Guarantors to, from time to time at the request of the Administrative Agent or
the Required Lenders, execute and deliver such documents and do such acts and
things as the Administrative Agent or the Required Lenders may reasonably
request in order to provide for or perfect or protect such Liens on the
Collateral.

(b) In the event any Borrower or any Guarantor forms or acquires any other
Subsidiary after the date hereof, except as otherwise provided in Sections 4.1
and 4.2 above, the Loan Parties shall do the following:

(i) upon such formation or acquisition, cause such newly formed or acquired
Subsidiary to execute and deliver to Administrative Agent a Joinder to each of
this Agreement (as a Borrower or Guarantor as Administrative Agent shall direct)
and the Security Agreement, deliver a collateral assignment of the purchase
agreement (if applicable) and deliver documents with respect to the Acquired
Business of the type described in Section 7.2(b) (if applicable), Section 7.2(e)
and Section 7.2(f); and

 

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(ii) within thirty (30) days after such formation or acquisition (or such longer
period as the Administrative Agent may permit) execute and deliver such other
Collateral Documents and such other instruments, documents, certificates, and
opinions of a type described in Section 7.2 or otherwise reasonably required by
the Administrative Agent in connection therewith.

SECTION 5. DEFINITIONS; INTERPRETATION.

Section 5.1. Definitions. The following terms when used herein shall have the
following meanings:

“Acquired Business” means the entity or assets acquired by any Loan Party or a
Subsidiary in an Acquisition, whether before or after the date hereof.

“Acquisition” means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of any business or division
of a Person, (b) the acquisition of in excess of 50% of the capital stock,
partnership interests, membership interests or equity of any Person (other than
a Person that is a Subsidiary), or otherwise causing any Person to become a
Subsidiary, or (c) a merger or consolidation or any other combination with
another Person (other than a Person that is a Subsidiary) provided that the
applicable Borrower or the Subsidiary is the surviving entity.

“Acquisition Loan” is defined in Section 1.1.

“Acquisition Loan Commitment” means, as to any Lender, the obligation of such
Lender to make its Acquisition Loan Percentage of any Acquisition Loan in the
maximum aggregate amount set forth opposite such Lender’s name on Schedule I
attached hereto and made a part hereof. The Acquisition Loan Commitments of the
Lenders aggregate $30,000,000 on the Closing Date.

“Acquisition Loan Commitment Expiry Date” means earliest to occur of (a) the
second anniversary of the date of this Agreement or (b) any date the Acquisition
Loan Commitment terminates pursuant to Section 9.2 or 9.3 hereof.

Acquisition Loan Commitment Increase is defined in Section 1.18.

“Acquisition Loan Credit” means the credit facility for the Acquisition Loans
described in Section 1.1 hereof.

“Acquisition Loan Maturity Date” means November 15, 2017 or such earlier date on
which the Acquisition Loans are accelerated.

“Acquisition Loan Notes” is defined in Section 1.11.

“Acquisition Loan Percentage” means, for each Lender, the percentage of the
Acquisition Loan Commitments represented by such Lender’s Acquisition Loan
Commitment or, if the Acquisition Loan Commitments have been terminated or have
expired, the percentage held by such Lender of the aggregate principal amount of
all Acquisition Loans then outstanding.

 

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“Additional Lender” is defined in Section 1.18.

“Adjusted LIBOR” is defined in Section 1.4(b) hereof.

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

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

“Affiliate” means any Person directly or indirectly controlling or controlled
by, or under direct or indirect common control with, another Person. A Person
shall be deemed to control another Person for purposes of this definition if
such Person possesses, directly or indirectly, the power to direct, or cause the
direction of, the management and policies of the other Person, whether through
the ownership of voting securities, common directors, trustees or officers, by
contract or otherwise; provided that, in any event for purposes of this
definition, any Person that owns, directly or indirectly, 5% or more of the
securities having the ordinary voting power for the election of directors or
governing body of a corporation or 5% or more of the partnership or other
ownership interest of any other Person (other than as a limited partner of such
other Person) will be deemed to control such corporation or other Person.

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

 

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“Applicable Margin” means, with respect to Loans, Reimbursement Obligations, and
the commitment fees and letter of credit fees payable under Section 2.1 hereof,
until the first Pricing Date, the rates per annum shown opposite Level II below,
and thereafter from one Pricing Date to the next the Applicable Margin means the
rates per annum determined in accordance with the following schedule:

 

LEVEL   

TOTAL FUNDED

DEBT/EBITDA RATIO

FOR SUCH PRICING DATE

  

APPLICABLE MARGIN FOR

BASE RATE LOANS UNDER
REVOLVING CREDIT AND

ACQUISITION LOAN CREDIT

AND REIMBURSEMENT

OBLIGATIONS SHALL BE:

 

APPLICABLE MARGIN

FOR EURODOLLAR

LOANS UNDER

REVOLVING CREDIT AND

ACQUISITION LOAN

CREDIT AND LETTER OF

CREDIT FEE SHALL BE:

 

APPLICABLE

MARGIN FOR

COMMITMENT FEE

SHALL BE:

IV

   Greater than or equal to 2.0 to 1.0    1.00%   2.00%   .375%

III

  

Less than 2.00 to 1.0, but greater than or equal to

1.50 to 1.0

   .75%   1.75%   .375%

II

  

Less than 1.50 to 1.0,

but greater than or equal

to 1.0 to 1.0

   .50%   1.50%   .30%

I

   Less than 1.0 to 1.0    .25%   1.25%   .25%

For purposes hereof, the term “Pricing Date” means, for any fiscal quarter of
the Borrowers ending on or after December 31, 2012, the date on which the
Administrative Agent is in receipt of the Borrowers’ most recent financial
statements (and, in the case of the year-end financial statements, audit report)
for the fiscal quarter then ended, pursuant to Section 8.5 hereof. The
Applicable Margin shall be established based on the Total Funded Debt/EBITDA
Ratio for the most recently completed fiscal quarter and the Applicable Margin
established on a Pricing Date shall remain in effect until the next Pricing
Date. If the Borrowers have not delivered their financial statements by the date
such financial statements (and, in the case of the year-end financial
statements, audit report) are required to be delivered under Section 8.5 hereof,
until such financial statements and audit report are delivered, the Applicable
Margin shall be the highest Applicable Margin (i.e., Level IV shall apply). If
the Borrowers subsequently deliver such financial statements before the next
Pricing Date, the Applicable Margin established by such late delivered financial
statements shall take effect from the date of delivery until the next Pricing
Date. In all other circumstances, the Applicable Margin established by such
financial statements shall be in effect from the Pricing Date that occurs
immediately after the end of the fiscal quarter covered by such financial
statements until the next Pricing Date. Each determination of the Applicable
Margin made by the Administrative Agent in accordance with the foregoing shall
be conclusive and binding on the Borrowers and the Lenders if reasonably
determined.

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

 

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“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

“Assignment and Acceptance” means an assignment and acceptance entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 13.12 hereof), and accepted by the Administrative Agent, in
substantially the form of Exhibit G or any other form approved by the
Administrative Agent.

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

“Base Rate” is defined in Section 1.4(a) hereof.

“Base Rate Loan” means a Loan bearing interest at a rate specified in
Section 1.4(a) hereof.

“BMO Harris” means BMO Harris Bank N.A., and its successors and assigns.

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

“Borrower Representative” is defined in Section 1.17 hereof.

“Borrowing” means the total of Loans of a single type advanced, continued for an
additional Interest Period, or converted from a different type into such type by
the Lenders under a Credit on a single date and, in the case of Eurodollar
Loans, for a single Interest Period. Borrowings of Loans are made and maintained
ratably from each of the Lenders under a Credit according to their Percentages
of such Credit. A Borrowing is “advanced” on the day Lenders advance funds
comprising such Borrowing to the Borrowers, is “continued” on the date a new
Interest Period for the same type of Loans commences for such Borrowing, and is
“converted” when such Borrowing is changed from one type of Loans to the other,
all as determined pursuant to Section 1.6 hereof. Borrowings of Swing Loans are
made by the Swing Line Lender in accordance with the procedures set forth in
Section 1.7 hereof.

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

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

 

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

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

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. §§9601 et seq., and any future
amendments.

“Change of Control” means any of (a) the acquisition by any “person” or “group”
(as such terms are used in sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) at any time of beneficial ownership of 10% or more of
the outstanding capital stock or other equity interests of the Parent on a
fully-diluted basis, (b) the failure of individuals who are members of the board
of directors of the Parent on the Closing Date (together with any new or
replacement directors whose initial nomination for election was approved by a
majority of the directors who were either directors on the Closing Date or
previously so approved) to constitute a majority of the board of directors of
the Parent, (c) the Parent ceases to own, legally and beneficially, 100% of the
equity interests of the Loan Parties and their Subsidiaries, or (d) any “Change
of Control” (or words of like import), as defined in any agreement or indenture
relating to any issue of Indebtedness of the Borrower or any Subsidiary shall
occur.

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

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

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

“Collateral Account” is defined in Section 9.4 hereof.

“Collateral Documents” means the Security Agreement, and all other mortgages,
deeds of trust, security agreements, pledge agreements, assignments, financing
statements and other documents as shall from time to time secure or relate to
the Obligations, the Hedging Liability, and the Funds Transfer and Deposit
Account Liability or any part thereof.

“Commitments” means the Revolving Credit Commitments and the Acquisition Loan
Commitments.

“Compliance Certificate” is defined in Section 8.5 hereof.

 

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

“Credit” means any of the Revolving Credit or Acquisition Loan Credit.

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

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

“Defaulting Lender” means any Lender that (a) has failed to fund any portion of
the Loans, participations in L/C Obligations or participations in Swing Line
Loans required to be funded by it hereunder (herein, a “Defaulted Loan”) within
two (2) Business Days of the date required to be funded by it hereunder unless
such failure has been cured, (b) has otherwise failed to pay over to the
Administrative Agent or any other Lender any other amount required to be paid by
it hereunder within two (2) Business Days of the date when due, unless the
subject of a good faith dispute or unless such failure has been cured, or
(c) has been deemed insolvent or become the subject of a bankruptcy or
insolvency proceeding or a receiver or conservator has been appointed for such
Lender.

“Defaulting Lender Excess” means, with respect to any Defaulting Lender, the
excess, if any, of such Defaulting Lender’s Percentage of the aggregate
outstanding principal amount of Loans of all Lenders (calculated as if all
Defaulting Lenders other than such Defaulting Lender had funded all of their
respective Defaulted Loans) over the aggregate outstanding principal amount of
all Loans of such Defaulting Lender.

“Defaulting Lender Period” means, with respect to any Defaulting Lender, the
period commencing on the date upon which such Lender first became a Defaulting
Lender and ending on the earliest of the following dates: (i) the date on which
all Commitments are cancelled or terminated and/or the Obligations are declared
or become immediately due and payable and (ii) the date on which (a) such
Defaulting Lender is no longer insolvent, the subject of a bankruptcy or
insolvency proceeding or, if applicable, under the direction of a receiver or
conservator, (b) the Defaulting Lender Excess with respect to such Defaulting
Lender shall have been reduced to zero (whether by the funding by such
Defaulting Lender of any Defaulted Loans of such Defaulting Lender or
otherwise), and (c) such Defaulting Lender shall have delivered to Borrower
Representative and the Administrative Agent a written reaffirmation of its
intention to honor its obligations hereunder with respect to its Commitments.

“Designated Disbursement Account” means the account of any Borrower maintained
with the Administrative Agent or its Affiliate and designated in writing to the
Administrative Agent as the Borrowers’ Designated Disbursement Account (or such
other account as the Borrower Representative and the Administrative Agent may
otherwise agree).

“Disposition” means the sale, lease, conveyance or other disposition of
Property, other than sales or other dispositions expressly permitted under
Sections 8.10(a), 8.10(b), 8.10(e), 8.10(f) or 8.10(g) hereof.

 

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“Domestic Subsidiary” means a Subsidiary that is not a Foreign Subsidiary.

“Dormant Subsidiary” means Sparton of Canada, Ltd., a corporation organized
under the laws of Canada and Sparton Engineered Products, Inc. – Flora Group, an
Illinois corporation.

“EBITDA” means, with reference to any period, Net Income for such period plus
all amounts deducted in arriving at such Net Income amount in respect of
(a) Interest Expense for such period, (b) federal, state, and local income taxes
for such period, (c) depreciation of fixed assets and amortization of intangible
assets for such period, (d) non-recurring fees, costs and expenses related to
the Related Transaction which do not exceed $500,000 in the aggregate and which
are approved by Administrative Agent, and (e) non-recurring fees, costs and
expenses related to Permitted Acquisitions which do not to exceed $500,000 in
the aggregate for any one Permitted Acquisition or $1,000,000 in the aggregate
in any fiscal year and which are approved by the Administrative Agent. For
purposes of calculating compliance with the financial covenants set forth in
Section 8.23, “EBITDA” shall include the EBITDA of any Acquired Business for any
applicable period prior to the consummation of the applicable Permitted
Acquisition, determined pursuant to financial information delivered to and
approved by Administrative Agent prior to the consummation of such Permitted
Acquisition for such period. Administrative Agent shall have approval rights
over any pro forma EBITDA adjustments relating to any Acquisition, and such pro
forma adjustments must be substantiated by a due diligence report provided by a
third party. Notwithstanding the foregoing, for purposes of calculating the
financial covenants set forth in Section 8.23, EBITDA for Onyx EMS and RPT shall
be deemed to be the following amounts for the following periods: (A) for the
fiscal quarter ending December 31, 2012, $1,350,000; (B) for the fiscal quarter
ending September 30, 2012, $1,350,000; (C) for the fiscal quarter ending
June 30, 2012, $1,350,000; and (D) for the for the fiscal quarter ending
March 31, 2012, $1,350,000.

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund, and (d) any other Person (other than a natural person) approved
by (i) the Administrative Agent, (ii) in the case of any assignment of a
Revolving Credit Commitment, the L/C Issuer, and (iii) unless an Event of
Default has occurred and is continuing, the Borrower Representative (each such
approval not to be unreasonably withheld or delayed); provided that
notwithstanding the foregoing, “Eligible Assignee” shall not include any
Borrower or any Guarantor or any of such Borrower’s or such Guarantor’s
Affiliates or Subsidiaries.

“Eligible Line of Business” means any business engaged in as of the date of this
Agreement by the Borrowers or any of its Subsidiaries, and other complimentary
or related business within the electromechanical device, electronics or related
industry.

“Environmental Claim” means any investigation, notice, violation, demand,
allegation, action, suit, injunction, judgment, order, consent decree, penalty,
fine, lien, proceeding or claim (whether administrative, judicial or private in
nature) arising (a) pursuant to, or in connection with an actual or alleged
violation of, any Environmental Law, (b) in connection with any Hazardous
Material, (c) from any abatement, removal, remedial, corrective or response
action in connection with a Hazardous Material, Environmental Law or order of a
governmental authority or (d) from any actual or alleged damage, injury, threat
or harm to health, safety, natural resources or the environment.

 

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“Environmental Law” means any current or future Legal Requirement pertaining to
(a) the protection of health, safety and the indoor or outdoor environment,
(b) the conservation, management or use of natural resources and wildlife,
(c) the protection or use of surface water or groundwater, (d) the management,
manufacture, possession, presence, use, generation, transportation, treatment,
storage, disposal, Release, threatened Release, abatement, removal, remediation
or handling of, or exposure to, any Hazardous Material or (e) pollution
(including any Release to air, land, surface water or groundwater), and any
amendment, rule, regulation, order or directive issued thereunder.

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

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

“Eurodollar Reserve Percentage” is defined in Section 1.4(b) hereof.

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

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

“Excess Availability” means, as of any time the same is to be determined, the
amount (if any) by which (a) the Revolving Credit Commitment as then in effect
exceeds (b) the aggregate principal amount of Revolving Loans, Swing Loans, and
L/C Obligations then outstanding.

“Excluded Accounts” is defined in Section 4.2.

“Excluded Real Estate” means the property located at 9621 Coors Road,
Albuquerque, New Mexico 87140.

“Excluded Stock” is defined in Section 4.2.

“Excluded Subsidiary” means each of the Dormant Subsidiaries.

“Excluded Vehicles” is defined in Section 4.2.

“Federal Funds Rate” means the fluctuating interest rate per annum described in
part (i) of clause (b) of the definition of Base Rate appearing in
Section 1.4(a) hereof.

“Fixed Charge Coverage Ratio” means, as of the date of determination thereof,
the ratio of (a) EBITDA minus Capital Expenditures to (b) Fixed Charges, in each
case, for the four fiscal quarters then ended.

 

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“Fixed Charges” means, with reference to any period, the sum of (a) all payments
of principal made or to be made during such period with respect to Indebtedness
of the Parent and its Subsidiaries, (b) cash Interest Expense paid or payable by
the Parent and its Subsidiaries during such period, (c) cash federal, state, and
local income taxes paid or payable by the Parent and its Subsidiaries during
such period, and (d) Restricted Payments made during such period.

“Foreign Subsidiary” means each Subsidiary which (a) is organized under the laws
of a jurisdiction other than the United States of America or any state thereof
or the District of Columbia, (b) conducts substantially all of its business
outside of the United States of America, and (c) has substantially all of its
assets outside of the United States of America.

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.

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

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

“Governmental Authority” means any federal, state, District of Columbia,
municipal, national or other government, governmental department, commission,
board, bureau, court, agency or instrumentality or political subdivision thereof
or any entity or officer exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to any government or any court, in
each case whether associated with a state of the United States, the United
States, or a foreign entity or government.

“Guarantor” and “Guarantors” each is defined in Section 4.1 hereof.

“Guaranty” and “Guaranties” each is defined in Section 4.1 hereof.

“Hazardous Material” means any substance, chemical, compound, product, solid,
gas, liquid, waste, byproduct, pollutant, contaminant or material which is
hazardous or toxic, and includes, without limitation, (a) asbestos,
polychlorinated biphenyls and petroleum (including crude oil or any fraction
thereof) and (b) any material classified or regulated as “hazardous” or “toxic”
or words of like import pursuant to an Environmental Law.

“Hazardous Material Activity” means any activity, event or occurrence involving
a Hazardous Material, including, without limitation, the manufacture,
possession, presence, use, generation, transportation, treatment, storage,
disposal, Release, threatened Release, abatement, removal, remediation, handling
of or corrective or response action to any Hazardous Material.

 

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“Hedging Liability” means the liability of any Loan Party or any Subsidiary to
any of the Lenders, or any Affiliates of such Lenders, in respect of any
interest rate, foreign currency, and/or commodity swap, exchange, cap, collar,
floor, forward, future or option agreement, or any other similar interest rate,
currency or commodity hedging arrangement, as any Loan Party or such Subsidiary,
as the case may be, may from time to time enter into with any one or more of the
Lenders party to this Agreement or their Affiliates.

“Hostile Acquisition” means the acquisition of the capital stock or other equity
interests of a Person through a tender offer or similar solicitation of the
owners of such capital stock or other equity interests which has not been
approved (prior to such acquisition) by resolutions of the Board of Directors of
such Person or by similar action if such Person is not a corporation, or as to
which such approval has been withdrawn.

“Incremental Commitment Increase” is defined in Section 1.18.

“Incremental Facility Amendment” is defined in Section 1.18.

“Incremental Facility Closing Date” is defined in Section 1.18.

“Indebtedness” means for any Person (without duplication) (a) all indebtedness
created, assumed or incurred in any manner by such Person representing money
borrowed (including by the issuance of debt securities), (b) all indebtedness
for the deferred purchase price of property or services (other than trade
accounts payable arising in the ordinary course of business which are not more
than ninety (90) days past due), (c) all indebtedness secured by any Lien upon
Property of such Person, whether or not such Person has assumed or become liable
for the payment of such indebtedness, (d) all Capitalized Lease Obligations of
such Person, and (e) all obligations of such Person on or with respect to
letters of credit, bankers’ acceptances and other extensions of credit whether
or not representing obligations for borrowed money.

“Interest Expense” means, with reference to any period, the sum of all interest
charges (including imputed interest charges with respect to Capitalized Lease
Obligations and all amortization of debt discount and expense) of the Parent and
its Subsidiaries for such period determined on a consolidated basis in
accordance with GAAP.

“Interest Payment Date” means (a) with respect to any Eurodollar Loan, the last
day of each Interest Period with respect to such Eurodollar Loan and on the
maturity date and, if the applicable Interest Period is longer than (3) three
months, on each day occurring every three (3) months after the commencement of
such Interest Period, (b) with respect to any Base Rate Loan (other than Swing
Loans), the last day of every calendar quarter) and on the maturity date, and
(c) as to any Swing Loan, (i) bearing interest by reference to the Base Rate,
the last day of every calendar month, and on the maturity date and (ii) bearing
interest by reference to the Swing Line Lender’s Quoted Rate, the last day of
the Interest Period with respect to such Swing Loan, and on the maturity date.

 

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“Interest Period” means the period commencing on the date a Borrowing of
Eurodollar Loans or Swing Loans (bearing interest at the Swing Line Lender’s
Quoted Rate) is advanced, continued, or created by conversion and ending (a) in
the case of Eurodollar Loans, 1, 2, 3, or 6 months thereafter and (b) in the
case of Swing Loans bearing interest at the Swing Line Lender’s Quoted Rate, on
the date one (1) to five (5) Business Days thereafter as mutually agreed by the
Borrower Representative and the Swing Line Lender, provided, however, that:

(i) no Interest Period shall extend beyond the final maturity date of the
relevant Loans;

(ii) no Interest Period with respect to any portion of the Acquisition Loans
shall extend beyond a date on which the Borrowers are required to make a
scheduled payment of principal on the Acquisition Loans unless the sum of
(a) the aggregate principal amount of Acquisition Loans that are Base Rate Loans
plus (b) the aggregate principal amount of Acquisition Loans that are Eurodollar
Loans with Interest Periods expiring on or before such date equals or exceeds
the principal amount to be paid on the Acquisition Loans on such payment date;

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

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

“Joinder Agreement” means (a) with respect to this Agreement, an agreement
pursuant to which a new Loan Party becomes a party to this Agreement
substantially in form of Exhibit F and (b) with respect to the Security
Agreement, an agreement pursuant to which a new Loan Party becomes a party to
the Security Agreement substantially in form of Annex VI thereto.

“L/C Issuer” means BMO Harris Bank N.A., in its capacity as the issuer of
Letters of Credit hereunder, and its successors in such capacity as provided in
Section 1.3(h) hereof.

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

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

“Legal Requirement” means any treaty, convention, statute, law, regulation,
ordinance, license, permit, governmental approval, injunction, judgment, order,
consent decree or other requirement of any governmental authority, whether
federal, state, or local.

 

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“Lenders” means and includes BMO Harris Bank N.A and the other financial
institutions from time to time party to this Agreement, including each assignee
Lender pursuant to Section 13.12 hereof and, unless the context otherwise
requires, the Swing Line Lender.

“Lending Office” is defined in Section 10.4 hereof.

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

“LIBOR” is defined in Section 1.4(b) hereof.

“LIBOR01 Page” is defined in Section 1.4(b) hereof.

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

“Loan” means any Revolving Loan, Swing Loan or Acquisition Loan, whether
outstanding as a Base Rate Loan or Eurodollar Loan or otherwise, each of which
is a “type” of Loan hereunder.

“Loan Documents” means this Agreement, the Notes (if any), the Applications, the
Guaranties, the Collateral Documents, and each other instrument or document to
be delivered hereunder or thereunder or otherwise in connection therewith.

“Loan Parties” means, collectively, each Borrower and each Guarantor a party
hereto.

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

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

“Mortgages” means, collectively, any mortgages or deeds of trust delivered to
the Administrative Agent pursuant to Section 4.3 hereof, as the same may be
amended, modified, supplemented or restated from time to time.

“Net Cash Proceeds” means, as applicable, (a) with respect to any Disposition by
a Person, cash and cash equivalent proceeds received by or for such Person’s
account, net of (i) reasonable direct costs relating to such Disposition and
(ii) sale, use or other transactional taxes paid or payable by such Person as a
direct result of such Disposition, (b) with respect to any Event of Loss of a
Person, cash and cash equivalent proceeds received by or for such Person’s
account (whether as a result of payments made under any applicable insurance
policy therefor or in connection with condemnation proceedings or otherwise),
net of reasonable direct

 

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costs incurred in connection with the collection of such proceeds, awards or
other payments, and (c) with respect to any offering of equity securities of a
Person or the issuance of any Indebtedness by a Person, cash and cash equivalent
proceeds received by or for such Person’s account, net of reasonable legal,
underwriting, and other fees and expenses incurred as a direct result thereof.

“Net Income” means, with reference to any period, the net income (or net loss)
of the Parent and its Subsidiaries for such period computed on a consolidated
basis in accordance with GAAP; provided that there shall be excluded from Net
Income (a) the net income (or net loss) of any Person accrued prior to the date
it becomes a Subsidiary of, or has merged into or consolidated with, any
Borrower or another Subsidiary, and (b) the net income (or net loss) of any
Person (other than a Subsidiary) in which any Borrower or any Subsidiary has a
equity interest in, except to the extent of the amount of dividends or other
distributions actually paid to any Borrower or any Subsidiary during such
period.

“Non-Excluded Subsidiary” means any Subsidiary of the Parent other than an
Excluded Subsidiary.

“Note” and “Notes” each is defined in Section 1.11 hereof.

“Obligations” means all obligations (monetary (including post-petition interest,
allowed or not) or otherwise) of the Borrowers to pay principal and interest on
the Loans, all Reimbursement Obligations owing under the Applications, all fees
and charges payable hereunder, and all other payment obligations of any Loan
Party or any Subsidiary of any Loan Party arising under or in relation to any
Loan Document, all Hedging Liability and all Funds Transfer and Deposit Account
Liability, in each case whether now existing or hereafter arising, due or to
become due, direct or indirect, absolute or contingent, and howsoever evidenced,
held or acquired.

“OFAC” means the United States Department of Treasury Office of Foreign Assets
Control.

“OFAC Event” means the event specified in Section 8.15 hereof.

“OFAC Sanctions Programs” means all laws, regulations, and Executive Orders
administered by OFAC, including without limitation, the Bank Secrecy Act,
anti-money laundering laws (including, without limitation, the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, Pub. L. 107-56 (a/k/a the USA Patriot Act)), and
all economic and trade sanction programs administered by OFAC, any and all
similar United States federal laws, regulations or Executive Orders, and any
similar laws, regulators or orders adopted by any State within the United
States.

“OFAC SDN List” means the list of the Specially Designated Nationals and Blocked
Persons maintained by OFAC.

“Onyx EMS” is defined in the “Preliminary Statement” to this Agreement.

“Parent” is defined in the introductory paragraph to this Agreement.

 

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

“Participating Lender” is defined in Section 1.3(e) hereof.

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

“Percentage” means for any Lender its Revolver Percentage or Acquisition Loan
Percentage, as applicable; and where the term “Percentage” is applied on an
aggregate basis (including, without limitation, Section 11.6 hereof), such
aggregate percentage shall be calculated by aggregating the separate components
of the Revolver Percentage and Acquisition Loan Percentage, and expressing such
components on a single percentage basis.

“Permitted Acquisition” means (i) the Related Transaction and (ii) any other
Acquisition with respect to which all of the following conditions shall have
been satisfied:

(a) the Acquired Business is in an Eligible Line of Business and is organized
under the laws of, and has its primary operations within, the United States of
America;

(b) the Acquisition shall not be a Hostile Acquisition;

(c) the financial statements of the Acquired Business shall have been audited by
a nationally recognized accounting firm or such financial statements shall have
undergone review by an accounting firm satisfactory to Administrative Agent of a
scope satisfactory to the Administrative Agent as part of the Acquisition due
diligence;

(d) for Acquisitions with total consideration of less than $5,000,000, the
Borrower Representative shall have notified the Administrative Agent and Lenders
not less than 30 days prior to any such Acquisition and furnished to the
Administrative Agent and Lenders at such time reasonable details as to such
Acquisition (including sources and uses of funds therefor);

(e) for Acquisitions with total consideration of $5,000,000 or more, the
Borrower Representative shall have notified the Administrative Agent and Lenders
not less than 45 days prior to any such Acquisition and furnished to the
Administrative Agent and Lenders at such time reasonable details as to such
Acquisition (including sources and uses of funds therefor), 3-year (or such
lesser period, as available, but not less than 2 years) historical financial
information of the Acquired Business and 1-year pro forma financial forecasts of
the Parent and its Subsidiaries, including the Acquired Business, on a
consolidated basis after giving effect to the Acquisition and covenant
compliance calculations reasonably satisfactory to the Administrative Agent;

(f) if the Acquisition is structured as a merger involving any Borrower or any
Loan Party (other than a Borrower), such Borrower or Loan Party, as applicable,
is the surviving Person;

(g) if a new Subsidiary is formed or acquired as a result of or in connection
with the Acquisition, the Borrowers shall have complied with the requirements of
Section 4 hereof in connection therewith to the extent required by such Section;

 

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(h) after giving effect to the Acquisition and any Credit Event in connection
therewith, no Default or Event of Default shall exist;

(i) demonstration to the satisfaction of the Administrative Agent of pro forma
compliance with all financial covenants (calculated on a trailing four quarters
basis) contained in Section 8.23 hereof after giving effect to the Acquisition,
and compliance with a pro forma Total Funded Debt/EBITDA Ratio of .25x below the
applicable covenant level set forth in Section 8.23;

(j) after giving effect to the Acquisition and any Credit Event in connection
therewith, the Borrowers shall have not less than $10,000,000 of Excess
Availability;

(k) the Total Consideration for the Acquired Business shall not exceed
$15,000,000 and, when taken together with the Total Consideration for all
Acquired Businesses acquired during the term of this Agreement, shall not exceed
$25,000,000 in the aggregate; and

(l) Borrower Representative shall certify the satisfaction of the foregoing
conditions on or prior to the date such Acquisition is consummated.

“Permitted Refinancing Indebtedness” means, with respect to any Indebtedness,
any extensions, renewals or refinancing of any such Indebtedness (as used in the
definition, the refinancing Indebtedness); provided, that (a) the amount of such
Indebtedness is not increased at the time of extension, renewal or refinancing
except by an amount equal to a reasonable premium or other reasonable amount
paid, and fees and expenses reasonably incurred, in connection with such
refinancing and by an amount equal to any existing commitments unutilized
thereunder; (b) the refinancing Indebtedness is on the whole and in all material
respects on terms no less favorable (as adjusted for current market conditions)
to the Loan Parties than such Indebtedness; (c) the weighted average life to
maturity of the refinancing Indebtedness is greater than the weighted average
life to maturity of such Indebtedness; (d) if such Indebtedness is
(i) Subordinated Debt, the refinancing Indebtedness is subordinated to the
Obligations to the same extent that such Indebtedness is subordinated to the
Obligations; or (ii) unsecured, such refinancing Indebtedness shall be
unsecured; and (e) the refinancing Indebtedness is incurred by the same Person
or Persons (or their successor(s)) that initially incurred (including, without
limitation, by guaranty) such Indebtedness.

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

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

 

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“Premises” means the real property owned or leased by any Loan Party or any
Subsidiary.

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

“RCRA” means the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments
of 1984, 42 U.S.C. §§6901 et seq., and any future amendments.

“Regulatory Change” shall mean the introduction of, or any change in any
applicable law, treaty, rule, regulation or guideline or in the interpretation
or administration thereof by any Governmental Authority or any central bank or
other fiscal, monetary or other authority having jurisdiction over
Administrative Agent or any Lender or its lending offices (for the avoidance of
doubt and notwithstanding anything herein to the contrary, the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all requests, rules, guidelines or
directives thereunder issued in connection therewith, and all requests, rules,
guidelines or directives promulgated by the Bank for International Settlements,
the Basel Committee on Banking Supervision (or any successor or similar
authority) or the United States regulatory authorities, in each case pursuant to
Basel III, shall in each case be deemed to be a “Regulatory Change” hereunder,
regardless of the date enacted, adopted or issued).

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

“Related Transaction” is defined in the “Preliminary Statement” to this
Agreement.

“Related Transaction Documents” shall mean that certain Related Transaction
Purchase Agreement and all agreements, instruments and documents executed or
delivered in connection therewith.

“Related Transaction Purchase Agreement” is defined in the “Preliminary
Statement” to this Agreement.

“Release” means any spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injecting, escaping, leaching, migration, dumping, or disposing
into the indoor or outdoor environment, including, without limitation, the
abandonment or discarding of barrels, drums, containers, tanks or other
receptacles containing or previously containing any Hazardous Material.

“Required Lenders” means, as of the date of determination thereof, Lenders whose
outstanding Loans and interests in Letters of Credit, Unused Revolving Credit
Commitments and Unused Acquisition Loan Commitments constitute 66-2/3% or more
of the sum of the total outstanding Loans, interests in Letters of Credit,
Unused Revolving Credit Commitments and Unused Acquisition Loan Commitments of
the Lenders; provided that, at any time there are only two Lenders, both such
Lenders.

“Restricted Payment” is defined in Section 8.12 hereof.

 

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

“Revolving Credit” means the credit facility for making Revolving Loans and
Swing Loans and issuing Letters of Credit described in Sections 1.2, 1.3 and 1.7
hereof.

“Revolving Credit Commitment” means, as to any Lender, the obligation of such
Lender to make Revolving Loans and to participate in Swing Loans and Letters of
Credit issued for the account of the Borrowers hereunder in an aggregate
principal or face amount at any one time outstanding not to exceed the amount
set forth opposite such Lender’s name on Schedule 1 attached hereto and made a
part hereof, as the same may be reduced or modified at any time or from time to
time pursuant to the terms hereof. The Borrowers and the Lenders acknowledge and
agree that the Revolving Credit Commitments of the Lenders aggregate $35,000,000
on the date hereof.

“Revolving Credit Commitment Increase” is defined in Section 1.18.

“Revolving Credit Termination Date” means November 15, 2017 or such earlier date
on which the Revolving Credit Commitments are terminated in whole pursuant to
Section 1.13, 9.2 or 9.3 hereof.

“Revolving Loan” is defined in Section 1.2 hereof and, as so defined, includes a
Base Rate Loan or a Eurodollar Loan, each of which is a “type” of Revolving Loan
hereunder.

“Revolving Note” is defined in Section 1.11 hereof.

“RPT” is defined in the “Preliminary Statement” to this Agreement.

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

“Security Agreement” means that certain Security Agreement dated the date of
this Agreement among the Borrowers and the Guarantors and the Administrative
Agent, as the same may be amended, modified, supplemented or restated from time
to time.

“Seller” is defined in the “Preliminary Statement” to this Agreement.

“Sparton Onyx” is defined in the “Preliminary Statement” to this Agreement.

“Subordinated Debt” means Indebtedness which is subordinated in right of payment
to the prior payment of the Obligations pursuant to subordination provisions
approved in writing by the Administrative Agent and is otherwise pursuant to
documentation that is, which is in an amount that is, and which contains
interest rates, payment terms, maturities, amortization schedules, covenants,
defaults, remedies and other material terms that are in form and substance, in
each case satisfactory to the Administrative Agent. As of the date of this
Agreement, there is no Subordinated Debt.

 

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

“Swing Line” means the credit facility for making one or more Swing Loans
described in Section 1.7 hereof.

“Swing Line Lender” means Administrative Agent or one of its Affiliates, acting
in its capacity as the Lender of Swing Loans hereunder, or any successor Lender
acting in such capacity appointed pursuant to Section 13.12 hereof.

“Swing Line Lender’s Quoted Rate” is defined in Section 1.7(c) hereof.

“Swing Line Sublimit” means $2,500,000, as reduced pursuant to the terms hereof.

“Swing Loan” and “Swing Loans” each is defined in Section 1.7 hereof.

“Swing Note” is defined in Section 1.11 hereof.

“Total Consideration” means, with respect to an Acquisition, the sum (but
without duplication) of (a) cash paid in connection with any Acquisition,
(b) indebtedness payable to the seller in connection with such Acquisition,
(c) the fair market value of any equity securities, including any warrants or
options therefor, delivered in connection with any Acquisition, (d) the present
value of covenants not to compete entered into in connection with such
Acquisition or other future payments which are required to be made over a period
of time and are not contingent upon any Loan Party or any Subsidiary meeting
financial performance objectives (exclusive of salaries paid in the ordinary
course of business) (discounted at the Base Rate), but only to the extent not
included in clause (a), (b) or (c) above, and (e) the amount of indebtedness
assumed in connection with such Acquisition.

“Total Funded Debt” means, at any time the same is to be determined, the sum
(but without duplication) of (a) all Indebtedness of the Parent and its
Subsidiaries at such time, and (b) all Indebtedness of any other Person which is
directly or indirectly guaranteed by any Loan Party or any Subsidiary or which
any Loan Party or any Subsidiary has agreed (contingently or otherwise) to
purchase or otherwise acquire or in respect of which any Loan Party or any
Subsidiary has otherwise assured a creditor against loss.

“Total Funded Debt/EBITDA Ratio” means, as of the last day of any fiscal quarter
of the Parent, the ratio of Total Funded Debt of the Parent and its Subsidiaries
as of the last day of such fiscal quarter to EBITDA of the Parent and its
Subsidiaries for the period of four fiscal quarters then ended.

 

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“Tranche A Acquisition Loan Amount” is defined in Section 1.8 hereof.

“Tranche A Acquisition Loans” is defined in Section 1.8 hereof.

“Tranche B Acquisition Loan Amount” is defined in Section 1.8 hereof.

“Tranche B Acquisition Loans” is defined in Section 1.8 hereof.

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

“Unused Acquisition Loan Commitments” means, at any time, the difference between
the Acquisition Loan Commitments then in effect and the aggregate outstanding
principal amount of all Acquisition Loans.

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

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

“Vietnam Subsidiary” means Spartronics Vietnam Co., Ltd., a limited liability
company organized in Vietnam.

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

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

“Wholly-Owned Subsidiary” means a Subsidiary of which all of the issued and
outstanding shares of capital stock (other than directors’ qualifying shares as
required by law) or other equity interests are owned by the Parent, any other
Borrower and/or one or more Wholly-Owned Subsidiaries within the meaning of this
definition.

Section 5.2. Interpretation. The foregoing definitions are equally applicable to
both the singular and plural forms of the terms defined. The words “hereof”,
“herein”, and “hereunder” and words of like import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. All references to time of day herein are references to Chicago,
Illinois, time unless otherwise specifically provided. Where the character or
amount of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, it shall be done in accordance with
GAAP except where such principles are inconsistent with the specific provisions
of this Agreement.

 

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Section 5.3. Change in Accounting Principles. If, after the date of this
Agreement, there shall occur any change in GAAP from those used in the
preparation of the financial statements referred to in Section 6.5 hereof and
such change shall result in a change in the method of calculation of any
financial covenant, standard or term found in this Agreement, either the
Borrower Representative or the Required Lenders may by notice to the Lenders and
the Borrower Representative, respectively, require that the Lenders and the
Borrowers negotiate in good faith to amend such covenants, standards, and terms
so as equitably to reflect such change in accounting principles, with the
desired result being that the criteria for evaluating the financial condition of
the Borrowers and their respective Subsidiaries shall be the same as if such
change had not been made. No delay by the Borrower Representative or the
Required Lenders in requiring such negotiation shall limit their right to so
require such a negotiation at any time after such a change in accounting
principles. Until any such covenant, standard, or term is amended in accordance
with this Section 5.3, financial covenants shall be computed and determined in
accordance with GAAP in effect prior to such change in accounting principles.
Without limiting the generality of the foregoing, the Borrowers shall neither be
deemed to be in compliance with any financial covenant hereunder nor out of
compliance with any financial covenant hereunder if such state of compliance or
noncompliance, as the case may be, would not exist but for the occurrence of a
change in accounting principles after the date hereof. Notwithstanding any other
provision contained herein, all terms of an accounting or financial nature used
herein shall be construed, and all computations of amounts and ratios referred
to herein shall be made, without giving effect to any election under Statement
of Financial Accounting Standards 159 (Codification of Accounting Standards
825-10) to value any Indebtedness or other liabilities of any Loan Party or any
Subsidiary at “fair value”, as defined therein.

SECTION 6. REPRESENTATIONS AND WARRANTIES.

Each of the Loan Parties represents and warrants to the Administrative Agent,
the Lenders, and the L/C Issuer as follows:

Section 6.1. Organization and Qualification. Each Borrower is duly organized,
validly existing, and in good standing as a corporation or limited liability
company, as applicable, under the laws of its respective jurisdiction of
organization, has full and adequate power to own its Property and conduct its
business as now conducted, and is duly licensed or qualified and in good
standing in each jurisdiction in which the nature of the business conducted by
it or the nature of the Property owned or leased by it requires such licensing
or qualifying, except where the failure to do so would not have a Material
Adverse Effect.

Section 6.2. Subsidiaries. Except as set forth on Schedule 6.2 hereto, each
Subsidiary is duly organized, validly existing, and in good standing under the
laws of the jurisdiction in which it is organized, has full and adequate power
to own its Property and conduct its business as now conducted, and is duly
licensed or qualified and in good standing in each jurisdiction in which the
nature of the business conducted by it or the nature of the Property owned or
leased by it requires such licensing or qualifying, except where the failure to
do so would not have a Material Adverse Effect. Schedule 6.2 hereto identifies
each Subsidiary, the jurisdiction of its organization, the percentage of issued
and outstanding shares of each class of its capital stock or other equity
interests owned by any Borrower and the other Subsidiaries and, if such
percentage is not 100% (excluding directors’ qualifying shares as required by
law), a description of each

 

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class of its authorized capital stock and other equity interests and the number
of shares of each class issued and outstanding. All of the outstanding shares of
capital stock and other equity interests of each Subsidiary are validly issued
and outstanding and fully paid and nonassessable and all such shares and other
equity interests indicated on Schedule 6.2 as owned by any Borrower or another
Subsidiary are owned, beneficially and of record, by such Borrower or such
Subsidiary free and clear of all Liens other than the Liens granted in favor of
the Administrative Agent pursuant to the Collateral Documents. There are no
outstanding commitments or other obligations of any Subsidiary of Parent to
issue, and no options, warrants or other rights of any Person to acquire, any
shares of any class of capital stock or other equity interests of any Subsidiary
of Parent.

Section 6.3. Authority and Validity of Obligations. Each of the Borrowers has
full right and authority to enter into this Agreement and the other Loan
Documents executed by it, to make the borrowings herein provided for, to grant
to the Administrative Agent the Liens described in the Collateral Documents
executed by such Borrower, and to perform all of its obligations hereunder and
under the other Loan Documents executed by it. Each of the Parent and each
Subsidiary has full right and authority to enter into the Loan Documents
executed by it, to guarantee the Obligations, Hedging Liability, and Funds
Transfer and Deposit Account Liability, to grant to the Administrative Agent the
Liens described in the Collateral Documents executed by such Person, and to
perform all of its obligations under the Loan Documents executed by it. The Loan
Documents delivered by the Borrowers and their respective Subsidiaries have been
duly authorized, executed, and delivered by such Persons and constitute valid
and binding obligations of the Borrowers and such Subsidiaries enforceable
against them in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors’ rights generally and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law); and this Agreement and the other Loan Documents
do not, nor does the performance or observance by any Borrower or any Subsidiary
of any of the matters and things herein or therein provided for, (a) contravene
or constitute a default under any provision of law or any judgment, injunction,
order or decree binding upon any Borrower or any Subsidiary or any provision of
the organizational documents (e.g., charter, certificate or articles of
incorporation and by-laws, certificate or articles of association and operating
agreement, partnership agreement, or other similar organizational documents) of
any Borrower or any Subsidiary, (b) contravene or constitute a default under any
covenant, indenture or agreement of or affecting any Borrower or any Subsidiary
or any of their Property, in each case where such contravention or default,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, or (c) result in the creation or imposition of any Lien
on any Property of any Borrower or any Subsidiary other than the Liens granted
in favor of the Administrative Agent pursuant to the Collateral Documents.

Section 6.4. Use of Proceeds; Margin Stock. The Borrowers shall use the proceeds
of the Acquisition Loans for their legal and proper business purposes including
to refinance existing indebtedness, to finance the Related Transactions, to
finance Capital Expenditures and future Permitted Acquisitions and to pay for
fees and expenses associated with the closing of this Agreement and foregoing
transactions, and the Borrowers shall use the proceeds of the Revolving Credit
for any of the foregoing purposes and for their general working capital
purposes; provided that such purposes are consistent with applicable Legal
Requirements.

 

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Neither any Loan Party nor any Subsidiary is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Loan or any other extension of
credit made hereunder will be used to purchase or carry any such margin stock or
to extend credit to others for the purpose of purchasing or carrying any such
margin stock. Margin stock (as hereinabove defined) constitutes less than 25% of
the assets of the Borrowers and their respective Subsidiaries which are subject
to any limitation on sale, pledge or other restriction hereunder.

Section 6.5. Financial Reports. The consolidated balance sheet of the Parent and
its Subsidiaries as at June 30, 2012, and the related consolidated statements of
income, retained earnings and cash flows of the Parent and its Subsidiaries for
the fiscal year then ended, and accompanying notes thereto, which financial
statements are accompanied by the audit report of BDO USA, LLP, independent
public accountants, and the unaudited interim consolidated balance sheet of the
Parent and its Subsidiaries as at September 30, 2012 and the related
consolidated statements of income, retained earnings and cash flows of the
Parent and its Subsidiaries for the three months then ended, heretofore
furnished to the Administrative Agent and the Lenders, fairly present the
consolidated financial condition of the Parent and its Subsidiaries as at said
dates and the consolidated results of their operations and cash flows for the
periods then ended in conformity with GAAP applied on a consistent basis.
Neither the Parent nor any Subsidiary has contingent liabilities which are
material to it other than as indicated on such financial statements or, with
respect to future periods, on the financial statements furnished pursuant to
Section 8.5 hereof.

Section 6.6. No Material Adverse Change. Since June 30, 2012, there has been no
change in the condition (financial or otherwise) or business of any Loan Party
or any Subsidiary except those occurring in the ordinary course of business,
none of which individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect.

Section 6.7. Full Disclosure. The statements and information furnished to the
Administrative Agent and the Lenders in connection with the negotiation of this
Agreement and the other Loan Documents and the commitments by the Lenders to
provide all or part of the financing contemplated hereby do not contain any
untrue statements of a material fact or omit a material fact necessary to make
the material statements contained herein or therein not misleading, the
Administrative Agent and the Lenders acknowledging that as to any projections
furnished to the Administrative Agent and the Lenders, each of the Loan Parties
only represents that the same were prepared on the basis of information and
estimates the Loan Parties believed to be reasonable.

Section 6.8. Trademarks, Franchises, and Licenses. Each of the Loan Parties and
the Subsidiaries own, possess, or have the right to use all necessary patents,
licenses, franchises, trademarks, trade names, trade styles, copyrights, trade
secrets, know how, and confidential commercial and proprietary information to
conduct their businesses as now conducted, without known conflict with any
patent, license, franchise, trademark, trade name, trade style, copyright or
other proprietary right of any other Person.

 

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Section 6.9. Governmental Authority and Licensing. Each of the Loan Parties and
the Subsidiaries have received all licenses, permits, and approvals of all
federal, state, and local governmental authorities, if any, necessary to conduct
their businesses, in each case where the failure to obtain or maintain the same
could reasonably be expected to have a Material Adverse Effect. No investigation
or proceeding which, if adversely determined, could reasonably be expected to
result in revocation or denial of any material license, permit or approval is
pending or, to the knowledge of any Loan Party, threatened.

Section 6.10. Good Title. Each of the Loan Parties and the Subsidiaries have
good and defensible title (or valid leasehold interests) to their assets as
reflected on the most recent consolidated balance sheet of the Parent and its
Subsidiaries furnished to the Administrative Agent and the Lenders (except for
sales of assets in the ordinary course of business), subject to no Liens other
than such thereof as are permitted by Section 8.8 hereof.

Section 6.11. Litigation and Other Controversies. There is no litigation or
governmental or arbitration proceeding or labor controversy pending, nor to the
knowledge of any Loan Party threatened, against any Loan Party or any Subsidiary
or any of their Property which if adversely determined, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.

Section 6.12. Taxes. All tax returns required to be filed by any Loan Party or
any Subsidiary in any jurisdiction have, in fact, been filed, and all taxes,
assessments, fees, and other governmental charges upon any Loan Party or any
Subsidiary or upon any of its Property, income or franchises, which are shown to
be due and payable in such returns, have been paid, except such taxes,
assessments, fees and governmental charges, if any, as are being contested in
good faith and by appropriate proceedings which prevent enforcement of the
matter under contest and as to which adequate reserves established in accordance
with GAAP have been provided. No Loan Party knows of any proposed additional tax
assessment against it or any of its Subsidiaries for which adequate provisions
in accordance with GAAP have not been made on their accounts. Adequate
provisions in accordance with GAAP for taxes on the books of each Loan Party and
each Subsidiary have been made for all open years, and for its current fiscal
period.

Section 6.13. Approvals. No authorization, consent, license or exemption from,
or filing or registration with, any court or governmental department, agency or
instrumentality, nor any approval or consent of any other Person, is or will be
necessary to the valid execution, delivery or performance by any Loan Party or
any Subsidiary of any Loan Document, except for such approvals which have been
obtained prior to the date of this Agreement and remain in full force and
effect.

Section 6.14. Affiliate Transactions. Neither any Loan Party nor any Subsidiary
is a party to any contracts or agreements with any of its Affiliates (other than
with Wholly-Owned Subsidiaries) on terms and conditions which are less favorable
to such Loan Party or such Subsidiary than would be usual and customary in
similar contracts or agreements between Persons not affiliated with each other.

 

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Section 6.15. Investment Company. Neither any Loan Party nor any Subsidiary is
an “investment company” or a company “controlled” by an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.

Section 6.16. ERISA. Each Loan Party and each other member of its Controlled
Group has fulfilled its obligations under the minimum funding standards of and
is in compliance in all material respects with ERISA and the Code to the extent
applicable to it and has not incurred any liability to the PBGC or a Plan under
Title IV of ERISA other than a liability to the PBGC for premiums under
Section 4007 of ERISA. Neither any Loan Party nor any Subsidiary has any
contingent liabilities with respect to any post-retirement benefits under a
Welfare Plan, other than liability for continuation coverage described in
article 6 of Title I of ERISA.

Section 6.17. Compliance with Laws. (a) Each of the Loan Parties and the
Subsidiaries are in compliance with the requirements of all federal, state and
local laws, rules and regulations applicable to or pertaining to their Property
or business operations (including, without limitation, the Occupational Safety
and Health Act of 1970, the Americans with Disabilities Act of 1990, and laws
and regulations establishing quality criteria and standards for air, water, land
and toxic or hazardous wastes and substances), except for any non-compliance
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

(b) Without limiting the representations and warranties set forth in
Section 6.17(a) above, except for those matters set forth on Schedule 6.17
hereto, and such matters, individually or in the aggregate, which could not
reasonably be expected to result in a Material Adverse Effect, each of the Loan
Parties represents and warrants that: (i) each of the Loan Parties and the
Subsidiaries, and each of the Premises, comply in all material respects with all
applicable Environmental Laws; (ii) each of the Loan Parties and the
Subsidiaries have obtained all governmental approvals required for their
operations and each of the Premises by any applicable Environmental Law;
(iii) neither any Loan Party nor any Subsidiary has, and no Loan Party has any
knowledge of any other Person who has, caused any Release, threatened Release or
disposal of any Hazardous Material at, on, about, or off any of the Premises in
any material quantity and, to the knowledge of any Loan Party, none of the
Premises are adversely affected by any Release, threatened Release or disposal
of a Hazardous Material originating or emanating from any other property;
(iv) none of the Premises contain and have contained any: (1) underground
storage tank, (2) material amounts of asbestos containing building material,
(3) landfills or dumps, (4) hazardous waste management facility as defined
pursuant to RCRA or any comparable state law, or (5) site on or nominated for
the National Priority List promulgated pursuant to CERCLA or any state remedial
priority list promulgated or published pursuant to any comparable state law;
(v) neither any Loan Party or any Subsidiary has used a material quantity of any
Hazardous Material or has conducted Hazardous Material Activity at any of the
Premises; (vi) neither any Loan Party nor any Subsidiary has any material
liability for response or corrective action, natural resource damage or other
harm pursuant to CERCLA, RCRA or any comparable state law; (vii) neither any
Loan Party nor any Subsidiary is subject to, has any notice or knowledge of or
is required to give any notice of any Environmental Claim involving any Loan
Party or any Subsidiary or any of the Premises, and there are no conditions or
occurrences at any of the Premises which could reasonably be anticipated to form
the basis for an Environmental Claim against any Loan Party or any Subsidiary or
such Premises; (viii) none of the Premises are subject to any, and no Loan Party
has any knowledge of any imminent restriction on the

 

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ownership, occupancy, use or transferability of the Premises in connection with
any (1) Environmental Law or (2) Release, threatened Release or disposal of a
Hazardous Material; and (ix) there are no conditions or circumstances at any of
the Premises which pose an unreasonable risk to the environment or the health or
safety of Persons.

Section 6.18. OFAC. (a) Each Borrower is in compliance with the requirements of
all OFAC Sanctions Programs applicable to it, (b) each Subsidiary of any
Borrower is in compliance with the requirements of all OFAC Sanctions Programs
applicable to such Subsidiary, (c) each Loan Party has provided to the
Administrative Agent, the L/C Issuer, and the Lenders all information regarding
such Loan Party and such Loan Party’s Affiliates and Subsidiaries necessary for
the Administrative Agent, the L/C Issuer, and the Lenders to comply with all
applicable OFAC Sanctions Programs, and (d) to the best of each Loan Party’s
knowledge, neither any Loan Party nor any of any Loan Party’s Affiliates or
Subsidiaries is, as of the date hereof, named on the current OFAC SDN List.

Section 6.19. Other Agreements. Neither any Loan Party nor any Subsidiary is in
default under the terms of any covenant, indenture or agreement of or affecting
such Person or any of its Property, which default if uncured could reasonably be
expected to have a Material Adverse Effect.

Section 6.20. Solvency. After giving effect to the Related Transaction, the Loan
Parties and their respective Subsidiaries are solvent, able to pay their debts
as they become due, and have sufficient capital to carry on their business and
all businesses in which they are about to engage.

Section 6.21. No Default. No Default or Event of Default has occurred and is
continuing.

Section 6.22. No Broker Fees. Neither the Administrative Agent nor any Lender
shall have any liability for any broker’s or finder’s fee or commission incurred
or owed by any Loan Party or its Affiliates with respect to the transactions
contemplated hereby or in connection with any Permitted Acquisition; and each of
the Borrowers hereby agrees to indemnify the Administrative Agent and the
Lenders against, and agree that they will hold the Administrative Agent and the
Lenders harmless from, any claim, demand, or liability for any such broker’s or
finder’s fees or commissions alleged to have been incurred in connection with
the transactions contemplated hereby or in connection with any Permitted
Acquisition and any expenses (including reasonable attorneys’ fees) arising in
connection with any such claim, demand, or liability.

Section 6.23. Related Transaction Purchase Agreement. The Loan Parties have
provided to the Administrative Agent a true and correct copy of the Related
Transaction Purchase Agreement. The Related Transaction Purchase Agreement is in
full force and effect and has not, except as reflected in amendments provided to
the Administrative Agent, been amended or modified in any material respect from
the version so delivered to the Administrative Agent, no material condition to
the effectiveness thereof has been waived and no material obligations of the
Seller thereunder have been waived, except to the extent approved in writing by
the Administrative Agent, and no Loan Party is aware of any default thereunder.
No

 

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authorization, consent, license, or exemption from, or filing or registration
with, any Governmental Authority, nor any material approval or consent of any
other Person, is or will be necessary to the valid execution, delivery, or
material performance by the Seller of the Related Transaction Purchase Agreement
or of any other instrument or document executed and delivered in connection
therewith, except for such thereof that have heretofore been obtained and remain
in full force and effect. As of the Closing Date, to the best of each of the
Loan Parties’ knowledge, all representations and warranties in the Related
Transaction Purchase Agreement are true and correct.

Section 6.24. Security Interest in Collateral. The provisions of the Collateral
Documents create legal and valid Liens on all the Collateral in favor of the
Administrative Agent, for the benefit of the Administrative Agent and the
Lenders, and such Liens constitute perfected and continuing Liens on the
Collateral, securing the Obligations, enforceable against the applicable Loan
Party and all third parties, and having priority over all other Liens on the
Collateral except, in the case of Permitted Liens, to the extent any such
Permitted Liens would have priority over the Liens in favor of the
Administrative Agent pursuant to any applicable law or agreement.

Section 6.25. Common Enterprise. The successful operation and condition of each
of the Loan Parties is dependent on the continued successful performance of the
functions of the group of the Loan Parties as a whole, and the successful
operation of each of the Loan Parties is dependent on the successful performance
and operation of each other Loan Party. Each Loan Party expects to derive
benefit (and its board of directors or other governing body has determined that
it may reasonably be expected to derive benefit), directly and indirectly, from
(a) successful operations of each of the other Loan Parties and (b) the credit
extended by the Lenders to the Borrowers hereunder, both in their separate
capacities and as members of the group of companies. Each Loan Party has
determined that execution, delivery, and performance of this Agreement and any
other Loan Documents to be executed by such Loan Party is within its purpose, in
furtherance of its direct and/or indirect business interests, will be of direct
and/or indirect benefit to such Loan Party, and is in its best interest.

Section 6.26. Subordinated Debt. The subordination provisions of any
Subordinated Debt are enforceable against the holders of such Subordinated Debt
by the Administrative Agent and the Lenders. All Obligations constitute senior
Indebtedness entitled to the benefits of the subordination provisions contained
in any Subordinated Debt.

SECTION 7. CONDITIONS PRECEDENT.

Section 7.1. All Credit Events. At the time of each Credit Event hereunder:

(a) each of the representations and warranties set forth herein and in the other
Loan Documents shall be and remain true and correct (i) if such date is the
Closing Date, on and as of such date and (ii) otherwise, in all material
respects (provided that if such representation or warranty is by its terms
qualified by concepts of materiality, such representation and warranty shall be
true and correct in all respects) on and as of such date, except to the extent
the same expressly relate to an earlier date;

 

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(b) no Default or Event of Default shall have occurred and be continuing or
would occur as a result of such Credit Event;

(c) in the case of a Borrowing the Administrative Agent shall have received the
notice required by Section 1.6 hereof, in the case of the issuance of any Letter
of Credit the L/C Issuer shall have received a duly completed Application for
such Letter of Credit together with any fees called for by Section 2.1 hereof,
and, in the case of an extension or increase in the amount of a Letter of
Credit, a written request therefor in a form acceptable to the L/C Issuer
together with fees called for by Section 2.1 hereof; and

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

Each request for a Borrowing hereunder and each request for the issuance of,
increase in the amount of, or extension of the expiration date of, a Letter of
Credit shall be deemed to be a representation and warranty by each of the Loan
Parties on the date on such Credit Event as to the facts specified in
subsections (a) through (c), both inclusive, of this Section; provided, however,
that the Lenders may continue to make advances under the Revolving Credit, in
the sole discretion of the Lenders with Revolving Credit Commitments,
notwithstanding the failure of the Borrowers to satisfy one or more of the
conditions set forth above and any such advances so made shall not be deemed a
waiver of any Default or Event of Default or other condition set forth above
that may then exist.

Section 7.2. Initial Credit Event. Before or concurrently with the initial
Credit Event:

(a) the Administrative Agent shall have received this Agreement duly executed by
the Borrowers, the Guarantors, and the Lenders;

(b) if requested by any Lender, the Administrative Agent shall have received for
such Lender such Lender’s duly executed Notes of the Borrowers dated the date
hereof and otherwise in compliance with the provisions of Section 1.11 hereof;

(c) the Administrative Agent shall have received the Security Agreement duly
executed by the Loan Parties, together with (i) original stock certificates or
other similar instruments or securities representing all of the issued and
outstanding shares of capital stock or other equity interests, to the extent
such equity interests are certificated, in each Domestic Subsidiary as of the
Closing Date, (ii) stock powers for the Collateral consisting of the stock or
other equity interest, to the extent such equity interests are certificated, in
each Domestic Subsidiary executed in blank and undated, (iii) UCC financing
statements to be filed against each Loan Party, as debtor, in favor of the
Administrative Agent, as secured party, (iv) patent, trademark, and copyright
collateral agreements to the extent requested by the Administrative Agent, and
(v) deposit account control agreements to the extent requested by the
Administrative Agent;

 

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

(e) the Administrative Agent shall have received copies of each Loan Party’s
articles of incorporation and bylaws (or comparable organizational documents)
and any amendments thereto, certified in each instance by its Secretary or
Assistant Secretary;

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

(g) the Administrative Agent shall have received copies of the certificates of
good standing for each Loan Party (dated no earlier than 30 days prior to the
date hereof) from the office of the secretary of the state of its incorporation
or organization and of each state in which it is qualified to do business as a
foreign corporation or organization;

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

(i) the Administrative Agent shall have received the initial fees called for by
Section 2.1 hereof;

(j) the capital and organizational structure of each Loan Party and Subsidiary
after giving effect to the Related Transaction shall be satisfactory to the
Administrative Agent, the Lenders, and the L/C Issuer and all legal, tax, and
regulatory matters relating to transactions contemplated hereby including the
Related Transactions shall be satisfactory to the Administrative Agent;

(k) each Lender and the L/C Issuer shall have received such evaluations and
certifications as it may reasonably require in order to satisfy itself as to the
value of the Collateral, the financial condition of each Loan Party and
Subsidiary, and the lack of material contingent liabilities of each Loan Party
and Subsidiary;

(l) the Administrative Agent shall have received financing statement, tax, and
judgment lien search results against the Property of the Loan Parties evidencing
the absence of Liens on its Property except as permitted by Section 8.8 hereof
or liens to be terminated referenced in (m) below;

(m) the Administrative Agent shall have received pay-off and lien release
letters from secured creditors of the Loan Parties and each Subsidiary setting
forth, among other things, the total amount of indebtedness outstanding and
owing to them (or outstanding letters of credit issued for the account of any
Loan Party or any Subsidiary) and containing an undertaking to cause to be
delivered to the Administrative Agent UCC termination statements and any other
lien release instruments necessary to release their Liens on the assets of the
Loan Parties and each Subsidiary, which pay-off and lien release letters shall
be in form and substance acceptable to the Administrative Agent;

 

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(n) the Administrative Agent shall have received the favorable written opinion
of counsel to the Loan Parties, in form and substance satisfactory to the
Administrative Agent;

(o) the Administrative Agent shall have received a fully executed Internal
Revenue Service Form W-9 for the Loan Parties;

(p) no material adverse change in the business, condition (financial or
otherwise), operations, performance, or properties, of any Loan Parties or their
Subsidiaries, taken as a whole, from that reflected in the June 30, 2012
financial statements already received by the Administrative Agent shall have
occurred; and in the case of Onyx EMS or any of its subsidiaries no such change
shall have occurred which constitutes a “Material Adverse Effect”, as such term
is defined in the Related Transaction Documents.

(q) the Administrative Agent shall have received the Related Transaction
Purchase Agreement and other material agreements and documents to be executed or
delivered in connection therewith, the purchase price to be paid by Loan Parties
in connection with the Related Transactions shall not exceed $44,000,000, plus
any positive working capital adjustment, plus transaction costs and expenses,
the representations and warranties set forth in the Related Transaction Purchase
Agreement shall be true and correct as of the Closing Date, the Related
Transaction Purchase Agreement and other material agreements and documents to be
executed or delivered in connection therewith shall otherwise be in form and
substance acceptable to the Administrative Agent;

(r) the Related Transaction shall have been approved by Seller’s board of
directors and (if necessary) shareholders and shall close concurrently with the
initial Credit Event on the terms set forth in the Related Transaction Purchase
Agreement and without the waiver by Sparton Onyx of any material conditions to
closing set forth therein, and Loan Parties and Seller shall have received any
regulatory approval necessary for the consummation of the Related Transactions
in accordance with all Legal Requirements, and all applicable waiting periods
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
all applicable rules and regulations thereunder shall have expired or been
terminated;

(s) on the Closing Date, both before and after giving effect to the Related
Transaction, no injunction, temporary restraining order or other legal action
that would prohibit or seek to unwind the Related Transaction or any component
thereof, or would prohibit the initial Credit Event, or other litigation which
could reasonably be expected to have a Material Adverse Effect, shall be pending
or, to the knowledge of any Loan Party, threatened;

(t) the Administrative Agent shall have received a satisfactory solvency
certificate from the Chief Financial Officer or other authorized officer
acceptable to Administrative Agent from each Loan Party before and after giving
effect to the Related Transaction;

(u) the Administrative Agent shall have received such other agreements,
instruments, documents, certificates, and opinions as the Administrative Agent
may reasonably request.

 

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SECTION 8. COVENANTS.

Each of the Loan Parties agrees that, so long as any credit is available to or
in use by the Borrowers hereunder, except to the extent compliance in any case
or cases is waived in writing pursuant to the terms of Section 13.13 hereof:

Section 8.1. Maintenance of Business. Each of the Loan Parties shall, and shall
cause each Subsidiary (other than Dormant Subsidiaries) to, preserve and
maintain its existence, except as otherwise provided in Section 8.10(f) hereof.
Each of the Loan Parties shall, and shall cause each Subsidiary (other than
Dormant Subsidiaries) to, preserve and keep in force and effect all licenses,
permits, franchises, approvals, patents, trademarks, trade names, trade styles,
copyrights, and other proprietary rights necessary to the proper conduct of its
business where the failure to do so could reasonably be expected to have a
Material Adverse Effect.

Section 8.2. Maintenance of Properties. Each of the Loan Parties shall, and
shall cause each Subsidiary to, maintain, preserve, and keep its property,
plant, and equipment in good repair, working order and condition (ordinary wear
and tear excepted), and shall from time to time make all needful and proper
repairs, renewals, replacements, additions, and betterments thereto so that at
all times the efficiency thereof shall be fully preserved and maintained, except
to the extent that, in the reasonable business judgment of such Person, any such
Property is no longer necessary for the proper conduct of the business of such
Person.

Section 8.3. Taxes and Assessments. Each of the Loan Parties shall duly pay and
discharge, and shall cause each Subsidiary to duly pay and discharge, all taxes,
rates, assessments, fees, and governmental charges upon or against it or its
Property, in each case before the same become delinquent and before penalties
accrue thereon, unless and to the extent that the same are being contested in
good faith and by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves are provided therefor.

Section 8.4. Insurance. Each of the Loan Parties shall insure and keep insured,
and shall cause each Subsidiary to insure and keep insured, with good and
responsible insurance companies with a general policyholder service rating of
not less than A- as rated in the most current available Best’s Insurance Report
(provided that, in the event of a downgrade of the general policyholder service
rating of any insurance company with which any Loan Party is insured to less
than A-, such Loan Party shall have 30 days after such downgrade to move the
applicable insurance to an insurance company with a general policyholder service
rating compliant with this Section), all insurable Property owned by it which is
of a character usually insured by Persons similarly situated and operating like
Properties against loss or damage from such hazards and risks, and in such
amounts, as are insured by Persons similarly situated and operating like
Properties; and each of the Loan Parties shall insure, and shall cause each
Subsidiary to insure, such other hazards and risks (including, without
limitation, business interruption, employers’ and public liability risks) with
good and responsible insurance companies with a general policyholder service
rating of not less than A- as rated in the most current available Best’s
Insurance Report (provided that, in the event of a downgrade of the general
policyholder service rating of any insurance company with which any Loan Party
is insured to less than A-, such Loan Party shall have 30 days after such
downgrade to move the applicable insurance to an insurance company with a
general policyholder service rating

 

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compliant with this Section) as and to the extent usually insured by Persons
similarly situated and conducting similar businesses. Each of the Loan Parties
shall in any event maintain, and cause each Subsidiary to maintain, insurance on
the Collateral to the extent required by the Collateral Documents. Each of the
Loan Parties shall, upon the request of the Administrative Agent, furnish to the
Administrative Agent and the Lenders a certificate setting forth in summary form
the nature and extent of the insurance maintained pursuant to this Section.

Section 8.5. Financial Reports. Each of the Loan Parties shall, and shall cause
each Subsidiary to, maintain a standard system of accounting in accordance with
GAAP and shall furnish to the Administrative Agent, each Lender, the L/C Issuer
and each of their duly authorized representatives such information respecting
the business and financial condition of each Loan Party and each Subsidiary as
the Administrative Agent or such Lender may reasonably request; and without any
request, shall furnish to the Administrative Agent, the Lenders, and L/C Issuer:

(a) as soon as available, and in any event no later than 45 days after the last
day of each fiscal quarter of each fiscal year of the Parent, a copy of the
consolidated balance sheet of the Parent and its Subsidiaries as of the last day
of such fiscal quarter and the consolidated statements of income, retained
earnings, and cash flows of the Parent and its Subsidiaries for the fiscal
quarter and for the fiscal year-to-date period then ended, each in reasonable
detail showing in comparative form the figures for the corresponding date and
period in the previous fiscal year, prepared by the Borrowers in accordance with
GAAP (subject to the absence of footnote disclosures and year-end audit
adjustments) and certified to by its chief financial officer or another officer
of the Borrower Representative acceptable to the Administrative Agent;

(b) as soon as available, and in any event no later than 90 days after the last
day of each fiscal year of the Parent, a copy of the consolidated balance sheet
of the Parent and its Subsidiaries as of the last day of the fiscal year then
ended and the consolidated statements of income, retained earnings, and cash
flows of the Parent and its Subsidiaries for the fiscal year then ended, and
accompanying notes thereto, each in reasonable detail showing in comparative
form the figures for the previous fiscal year, accompanied in the case of the
consolidated financial statements by an unqualified opinion of BDO USA, LLP or
another firm of independent public accountants of recognized national standing,
selected by the Borrowers and satisfactory to the Administrative Agent and the
Required Lenders, to the effect that the consolidated financial statements have
been prepared in accordance with GAAP and present fairly in accordance with GAAP
the consolidated financial condition of the Parent and its Subsidiaries as of
the close of such fiscal year and the results of their operations and cash flows
for the fiscal year then ended and that an examination of such accounts in
connection with such financial statements has been made in accordance with
generally accepted auditing standards and, accordingly, such examination
included such tests of the accounting records and such other auditing procedures
as were considered necessary in the circumstances;

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

 

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(d) promptly after receipt thereof, a copy of any audit by a regulatory agency
revealing, or other notice of, any material noncompliance with any applicable
law, regulation or guideline relating to any Loan Party or any Subsidiary, or
its business;

(e) as soon as available, and in any event no later than 30 days after the start
of each fiscal year of the Parent, a copy of the Parent’s and its Subsidiaries’
consolidated business plan for such fiscal year, such business plan to show the
Parent’s projected consolidated revenues, expenses and balance sheet on a
quarter-by-quarter basis, such business plan to be in reasonable detail prepared
by the Borrowers and in form satisfactory to the Administrative Agent and the
Required Lenders (which shall include a summary of all assumptions made in
preparing such business plan);

(f) notice of any Change of Control;

(g) promptly after knowledge thereof shall have come to the attention of any
responsible officer of any Loan Party, written notice of (i) any threatened or
pending litigation or governmental or arbitration proceeding or labor
controversy against any Loan Party or any Subsidiary or any of their Property
which, if adversely determined, could reasonably be expected to have a Material
Adverse Effect or (ii) the occurrence of any Default or Event of Default
hereunder;

(h) promptly after becoming aware of any default or any event which, with the
giving of notice or lapse of time, or both, would constitute a default, under
any Related Transaction Document, in each case, which default or event could
reasonably be expected to result in a claim or incurrence of liabilities by the
Loan Parties in excess of $500,000 or otherwise to have a Material Adverse
Effect;

(i) with each of the financial statements delivered pursuant to subsections (a)
and (b) above, a written certificate in the form attached hereto as Exhibit E (a
“Compliance Certificate”) signed by the chief financial officer of the Borrower
Representative or another officer of any Borrower acceptable to the
Administrative Agent to the effect that to the best of such officer’s knowledge
and belief no Default or Event of Default has occurred during the period covered
by such statements or, if any such Default or Event of Default has occurred
during such period, setting forth a description of such Default or Event of
Default and specifying the action, if any, taken by any Loan Party or any
Subsidiary to remedy the same. Such certificate shall also set forth the
calculations supporting such statements in respect of Section 8.23 hereof; and

(j) promptly following any request therefor, such other information regarding
the operations, business affairs and financial condition of any Loan Party or
any Subsidiary, as the Administrative Agent may reasonably request, including,
without limitation, if the Administrative Agent so requests, consolidating
financial statements for the Loan Parties and their Subsidiaries

Section 8.6. Inspection. Each of the Loan Parties shall, and shall cause each
Subsidiary to, permit the Administrative Agent, each Lender, the L/C Issuer, and
each of their duly authorized representatives and agents to visit and inspect
any of its Property, corporate

 

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books, and financial records, to examine and make copies of its books of
accounts and other financial records, and to discuss its affairs, finances, and
accounts with, and to be advised as to the same by, its officers, employees and
independent public accountants (and by this provision each of the Loan Parties
hereby authorizes such accountants to discuss with the Administrative Agent,
such Lenders, and L/C Issuer the finances and affairs of the Loan Parties and
their respective Subsidiaries) at such reasonable times and intervals as the
Administrative Agent or any such Lender or L/C Issuer may designate, subject in
each case to any restrictions imposed by applicable laws or regulations on such
visits, inspections, examinations and discussions but only to the extent of such
restrictions, and, so long as no Default or Event of Default exists, with
reasonable prior notice to the Borrower Representative.

Section 8.7. Borrowings and Guaranties. No Loan Party shall, nor shall any Loan
Party permit any Subsidiary to, issue, incur, assume, create or have outstanding
any Indebtedness, or incur liabilities for interest rate, currency, or commodity
cap, collar, swap, or similar hedging arrangements, or be or become liable as
endorser, guarantor, surety or otherwise for any debt, obligation or undertaking
of any other Person, or otherwise agree to provide funds for payment of the
obligations of another, or supply funds thereto or invest therein or otherwise
assure a creditor of another against loss, or apply for or become liable to the
issuer of a letter of credit which supports an obligation of another, or
subordinate any claim or demand it may have to the claim or demand of any other
Person; provided, however, that the foregoing shall not restrict nor operate to
prevent:

(a) the Obligations, Hedging Liability, and Funds Transfer and Deposit Account
Liability of the Loan Parties and their respective Subsidiaries owing to the
Administrative Agent and the Lenders (and their Affiliates);

(b) purchase money indebtedness and Capitalized Lease Obligations of the
Borrowers and their respective Subsidiaries in an amount not to exceed
$2,500,000 in the aggregate at any one time outstanding;

(c) Indebtedness existing on the date hereof and set forth in Schedule 8.7 and
any Permitted Refinancing Indebtedness with respect thereto;

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

(e) Indebtedness of any Loan Party to any other Loan Party;

(f) Guarantees by any Loan Party of Indebtedness or other obligations of another
Loan Party;

(g) Indebtedness of any Person that becomes a Subsidiary after the date hereof;
provided that such Indebtedness is limited to (i) Indebtedness consisting of
purchase money indebtedness, Capital Lease Obligations or other Indebtedness
approved by Administrative Agent, in each case, which Indebtedness exists at the
time such Person becomes a Subsidiary and is not created in contemplation of or
in connection with such Person becoming a Subsidiary and Permitted Refinancing
Indebtedness with respect thereto, and (ii) deferred purchase price, seller
notes, earnouts, and similar deferred payment obligations incurred in connection
with a

 

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Permitted Acquisition, in each case, which constitutes Subordinated Debt or is
otherwise approved by the Administrative Agent and Permitted Refinancing
Indebtedness with respect thereto; and

(h) unsecured indebtedness of the Borrowers and their respective Subsidiaries
not otherwise permitted by this Section in an amount not to exceed $2,500,000 in
the aggregate at any one time outstanding.

Section 8.8. Liens. No Loan Party shall, nor shall any Loan Party permit any
Subsidiary to, create, incur or permit to exist any Lien of any kind on any
Property owned by any such Person; provided, however, that the foregoing shall
not apply to nor operate to prevent:

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

(b) mechanics’, workmen’s, materialmen’s, landlords’, carriers’ or other similar
Liens arising in the ordinary course of business with respect to obligations
which are not due or which are being contested in good faith by appropriate
proceedings which prevent enforcement of the matter under contest;

(c) judgment liens and judicial attachment liens not constituting an Event of
Default under Section 9.1(g) hereof and the pledge of assets for the purpose of
securing an appeal, stay or discharge in the course of any legal proceeding,
provided that the aggregate amount of such judgment liens and attachments and
liabilities of the Borrowers and their respective Subsidiaries secured by a
pledge of assets permitted under this subsection, including interest and
penalties thereon, if any, shall not be in excess of $1,000,000 at any one time
outstanding;

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

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

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

 

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(g) “bankers” liens arising by operation of law in respect of any deposit
accounts of any Loan Party or any Subsidiary that are maintained in accordance
with the terms of this Agreement;

(h) Liens granted in favor of the Administrative Agent pursuant to the
Collateral Documents;

(i) any Lien on any property or asset of any Loan Party or any Subsidiary
existing on the date hereof and set forth in Schedule 8.8; provided that
(i) such Lien shall not apply to any other Property of any Borrower or
Subsidiary and (ii) such Lien shall secure only those obligations which it
secures on the date hereof; and

(j) any Lien existing on any Property (other than accounts, inventory or the
capital stock or other equity interests issued by a Subsidiary) prior to the
acquisition thereof by any Borrower or any Subsidiary pursuant to a Permitted
Acquisition or existing on any Property (other than accounts, inventory and
capital stock or other equity interests issued by a Subsidiary) of any Person
that becomes a Loan Party after the date hereof pursuant to a Permitted
Acquisition prior to the time such Person becomes a Loan Party; provided that
(i) such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Loan Party, as the case may be, (ii) such
Lien shall not apply to any other Property of the Loan Party and (iii) such Lien
shall secure only those obligations which it secures on the date of such
acquisition or the date such Person becomes a Loan Party, as the case may be.

Section 8.9. Investments, Acquisitions, Loans and Advances. No Loan Party shall,
nor shall any Loan Party permit any Subsidiary to, directly or indirectly, make,
retain or have outstanding any investments (whether through purchase of stock or
obligations or otherwise) in, or loans or advances to (other than for travel
advances and other similar cash advances made to employees in the ordinary
course of business), any other Person, or acquire all or any substantial part of
the assets or business of any other Person or division thereof; provided,
however, that the foregoing shall not apply to nor operate to prevent:

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

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

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

(d) investments in repurchase obligations with a term of not more than seven
(7) days for underlying securities of the types described in subsection (a)
above entered into with any bank meeting the qualifications specified in
subsection (c) above, provided all such agreements require physical delivery of
the securities securing such repurchase agreement, except those delivered
through the Federal Reserve Book Entry System;

 

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(e) investments in money market funds that invest solely, and which are
restricted by their respective charters to invest solely, in investments of the
type described in the immediately preceding subsections (a), (b), (c), and
(d) above;

(f) investments consisting of Deposit Accounts maintained in accordance with
this Agreement and the other Loan Documents;

(g) receivables created in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms;

(h) investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business;

(i) investments in existence on the date hereof and described in Schedule 8.9;

(j) investments constituting deposits described in Section 8.8(a);

(k) Permitted Acquisitions;

(l) investments by a Loan Party in any other Loan Party;

(m) advances in the ordinary course of business by any Loan Party to the Vietnam
Subsidiary to pay for trade services to be rendered by the Vietnam Subsidiary to
such Loan Party and on terms and conditions which comply with Section 8.16
hereof;

(n) investments of any Person existing at the time such Person becomes a
Subsidiary of any Loan Party or merges with any Loan Party or any of its
Subsidiaries pursuant to a Permitted Acquisition so long as such investments
were not made in contemplation of such Person becoming a Subsidiary or of such
merger; and

(o) other investments, loans, and advances in addition to those otherwise
permitted by this Section in an amount not to exceed $2,000,000 in the aggregate
at any one time outstanding.

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

Section 8.10. Mergers, Consolidations and Sales. No Loan Party shall, nor shall
any Loan Party permit any Subsidiary to, be a party to any merger or
consolidation, or sell, transfer, lease or otherwise dispose of all or any part
of its Property, including any disposition of Property as part of a sale and
leaseback transaction, or in any event sell or discount (with or without
recourse) any of its notes or accounts receivable; provided, however, that this
Section shall not apply to nor operate to prevent:

 

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(a) the sale or lease of inventory in the ordinary course of business;

(b) the disposition of cash in transactions not otherwise prohibited by this
Agreement;

(c) the sale, transfer or other disposition of any tangible personal property
that, in the reasonable business judgment of any Borrower or any Subsidiary, has
become obsolete or worn out, and which is disposed of in the ordinary course of
business;

(d) dispositions resulting from any casualty or other insured damage to, or any
taking under power of eminent domain or by condemnation or similar proceeding
of, any property or asset of any Loan Party or any Subsidiary;

(e) the sale, transfer, lease or other disposition of Property of the Loan
Parties and their respective Subsidiaries to one another in the ordinary course
of its business; provided that any such sales, transfers or dispositions
involving a Subsidiary that is not a Loan Party shall be made in compliance with
Section 8.16;

(f) the merger of any Subsidiary with and into a Borrower or any other
Subsidiary, provided that, in the case of any merger involving any Borrower,
such Borrower is the Person surviving the merger and in the case of any merger
involving any Loan Party (other than a Borrower), the Loan Party is the Person
surviving the merger;

(g) dividends or distributions permitted by Section 8.12;

(h) the sale of delinquent notes or accounts receivable in the ordinary course
of business for purposes of collection only (and not for the purpose of any bulk
sale or securitization transaction); and

(i) the sale, transfer, lease or other disposition of Property of any Loan Party
or any Subsidiary (excluding any disposition of Property as part of a sale and
leaseback transaction and any capital stock or other equity interests of a
Subsidiary) aggregating for the Loan Parties and their respective Subsidiaries
not more than $3,000,000 during any fiscal year of the Borrowers.

Section 8.11. Maintenance of Subsidiaries. No Loan Party shall assign, sell or
transfer, nor shall any Loan Party permit any Subsidiary to issue, assign, sell
or transfer, any shares of capital stock or other equity interests of a
Subsidiary; provided, however, that the foregoing shall not operate to prevent
(a) Liens on the capital stock or other equity interests of Subsidiaries granted
to the Administrative Agent pursuant to the Collateral Documents, (b) the
issuance, sale, and transfer to any person of any shares of capital stock of a
Subsidiary solely for the purpose of qualifying, and to the extent legally
necessary to qualify, such person as a director of such Subsidiary, or (c) any
transaction permitted by Section 8.10(f) or (g) above.

Section 8.12. Dividends and Certain Other Restricted Payments. No Loan Party
shall, nor shall any Loan Party permit any Subsidiary to, (a) declare or pay any
dividends on or make any other distributions in respect of any class or series
of its capital stock or other equity interests (other than dividends or
distributions payable solely in its capital stock or other equity interests), or
(b) directly or indirectly purchase, redeem, or otherwise acquire or retire any
of its capital stock or other equity interests or any warrants, options, or
similar instruments to acquire the same (the dividends, distributions,
purchases, redemptions and other payments restricted by this Section 8.12,
collectively, “Restricted Payments”); provided, however, that the foregoing
shall

 

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not operate to prevent (i) the making of dividends or distributions by any
Subsidiary to any Borrower or (ii) (x) the purchase of Parent’s common stock for
an amount not to exceed $3,000,000 in the aggregate during any fiscal year or
(y) the making of dividends as approved by the Parent’s Board of Directors in
the aggregate amount of up to $3,000,000 during any fiscal year so long as (in
the case of each of clause (x) and (y)) (A) no Default or Event of Default
exists or would be caused by such purchase and (B) the Loan Parties are in
compliance with the financial covenants set forth in Section 8.23, on a pro
forma basis, immediately prior to and after the effect of such purchase.

Section 8.13. ERISA. Each of the Loan Parties shall, and shall cause each
Subsidiary to, promptly pay and discharge all obligations and liabilities
arising under ERISA of a character which if unpaid or unperformed could
reasonably be expected to result in the imposition of a Lien against any of its
Property. Each of the Loan Parties shall, and shall cause each Subsidiary to,
promptly notify the Administrative Agent and each Lender of: (a) the occurrence
of any reportable event (as defined in ERISA) with respect to a Plan,
(b) receipt of any notice from the PBGC of its intention to seek termination of
any Plan or appointment of a trustee therefor, (c) its intention to terminate or
withdraw from any Plan, and (d) the occurrence of any event with respect to any
Plan which would result in the incurrence by any Loan Party or any Subsidiary of
any material liability, fine or penalty, or any material increase in the
contingent liability of any Loan Party or any Subsidiary with respect to any
post-retirement Welfare Plan benefit.

Section 8.14. Compliance with Laws. (a) Each of the Loan Parties shall, and
shall cause each Subsidiary to, comply in all respects with the requirements of
all federal, state, and local laws, rules, regulations, ordinances and orders
applicable to or pertaining to its Property or business operations, where any
such non-compliance, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect or result in a Lien upon any of its
Property.

(b) Without limiting the agreements set forth in Section 8.14(a) above, each of
the Loan Parties shall, and shall cause each Subsidiary to, at all times, do the
following to the extent the failure to do so, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect: (i) comply in
all material respects with, and maintain each of the Premises in compliance in
all material respects with, all applicable Environmental Laws; (ii) require that
each tenant and subtenant, if any, of any of the Premises or any part thereof
comply in all material respects with all applicable Environmental Laws;
(iii) obtain and maintain in full force and effect all material governmental
approvals required by any applicable Environmental Law for operations at each of
the Premises; (iv) cure any material violation by it or at any of the Premises
of applicable Environmental Laws; (v) not allow the presence or operation at any
of the Premises of any (1) landfill or dump or (2) hazardous waste management
facility or solid waste disposal facility as defined pursuant to RCRA or any
comparable state law; (vi) not manufacture, use, generate, transport, treat,
store, release, dispose or handle any Hazardous Material at any of the Premises
except in the ordinary course of its business and in de minimis amounts;
(vii) within ten (10) Business Days notify the Administrative Agent in writing
of and provide any reasonably requested documents upon learning of any of the
following in connection with any Loan Party or any Subsidiary or any of the
Premises: (1) any material liability for response or corrective action, natural
resource damage or other harm pursuant to CERCLA, RCRA or any comparable state
law; (2) any material Environmental Claim; (3) any

 

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material violation of an Environmental Law or material Release, threatened
Release or disposal of a Hazardous Material; (4) any restriction on the
ownership, occupancy, use or transferability arising pursuant to any
(x) Release, threatened Release or disposal of a Hazardous Material or
(y) Environmental Law; or (5) any environmental, natural resource, health or
safety condition, which could reasonably be expected to have a Material Adverse
Effect; (viii) conduct at its expense any investigation, study, sampling,
testing, abatement, cleanup, removal, remediation or other response action
necessary to remove, remediate, clean up or abate any material Release,
threatened Release or disposal of a Hazardous Material as required by any
applicable Environmental Law, (ix) abide by and observe any restrictions on the
use of the Premises imposed by any governmental authority as set forth in a deed
or other instrument affecting any Loan Party’s or any Subsidiary’s interest
therein; (x) promptly provide or otherwise make available to the Administrative
Agent any reasonably requested environmental record concerning the Premises
which any Loan Party or any Subsidiary possesses or can reasonably obtain; and
(xi) perform, satisfy, and implement any operation or maintenance actions
required by any governmental authority or Environmental Law, or included in any
no further action letter or covenant not to sue issued by any governmental
authority under any Environmental Law.

Section 8.15. Compliance with OFAC Sanctions Programs. (a) Each of the Loan
Parties shall at all times comply with the requirements of all OFAC Sanctions
Programs applicable to such Loan Party and shall cause each of its Subsidiaries
to comply with the requirements of all OFAC Sanctions Programs applicable to
such Subsidiary.

(b) Each of the Loan Parties shall provide the Administrative Agent, the L/C
Issuer, and the Lenders any information regarding such Loan Party, its
Affiliates, and its Subsidiaries necessary for the Administrative Agent, the L/C
Issuer, and the Lenders to comply with all applicable OFAC Sanctions Programs;
subject however, in the case of Affiliates, to such Loan Party’s ability to
provide information applicable to them.

(c) If any Loan Party obtains actual knowledge or receives any written notice
that any Loan Party, any Affiliate or any Subsidiary is named on the then
current OFAC SDN List (such occurrence, an “OFAC Event”), the Loan Parties shall
promptly (i) give written notice to the Administrative Agent, the L/C Issuer,
and the Lenders of such OFAC Event, and (ii) comply with all applicable laws
with respect to such OFAC Event (regardless of whether the party included on the
OFAC SDN List is located within the jurisdiction of the United States of
America), including the OFAC Sanctions Programs, and each of the Loan Parties
hereby authorizes and consents to the Administrative Agent, the L/C Issuer, and
the Lenders taking any and all steps the Administrative Agent, the L/C Issuer,
or the Lenders deem necessary, in their sole but reasonable discretion, to avoid
violation of all applicable laws with respect to any such OFAC Event, including
the requirements of the OFAC Sanctions Programs (including the freezing and/or
blocking of assets and reporting such action to OFAC).

Section 8.16. Burdensome Contracts With Affiliates. No Loan Party shall, nor
shall any Loan Party permit any Subsidiary to, enter into any contract,
agreement or business arrangement with any of its Affiliates (other than any
contract, agreement or business arrangement exclusively among Loan Parties) on
terms and conditions which are less favorable to such Loan Party or such
Subsidiary than would be usual and customary in similar contracts, agreements or
business arrangements between Persons not affiliated with each other.

 

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Section 8.17. No Changes in Fiscal Year. The fiscal year of the Loan Parties and
their respective Subsidiaries ends on June 30 of each year; and no Loan Party
shall, nor shall any Loan Party permit any Subsidiary to, change its fiscal year
from its present basis.

Section 8.18. Formation of Subsidiaries. The Loan Parties shall provide the
Administrative Agent and the Lenders notice of the formation or acquisition of
any Domestic Subsidiary promptly upon the formation or acquisition thereof and
comply with the requirements of Section 4 hereof (at which time Schedule 6.2
shall be deemed amended to include reference to such Subsidiary) within the time
periods required thereby. Except for Foreign Subsidiaries existing on the
Closing Date and identified on Schedule 6.2 hereof, no Loan Party shall, nor
shall any Loan Party permit any Subsidiary to, form or acquire any Foreign
Subsidiary.

Section 8.19. Change in the Nature of Business. No Loan Party shall, nor shall
any Loan Party permit any Subsidiary to, engage in any business or activity if
as a result the general nature of the business of any Loan Party or any
Subsidiary would be changed in any material respect from the general nature of
the business engaged in by it as of the Closing Date.

Section 8.20. Use of Proceeds. Each of the Borrowers shall use the credit
extended under this Agreement solely for the purposes set forth in, or otherwise
permitted by, Section 6.4 hereof.

Section 8.21. No Restrictions. Except as provided herein or in the other Loan
Documents, no Loan Party shall, nor shall any Loan Party permit any Subsidiary
to, directly or indirectly create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any Loan Party or any Subsidiary to: (a) pay dividends or make any
other distribution on any Subsidiary’s capital stock or other equity interests
owned by any Loan Party or any other Subsidiary, (b) pay any indebtedness owed
to any Loan Party or any other Subsidiary, (c) make loans or advances to any
Loan Party or any other Subsidiary, (d) transfer any of its Property to any Loan
Party or any other Subsidiary, or (e) incur or guarantee the Obligations,
Hedging Liability, and Funds Transfer and Deposit Account Liability, as
applicable, and/or grant Liens on its assets to the Administrative Agent as
required by the Loan Documents.

Section 8.22. Subordinated Debt. No Loan Party shall, nor shall any Loan Party
permit any Subsidiary to, (a) amend or modify any of the terms or conditions
relating to any Subordinated Debt, (b) make any voluntary prepayment of any
Subordinated Debt or effect any voluntary redemption thereof, or (c) make any
payment on account of any Subordinated Debt which is prohibited under the terms
of any instrument or agreement subordinating the same to the Obligations.
Notwithstanding the foregoing, the applicable Loan Party may agree to a decrease
in the interest rate applicable thereto or to a deferral of repayment of any of
the principal of or interest on any Subordinated Debt beyond the current due
dates therefor.

Section 8.23. Financial Covenants. (a) Total Funded Debt/EBITDA Ratio. As of the
last day of each fiscal quarter of the Parent ending during the relevant period
set forth below, the Loan Parties shall not permit the Total Funded Debt/EBITDA
Ratio to be greater than the corresponding ratio set forth opposite such period:

 

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PERIOD(S) ENDING    TOTAL FUNDED DEBT/EBITDA RATIO
SHALL  NOT BE GREATER THAN:

Fiscal quarter ending 12/31/12 and each fiscal quarter thereafter to and
including 3/31/2015

   3.0 to 1.0

Fiscal quarter ending 6/30/15 and each fiscal quarter thereafter to and
including 3/31/2016

   2.75 to 1.0

Fiscal quarter ending 6/30/16 and each fiscal quarter thereafter

   2.50 to 1.0

(b) Fixed Charge Coverage Ratio. As of December 31, 2012 and the last day of
each fiscal quarter of Parent thereafter, the Loan Parties shall maintain a
Fixed Charge Coverage Ratio of not less than 1:25:1.00.

Section 8.24. [Reserved]

Section 8.25. Cash Management. Each of the Loan Parties and each Subsidiary
covenants and agrees, commencing not later than 120 days after the Closing Date
and at all times thereafter during the term of this Agreement, to (a) utilize
BMO Harris as its sole and primary bank of account and depository for all
financial services, including all receipts, disbursements, cash management and
related services and (b) maintain all deposit accounts with BMO Harris or with
other financial institution(s) selected by the Loan Parties and reasonably
acceptable to BMO Harris so long as such financial institution(s) have entered
into an account control agreement or blocked account agreement, as applicable,
with the Administrative Agent, on behalf of itself and the Lenders, relating to
such deposit account(s) (other than the Excluded Accounts) in form and substance
acceptable to the Administrative Agent. In the event that the average collected
balances of the Loan Parties and each Subsidiary are not sufficient to cover the
costs of related activity, the account of any Loan Party or any such Subsidiary
will be subject to the standard charges of the Bank, which shall be debited
against such account on a monthly basis.

Section 8.26. Limitations on Dormant Subsidiaries. No Loan Party shall, nor
shall any Loan Party permit any Subsidiary to, permit any Dormant Subsidiary,
directly or indirectly, to do any of the following unless the Borrower
Representative shall have designated such Subsidiary as a Non-Excluded
Subsidiary and otherwise complied with the requirements of Section 4 in
connection therewith: (a) incur, directly or indirectly, any Indebtedness or any
other obligation or liability whatsoever, including, without limitation, any
liability as endorser, guarantor, surety or otherwise for any debt, obligation,
or undertaking of any other Person, except as set forth on Schedule 8.26;
(b) create or suffer to exist any Lien upon any property or assets now owned or
hereafter acquired by any Dormant Subsidiary other than the Liens created under
the Loan Documents to which it is a party; or (c) engage in any business or
activity or own any assets (including, without limitation, cash and cash
equivalents), except as set forth on Schedule 8.26.

 

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SECTION 9. EVENTS OF DEFAULT AND REMEDIES.

Section 9.1. Events of Default. Any one or more of the following shall
constitute an “Event of Default” hereunder:

(a) default in the payment when due of all or any part of the principal of any
Loan (whether at the stated maturity thereof or at any other time provided for
in this Agreement) or of any Reimbursement Obligation, or default for a period
of five (5) Business Days in the payment when due of any interest, fee or other
Obligation payable hereunder or under any other Loan Document;

(b) default in the observance or performance of any covenant set forth in
Sections 8.1, 8.4, 8.5, 8.7, 8.8, 8.9, 8.10, 8.11, 8.12, 8.17, 8.18, 8.19, 8.20,
8.21, 8.22, 8.23, 8.25 or 8.26 hereof or of any provision in any Loan Document
dealing with the use, disposition or remittance of the proceeds of Collateral or
requiring the maintenance of insurance thereon;

(c) default in the observance or performance of any other provision hereof or of
any other Loan Document which is not remedied within 30 days after the earlier
of (i) the date on which such failure shall first become known to any officer of
any Loan Party or (ii) written notice thereof is given to the Borrower
Representative by the Administrative Agent;

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

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

(f) default shall occur under any Indebtedness issued, assumed or guaranteed by
any Loan Party or any Subsidiary aggregating in excess of $1,000,000, or under
any indenture, agreement or other instrument under which the same may be issued,
and such default shall continue for a period of time sufficient to permit the
acceleration of the maturity of any such Indebtedness (whether or not such
maturity is in fact accelerated), or any such Indebtedness shall not be paid
when due (whether by demand, lapse of time, acceleration or otherwise);

(g) any judgment or judgments, writ or writs or warrant or warrants of
attachment, or any similar process or processes, shall be entered or filed
against any Loan Party or any Subsidiary, or against any of its Property, in an
aggregate amount in excess of $1,000,000 (except to the extent fully covered by
insurance pursuant to which the insurer has accepted liability therefor in
writing), and which remains undischarged, unvacated, unbonded or unstayed for a
period of 30 days;

 

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(h) any Loan Party or any Subsidiary, or any member of its Controlled Group,
shall fail to pay when due an amount or amounts aggregating in excess of
$1,000,000 which it shall have become liable to pay to the PBGC or to a Plan
under Title IV of ERISA; or notice of intent to terminate a Plan or Plans having
aggregate Unfunded Vested Liabilities in excess of $1,000,000 (collectively, a
“Material Plan”) shall be filed under Title IV of ERISA by any Loan Party or any
Subsidiary, or any other member of its Controlled Group, any plan administrator
or any combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any Material Plan or a proceeding shall be instituted by a fiduciary
of any Material Plan against any Loan Party or any Subsidiary, or any member of
its Controlled Group, to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within 30 days thereafter; or a
condition shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated;

(i) any Change of Control shall occur;

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

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

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

Section 9.3. Bankruptcy Defaults. When any Event of Default described in
subsections (j) or (k) of Section 9.1 hereof with respect to any Loan Party has
occurred and is continuing, then all outstanding Loans shall immediately become
due and payable together with all other amounts payable under the Loan Documents
without presentment, demand, protest or notice of any kind, the obligation of
the Lenders to extend further credit pursuant to any of the terms hereof shall
immediately terminate and the Borrowers shall immediately pay to the
Administrative Agent the full amount then available for drawing under all
outstanding Letters of Credit, each of the Borrowers acknowledging and agreeing
that the Lenders would not have an adequate remedy at law for failure by the
Borrowers to honor any such demand and that the Lenders, and the Administrative
Agent on their behalf, shall have the right to require the Borrowers to
specifically perform such undertaking whether or not any draws or other demands
for payment have been made under any of the Letters of Credit.

Section 9.4. Collateral for Undrawn Letters of Credit. (a) If the prefunding or
prepayment of the amount available for drawing under any or all outstanding
Letters of Credit is required under Section 1.3, Section 1.9(b), Section 1.15,
Section 9.2 or Section 9.3 above, the Borrowers shall forthwith pay the amount
required to be so prefunded or prepaid, to be held by the Administrative Agent
as provided in subsection (b) below.

(b) All amounts prefunded or prepaid pursuant to subsection (a) above shall be
held by the Administrative Agent in one or more separate collateral accounts
(each such account, and the credit balances, properties, and any investments
from time to time held therein, and any substitutions for such account, any
certificate of deposit or other instrument evidencing any of the foregoing and
all proceeds of and earnings on any of the foregoing being collectively called
the “Collateral Account”) as security for, and for application by the
Administrative Agent (to the extent available) to, the reimbursement of any
payment under any Letter of Credit then or thereafter made by the L/C Issuer and
to the payment of the unpaid balance of all other Obligations (and to all
Hedging Liability and Funds Transfer and Deposit Account Liability). The
Collateral Account shall be held in the name of and subject to the exclusive
dominion and control of the Administrative Agent, including the exclusive right
of withdrawal over such Collateral Accounts, and Borrowers hereby grant the
Administrative Agent a security interest in such Collateral Accounts to secure
the reimbursement of any payment under any Letter of Credit then or thereafter
made by the L/C Issuer and to the payment of the unpaid balance of all other
Obligations (and to all Hedging Liability and Funds Transfer and Deposit Account
Liability). So long as no Default or Event of Default is then existing, if and
when requested by the Borrowers, the Administrative Agent shall invest funds
held in the Collateral Account from time to time in direct obligations of, or
obligations the principal of and interest on which are unconditionally

 

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guaranteed by, the United States of America with a remaining maturity of one
year or less, provided that the Administrative Agent is irrevocably authorized
to sell investments held in the Collateral Account when and as required to make
payments out of the Collateral Account for application to amounts due and owing
from the Borrowers to the L/C Issuer, the Administrative Agent or the Lenders.
Interest or profits, if any, on such investments shall accumulate in the
respective Collateral Accounts. Moneys in the Collateral Accounts shall be
applied by the Administrative Agent to reimburse the L/C Issuer for any payment
under the Letters of Credit for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrowers for the L/C Obligations at such time or, if the
maturity of the Loans has been accelerated, be applied to satisfy other
Obligations. If the Borrowers shall have made payment of all obligations
referred to in this Section, so long as no Letters of Credit, Commitments, Loans
or other Obligations, Hedging Liability, or Funds Transfer and Deposit Account
Liability remain outstanding, at the request of the Borrowers the Administrative
Agent shall release to the Borrower Representative any remaining amounts held in
the Collateral Accounts.

Section 9.5. Notice of Default. The Administrative Agent shall give notice to
the Borrower Representative under Section 9.1(c) hereof promptly upon being
requested to do so by any Lender and shall thereupon notify all the Lenders
thereof.

SECTION 10. CHANGE IN CIRCUMSTANCES.

Section 10.1. Change of Law. Notwithstanding any other provisions of this
Agreement or any other Loan Document, if at any time any change in applicable
law or regulation or in the interpretation thereof makes it unlawful for any
Lender to make or continue to maintain any Eurodollar Loans or to perform its
obligations as contemplated hereby, such Lender shall promptly give notice
thereof to the Borrower Representative and such Lender’s obligations to make or
maintain Eurodollar Loans under this Agreement shall be suspended until it is no
longer unlawful for such Lender to make or maintain Eurodollar Loans. The
Borrowers shall prepay on demand the outstanding principal amount of any such
affected Eurodollar Loans, together with all interest accrued thereon and all
other amounts then due and payable to such Lender under this Agreement;
provided, however, subject to all of the terms and conditions of this Agreement,
the Borrowers may then elect to borrow the principal amount of the affected
Eurodollar Loans from such Lender by means of Base Rate Loans from such Lender,
which Base Rate Loans shall not be made ratably by the Lenders but only from
such affected Lender.

Section 10.2. Unavailability of Deposits or Inability to Ascertain, or
Inadequacy of, LIBOR. If on or prior to the first day of any Interest Period for
any Borrowing of Eurodollar Loans:

(a) the Administrative Agent determines that deposits in U.S. Dollars (in the
applicable amounts) are not being offered to it in the interbank eurodollar
market for such Interest Period, or that by reason of circumstances affecting
the interbank eurodollar market adequate and reasonable means do not exist for
ascertaining the applicable LIBOR, or

 

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

then the Administrative Agent shall forthwith give notice thereof to the
Borrower Representative and the Lenders, whereupon until the Administrative
Agent notifies the Borrower Representative that the circumstances giving rise to
such suspension no longer exist, the obligations of the Lenders to make
Eurodollar Loans shall be suspended.

Section 10.3. Increased Cost and Reduced Return. (a) If, on or after the date
hereof, any Regulatory Change, or compliance by any Lender (or its Lending
Office) or the L/C Issuer with any request or directive (whether or not having
the force of law) of any such Governmental Authority, central bank or comparable
agency:

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

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

and the result of any of the foregoing is to increase the cost to such Lender
(or its Lending Office) or the L/C Issuer of making or maintaining any
Eurodollar Loan, issuing or maintaining a Letter of Credit, or participating
therein, or to reduce the amount of any sum received or receivable by such
Lender (or its Lending Office) or the L/C Issuer under this Agreement or under
any other Loan Document with respect thereto, by an amount deemed by such Lender
or L/C Issuer to be material, then, within 15 days after demand by such Lender
or L/C Issuer (with a copy to the Administrative Agent), the Borrowers shall be
obligated to pay to such Lender or L/C Issuer such additional amount or amounts
as will compensate such Lender or L/C Issuer for such increased cost or
reduction.

 

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(b) If, after the date hereof, any Lender, the L/ C Issuer, or the
Administrative Agent shall have determined that the adoption of any applicable
law, rule or regulation regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Lending Office) or
the L/C Issuer or any corporation controlling such Lender or L/C Issuer with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has had the
effect of reducing the rate of return on such Lender’s or L/C Issuer ‘s or such
corporation’s capital as a consequence of its obligations hereunder to a level
below that which such Lender or L/C Issuer or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender’s or L/C Issuer ‘s or such corporation’s policies with respect to
capital adequacy) by an amount deemed by such Lender or L/C Issuer to be
material, then from time to time, within 15 days after demand by such Lender or
L/C Issuer (with a copy to the Administrative Agent), the Borrowers shall pay to
such Lender or L/C Issuer, as applicable, such additional amount or amounts as
will compensate such Lender or L/C Issuer for such reduction.

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

Section 10.4. Lending Offices. Each Lender may, at its option, elect to make its
Loans hereunder at the branch, office or affiliate specified on the appropriate
signature page hereof (each a “Lending Office”) for each type of Loan available
hereunder or at such other of its branches, offices or affiliates as it may from
time to time elect and designate in a written notice to the Borrower
Representative and the Administrative Agent. To the extent reasonably possible,
a Lender shall designate an alternative branch or funding office with respect to
its Eurodollar Loans to reduce any liability of the Borrowers to such Lender
under Section 10.3 hereof or to avoid the unavailability of Eurodollar Loans
under Section 10.2 hereof, so long as such designation is not otherwise
disadvantageous to the Lender.

Section 10.5. Discretion of Lender as to Manner of Funding. Notwithstanding any
other provision of this Agreement, each Lender shall be entitled to fund and
maintain its funding of all or any part of its Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations hereunder with respect to Eurodollar Loans shall be made as if
each Lender had actually funded and maintained each Eurodollar Loan through the
purchase of deposits in the interbank eurodollar market having a maturity
corresponding to such Loan’s Interest Period, and bearing an interest rate equal
to LIBOR for such Interest Period.

 

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SECTION 11. THE ADMINISTRATIVE AGENT.

Section 11.1. Appointment and Authorization of Administrative Agent. Each Lender
and the L/C Issuer hereby appoints BMO Harris Bank N.A. as the Administrative
Agent under the Loan Documents and hereby authorizes the Administrative Agent to
take such action as Administrative Agent on its behalf and to exercise such
powers under the Loan Documents as are delegated to the Administrative Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto. The Lenders and L/C Issuer expressly agree that the Administrative
Agent is not acting as a fiduciary of the Lenders or the L/C Issuer in respect
of the Loan Documents, the Loan Parties or otherwise, and nothing herein or in
any of the other Loan Documents shall result in any duties or obligations on the
Administrative Agent or any of the Lenders or L/C Issuer except as expressly set
forth herein.

Section 11.2. Administrative Agent and its Affiliates. The Administrative Agent
shall have the same rights and powers under this Agreement and the other Loan
Documents as any other Lender and may exercise or refrain from exercising such
rights and power as though it were not the Administrative Agent, and the
Administrative Agent and its affiliates may accept deposits from, lend money to,
and generally engage in any kind of business with any Loan Party or any
Affiliate of any Loan Party as if it were not the Administrative Agent under the
Loan Documents. The term “Lender” as used herein and in all other Loan
Documents, unless the context otherwise clearly requires, includes the
Administrative Agent in its individual capacity as a Lender (if applicable).

Section 11.3. Action by Administrative Agent. If the Administrative Agent
receives from any Loan Party a written notice of an Event of Default pursuant to
Section 8.5 hereof, the Administrative Agent shall promptly give each of the
Lenders and L/C Issuer written notice thereof. The obligations of the
Administrative Agent under the Loan Documents are only those expressly set forth
therein. Without limiting the generality of the foregoing, the Administrative
Agent shall not be required to take any action hereunder with respect to any
Default or Event of Default, except as expressly provided in Sections 9.2 and
9.5. Upon the occurrence of an Event of Default, the Administrative Agent shall
take such action to enforce its Lien on the Collateral and to preserve and
protect the Collateral as may be directed by the Required Lenders. Unless and
until the Required Lenders give such direction, the Administrative Agent may
(but shall not be obligated to) take or refrain from taking such actions as it
deems appropriate and in the best interest of all the Lenders and L/C Issuer. In
no event, however, shall the Administrative Agent be required to take any action
in violation of applicable law or of any provision of any Loan Document, and the
Administrative Agent shall in all cases be fully justified in failing or
refusing to act hereunder or under any other Loan Document unless it first
receives any further assurances of its indemnification from the Lenders that it
may require, including prepayment of any related expenses and any other
protection it requires against any and all costs, expense, and liability which
may be incurred by it by reason of taking or continuing to take any such action.
The Administrative Agent shall be entitled to assume that no Default or Event of
Default exists unless notified in writing to the contrary by a Lender, the L/C
Issuer, or any Loan Party. In all cases in which the Loan Documents do not
require the Administrative Agent to take specific action, the Administrative
Agent shall be fully justified in using its discretion in failing to take or in
taking any action thereunder. Any instructions of the Required Lenders, or of
any other group of Lenders called for under the specific provisions of the Loan
Documents, shall be binding upon all the Lenders and the holders of the
Obligations.

Section 11.4. Consultation with Experts. The Administrative Agent may consult
with legal counsel, independent public accountants, and other experts selected
by it and shall not be liable for any action taken or omitted to be taken by it
in good faith in accordance with the advice of such counsel, accountants or
experts.

 

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Section 11.5. Liability of Administrative Agent; Credit Decision. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or not taken by it in connection with the
Loan Documents: (i) with the consent or at the request of the Required Lenders
or (ii) in the absence of its own gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into or verify:
(i) any statement, warranty or representation made in connection with this
Agreement, any other Loan Document or any Credit Event; (ii) the performance or
observance of any of the covenants or agreements of any Loan Party or any
Subsidiary contained herein or in any other Loan Document; (iii) the
satisfaction of any condition specified in Section 7 hereof, except receipt of
items required to be delivered to the Administrative Agent; or (iv) the
validity, effectiveness, genuineness, enforceability, perfection, value, worth
or collectibility hereof or of any other Loan Document or of any other documents
or writing furnished in connection with any Loan Document or of any Collateral;
and the Administrative Agent makes no representation of any kind or character
with respect to any such matter mentioned in this sentence. The Administrative
Agent may execute any of its duties under any of the Loan Documents by or
through employees, agents, and attorneys-in-fact and shall not be answerable to
the Lenders, the L/C Issuer, any Loan Party, or any other Person for the default
or misconduct of any such agents or attorneys-in-fact selected with reasonable
care. The Administrative Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, other document or statement
(whether written or oral) believed by it to be genuine or to be sent by the
proper party or parties. In particular and without limiting any of the
foregoing, the Administrative Agent shall have no responsibility for confirming
the accuracy of any compliance certificate or other document or instrument
received by it under the Loan Documents. The Administrative Agent may treat the
payee of any Obligation as the holder thereof until written notice of transfer
shall have been filed with the Administrative Agent signed by such payee in form
satisfactory to the Administrative Agent. Each Lender and L/C Issuer
acknowledges that it has independently and without reliance on the
Administrative Agent or any other Lender or L/C Issuer, and based upon such
information, investigations and inquiries as it deems appropriate, made its own
credit analysis and decision to extend credit to the Borrowers in the manner set
forth in the Loan Documents. It shall be the responsibility of each Lender and
L/C Issuer to keep itself informed as to the creditworthiness of the Loan
Parties and their respective Subsidiaries, and the Administrative Agent shall
have no liability to any Lender or L/C Issuer with respect thereto.

Section 11.6. Indemnity. The Lenders shall ratably, in accordance with their
respective Percentages, indemnify and hold the Administrative Agent, and its
directors, officers, employees, agents, and representatives harmless from and
against any liabilities, losses, costs or expenses suffered or incurred by it
under any Loan Document or in connection with the transactions contemplated
thereby, regardless of when asserted or arising, except to the extent they are
promptly reimbursed for the same by the Borrowers and except to the extent that
any event giving rise to a claim was caused by the gross negligence or willful
misconduct of the party seeking to be indemnified as finally determined by a
court of competent jurisdiction. The obligations of the Lenders under this
Section shall survive termination of this Agreement. The

 

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Administrative Agent shall be entitled to offset amounts received for the
account of a Lender under this Agreement against unpaid amounts due from such
Lender to the Administrative Agent, any L/C Issuer, or Swing Line Lender
hereunder (whether as fundings of participations, indemnities or otherwise, and
with any amounts offset for the benefit of the Administrative Agent to be held
by it for its own account and with any amounts offset for the benefit of a L/C
Issuer or Swing Line Lender to be remitted by the Administrative Agent to or for
the account of such L/C Issuer or Swing Line Lender, as applicable), but shall
not be entitled to offset against amounts owed to the Administrative Agent, any
L/C Issuer or Swing Line Lender by any Lender arising outside of this Agreement
and the other Loan Documents.

Section 11.7. Resignation of Administrative Agent and Successor Administrative
Agent. The Administrative Agent may resign at any time by giving written notice
thereof to the Lenders, the L/C Issuer, and the Borrower Representative. Upon
any such resignation of the Administrative Agent, the Required Lenders shall
have the right to appoint a successor Administrative Agent. If no successor
Administrative Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the retiring
Administrative Agent’s giving of notice of resignation then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which may be any Lender hereunder or any commercial bank,
or an Affiliate of a commercial bank, having an office in the United States of
America and having a combined capital and surplus of at least $200,000,000. Upon
the acceptance of its appointment as the Administrative Agent hereunder, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights and duties of the retiring Administrative Agent under the Loan
Documents, and the retiring Administrative Agent shall be discharged from its
duties and obligations thereunder. After any retiring Administrative Agent’s
resignation hereunder as Administrative Agent, the provisions of this Section 11
and all protective provisions of the other Loan Documents shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent, but no successor Administrative Agent shall in any event
be liable or responsible for any actions of its predecessor. If the
Administrative Agent resigns and no successor is appointed, the rights and
obligations of such Administrative Agent shall be automatically assumed by the
Required Lenders and (i) the Borrowers shall be directed to make all payments
due each Lender and L/C Issuer hereunder directly to such Lender or L/C Issuer
and (ii) the Administrative Agent’s rights in the Collateral Documents shall be
assigned without representation, recourse or warranty to the Lenders and L/C
Issuer as their interests may appear.

Section 11.8. L/C Issuer and Swing Line Lender. The L/C Issuer shall act on
behalf of the Lenders with respect to any Letters of Credit issued by it and the
documents associated therewith, and the Swing Line Lender shall act on behalf of
the Lenders with respect to the Swing Loans made hereunder. The L/C Issuer and
the Swing Line Lender shall each have all of the benefits and immunities
(i) provided to the Administrative Agent in this Section 11 with respect to any
acts taken or omissions suffered by the L/C Issuer in connection with Letters of
Credit issued by it or proposed to be issued by it and the Applications
pertaining to such Letters of Credit or by the Swing Line Lender in connection
with Swing Loans made or to be made hereunder as fully as if the term
“Administrative Agent”, as used in this Section 11, included the L/C Issuer and
the Swing Line Lender with respect to such acts or omissions and (ii) as
additionally provided in this Agreement with respect to such L/C Issuer or Swing
Line Lender, as applicable.

 

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Section 11.9. Hedging Liability and Funds Transfer and Deposit Account Liability
Arrangements. By virtue of a Lender’s execution of this Agreement or an
assignment agreement pursuant to Section 13.12 hereof, as the case may be, any
Affiliate of such Lender with whom any Loan Party or any Subsidiary has entered
into an agreement creating Hedging Liability or Funds Transfer and Deposit
Account Liability shall be deemed a Lender party hereto for purposes of any
reference in a Loan Document to the parties for whom the Administrative Agent is
acting, it being understood and agreed that the rights and benefits of such
Affiliate under the Loan Documents consist exclusively of such Affiliate’s right
to share in payments and collections out of the Collateral and the Guaranties as
more fully set forth in Section 3.1 hereof. In connection with any such
distribution of payments and collections, or any request for the release of the
Guaranties and the Administrative Agent’s Liens in connection with the
termination of the Commitments and the payment in full of the Obligations, the
Administrative Agent shall be entitled to assume no amounts are due to any
Lender or its Affiliate with respect to Hedging Liability or Funds Transfer and
Deposit Account Liability unless such Lender has notified the Administrative
Agent in writing of the amount of any such liability owed to it or its Affiliate
prior to such distribution or payment or release of Guaranties and Liens.

Section 11.10. Designation of Additional Agents. The Administrative Agent shall
have the continuing right, for purposes hereof, at any time and from time to
time to designate one or more of the Lenders (and/or its or their Affiliates) as
“syndication agents,” “documentation agents,” “book runners,” “lead arrangers,”
“arrangers,” or other designations for purposes hereto, but such designation
shall have no substantive effect, and such Lenders and their Affiliates shall
have no additional powers, duties or responsibilities as a result thereof.

Section 11.11. Authorization to Release or Subordinate or Limit Liens. The
Administrative Agent is hereby irrevocably authorized by each of the Lenders and
the L/C Issuer to (a) release any Lien covering any Collateral that is sold,
transferred, or otherwise disposed of in accordance with the terms and
conditions of this Agreement and the relevant Collateral Documents (including a
sale, transfer, or disposition permitted by the terms of Section 8.10 hereof or
which has otherwise been consented to in accordance with Section 13.13 hereof),
(b) release or subordinate any Lien on Collateral consisting of goods financed
with purchase money indebtedness or under a Capital Lease to the extent such
purchase money indebtedness or Capitalized Lease Obligation, and the Lien
securing the same, are permitted by Sections 8.7(b) and 8.8(d) hereof,
(c) reduce or limit the amount of the indebtedness secured by any particular
item of Collateral to an amount not less than the estimated value thereof to the
extent necessary to reduce mortgage registry, filing and similar tax, and
(d) release Liens on the Collateral following termination or expiration of the
Commitments and payment in full in cash of the Obligations and, if then due,
Hedging Liability and Funds Transfer and Deposit Account Liability.

Section 11.12. Authorization to Enter into, and Enforcement of, the Collateral
Documents. The Administrative Agent is hereby irrevocably authorized by each of
the Lenders and the L/C Issuer to execute and deliver the Collateral Documents
on behalf of each of the Lenders and their Affiliates and the L/C Issuer and to
take such action and exercise such powers under the Collateral Documents as the
Administrative Agent considers appropriate, provided the Administrative Agent
shall not amend the Collateral Documents unless such amendment is agreed to in
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agrees that it will be bound by the terms and conditions of the Collateral
Documents upon the execution and delivery thereof by the Administrative Agent.
Except as otherwise specifically provided for herein, no Lender (or its
Affiliates) or L/C Issuer, other than the Administrative Agent, shall have the
right to institute any suit, action or proceeding in equity or at law for the
foreclosure or other realization upon any Collateral or for the execution of any
trust or power in respect of the Collateral or for the appointment of a receiver
or for the enforcement of any other remedy under the Collateral Documents; it
being understood and intended that no one or more of the Lenders (or their
Affiliates) or L/C Issuer shall have any right in any manner whatsoever to
affect, disturb or prejudice the Lien of the Administrative Agent (or any
security trustee therefor) under the Collateral Documents by its or their action
or to enforce any right thereunder, and that all proceedings at law or in equity
shall be instituted, had, and maintained by the Administrative Agent (or its
security trustee) in the manner provided for in the relevant Collateral
Documents for the benefit of the Lenders, the L/C Issuer, and their Affiliates.

SECTION 12. THE GUARANTEES.

Section 12.1. The Guarantees. To induce the Lenders and L/C Issuer to provide
the credits described herein and in consideration of benefits expected to accrue
to the Borrowers by reason of the Commitments and for other good and valuable
consideration, receipt of which is hereby acknowledged, each of Parent’s direct
and indirect Subsidiaries a party hereto (other than Borrowers) (including any
Subsidiary executing a Joinder Agreement as a Guarantor in the form attached
hereto as Exhibit F or such other form acceptable to the Administrative Agent)
hereby unconditionally and irrevocably guarantees jointly and severally to the
Administrative Agent, the Lenders, and the L/C Issuer and their Affiliates, the
due and punctual payment of all present and future Obligations, Hedging
Liability, and Funds Transfer and Deposit Account Liability, including, but not
limited to, the due and punctual payment of principal of and interest on the
Loans, the Reimbursement Obligations, and the due and punctual payment of all
other Obligations now or hereafter owed by the Borrowers under the Loan
Documents and the due and punctual payment of all Hedging Liability and Funds
Transfer and Deposit Account Liability, in each case as and when the same shall
become due and payable, whether at stated maturity, by acceleration, or
otherwise, according to the terms hereof and thereof (including all interest,
costs, fees, and charges after the entry of an order for relief against any
Borrower or such other obligor in a case under the United States Bankruptcy Code
or any similar proceeding, whether or not such interest, costs, fees and charges
would be an allowed claim against any such Borrower or any such obligor in any
such proceeding). In case of failure by the Borrowers or other obligor
punctually to pay any Obligations, Hedging Liability, or Funds Transfer and
Deposit Account Liability guaranteed hereby, each Guarantor hereby
unconditionally agrees to make such payment or to cause such payment to be made
punctually as and when the same shall become due and payable, whether at stated
maturity, by acceleration, or otherwise, and as if such payment were made by the
Borrowers or such obligor.

Section 12.2. Guarantee Unconditional. The obligations of each Guarantor under
this Section 12 shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged, or otherwise
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(a) any extension, renewal, settlement, compromise, waiver, or release in
respect of any obligation of any Borrower or other obligor or of any other
guarantor under this Agreement or any other Loan Document or by operation of law
or otherwise;

(b) any modification or amendment of or supplement to this Agreement or any
other Loan Document or any agreement relating to Hedging Liability or Funds
Transfer and Deposit Account Liability;

(c) any change in the corporate existence, structure, or ownership of, or any
insolvency, bankruptcy, reorganization, or other similar proceeding affecting,
any Borrower or other obligor, any other guarantor, or any of their respective
assets, or any resulting release or discharge of any obligation of any Borrower
or other obligor or of any other guarantor contained in any Loan Document;

(d) the existence of any claim, set-off, or other rights which any Borrower or
other obligor or any other guarantor may have at any time against the
Administrative Agent, any Lender, the L/C Issuer or any other Person, whether or
not arising in connection herewith;

(e) any failure to assert, or any assertion of, any claim or demand or any
exercise of, or failure to exercise, any rights or remedies against any Borrower
or other obligor, any other guarantor, or any other Person or Property;

(f) any application of any sums by whomsoever paid or howsoever realized to any
obligation of any Borrower or other obligor, regardless of what obligations of
any Borrower or other obligor remain unpaid;

(g) any invalidity or unenforceability relating to or against any Borrower or
other obligor or any other guarantor for any reason of this Agreement or of any
other Loan Document or any agreement relating to Hedging Liability or Funds
Transfer and Deposit Account Liability or any provision of applicable law or
regulation purporting to prohibit the payment by any Borrower or other obligor
or any other guarantor of the principal of or interest on any Loan or any
Reimbursement Obligation or any other amount payable under the Loan Documents or
any agreement relating to Hedging Liability or Funds Transfer and Deposit
Account Liability; or

(h) any other act or omission to act or delay of any kind by the Administrative
Agent, any Lender, the L/C Issuer, or any other Person or any other circumstance
whatsoever that might, but for the provisions of this paragraph, constitute a
legal or equitable discharge of the obligations of any Guarantor under this
Section 12.

Section 12.3. Discharge Only upon Payment in Full; Reinstatement in Certain
Circumstances. Each Guarantor’s obligations under this Section 12 shall remain
in full force and effect until the Commitments are terminated, all Letters of
Credit have expired, and the principal of and interest on the Loans and all
other amounts payable by the Borrowers and the Guarantors under this Agreement
and all other Loan Documents and, if then outstanding and unpaid, all Hedging
Liability and Funds Transfer and Deposit Account Liability shall have been paid
in full. If at any time any payment of the principal of or interest on any Loan
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Obligation or any other amount payable by the Borrowers or other obligor or any
Guarantor under the Loan Documents or any agreement relating to Hedging
Liability or Funds Transfer and Deposit Account Liability is rescinded or must
be otherwise restored or returned upon the insolvency, bankruptcy, or
reorganization of any Borrower or other obligor or of any guarantor, or
otherwise, each Guarantor’s obligations under this Section 12 with respect to
such payment shall be reinstated at such time as though such payment had become
due but had not been made at such time.

Section 12.4. Subrogation. Each Guarantor agrees it will not exercise any rights
which it may acquire by way of subrogation by any payment made hereunder, or
otherwise, until all the Obligations, Hedging Liability, and Funds Transfer and
Deposit Account Liability shall have been paid in full subsequent to the
termination of all the Commitments and expiration of all Letters of Credit. If
any amount shall be paid to a Guarantor on account of such subrogation rights at
any time prior to the later of (x) the payment in full of the Obligations,
Hedging Liability, and Funds Transfer and Deposit Account Liability and all
other amounts payable by the Borrowers hereunder and the other Loan Documents
and (y) the termination of the Commitments and expiration of all Letters of
Credit, such amount shall be held in trust for the benefit of the Administrative
Agent, the Lenders, and the L/C Issuer (and their Affiliates) and shall
forthwith be paid to the Administrative Agent for the benefit of the Lenders and
L/C Issuer (and their Affiliates) or be credited and applied upon the
Obligations, Hedging Liability, and Funds Transfer and Deposit Account
Liability, whether matured or unmatured, in accordance with the terms of this
Agreement.

Section 12.5. Waivers. Each Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest, and any notice not provided for herein, as well as
any requirement that at any time any action be taken by the Administrative
Agent, any Lender, the L/C Issuer, or any other Person against any Borrower or
other obligor, another guarantor, or any other Person.

Section 12.6. Limit on Recovery. Notwithstanding any other provision hereof, the
right of recovery against each Guarantor under this Section 12 shall not exceed
$1.00 less than the lowest amount which would render such Guarantor’s
obligations under this Section 12 void or voidable under applicable law,
including, without limitation, fraudulent conveyance law.

Section 12.7. Stay of Acceleration. If acceleration of the time for payment of
any amount payable by any Borrower or other obligor under this Agreement or any
other Loan Document, or under any agreement relating to Hedging Liability or
Funds Transfer and Deposit Account Liability, is stayed upon the insolvency,
bankruptcy or reorganization of any Borrower or such obligor, all such amounts
otherwise subject to acceleration under the terms of this Agreement or the other
Loan Documents, or under any agreement relating to Hedging Liability or Funds
Transfer and Deposit Account Liability, shall nonetheless be payable by the
Guarantors hereunder forthwith on demand by the Administrative Agent made at the
request of the Required Lenders.

Section 12.8. Benefit to Guarantors. The Borrowers and the Guarantors are
engaged in related businesses and integrated to such an extent that the
financial strength and flexibility of the Borrowers has a direct impact on the
success of each Guarantor. Each Guarantor will derive substantial direct and
indirect benefit from the extensions of credit hereunder.

 

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Section 12.9. Guarantor Covenants. Each Guarantor shall take such action as any
Borrower is required by this Agreement to cause such Guarantor to take, and
shall refrain from taking such action as any Borrower is required by this
Agreement to prohibit such Guarantor from taking.

SECTION 13. MISCELLANEOUS.

Section 13.1. Withholding Taxes. (a) Payments Free of Withholding. Except as
otherwise required by law and subject to Section 13.1(b) hereof, each payment by
the Borrowers and the Guarantors under this Agreement or the other Loan
Documents shall be made without withholding for or on account of any present or
future taxes (other than overall net income taxes on the recipient) imposed by
or within the jurisdiction in which such Borrower or such Guarantor is
domiciled, any jurisdiction from which such Borrower or such Guarantor makes any
payment, or (in each case) any political subdivision or taxing authority thereof
or therein. If any such withholding is so required, such Borrower or such
Guarantor shall make the withholding, pay the amount withheld to the appropriate
governmental authority before penalties attach thereto or interest accrues
thereon, and forthwith pay such additional amount as may be necessary to ensure
that the net amount actually received by each Lender, the L/C Issuer, and the
Administrative Agent free and clear of such taxes (including such taxes on such
additional amount) is equal to the amount which that Lender, L/C Issuer, or the
Administrative Agent (as the case may be) would have received had such
withholding not been made. If the Administrative Agent, the L/C Issuer, or any
Lender pays any amount in respect of any such taxes, penalties or interest, such
Borrower or such Guarantor shall reimburse the Administrative Agent, the L/C
Issuer or such Lender for that payment on demand in the currency in which such
payment was made. If such Borrower or such Guarantor pays any such taxes,
penalties or interest, it shall deliver official tax receipts evidencing that
payment or certified copies thereof to the Lender, the L/C Issuer or
Administrative Agent on whose account such withholding was made (with a copy to
the Administrative Agent if not the recipient of the original) on or before the
thirtieth day after payment.

(b) U.S. Withholding Tax Exemptions. Each Lender or L/C Issuer that is not a
United States person (as such term is defined in Section 7701(a)(30) of the
Code) shall submit to the Borrower Representative and the Administrative Agent
on or before the date the initial Credit Event is made hereunder or, if later,
the date such financial institution becomes a Lender or L/C Issuer hereunder,
two duly completed and signed copies of (i) either Form W-8 BEN (relating to
such Lender or L/C Issuer and entitling it to a complete exemption from
withholding under the Code on all amounts to be received by such Lender or L/C
Issuer, including fees, pursuant to the Loan Documents and the Obligations) or
Form W-8 ECI (relating to all amounts to be received by such Lender or L/C
Issuer, including fees, pursuant to the Loan Documents and the Obligations) of
the United States Internal Revenue Service or (ii) solely if such Lender is
claiming exemption from United States withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of “portfolio interest”, a Form W-8
BEN, or any successor form prescribed by the Internal Revenue Service, and a
certificate representing that such Lender is not a bank for purposes of
Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning
of Section 871(h)(3)(B) of the Code) of any Borrower and is not a controlled
foreign corporation related to any Borrower (within the meaning of
Section 864(d)(4) of the Code). Thereafter and from time to time, each Lender
and L/C Issuer shall submit to the Borrower

 

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Representative and the Administrative Agent such additional duly completed and
signed copies of one or the other of such Forms (or such successor forms as
shall be adopted from time to time by the relevant United States taxing
authorities) and such other certificates as may be (i) requested by the Borrower
Representative in a written notice, directly or through the Administrative
Agent, to such Lender or L/C Issuer and (ii) required under then-current United
States law or regulations to avoid or reduce United States withholding taxes on
payments in respect of all amounts to be received by such Lender or L/C Issuer,
including fees, pursuant to the Loan Documents or the Obligations. Upon the
request of the Borrower Representative or the Administrative Agent, each Lender
and L/C Issuer that is a United States person (as such term is defined in
Section 7701(a)(30) of the Code) shall submit to the Borrower Representative and
the Administrative Agent a certificate to the effect that it is such a United
States person.

(c) Inability of Lender to Submit Forms. If any Lender or L/C Issuer determines,
as a result of any change in applicable law, regulation or treaty, or in any
official application or interpretation thereof, that it is unable to submit to
the Borrower Representative or the Administrative Agent any form or certificate
that such Lender or L/C Issuer is obligated to submit pursuant to subsection (b)
of this Section 13.1 or that such Lender or L/C Issuer is required to withdraw
or cancel any such form or certificate previously submitted or any such form or
certificate otherwise becomes ineffective or inaccurate, such Lender or L/C
Issuer shall promptly notify the Borrower Representative and Administrative
Agent of such fact and the Lender or L/C Issuer shall to that extent not be
obligated to provide any such form or certificate and will be entitled to
withdraw or cancel any affected form or certificate, as applicable.

Section 13.2. No Waiver, Cumulative Remedies. No delay or failure on the part of
the Administrative Agent, the L/C Issuer, or any Lender, or on the part of the
holder or holders of any of the Obligations, in the exercise of any power or
right under any Loan Document shall operate as a waiver thereof or as an
acquiescence in any default, nor shall any single or partial exercise of any
power or right preclude any other or further exercise thereof or the exercise of
any other power or right. The rights and remedies hereunder of the
Administrative Agent, the L/C Issuer, the Lenders, and of the holder or holders
of any of the Obligations are cumulative to, and not exclusive of, any rights or
remedies which any of them would otherwise have.

Section 13.3. Non-Business Days. If any payment hereunder becomes due and
payable on a day which is not a Business Day, the due date of such payment shall
be extended to the next succeeding Business Day on which date such payment shall
be due and payable. In the case of any payment of principal falling due on a day
which is not a Business Day, interest on such principal amount shall continue to
accrue during such extension at the rate per annum then in effect, which accrued
amount shall be due and payable on the next scheduled date for the payment of
interest.

Section 13.4. Documentary Taxes. The Borrowers agree to pay on demand any
documentary, stamp or similar taxes payable in respect of this Agreement or any
other Loan Document, including interest and penalties, in the event any such
taxes are assessed, irrespective of when such assessment is made and whether or
not any credit is then in use or available hereunder.

 

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Section 13.5. Survival of Representations. All representations and warranties
made herein or in any other Loan Document or in certificates given pursuant
hereto or thereto shall survive the execution and delivery of this Agreement and
the other Loan Documents, and shall continue in full force and effect with
respect to the date as of which they were made as long as any credit is in use
or available hereunder.

Section 13.6. Survival of Indemnities. All indemnities and other provisions
relative to reimbursement to the Lenders and L/C Issuer of amounts sufficient to
protect the yield of the Lenders and L/C Issuer with respect to the Loans and
Letters of Credit, including, but not limited to, Sections 1.12, 10.3, and 13.15
hereof, shall survive the termination of this Agreement and the other Loan
Documents and the payment of the Obligations.

Section 13.7. Sharing of Set-Off. Each Lender agrees with each other Lender a
party hereto that if such Lender shall receive and retain any payment, whether
by set-off or application of deposit balances or otherwise, on any of the Loans
or Reimbursement Obligations in excess of its ratable share of payments on all
such Obligations then outstanding to the Lenders, then such Lender shall
purchase for cash at face value, but without recourse, ratably from each of the
other Lenders such amount of the Loans or Reimbursement Obligations, or
participations therein, held by each such other Lenders (or interest therein) as
shall be necessary to cause such Lender to share such excess payment ratably
with all the other Lenders; provided, however, that if any such purchase is made
by any Lender, and if such excess payment or part thereof is thereafter
recovered from such purchasing Lender, the related purchases from the other
Lenders shall be rescinded ratably and the purchase price restored as to the
portion of such excess payment so recovered, but without interest. For purposes
of this Section, amounts owed to or recovered by the L/C Issuer in connection
with Reimbursement Obligations in which Lenders have been required to fund their
participation shall be treated as amounts owed to or recovered by the L/C Issuer
as a Lender hereunder.

Section 13.8. Notices. Except as otherwise specified herein, all notices
hereunder and under the other Loan Documents shall be in writing (including,
without limitation, notice by telecopy) and shall be given to the relevant party
at its address or telecopier number set forth below, or such other address or
telecopier number as such party may hereafter specify by notice to the
Administrative Agent and the Borrower Representative given by courier, by United
States certified or registered mail, by telecopy or by other telecommunication
device capable of creating a written record of such notice and its receipt.
Notices under the Loan Documents to any Lender shall be addressed to its address
or telecopier number set forth on its Administrative Questionnaire; and notices
under the Loan Documents to the Borrower Representative, any Guarantor, the
Administrative Agent or L/C Issuer shall be addressed to its respective address
or telecopier number set forth below:

 

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to the Borrower Representative or any

Guarantor:

 

SPARTON CORPORATION

425 N. Martingale Rd.

Schaumburg, IL 60173

Attention:    Cary Wood and Greg

                    Slome

Telephone:  847-762-5800

Telecopy: 847-762-5820

  

to the Administrative Agent and L/C Issuer:

 

 

BMO HARRIS BANK N.A.

111 West Monroe Street

Chicago, Illinois 60603

Attention: Carl Skoog, Senior Vice President

Telephone: 312-461-3718

Telecopy: 312-291-8571

Each such notice, request or other communication shall be effective (i) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section or in the relevant Administrative Questionnaire and a
confirmation of such telecopy has been received by the sender, (ii) if given by
mail, 5 days after such communication is deposited in the mail, certified or
registered with return receipt requested, addressed as aforesaid or (iii) if
given by any other means, when delivered at the addresses specified in this
Section or in the relevant Administrative Questionnaire; provided that any
notice given pursuant to Section 1 hereof shall be effective only upon receipt.

Section 13.9. Counterparts. This Agreement may be executed in any number of
counterparts, and by the different parties hereto on separate counterpart
signature pages, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.

Section 13.10. Successors and Assigns. This Agreement shall be binding upon the
Borrowers and the Guarantors and their successors and assigns, and shall inure
to the benefit of the Administrative Agent, the L/C Issuer, and each of the
Lenders, and the benefit of their respective successors and assigns, including
any subsequent holder of any of the Obligations. The Borrowers and the
Guarantors may not assign any of their rights or obligations under any Loan
Document without the written consent of all of the Lenders and, with respect to
any Letter of Credit or the Application therefor, the L/C Issuer.

Section 13.11. Participants. Each Lender shall have the right at its own cost to
grant participations (to be evidenced by one or more agreements or certificates
of participation) in the Loans made and Reimbursement Obligations and/or
Commitments held by such Lender at any time and from time to time to one or more
other Persons; provided that no such participation shall relieve any Lender of
any of its obligations under this Agreement, and, provided, further that no such
participant shall have any rights under this Agreement except as provided in
this Section, and the Administrative Agent shall have no obligation or
responsibility to such participant. Any agreement pursuant to which such
participation is granted shall provide that the granting Lender shall retain the
sole right and responsibility to enforce the obligations of the Borrowers under
this Agreement and the other Loan Documents including, without limitation, the
right to approve any amendment, modification or waiver of any provision of the
Loan Documents, except that such agreement may provide that such Lender will not
agree to any modification, amendment or waiver of the Loan Documents that would
reduce the amount of or postpone any fixed date for payment of any Obligation in
which such participant has an interest. Any party to which such a participation
has been granted shall have the benefits of Section 1.12 and Section 10.3
hereof.

 

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Section 13.12. Assignments. (a) Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of such Lender’s rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
at the time owing to it); provided that any such assignment shall be subject to
the following conditions:

(i) Minimum Amounts. (A) In the case of an assignment of the entire remaining
amount of the assigning Lender’s Commitment and the Loans and participation
interest in L/C Obligations at the time owing to it or in the case of an
assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum
amount need be assigned; and (B) in any case not described in
subsection (a)(i)(A) of this Section, the aggregate amount of the Commitment
(which for this purpose includes Loans and participation interest in L/C
Obligations outstanding thereunder) or, if the applicable Commitment is not then
in effect, the principal outstanding balance of the Loans and participation
interest in L/C Obligations of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with respect
to such assignment is delivered to the Administrative Agent or, if “Effective
Date” is specified in the Assignment and Acceptance, as of the Effective Date)
shall not be less than $5,000,000, in the case of any assignment in respect of
the Revolving Credit, or $1,000,000, in the case of any assignment in respect of
any Acquisition Loan, unless each of the Administrative Agent and, so long as no
Event of Default has occurred and is continuing, the Borrower Representative
otherwise consents (each such consent not to be unreasonably withheld or
delayed);

(ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loan or the Commitment
assigned, except that this clause (ii) shall not prohibit any Lender from
assigning all or a portion of its rights and obligations among separate Credits
on a non-pro rata basis.

(iii) Required Consents. No consent shall be required for any assignment except
to the extent required by Section 13.12(a)(i)(B) and, in addition:

(a) the consent of the Borrower Representative (such consent not to be
unreasonably withheld or delayed) shall be required unless (x) an Event of
Default has occurred and is continuing at the time of such assignment or
(y) such assignment is to a Lender, an Affiliate of a Lender or an Approved
Fund; provided that the Borrower Representative shall be deemed to have
consented to any such assignment unless it shall object thereto by written
notice to the Administrative Agent within five (5) Business Days after having
received notice thereof;

(b) the consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed) shall be required for assignments in respect of (i) the
Revolving Credit if such assignment is to a Person that is not a Lender with a
Commitment in respect of such facility, an Affiliate of such Lender or an
Approved Fund with respect to such Lender or (ii) the Acquisition Loans to a
Person who is not a Lender, an Affiliate of a Lender or an Approved Fund;

 

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(c) the consent of the L/C Issuer (such consent not to be unreasonably withheld
or delayed) shall be required for any assignment that increases the obligation
of the assignee to participate in exposure under one or more Letters of Credit
(whether or not then outstanding); and

(d) the consent of the Swing Line Lender (such consent not to be unreasonably
withheld or delayed) shall be required for any assignment that increases the
obligation of the assignee to participate in exposure under one or more Swing
Loans (whether or not then outstanding).

(iv) Assignment and Acceptance. The parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance, together with
a processing and recordation fee of $3,500, and the assignee, if it is not a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire.

(v) No Assignment to any Loan Party. No such assignment shall be made to any
Loan Party or any of Affiliates or Subsidiaries of any Loan Party.

(vi) No Assignment to Natural Persons. No such assignment shall be made to a
natural person.

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to Section 13.12(b) hereof, from and after the effective date specified in each
Assignment and Acceptance, the assignee thereunder shall be a party to this
Agreement and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto) but shall continue to be entitled to
the benefits of Sections 13.6 and 13.15 with respect to facts and circumstances
occurring prior to the effective date of such assignment. Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not
comply with this Section shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in
accordance with Section 13.11 hereof.

(b) Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrowers, shall maintain at one of its offices in Chicago,
Illinois, a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive, and the Borrowers, the Administrative Agent,
and the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrowers and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.

 

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

(d) Notwithstanding anything to the contrary herein, if at any time the Swing
Line Lender assigns all of its Revolving Credit Commitments and Revolving Loans
pursuant to subsection (a) above, the Swing Line Lender may terminate the Swing
Line. In the event of such termination of the Swing Line, the Borrowers shall be
entitled to appoint another Lender to act as the successor Swing Line Lender
hereunder (with such Lender’s consent); provided, however, that the failure of
the Borrowers to appoint a successor shall not affect the resignation of the
Swing Line Lender. If the Swing Line Lender terminates the Swing Line, it shall
retain all of the rights of the Swing Line Lender provided hereunder with
respect to Swing Loans made by it and outstanding as of the effective date of
such termination, including the right to require Lenders to make Revolving Loans
or fund participations in outstanding Swing Loans pursuant to Section 1.7
hereof.

Section 13.13. Amendments. Any provision of this Agreement or the other Loan
Documents may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed by (a) the Borrowers, (b) the Required Lenders, and
(c) if the rights or duties of the Administrative Agent, the L/C Issuer, or the
Swing Line Lender are affected thereby, the Administrative Agent, the L/C
Issuer, or the Swing Line Lender, as applicable; provided that:

(i) no amendment or waiver pursuant to this Section 13.13 shall (A) increase any
Commitment of any Lender without the consent of such Lender or (B) reduce the
amount of or postpone the date for any scheduled payment of any principal of or
interest on any Loan or of any Reimbursement Obligation or of any fee payable
hereunder without the consent of the Lender to which such payment is owing or
which has committed to make such Loan or Letter of Credit (or participate
therein) hereunder;

(ii) no amendment or waiver pursuant to this Section 13.13 shall, unless signed
by each Lender, extend the Revolving Credit Termination Date, change the
definition of Required Lenders, change the provisions of this Section 13.13,
release any material guarantor or all or substantially all of the Collateral
(except as otherwise provided for in the Loan Documents), or affect the number
of Lenders required to take any action hereunder or under any other Loan
Document; and

(iii) no amendment to Section 12 hereof shall be made without the consent of the
Guarantor(s) affected thereby.

Section 13.14. Headings. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.

 

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Section 13.15. Costs and Expenses; Indemnification. (a) The Borrowers agree to
pay all costs and expenses of the Administrative Agent in connection with the
preparation, negotiation, syndication, and administration of the Loan Documents,
including, without limitation, the reasonable fees and disbursements of counsel
to the Administrative Agent, in connection with the preparation and execution of
the Loan Documents, and any amendment, waiver or consent related thereto,
whether or not the transactions contemplated herein are consummated, together
with any fees and charges suffered or incurred by the Administrative Agent in
connection with periodic environmental audits, fixed asset appraisals, title
insurance policies, collateral filing fees and lien searches; provided that in
the absence of an Event of Default, the Borrowers shall not be required to pay
for more than one (1) such environmental audit or fixed asset appraisal per
calendar year. The Borrowers agree to pay to the Administrative Agent, the L/C
Issuer and each Lender, and any other holder of any Obligations outstanding
hereunder, all costs and expenses reasonably incurred or paid by the
Administrative Agent, the L/C Issuer, such Lender, or any such holder, including
reasonable attorneys’ fees and disbursements and court costs, in connection with
any Default or Event of Default hereunder or in connection with the enforcement
of any of the Loan Documents (including all such costs and expenses incurred in
connection with any proceeding under the United States Bankruptcy Code involving
any Borrower or any Guarantor as a debtor thereunder). The Borrowers further
agree to indemnify the Administrative Agent, the L/C Issuer, each Lender, and
any security trustee therefor, and their respective directors, officers,
employees, agents, financial advisors, and consultants (each such Person being
called an “Indemnitee”) against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all
reasonable fees and disbursements of counsel for any such Indemnitee and all
expenses of litigation or preparation therefor, whether or not the Indemnitee is
a party thereto, or any settlement arrangement arising from or relating to any
such litigation) which any of them may pay or incur arising out of or relating
to any Loan Document or any of the transactions contemplated thereby or the
direct or indirect application or proposed application of the proceeds of any
Loan or Letter of Credit, other than those which arise from the gross negligence
or willful misconduct of the party claiming indemnification as finally
determined by a court of competent jurisdiction. The Borrowers, upon demand by
the Administrative Agent, the L/C Issuer or a Lender at any time, shall
reimburse the Administrative Agent, the L/C Issuer or such Lender for any legal
or other expenses (including, without limitation, all reasonable fees and
disbursements of counsel for any such Indemnitee) incurred in connection with
investigating or defending against any of the foregoing (including any
settlement costs relating to the foregoing) except if the same is directly due
to the gross negligence or willful misconduct of the party to be indemnified as
finally determined by a court of competent jurisdiction. To the extent permitted
by applicable law, neither any Borrower nor any Guarantor shall assert, and each
such Person hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or the other Loan Documents or any agreement or instrument
contemplated hereby or thereby, the transactions contemplated hereby or thereby,
any Loan or Letter of Credit or the use of the proceeds thereof. The obligations
of the Borrowers under this Section shall survive the termination of this
Agreement.

(b) Each of the Borrowers unconditionally agrees to forever indemnify, defend
and hold harmless, and covenants not to sue for any claim for contribution
against, each Indemnitee for any damages, costs, loss or expense, including
without limitation, response, remedial or

 

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removal costs and all fees and disbursements of counsel for any such Indemnitee,
arising out of any of the following: (i) any presence, release, threatened
release or disposal of any hazardous or toxic substance or petroleum by any Loan
Party or any Subsidiary or otherwise occurring on or with respect to its
Property (whether owned or leased), (ii) the operation or violation of any
environmental law, whether federal, state, or local, and any regulations
promulgated thereunder, by any Loan Party or any Subsidiary or otherwise
occurring on or with respect to its Property (whether owned or leased),
(iii) any claim for personal injury or property damage in connection with any
Loan Party or any Subsidiary or otherwise occurring on or with respect to its
Property (whether owned or leased), and (iv) the inaccuracy or breach of any
environmental representation, warranty or covenant by any Loan Party or any
Subsidiary made herein or in any other Loan Document evidencing or securing any
Obligations or setting forth terms and conditions applicable thereto or
otherwise relating thereto, except for damages arising from the willful
misconduct or gross negligence of the relevant Indemnitee as finally determined
by a court of competent jurisdiction. This indemnification shall survive the
payment and satisfaction of all Obligations and the termination of this
Agreement, and shall remain in force beyond the expiration of any applicable
statute of limitations and payment or satisfaction in full of any single claim
under this indemnification. This indemnification shall be binding upon the
successors and assigns of each of the Borrowers and shall inure to the benefit
of each Indemnitee and its successors and assigns.

Section 13.16. Set-off. In addition to any rights now or hereafter granted under
the Loan Documents or applicable law and not by way of limitation of any such
rights, upon the occurrence of any Event of Default, each Lender, the L/C
Issuer, each subsequent holder of any Obligation, and each of their respective
affiliates, is hereby authorized by each Borrower and each Guarantor at any time
or from time to time, without notice to any Borrower, any Guarantor or to any
other Person, any such notice being hereby expressly waived, to set-off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, indebtedness evidenced by certificates of deposit, whether
matured or unmatured, and in whatever currency denominated, but not including
trust accounts) and any other indebtedness at any time held or owing by that
Lender, L/C Issuer, subsequent holder, or affiliate, to or for the credit or the
account of such Borrower or such Guarantor, whether or not matured, against and
on account of the Obligations of such Borrower or such Guarantor to that Lender,
L/C Issuer, or subsequent holder under the Loan Documents, including, but not
limited to, all claims of any nature or description arising out of or connected
with the Loan Documents, irrespective of whether or not (a) that Lender, L/C
Issuer, or subsequent holder shall have made any demand hereunder or (b) the
principal of or the interest on the Loans and other amounts due hereunder shall
have become due and payable pursuant to Section 9 and although said obligations
and liabilities, or any of them, may be contingent or unmatured.

Section 13.17. Entire Agreement. The Loan Documents constitute the entire
understanding of the parties thereto with respect to the subject matter thereof
and any prior agreements, whether written or oral, with respect thereto are
superseded hereby.

Section 13.18. Governing Law. This Agreement and the other Loan Documents
(except as otherwise specified therein), and the rights and duties of the
parties hereto, shall be construed and determined in accordance with the
internal laws of the State of Illinois.

 

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Section 13.19. Severability of Provisions. Any provision of any Loan Document
which is unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction. All rights, remedies and powers provided in
this Agreement and the other Loan Documents may be exercised only to the extent
that the exercise thereof does not violate any applicable mandatory provisions
of law, and all the provisions of this Agreement and other Loan Documents are
intended to be subject to all applicable mandatory provisions of law which may
be controlling and to be limited to the extent necessary so that they will not
render this Agreement or the other Loan Documents invalid or unenforceable.

Section 13.20. Excess Interest. Notwithstanding any provision to the contrary
contained herein or in any other Loan Document, no such provision shall require
the payment or permit the collection of any amount of interest in excess of the
maximum amount of interest permitted by applicable law to be charged for the use
or detention, or the forbearance in the collection, of all or any portion of the
Loans or other obligations outstanding under this Agreement or any other Loan
Document (“Excess Interest”). If any Excess Interest is provided for, or is
adjudicated to be provided for, herein or in any other Loan Document, then in
such event (a) the provisions of this Section shall govern and control,
(b) neither any Borrower nor any guarantor or endorser shall be obligated to pay
any Excess Interest, (c) any Excess Interest that the Administrative Agent or
any Lender may have received hereunder shall, at the option of the
Administrative Agent, be (i) applied as a credit against the then outstanding
principal amount of Obligations hereunder and accrued and unpaid interest
thereon (not to exceed the maximum amount permitted by applicable law),
(ii) refunded to the Borrowers, or (iii) any combination of the foregoing,
(d) the interest rate payable hereunder or under any other Loan Document shall
be automatically subject to reduction to the maximum lawful contract rate
allowed under applicable usury laws (the “Maximum Rate”), and this Agreement and
the other Loan Documents shall be deemed to have been, and shall be, reformed
and modified to reflect such reduction in the relevant interest rate, and
(e) neither any Borrower nor any guarantor or endorser shall have any action
against the Administrative Agent or any Lender for any damages whatsoever
arising out of the payment or collection of any Excess Interest. Notwithstanding
the foregoing, if for any period of time interest on any of the Borrowers’
Obligations is calculated at the Maximum Rate rather than the applicable rate
under this Agreement, and thereafter such applicable rate becomes less than the
Maximum Rate, the rate of interest payable on the Borrowers’ Obligations shall
remain at the Maximum Rate until the Lenders have received the amount of
interest which such Lenders would have received during such period on the
Borrowers’ Obligations had the rate of interest not been limited to the Maximum
Rate during such period.

Section 13.21. Construction. The parties acknowledge and agree that the Loan
Documents shall not be construed more favorably in favor of any party hereto
based upon which party drafted the same, it being acknowledged that all parties
hereto contributed substantially to the negotiation of the Loan Documents. The
provisions of this Agreement relating to Subsidiaries shall only apply during
such times as any Loan Party has one or more Subsidiaries. NOTHING CONTAINED
HEREIN SHALL BE DEEMED OR CONSTRUED TO PERMIT ANY ACT OR OMISSION WHICH IS
PROHIBITED BY THE TERMS OF ANY COLLATERAL DOCUMENT, THE COVENANTS AND AGREEMENTS
CONTAINED HEREIN BEING IN ADDITION TO AND NOT IN SUBSTITUTION FOR THE COVENANTS
AND AGREEMENTS CONTAINED IN THE COLLATERAL DOCUMENTS.

 

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Section 13.22. Lender’s and L/C Issuer ‘s Obligations Several. The obligations
of the Lenders and L/C Issuer hereunder are several and not joint. Nothing
contained in this Agreement and no action taken by the Lenders or L/C Issuer
pursuant hereto shall be deemed to constitute the Lenders and L/C Issuer a
partnership, association, joint venture or other entity.

Section 13.23. Submission to Jurisdiction; Waiver of Jury Trial. The Borrowers
and the Guarantors hereby submit to the nonexclusive jurisdiction of the United
States District Court for the Northern District of Illinois and of any Illinois
State court sitting in the City of Chicago for purposes of all legal proceedings
arising out of or relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or thereby. The Borrowers and the Guarantors
irrevocably waive, to the fullest extent permitted by law, any objection which
they may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum. The Borrowers, the Guarantors,
the Administrative Agent, the L/C Issuer and the Lenders hereby irrevocably
waive any and all right to trial by jury in any legal proceeding arising out of
or relating to any Loan Document or the transactions contemplated thereby.

Section 13.24. USA Patriot Act. Each Lender and L/C Issuer that is subject to
the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “Act”) hereby notifies each of the Borrowers
that pursuant to the requirements of the Act, it is required to obtain, verify,
and record information that identifies such Borrower, which information includes
the name and address of such Borrower and other information that will allow such
Lender or L/C Issuer to identify such Borrower in accordance with the Act.

Section 13.25. Confidentiality. Each of the Administrative Agent, the Lenders,
and the L/C Issuer severally agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisors to the extent any such Person has
a need to know such Information (it being understood that the Persons to whom
such disclosure is made will first be informed of the confidential nature of
such Information and instructed to keep such Information confidential), (b) to
the extent requested by any regulatory authority (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to
(A) any assignee of or participant in, or any prospective assignee of or
participant in, any of its rights or obligations under this Agreement or (B) any
actual or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to any Borrower or any Subsidiary and its obligations,
(g) with the prior written consent of the Borrower Representative, (h) to the
extent such Information (A) becomes publicly available other than as a result of
a breach of this Section or (B) becomes available to the Administrative Agent,
any Lender or the L/C Issuer on a non-confidential basis from a source other
than any Borrower or any Subsidiary or any of their directors, officers,
employees or agents, including accountants, legal counsel and other advisors,
(i) to rating agencies if requested or required by such agencies

 

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in connection with a rating relating to the Loans or Commitments hereunder, or
(j) to entities which compile and publish information about the syndicated loan
market, provided that only basic information about the pricing and structure of
the transaction evidenced hereby may be disclosed pursuant to this
subsection (j). For purposes of this Section, “Information” means all
information received from any Loan Party or any of the Subsidiaries or from any
other Person on behalf of any Loan Party or any Subsidiary relating to any Loan
Party or any Subsidiary or any of their respective businesses, other than any
such information that is available to the Administrative Agent, any Lender or
the L/C Issuer on a non-confidential basis prior to disclosure by any Loan Party
or any of their respective Subsidiaries or from any other Person on behalf of
any Loan Party or any of their respective Subsidiaries.

[SIGNATURE PAGES TO FOLLOW]

 

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(Signature Page to Credit Agreement)

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

 

BORROWERS:            

SPARTON CORPORATION, an Ohio

corporation

            By:   /s/ Michael Osborne               Michael Osborne            
  Senior Vice President – Corporate               Development            

SPARTRONICS, INC., a Michigan

corporation

            By:   /s/ Steve Korwin               Steve Korwin               Vice
President            

SPARTON TECHNOLOGY, INC., a New

Mexico corporation

            By:   /s/ Steve Korwin               Steve Korwin               Vice
President            

SPARTON ELECTRONICS FLORIDA,

INC., a Florida corporation

            By:   /s/ Steve Korwin               Steve Korwin               Vice
President            

SPARTON MEDICAL SYSTEMS, INC.,

a Michigan corporation

            By:   /s/ Steve Korwin               Steve Korwin               Vice
President

 

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(Signature Page to Credit Agreement)

 

BORROWERS:            

SPARTON MEDICAL SYSTEMS

COLORADO, LLC, a Colorado limited

liability company

            By:   /s/ Steve Korwin               Steve Korwin               Vice
President            

SPARTON BP MEDICAL DENVER,

LLC, a Delaware limited liability company

            By:   /s/ Steve Korwin               Steve Korwin               Vice
President            

SPARTON ONYX, LLC, a Delaware

limited liability company

            By:   /s/ Steve Korwin               Steve Korwin               Vice
President             The following Borrowers intending by their signatures
hereto to join this Agreement immediately upon the consummation of the Related
Transaction            

ONYX EMS, LLC, a South Dakota limited

liability company

            By:   /s/ Michael Osborne               Michael Osborne            
  President

 

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(Signature Page to Credit Agreement)

 

BORROWERS:            

RESONANT POWER TECHNOLOGY,

INC., a Wisconsin corporation

            By:   /s/ Michael Osborne               Michael Osborne            
  President

 

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(Signature Page to Credit Agreement)

 

ADMINISTRATIVE AGENT AND L/C

ISSUER:

           

BMO HARRIS BANK, N.A., as L/C Issuer

and as Administrative Agent

            By:   /s/ Andre Bonakdar               Andre Bonakdar              
Vice President

 

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(Signature Page to Credit Agreement)

 

LENDERS:             BMO HARRIS BANK N.A.             By:   /s/ Andre Bonakdar  
            Andre Bonakdar               Vice President

 

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